PDD Holdings Inc.

For Q1 2026, total revenue increased 11% year over year to RMB 106.2 billion. Online marketing services and others were RMB 49.9 billion, up from RMB 48.7 billion in the prior-year quarter, and transaction services were RMB 56.3 billion, up 20% year over year. Total cost of revenues increased to RMB 46.9 billion, and GAAP operating expenses were RMB 39.8 billion; on a non-GAAP basis operating expenses were RMB 38.3 billion, equal to 36% of revenue versus 38% a year ago. GAAP operating profit was RMB 19.6 billion, up 22% year over year, while non-GAAP operating profit was RMB 21.1 billion with a 20% margin. GAAP diluted EPS was RMB 8.48 and non-GAAP diluted EPS was RMB 9.51. Net cash from operating activities was RMB 16.4 billion, and cash, cash equivalents and short-term investments were RMB 436.1 billion. The company did not provide next-quarter or full-year financial guidance on this call.

The co-CEOs described 2026 as the start of PDD’s second decade and a year of organizational reinvention centered on safety, compliance, social responsibility, and high-quality development. Their strategic message was consistent: the company wants to deepen supply-chain capabilities, support merchants, and build first-party brands as a long-term path to ecosystem value. Tone was deliberate and reform-oriented, with repeated references to taking on more responsibility and accepting near-term complexity to strengthen the platform over time.

The CFO said first-quarter revenue growth was driven mainly by transaction services, while cost of revenues rose to RMB 46.9 billion because of higher fulfillment fees, bandwidth and server costs, and payment processing fees. Non-GAAP operating expenses were RMB 38.3 billion, or 36% of revenue, down from 38% a year ago, and non-GAAP sales and marketing expense ratio improved to 31% from 34%. R&D expense was RMB 4 billion on a non-GAAP basis, up 32% year over year. He also highlighted RMB 16.4 billion of operating cash flow and RMB 436.1 billion in cash, cash equivalents and short-term investments.

Analysts pressed management on why the first-party brand initiative was launched now, how the RMB 100 billion commitment would be deployed, and whether slower online marketing growth signaled pressure on GMV. Management said the timing reflects a broader restructuring and a need to address supply-chain bottlenecks, brand-building gaps, and industry fragmentation. They said the new model is intended to internalize some risk, provide sales certainty to manufacturers, and deepen long-term supply-chain capabilities rather than chase short-term marketing-driven growth. On margins, management said quarter-to-quarter fluctuations are normal because of seasonality and ongoing investment, and that the focus remains long-term intrinsic value rather than a fixed near-term profit margin.