Temu Owner PDD Posts Profit Miss Amid Fierce Competition in China

By Tracy Qu and Jiahui Huang

The Chinese owner of bargain-shopping app Temu reported worse-than-expected profit in the first quarter of 2026, amid fierce domestic competition and increased regulatory pressure.

PDD Holdings' net profit declined 15% from a year earlier to 12.55 billion yuan, equivalent to $1.85 billion, for the three months ended March. Revenue rose 11% to 106.23 billion yuan.

Analysts had expected net profit of 22.80 billion yuan on revenue of 109.95 billion yuan, according to a FactSet consensus estimate.

"We are investing resolutely in our supply chain capabilities," said Jun Liu, PDD's vice president of finance. "These investments are the cornerstone of a resilient and thriving platform ecosystem, and we are prepared to invest over the long term."

PDD previously cautioned that its financial performance could fluctuate as it strengthened its e-commerce ecosystem. The company is currently rolling out more support initiatives to prevent merchants from defecting to other platforms.

China's market regulator in April levied 3.6 billion yuan in fines against seven platforms operated by PDD, Meituan, JD.com, Alibaba Group and ByteDance over their failure to properly verify online food vendors' licenses and take necessary measures to protect consumers. PDD received the heaviest penalty, with a fine of 1.5 billion yuan.

According to the State Administration for Market Regulation, PDD repeatedly declined to provide required materials and used violence to obstruct regulatory enforcement.

PDD later said in a Weibo post that it accepted and would comply with the regulator's decision. "We will take this as a lesson to further standardize our business processes, as well as optimize and upgrade our operations," the company said.

Earlier in March, management said that the company was still in "a strategic investment phase," and that it had seen the e-commerce industry "enter a new phase of intensified competition and slowing growth."

American depositary receipts of PDD have continued to weaken after falling about 10% in the first three months of 2026, losing nearly 15% year to date. The company's ADRs fell 5.4% in premarket trading Wednesday.

Ahead of the earnings release, Citi said that it expected management to maintain a cautious outlook given intense industry competition, a tightening regulatory environment and pressure on profitability.

Write to Tracy Qu at tracy.qu@wsj.com and Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

May 27, 2026 07:12 ET (11:12 GMT)