PDD Holdings Inc, the parent company of the fast-growing online shopping platform Temu, reported a strong second quarter of 2024, with revenue surging 86% year-over-year to $13.36 billion. However, this figure missed analyst expectations of $14.02 billion. Despite the revenue shortfall, the Chinese online retailer delivered impressive adjusted earnings per ADS of $3.20, exceeding the analyst consensus estimate of $2.73. This performance came on the back of significant growth in both online marketing services and transaction services.
Revenues from online marketing services and others climbed 29% year-over-year to $6.76 billion, while revenues from transaction services surged a staggering 234% year-over-year to $6.6 billion. PDD Holdings also posted a strong adjusted operating profit of $4.81 billion, representing a 139% increase year over year. The company held a robust $39.2 billion in cash and equivalents as of June 30, 2024, and generated a substantial $6.03 billion in operating cash flow.
Despite the impressive performance, PDD Holdings executives expressed concerns about future growth. “While encouraged by the solid progress we made in the past few quarters, we see many challenges ahead,” said Mr. Lei Chen, Chair and Co-CEO of PDD Holdings. “In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “Profitability will also likely be impacted as we continue to invest resolutely.”
PDD Holdings stock has performed exceptionally well over the past year, rising over 73% in the last 12 months. However, the stock experienced a significant dip in premarket trading on Monday, falling by 14.70% to $119.35. This decline is likely attributed to the revenue miss and the company’s cautious outlook for future growth.
