Rising competition from livestreaming and social e-commerce is challenging PDD’s market position. The Chinese owner of bargain-shopping app Temu reported better-than-expected profit in the second quarter, as the company navigated fierce domestic competition and increased regulatory pressure. PDD Holdings has cautioned that its financial performance could fluctuate as it strengthens its e-commerce ecosystem.

In recent quarters, the company has rolled out more support initiatives to prevent merchants from defecting to other platforms. It has also emphasized the need for these investments to secure its long-term growth. At the same time, rising competition from livestreaming and social e-commerce is challenging PDD’s market position.

As short video platforms such as Byte Dance’s Douyin—Tik Tok’s sister app in China—and [PERSON_NAME], an Instagram-like platform known as Red Note, gain in popularity, they have also taken a sizable share of the market held by traditional e-commerce players. The company behind Temu and Chinese platform Pinduoduo on Monday said net profit fell 12% from a year earlier to 27.18 billion yuan, equivalent to $4.04 billion, for the three months ended June. Revenue rose 8.1% to 112.36 billion yuan.

Analysts had expected net profit of 24.40 billion yuan on revenue of 115.41 billion yuan, according to a Fact Set consensus estimate.