PDD Holdings Inc. American Depositary Shares 2026 Q2 Earnings Call

Hello everyone, and thank you for joining us today. PDD Holdings earnings release was distributed earlier and is available on our website at investor.pddholdings.com, as well as through the GlobeNewswire services. Before we begin, I'd like to refer you to our safe harbor statement in the earnings press release, which applies to this call, as we'll make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Co-Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen, our Co-Chairman and Co-Chief Executive Officer, as well as Mr. Li Zhong, our Financial Director. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus.

Zhong will then walk us through our financial results for the second quarter ended June 30, 2026. On today's call, certain management remarks will be in Chinese. I will help translate. Please kindly note that English translation is for reference only, and in case of any discrepancy, statements in the original language should prevail. Now it's my pleasure to introduce our Co-Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen. Jiazhen, please go ahead. Hello, everyone. This is Zhao Jiazhen, and thank you for joining our earnings call for the second quarter of 2026. Before we formally begin, we would like to take this opportunity to express our deepest condolences on the passing of our Independent Director, Professor Ivonne M.C.M. Rietjens, and to pay our highest tribute to her significant contributions and dedicated service during her tenure with us.

Professor Rietjens served a long tenure as Chair of the Toxicology Department at Wageningen University & Research in the Netherlands, and earned an international reputation in the fields of food research and drug effects. Since joining the company as an Independent Director in August 2023, Professor Rietjens provided invaluable professional advice on the company's governance and development. At the same time, as a long-standing partner of our smart agricultural competition, Wageningen University & Research has consistently brought international perspectives and expert guidance to the event, helping it become an important global platform for innovation in agricultural technology as well as for talent development. We will carry forward her passion for agricultural research and continue to increase our investment in agriculture and agricultural research. And through these long-term commitments, honor her professional legacy and make greater contributions to agricultural and food safety research worldwide.

Now, let us return to the results for the quarter. The second quarter this year marked a new phase in the new decade of high-quality development, as we moved from initial rollout to deeper execution. Our 100 billion support program has entered a phase in which our sustained investment is beginning to yield tangible results. The positive effects across our platform and industry are being unlocked at a faster pace, with improvements in both the quality and efficiency across the supply and demand sides. At the same time, we continue to make steady progress on our strategic goal of building another PDD over the next three years. Although the initial rollout of our first-party brand model over the past six months was slower than expected due to certain external factors, the overall momentum remains positive. The operations are now fully underway and are progressing smoothly.

We will commit fully to transforming the supply chain for higher quality growth, drive the upgrading of traditional industries, and continue to unlock the supply chain's new growth potential from within. Furthermore, to accelerate supply chain transformation and upgrades, we have established a dedicated company in the Xiong'an New Area and purchased an office building there to focus on new opportunities created by intelligent technologies. To support upgrading and high quality development of traditional manufacturing, we have also established a data processing service center for traditional industries and an integrated service center to help traditional manufacturers move up the value chain and pursue high quality development.

过去的这个季度，我们的业绩表现保持稳健。本季度集团收入1,124亿元，同比增长8%。净利润272亿元，同比下降12%。这主要源于我们对平台以及产业生态的一系列投入，一定程度上影响了本季度的业绩表现。 We delivered solid results for the quarter.

Group revenue was RMB 112.4 billion, representing a year-over-year increase of 8%, while group net income was RMB 27.2 billion, declining 12% year-over-year. This mainly reflected our continued investments in our platform and a broader industry ecosystem, which partly weighed on our performance this quarter.

今年上半年，电商行业的竞争仍然激烈，市场环境复杂多变，给平台治理、产业发展都提出了更高的要求，这些都给我们带来新的挑战。我们继续通过治理、减免、扶持的系统性举措，持续加大对平台及产业生态的投入，全力构建多方共赢的平台生态。 In the first half of this year, competition in the e-commerce industry remained intense.

A complex and rapidly evolving market environment placed greater demands on both platform governance and industry development, presenting us with new challenges. We continue to step up investment in our platform and industry ecosystems through a coordinated set of measures focused on governance, fee reductions, and merchant support, with the goal of building a platform ecosystem that creates value for all participants.

在平台治理上，我们大幅增加研发费用的投入，不仅迭代升级技术反控体系，更大幅扩充专项治理团队，将治理的触角延伸至全域品类。针对垂直类目特性，我们逐一开展靶向式专项治理，推动生态治理向常态化、精细化、制度化纵深迈进。 We have significantly increased our R&D spending on platform governance.

In addition to upgrading our technology-enabled risk prevention and control systems, we significantly expanded our specialist trust and safety teams and strengthened our oversight across all product categories. By taking into account specific characteristics of the different categories and launching targeted governance initiatives, we made ecosystem governance more regular, granular, and rules-based.

截至目前，平台已累计出台150余项综合治理举措，仅6月份便针对细分领域集中落地了50余个专项方案，覆盖商品准入、食品安全、药品安全、资质审核、广告治理、知识产权保护、虚假营销整治、直播带货规范、技术滥用防范等关键环节。我们坚持以制度的刚性筑牢合规底线，以系统思维重构治理逻辑，切实营造一个更安全、更规范、更值得信赖的消费环境。 To date, the platform has introduced more than 150 comprehensive trust and safety measures.

In June alone, we launched over 50 targeted initiatives addressing key areas such as product listing controls, food and drug safety, qualification reviews, advertising compliance, intellectual property protection, misleading marketing, livestream e-commerce standards, and the prevention of technology misuse. We are dedicated to upholding high compliance standards through rigorous rules, taking a systematic approach to reshaping our governance framework and fostering a safer, better regulated, and more trustworthy shopping environment.