May 27th, 2026

The quarter showed solid top-line growth (revenues +11%) and stronger operating profits (GAAP OP +22%, non‑GAAP OP margin up to 20%) with robust cash balances and clear strategic moves (launch of a first‑party brand company and major multi‑year supply‑chain investments). At the same time, net income and EPS declined year‑over‑year, costs of revenue rose ~15%, and marketing revenue growth slowed. Management is prioritizing long‑term supply‑chain and compliance investments that support structural transformation but may pressure near‑term earnings.

Company Guidance

Management reiterated long-term, supply‑chain‑led guidance: they will accelerate a 3‑year plan to “build another PDD” by doubling down on first‑party brand investment (a dedicated company with an initial RMB 15 billion cash injection and a planned RMB 100 billion investment over the next few years) and continuing the broader “$100 billion” support program; operational targets include expanding free‑shipping/direct‑to‑village coverage to >70% of local villages (transfer warehouses approaching ~10,000 daily orders) and logistics measures that have cut some remote shipping costs by ~80% (example: shipping to certain regions reduced to ~RMB 10 from ~RMB 50), helping some merchants grow orders to western provinces >30% y/y. Financially they reported Q1 revenue +11% y/y to RMB 106.2 billion (transaction services RMB 56.3 billion, +20% y/y; online marketing RMB 49.9 billion), cost of revenues up 15% to RMB 46.9 billion, GAAP operating profit RMB 19.6 billion (+22% y/y), non‑GAAP operating profit RMB 21.1 billion (20% margin vs 19% a year ago), non‑GAAP net income RMB 14.1 billion (non‑GAAP diluted EPS RMB 9.51), net cash from operations RMB 16.4 billion and cash/cash equivalents and short‑term investments of RMB 436.1 billion — and they emphasized continued heavy, patient investment in supply‑chain, brand and compliance rather than short‑term margin targets.