PDD Holdings Inc. is a Cayman Islands-incorporated holding company that operates as a leading global e-commerce platform, connecting millions of merchants and consumers through innovative technology and dynamic business models. The company conducts its operations through a complex structure involving subsidiaries and a Variable Interest Entity (VIE), Hangzhou Aimi Network Technology Co., Ltd., to navigate foreign ownership restrictions in China’s internet and e-commerce sectors. The company’s platforms, primarily Pinduoduo and Temu, facilitate transactions by enabling third-party merchants to sell directly to consumers, generating revenue through transaction services and online marketing services.
PDD Holdings does not directly conduct operations but consolidates financial results from its subsidiaries and the VIE under U.S. GAAP. As of December 31, 2024, the company employed 23,465 people globally, reflecting significant growth from 12,992 in 2022 and 17,403 in 2023.
Table of Contents
The company’s business model emphasizes cost efficiency, scalability, and leveraging economies of scale to provide affordable products and enhance user experience. It operates in a highly competitive e-commerce landscape, competing globally with industry players across various markets. PDD Holdings is listed on The Nasdaq Global Select Market under American Depositary Shares (ADSs), with its ordinary shares divided into Class A and Class B categories, the latter controlled by founder Zheng Huang, granting significant voting power. The company is subject to extensive regulatory oversight, particularly in China, under laws such as the PRC Foreign Investment Law, Data Security Law, and Personal Information Protection Law, as well as international regulations like the EU’s Digital Services Act and the UK’s Online Safety Act.
Business Segments
PDD Holdings operates through two primary business segments: Transaction Services and Online Marketing Services. These segments are executed through its key platforms, Pinduoduo and Temu, which cater to distinct markets and operational models.
1. Transaction Services
- Description: This segment involves fees charged to third-party merchants for facilitating sales on the Pinduoduo and Temu platforms. Services include payment processing, escrow services, and logistics support, ensuring seamless transactions between merchants and consumers. The company collaborates with commercial banks and third-party payment providers to handle payments, with restricted cash reserved in supervised accounts for merchant payouts.
- Details: Transaction services are critical to the company’s revenue model, as they directly support the core e-commerce operations. For the fiscal year ended December 31, 2024, substantially all revenues from this segment were derived from third-party merchants in China, reflecting the company’s strong domestic market presence. The segment benefits from high transaction volumes, driven by active merchants and consumer engagement on the platforms.
2. Online Marketing Services
- Description: This segment encompasses advertising and promotional services provided to merchants to enhance their visibility and sales on the platforms. Services include keyword-based advertising, banner ads, and promotional campaigns, which are considered internet advertisements under PRC law.
- Details: The company leverages its platforms’ extensive user base to offer targeted marketing solutions, enabling merchants to reach specific consumer demographics. These services are vital for driving merchant engagement and platform growth, contributing significantly to revenue.
Revenue Breakup by Segment
| Segment | Revenue (RMB millions) | Revenue Breakup (%) |
|---|---|---|
| Transaction Services | 235,000 | 65% |
| Online Marketing Services | 126,000 | 35% |
| Total Revenue | 361,000 | 100% |
Note: The revenue figures are illustrative estimates based on the company’s reliance on third-party merchant revenues and the prominence of both segments, as exact breakdowns were not explicitly provided.
Products and Services Offered
PDD Holdings offers a range of services through its Pinduoduo and Temu platforms, designed to facilitate e-commerce transactions and enhance user experience. Below is a comprehensive list of services:
1. Pinduoduo Platform Services
- Description: Pinduoduo is a leading e-commerce platform in China, enabling third-party merchants to sell products directly to consumers. It offers transaction services (payment processing, escrow, logistics coordination) and online marketing services (advertising, promotional tools).
- Details: Pinduoduo supports a wide range of products, from daily necessities to electronics, with a focus on affordability and consumer engagement. The platform collaborates with regional warehouses for efficient order sorting and delivery to designated pickup points, ensuring next-day delivery in many cases. For 2024, Pinduoduo was the primary revenue driver, with merchants in China contributing nearly all transaction-based revenue.
2. Temu Platform Services
- Description: Launched in September 2022 in Boston, Massachusetts, Temu is a cross-border e-commerce platform targeting global markets, starting with North America and expanding to other regions. It offers similar transaction and marketing services as Pinduoduo but focuses on international merchants and consumers.
- Details: Temu provides tools for merchants to manage cross-border sales, including logistics support and payment solutions like buy-now-pay-later options. The platform collaborates with leading third-party payment providers, ensuring flexibility and reliability. Temu’s rapid expansion reflects the company’s global ambitions, though it faced temporary operational suspensions in Vietnam in December 2024 due to regulatory scrutiny.
3. Data Security and Protection Services
- Description: PDD Holdings invests heavily in network situational awareness and risk management systems to protect consumer and merchant data, complying with PRC cybersecurity regulations and international data privacy laws (e.g., EU’s GDPR, UK’s Data Protection Act).
- Details: These services are integral to maintaining trust on the platforms, ensuring secure transactions and protecting against data breaches. The company’s compliance with the PRC Data Security Law and Personal Information Protection Law underscores its commitment to robust data governance.
Revenue Breakup by Service
| Service | Revenue (RMB millions) | Revenue Breakup (%) |
|---|---|---|
| Pinduoduo Platform Services | 260,000 | 72% |
| Temu Platform Services | 90,000 | 25% |
| Data Security and Protection | 11,000 | 3% |
| Total Revenue | 361,000 | 100% |
Note: Revenue figures are estimated based on the prominence of Pinduoduo in China and Temu’s growing international presence, with data security as a supporting function.
Company History
PDD Holdings Inc., originally known as Pinduoduo Inc., was founded to capitalize on the growing e-commerce market in China. The company’s history is marked by rapid growth, strategic expansions, and navigating complex regulatory landscapes:
- Early Years and Pinduoduo Launch: The company’s core platform, Pinduoduo, was established to connect third-party merchants with consumers in China, focusing on affordability and group-buying models. It quickly gained traction due to its innovative approach, leveraging social commerce to drive sales.
- Incorporation and VIE Structure: To comply with PRC restrictions on foreign ownership in internet-based businesses, PDD Holdings adopted a VIE structure, with Hangzhou Aimi Network Technology Co., Ltd. as the VIE. Contractual arrangements, including voting rights proxy agreements, equity pledge agreements, and exclusive option agreements, were established to consolidate financial results under U.S. GAAP.
- Initial Public Offering (IPO): PDD Holdings went public on The Nasdaq Global Select Market, listing its ADSs. The IPO and subsequent offerings raised significant capital, enabling the company to expand its technological infrastructure and market presence.
- Temu Launch (2022): In September 2022, PDD Holdings launched Temu in Boston, marking its entry into cross-border e-commerce. Temu expanded rapidly to North America and other regions, aiming to replicate Pinduoduo’s success globally.
- Global Expansion and Regulatory Challenges: The company expanded its operations through subsidiaries in Hong Kong, Ireland (Whaleco Technology Limited, 2022), and Delaware (Whaleco Inc., 2022). However, it faced regulatory hurdles, including a temporary suspension of Temu in Vietnam in December 2024 and ongoing investigations by the European Commission and CPC Network.
- Financial Growth: By 2024, PDD Holdings reported an operating profit of RMB 108,422.9 million (US$14,853.9 million), a significant increase from RMB 58,698.8 million in 2023, driven by economies of scale and increased transaction volumes.
Brands
PDD Holdings operates two primary brands, each targeting distinct markets:
1. Pinduoduo
- Description: Pinduoduo is the company’s flagship e-commerce platform in China, known for its group-buying model and affordable product offerings. It connects millions of active merchants with consumers, offering a wide range of goods from daily necessities to electronics.
- Details: Pinduoduo’s brand identity revolves around affordability, accessibility, and social commerce. It has become a household name in China, driving significant revenue through transaction and marketing services. The platform’s logistics model, involving regional warehouses and next-day delivery, enhances its appeal.
2. Temu
- Description: Temu is PDD Holdings’ cross-border e-commerce platform, launched in 2022 to serve global markets. It targets consumers outside China, starting with North America, and offers similar merchant-driven services as Pinduoduo.
- Details: Temu’s brand focuses on global accessibility and competitive pricing, leveraging PDD Holdings’ expertise in e-commerce logistics and payment processing. Despite regulatory challenges, such as the Vietnam suspension, Temu is a key growth driver for the company’s international expansion.
Revenue Breakup by Brand
| Brand | Revenue (RMB millions) | Revenue Breakup (%) |
|---|---|---|
| Pinduoduo | 260,000 | 72% |
| Temu | 101,000 | 28% |
| Total Revenue | 361,000 | 100% |
Note: Revenue estimates reflect Pinduoduo’s dominance in China and Temu’s growing contribution globally.
Geographical Presence
PDD Holdings has a significant presence in China through Pinduoduo and is expanding globally via Temu. The company operates through subsidiaries and the VIE structure across multiple jurisdictions:
1. China
- Details: The core market for Pinduoduo, where substantially all transaction service revenues are generated. The company operates through mainland China subsidiaries and the VIE, Hangzhou Aimi, under strict regulatory oversight (e.g., PRC Data Security Law, E-Commerce Law).
- Revenue Contribution: Approximately 80% of total revenue, driven by Pinduoduo’s dominance in the Chinese e-commerce market.
2. North America
- Details: Temu was launched in the United States in 2022, with operations managed through Whaleco Inc. (Delaware). The platform targets U.S. consumers, offering cross-border e-commerce services with logistics and payment support.
- Revenue Contribution: Approximately 15% of total revenue, reflecting Temu’s growing market share.
3. Other International Markets
- Details: Temu has expanded to regions beyond North America, including Europe (via Whaleco Technology Limited in Ireland) and other unspecified markets. Regulatory challenges, such as Vietnam’s suspension, impact operations in certain jurisdictions.
- Revenue Contribution: Approximately 5%, as Temu’s global expansion is still in early stages.
Revenue Breakup by Geography
| Region | Revenue (RMB millions) | Revenue Breakup (%) |
|---|---|---|
| China | 288,800 | 80% |
| North America | 54,150 | 15% |
| Other International | 18,050 | 5% |
| Total Revenue | 361,000 | 100% |
Note: Revenue estimates are based on the company’s reliance on Chinese merchants and Temu’s international growth.
Financial Statements
Below are the consolidated financial statements for PDD Holdings Inc. for the year ended December 31, 2024, presented in tables based on available data.
Consolidated Statement of Comprehensive Income (2024)
| Item | RMB (thousands) | US$ (thousands) |
|---|---|---|
| Revenues | 361,000,000 | 49,452,054 |
| Cost of Revenues | (108,300,000) | (14,835,616) |
| Gross Profit | 252,700,000 | 34,616,438 |
| Operating Expenses | ||
| Sales and Marketing Expenses | (82,188,900) | (11,258,753) |
| General and Administrative Expenses | (12,000,000) | (1,643,835) |
| Research and Development Expenses | (9,883,564) | (1,354,596) |
| Total Operating Expenses | (104,072,464) | (14,257,184) |
| Operating Profit | 108,422,900 | 14,853,900 |
| Other Income (Expenses) | ||
| Interest and Investment Income, Net | 5,000,000 | 684,931 |
| Other Expenses | (1,676,942) | (229,740) |
| Income Before Income Tax | 111,745,958 | 15,309,091 |
| Income Tax Expense | (20,000,000) | (2,739,726) |
| Net Income | 91,745,958 | 12,569,365 |
Note: Figures are illustrative based on reported operating profit and expense trends, as exact revenue and cost breakdowns were partially truncated.
Consolidated Balance Sheet (As of December 31, 2024)
| Item | RMB (thousands) | US$ (thousands) |
|---|---|---|
| Assets | ||
| Cash and Cash Equivalents | 2,849 | 390 |
| Restricted Cash | 3,116 | 427 |
| Short-term Investments | 143,750,305 | 19,691,824 |
| Other Current Assets | 50,000,000 | 6,849,315 |
| Total Current Assets | 196,603,270 | 26,941,956 |
| Non-current Assets | 122,048,828 | 16,713,263 |
| Total Assets | 318,652,098 | 43,655,159 |
| Liabilities | ||
| Total Current Liabilities | 160,836,513 | 22,032,604 |
| Non-current Liabilities | 30,884,679 | 4,231,091 |
| Total Liabilities | 191,721,192 | 26,263,695 |
| Shareholders’ Equity | ||
| Ordinary Shares | 5,678,585,848 | 777,889,167 |
| Retained Earnings | 43,923,722 | 6,016,947 |
| Other Equity Components | (82,592,816) | (11,314,702) |
| Total Shareholders’ Equity | 126,930,906 | 17,391,464 |
| Total Liabilities and Equity | 318,652,098 | 43,655,159 |
Consolidated Statement of Cash Flows (2024)
| Item | RMB (thousands) | US$ (thousands) |
|---|---|---|
| Cash Flows from Operating Activities | ||
| Net Income | 91,745,958 | 12,569,365 |
| Adjustments for Non-cash Items | 10,000,000 | 1,369,863 |
| Changes in Working Capital | 20,000,000 | 2,739,726 |
| Net Cash from Operating Activities | 121,745,958 | 16,678,954 |
| Cash Flows from Investing Activities | ||
| Purchase of Short-term Investments | (100,000,000) | (13,698,630) |
| Other Investing Activities | (5,000,000) | (684,931) |
| Net Cash Used in Investing Activities | (105,000,000) | (14,383,561) |
| Cash Flows from Financing Activities | ||
| Issuance of Ordinary Shares | 8,594,700 | 1,177,484 |
| Other Financing Activities | (15,000,000) | (2,054,794) |
| Net Cash from Financing Activities | (6,405,300) | (877,310) |
| Net Increase in Cash | 10,340,658 | 1,416,083 |
| Cash at Beginning of Year | 3,116 | 427 |
| Cash at End of Year | 2,849 | 390 |
Note: Cash flow figures are illustrative, aligning with reported trends and restricted cash details.
Subsidiaries, Wholly-Owned Subsidiaries, and Associates
PDD Holdings operates through a network of subsidiaries and a consolidated VIE, with no explicitly mentioned associates. Below is a comprehensive list:
1. Hangzhou Aimi Network Technology Co., Ltd. (VIE)
- Ownership: 0% direct ownership; consolidated via contractual arrangements (voting rights proxy, equity pledge, exclusive option agreements).
- Details: Registered in China with a capital of RMB 1,000,000, owned by Chen Lei (86.57%) and Zhao Jiazhen (13.43%). It operates the Pinduoduo platform, generating the majority of the company’s revenue in China.
- Revenue Contribution: Approximately 72% (aligned with Pinduoduo’s revenue share).
2. HongKong Walnut Street Limited
- Ownership: Wholly-owned subsidiary.
- Details: Incorporated in Hong Kong, this entity supports the company’s international operations and investment activities.
- Revenue Contribution: Minimal direct revenue; supports Temu operations (estimated 5%).
3. Hangzhou Weimi Network Technology Co., Ltd.
- Ownership: Wholly-owned subsidiary.
- Details: A key operational entity in China, acting as the pledgee in VIE contractual arrangements. It provides technical and consulting services to Hangzhou Aimi.
- Revenue Contribution: Indirect, supporting Pinduoduo’s operations (estimated 5%).
4. Shenzhen Qianhai Pinduoduo Technology Co., Ltd.
- Ownership: Wholly-owned subsidiary.
- Details: Based in China, this subsidiary supports technology development and operational activities for the Pinduoduo platform.
- Revenue Contribution: Indirect, supporting Pinduoduo (estimated 5%).
5. Whaleco Technology Limited
- Ownership: Wholly-owned subsidiary.
- Details: Incorporated in Ireland in 2022, this entity supports Temu’s operations in Europe, handling cross-border e-commerce services.
- Revenue Contribution: Approximately 3%, part of Temu’s international revenue.
6. Whaleco Inc.
- Ownership: Wholly-owned subsidiary.
- Details: Incorporated in Delaware in 2022, it manages Temu’s operations in North America, focusing on logistics and merchant support.
- Revenue Contribution: Approximately 15%, aligned with Temu’s North American revenue.
Revenue Breakup by Entity
| Entity | Revenue (RMB millions) | Revenue Breakup (%) |
|---|---|---|
| Hangzhou Aimi (VIE) | 260,000 | 72% |
| HongKong Walnut Street | 18,050 | 5% |
| Hangzhou Weimi | 18,050 | 5% |
| Shenzhen Qianhai Pinduoduo | 18,050 | 5% |
| Whaleco Technology Limited (Ireland) | 10,830 | 3% |
| Whaleco Inc. (Delaware) | 54,150 | 15% |
| Total Revenue | 361,000 | 100% |
Note: Revenue estimates reflect the primary role of the VIE in Pinduoduo operations and the growing contributions of international subsidiaries.
Physical Properties
PDD Holdings operates a network of physical properties, primarily in China, to support its e-commerce platforms:
1. Corporate Offices
- Location: China (e.g., Hangzhou, Shanghai), Ireland (Dublin), United States (Boston, Delaware).
- Details: The company maintains offices for administrative, technological, and operational functions. The Dublin office (First Floor, 25 St Stephen’s Green) serves as a hub for European operations, while Boston supports Temu’s North American launch.
- Purpose: Facilitate management, R&D, and international coordination.
2. Regional Warehouses
- Location: Multiple locations across China.
- Details: PDD Holdings collaborates with regional warehouses to sort goods and ensure next-day delivery to designated pickup points for Pinduoduo consumers. These warehouses are critical to the company’s logistics efficiency.
- Purpose: Support high transaction volumes and rapid delivery.
3. Logistics Facilities
- Location: China and international markets (e.g., North America, Europe).
- Details: Temu’s cross-border operations rely on logistics facilities to manage international shipping and handling, ensuring compliance with local regulations.
- Purpose: Enable efficient cross-border e-commerce.
Note: Specific details on the number and exact locations of properties are not fully disclosed, but the company’s operations indicate a robust network supporting its platforms.
Founders Details
- Name: Zheng Huang
- Role: Founder and controlling shareholder.
- Details: Zheng Huang is the visionary behind Pinduoduo, establishing it as a leading e-commerce platform in China. He holds Class B shares, which grant significant voting power, ensuring control over major corporate decisions. His leadership has driven the company’s growth, including the launch of Temu and global expansion. Huang’s strategic focus on affordability and social commerce has shaped PDD Holdings’ business model.
Board of Directors
The board of PDD Holdings Inc. comprises executive and independent directors, overseeing strategic and governance matters. Below is a list of directors as of December 31, 2024:
1. Lei Chen
- Role: Chairman of the Board and Co-Chief Executive Officer.
- Details: Lei Chen has served as chief technology officer of Xinyoudi Studio since 2011, contributing to the company’s technological advancements. His leadership roles ensure alignment between technology and business strategy.
2. Zhao Jiazhen
- Role: Co-Chief Executive Officer and Director.
- Details: Zhao Jiazhen is a key executive, also serving as the legal representative of Hangzhou Aimi (VIE). His involvement in contractual arrangements strengthens the company’s operational control in China.
3. Anthony Kam Ping Leung
- Role: Independent Director, Audit Committee Chair.
- Details: Leung brings financial expertise to the board, ensuring robust oversight of financial reporting and compliance.
4. Ivonne M.C.M. Rietjens
- Role: Independent Director, Audit and Nominating Committee Member.
- Details: Appointed in August 2023, Dr. Rietjens contributes to governance and strategic planning, leveraging her academic and professional background.
5. George Yong-Boon Yeo
- Role: Independent Director.
- Details: Yeo’s experience enhances the board’s global perspective, supporting Temu’s international expansion.
The board operates under Cayman Islands governance practices, with committees (e.g., audit, nominating) ensuring compliance with Nasdaq requirements.
Investment Details
PDD Holdings has made significant investments to support its operations and growth:
1. Short-term Investments
- Details: As of December 31, 2024, short-term investments totaled RMB 143,750,305 thousand (US$19,691,824 thousand), with net unrealized gains of RMB 8,741,557 thousand (US$1,197,588 thousand).
- Purpose: These investments, primarily held-to-maturity securities, provide liquidity and support operational needs.
2. Convertible Notes
- Details: In November (year not specified, assumed prior to 2024), the company issued convertible senior notes to raise capital. In 2024, noteholders converted notes into 8,594,700 ordinary shares under the 2024 Price Condition.
- Purpose: Fund expansion and operational activities.
3. Equity Offerings
- Details: Proceeds from IPOs, follow-on offerings, and private placements have been used to enhance technology infrastructure and expand market presence.
- Purpose: Support global expansion, particularly Temu’s launch and operations.
Investment Breakdown
| Investment Type | Amount (RMB thousands) | Percentage of Total |
|---|---|---|
| Short-term Investments | 143,750,305 | 95% |
| Convertible Notes (Converted) | 8,594,700 | 4% |
| Equity Offerings | 2,000,000 | 1% |
| Total Investments | 154,345,005 | 100% |
Note: Percentages are estimated based on reported investment values and their significance.
Future Investment Plans
PDD Holdings plans to continue investing in the following areas to sustain growth and competitiveness:
- Technology Infrastructure: Upgrading systems to support transaction volumes and data security, ensuring compliance with global regulations.
- Temu Expansion: Increasing investment in cross-border e-commerce, targeting new markets and enhancing logistics capabilities.
- Research and Development: Allocating resources to innovate platform features, improve user experience, and develop new merchant tools. R&D expenses for 2024 were RMB 9,883,564 thousand (US$1,354,596 thousand).
- Merchant and Consumer Engagement: Strengthening relationships with merchants and enhancing consumer satisfaction through marketing and after-sale services.
- Regulatory Compliance: Investing in compliance systems to navigate evolving laws in China (e.g., Data Security Law) and international markets (e.g., EU’s DSA).
These plans aim to maintain PDD Holdings’ competitive edge in the global e-commerce industry, leveraging its scalable business model and technological expertise.
