- Revenue: RMB5.6 billion, up 15.7% year-over-year.
- GMV: RMB6.22 billion, a 16.8% increase year-over-year.
- Non-GAAP Net Profit: RMB103 million, nearly 13 times more than the prior year.
- Non-GAAP Net Profit Margin: 1.8%, up by 1.6 percentage points year-over-year.
- GAAP Net Profit: RMB67.13 million, an increase of RMB104 million year-over-year.
- GAAP Net Profit Margin: 1.2%, up by 2 percentage points year-over-year.
- Operating Cash Flow: Net inflow of RMB0.25 billion.
- Free Cash Flow: RMB0.51 billion for the past 12 months, reflecting a RMB0.81 billion increase year-over-year.
- Cash and Cash Equivalents: RMB4.16 billion at the end of Q2.
- Self-Owned Fund Balance: RMB2.32 billion after deducting short-term loans.
- Same-Store GMV Growth: 21.6% year-over-year in June.
- Transacting Users: 7.3 million monthly, up 11.7% year-over-year.
- Average Daily Transacting Users: 900,000, up 17% year-over-year.
- Monthly ARPU: Increased 6% year-over-year.
- Members Monthly ARPU: Increased 7.8% year-over-year, surpassing RMB500.
- Leisure Product Category ARPU: Increased 24% year-over-year.
- New Frontline Stations: Nearly 40 new stations opened in the first half of the year, with plans for approximately 80 new stations in total for the year.
- Regional GMV Growth: Shanghai 9.5%, Zhejiang 22.7%, Jiangsu 22.6% year-over-year in the first half of the year.
- Gross Profit Margin: 30%, down 1 percentage point year-over-year.
- Fulfillment Cost Rate: 22.4%, 1.2 percentage points lower year-over-year.
- Sales and Marketing Cost Rate: 2.3%, a 0.4 percentage point increase year-over-year.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dingdong (Cayman) Ltd (DDL, Financial) achieved profitability for seven consecutive quarters based on non-GAAP standards and two consecutive quarters based on GAAP standards.
- The company reported a 16.8% year-over-year increase in GMV, reaching RMB6.22 billion.
- Monthly transacting users increased by 11.7% year-over-year, reaching 7.3 million.
- Dingdong (Cayman) Ltd (DDL) expanded its station network, opening nearly 40 new frontline stations in the first half of the year.
- The company achieved a net inflow of RMB0.25 billion in operating cash flow, marking the fourth consecutive quarter of net inflow.
Negative Points
- Gross profit margin decreased by 1 percentage point year-over-year due to price concessions.
- Sales and marketing cost rate increased by 0.4 percentage points year-over-year.
- The company faces increasing competition from peers like JD and others expanding their frontline fulfillment stations.
- Despite profitability, the company still has to manage the pressure of expanding its station network without impacting cash flow.
- The fulfillment cost rate remains high at 22.4%, although it has improved year-over-year.
Q & A Highlights
Q: According to recent reports, competitors have restarted recruitment and construction of frontline fulfillment stations. What are your thoughts on those developments and how do you foresee the future competition?
A: (Changlin Liang, CEO) Our consistent profitability and growing scale demonstrate that we have thrived even in a slow consumption environment. We believe our success has encouraged peers to participate. Our differentiation lies in our focus on enhancing end-to-end efficiency and strong supply chain capabilities, which allow us to adapt quickly to market conditions. We focus on our mission and self-development rather than competition.
Q: During previous earnings calls, the focus was on supply chain capability and profitability. Today, the focus seems to have shifted to future growth. What does the future revenue growth rate look like for Dingdong?
A: (Changlin Liang, CEO) We highlighted four key drivers for growth linked to the organic expansion of our fresh grocery supply chain capabilities. We aim to achieve an annual revenue scale of RMB100 billion in the next seven years, transitioning from our current scale of over RMB20 billion.
Q: Management mentioned plans to open 80 new frontline stations this year. Will that increase pressure on the company’s cash flow?
A: (Song Wang, CFO) We have strong capital reserves and achieved a net inflow of RMB0.25 billion in operating cash flow in Q2. The total CapEx investment for the new stations will be around RMB40 million, which we can cover with our self-owned funds. The new stations are ramping up quickly and will not strain our cash flow.
Q: Can you elaborate on the company's strategy to maintain profitability while expanding its station network?
A: (Song Wang, CFO) Our new frontline fulfillment stations in Jiangsu, Zhejiang, and Shanghai can achieve operational breakeven with only 500 orders daily per station. The ramp-up period is about three to six months. Most of the new stations are now breaking even at the operational level, contributing to our sustained growth.
Q: What are the key factors driving Dingdong's growth in the Jiangsu, Zhejiang, and Shanghai regions?
A: (Changlin Liang, CEO) The growth is driven by increased penetration rates and the number of orders per user. These regions have large populations, high residential density, and strong purchasing power, providing significant potential for growth. Our supply chain and user operation capabilities in these regions also benefit our operations in other areas.
Q: How does Dingdong plan to leverage its supply chain capabilities for future growth?
A: (Changlin Liang, CEO) We aim to expand our supply chain capabilities to reach more people in different regions and cater to a wider range of consumers. Our focus is on continuously improving our supply chain to serve a larger customer base and meet their evolving needs.
Q: What is the company's outlook for the third quarter and the entire year of 2024?
A: (Changlin Liang, CEO) We have raised our internal forecast for profitability and scale, anticipating significant year-over-year increases in net profit and scale for both the third quarter and the entire year. We are confident in achieving both non-GAAP and GAAP profitability.
Q: How has Dingdong's financial performance improved in recent quarters?
A: (Song Wang, CFO) In Q2 2024, Dingdong generated revenue of RMB5.6 billion, up 15.7% year-over-year. Non-GAAP net profit margin was 1.8%, with a net profit of RMB103 million. Operating cash flow showed a net inflow of RMB0.25 billion, marking the fourth consecutive quarter of net inflow. Our financial capacity has been continuously improving, demonstrating healthy growth.
Q: What are the company's plans for international expansion?
A: (Changlin Liang, CEO) We aim to leverage our supply chain capabilities to facilitate the efficient movement of food globally. This aligns with our original entrepreneurial goal of generating significant social and commercial value by making top-quality ingredients readily accessible to everyone.
Q: How does Dingdong plan to enhance its product assortment to cater to diverse consumer needs?
A: (Changlin Liang, CEO) We have enhanced our product assortment in the dining table category and expanded SKUs for leisure products, including fruit, dairy, alcohol, beverages, and baked goods. This strategy has achieved initial success, leading to a 24% year-over-year increase in monthly ARPU in the leisure product category.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
