Temu’s parent company, PDD Holdings, came out with mixed earnings late last week, posting double-digit revenue gains for Q4 but falling short of analysts’ estimates.
The company, publicly listed on the NASDAQ, saw Q4 2024 revenue of 110.6 billion RMB ($15.3 billion), up 24 percent year on year; it attributed the uptick to “the increase in revenues from online marketing services and transaction services,” which it increased its operating expenses by 19 percent year on year to achieve.
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Analysts had projected PDD’s revenue would come in closer to $15.5 billion, and the 24 percent growth marks a deceleration, on the heels of the 44 percent year-on-year growth the company boasted in Q3 2024. Even still, Q3’s growth missed expectations, making Q4 the second consecutive quarter that PDD missed analyst expectations.
Chen Lei, chairman and co-CEO of PDD, said on the company’s earnings call that the environment the company operates in could continue to stymie its short-term growth amidst uncertainties.
“Our significant ecosystem investment coupled with [a] fast-changing external environment and intensified competition landscape will impact short-term financials,” he shared with investors.
While neither Lei nor his fellow executives mentioned any specific external factors explicitly, one that may be threatening PDD’s further growth is the potential closure of the de minimis loophole, which allows parcels valued at less than $800 to enter the United States duty free. If that closes, Temu could find its business crippled by mandatory tariffs on the myriad packages it imports into the country daily.
What’s more, Temu has faced regulatory scrutiny in various jurisdictions, including the European Union’s inquiry into the company under the Digital Services Act, and Vietnam’s choice to suspend the platform following its failure to register ahead of a mandated deadline. It has also been banned in Indonesia.
Executives also alluded to an “intensified competition landscape” as a factor influencing short-term financial success. PDD’s Chinese competitors, Alibaba Group and JD.com, each posted stronger-than-expected sales for the same period.
Still, the company saw marked growth throughout 2024, as compared with 2023. It posted full-year revenue of 393.8 billion RMB ($54.3 billion), up 59 percent from 2023, and executives said they believe such growth will continue in the long term.