Dingdong (Cayman) Limited Price & Performance (DDL)

I will now turn the call to our first speaker today, the Founder and CEO of Dingdong, Hello, everyone. Thank you for joining the Dingdong earnings call for Q4 twenty twenty four. We achieved non GAAP profitability for the ninth consecutive quarter and GAAP profitability for the fourth consecutive quarter. Additionally, we have recorded positive year over year revenue growth for four straight quarters. This stable profitability has established a solid foundation for the company's future development. First, I'll present our Q4 twenty twenty four performance followed by an analysis of our operating data and conclude with a brief outlook on future developments and performance. In Q4 twenty twenty four, DingDong reported a GMV of RMB6.55 billion, an 18.4% year over year increase. The company's revenue grew to RMB5.91 billion, an 18.3% year over year increase. Under non GAAP standards, Gengdong achieved a net profit of RMB120 million, more than six times the RMB16 million reported in Q4 twenty This resulted in a net profit margin of 2%, an increase of 1.7 percentage points year over year. Under GAAP standards, the net profit was RMB90 million a turnaround from a loss of RMB4.39 million Q4 twenty twenty three leading to a net profit margin of 1.6%.

For the full year of 2024, Dingo reported a GMV of RMB25.56 billion, year over year increase of 16.3%. Revenue reached RMB23.07 billion a 15.5% increase compared to the previous year. Under the non GAAP standard, they don't report it a net profit of RMB420 million marking an increase of more than 8x compared to RMB45 million in same period last year. Representing a net profit margin of 1.8%. Up by 1.6 percentage points year over year. According to GAAP standards, Binom reported a net profit of RMB300 million a significant turnaround from a loss of RMB91 million in the same period last year, resulting in a net The rapid performance growth is mainly fueled by directly increasing user penetration improved user conversion rates and higher user ARPU in existing regions. Regarding user scale, in Q4, the average number of monthly a year over year increase of 16.1%. The average monthly transaction conversion rate was 63.6% up 4.7 percentage points year over year. Additionally, ARPU saw a rise of 3.7% year over year. As users scale continue to grow rapidly, user engagement also rose. In Q4, users placed an average of 4.2 monthly orders, a 3% increase year over year.

Among members, the average monthly order frequency rose to seven orders. A year over year increase of 4.5%. This continued strong performance built on Q3's results showcasing high user retention and frequent repurchases. These outcomes were attributed to our comprehensive efforts across various dimensions, including product capability development, operational enhancement, improved user experience and data driven [indiscernible] Regarding regional performance, Jiangsu, Chezhan and Shanghai continued to show relatively rapid growth serving as the primary drivers of our overall expansion. This quarter GMV for the Shanghai region increased by 616.8% year over year, while in Jiangsu and Zhejiang, it grew more than 20% year over year. Notably, 13 cities within Jiangsu, Zhejiang and Shanghai region achieved a year over year GMV growth of over 30% This quarter's growth rate in these regions was the highest recorded for the year, excluding the peak season in Q3. [indiscernible] We accelerated the development of our frontline fulfillment station network in D. Key regions. By the end of Q4, the company had opened a total of 130 new frontline fulfillment stations throughout the year, with 50 of those opening in Q4 alone. This achievement surpassed our annual target of 110 new frontline stations that we mentioned during the Q3 quarterly conference.

We continue to enhance the density and efficiency of our frontline fulfillment station network in these core areas our goal was to further strengthen our order fulfillment capabilities, reduce distribution costs improved operational efficiency and established a solid foundation for 2025. I would like to update you on Dingdong performance during the Lunar New Year. From New Year's Eve to the sixth day of the first lunar month, the Nash GMV increased by more than 15% year over year. It grew 10% in the core market of Shanghai while regions such as Ningbo, Nanjing and Changzhou saw growth of over 30%. During this period, some high quality products experienced significant increases including salmon in the seafood sector, premake alcoholic beverages and traditional Lunar New Year's dishes, which saw growth of 50% and even more than 120% year over year in some cases. These standout products are a key driving force behind Day Knows continued growth. We've been reflecting on our business model the competitive landscape Among the four key ASHA builds of more, faster, better and cheaper, our company, which focuses on fresh groceries, sees the greatest opportunity in better. This involves four key areas: better users, better products, better services and better mindshare.

Here are our ideas for developing high quality products. One, we create great products by aligning with or discovering users' real needs and ultimately delivering value to our customers. Two, we ensure that our food product maintain high and consistent quality. While perfection may not be achievable in a single product development cycle, we focus on responding to user feedback and iterating our products. Continuously working to improve our offerings, Three, we aim to create differentiated products or those available at structurally lower prices Four, we believe in storytelling for our products Our offerings feature visually appealing packaging, attractive designs and engaging stories that resonate with customers. Five, our goal is to be captivating. Soulful and to provide distinct value propositions. To attract valuable users, we must first create compelling products and services positioning ourselves as interesting entities that naturally captivate an audience. Over the past year, we have developed a variety of products including our popular crafts and Daeng Dong's customized pumpkin raw milk. Looking ahead, we're committed to expanding our mission of creating high quality products that are also reasonably priced. Better products, better service to the clients are our mission and original [indiscernible] Lastly, let's turn to our outlook for Q1 of twenty twenty five.

We expect to achieve year over year scale growth and maintain non GAAP profitability in the first quarter of twenty twenty five. However, in 2025, the from pursuing short term scale and profitability to focusing on quality and long term competitiveness which may impact us Nonetheless, we're confident in the long term development of the company's business. This concludes my prepared remarks. Thank you all for listening. I would like to turn the call over to our CFO, Wang Song, to go over our financials. Thank you, Mr. Liang, and hello, everyone. Before I review our financial performance for the fourth quarter, please note that all of our figures are in RMB. In 2024, DingDong achieved significant growth and profitability. The annual GMV reached RMB25.56 billion, while revenue amounted to RMB23.07 billion, reflecting year over year increases of 16.315.5% Notably, GMV in 22 cities experienced substantial double digit growth. Additionally, our profits for the year reached an all time high. Non GAAP net profit margin was 1.8% an increase of 1.6 percentage points year over year. With a net profit of RMB420 million. An impressive RMB8.3 fold increase compared to the previous year. Under GAAP standards, we achieved profitability for the first time.

Recording a net profit margin of 1.3% which is 1.8 percentage points higher than the previous year, with a net profit of RMB300 million. Furthermore, our strong growth is evident in our cash flow. The full year net operating cash inflow reached a historic high of 9 RMB930 million. A significant increase of RMB1.16 billion year over year. For the first time in our history, the full year free cash flow turned positive. Amounting to RMB830 million. In Q4, Dingyou reported revenue of five year over year growth. In Q4, Dingo reported revenue of RMB5.91 billion and 18.3% year over year increase. This marks the fourth consecutive quarter of positive year over year growth. Non GAAP net profit margin was 2%. Indicating profitability for the nine consecutive quarter.

While GAAP net profit margin stood at 1.6% maintaining four straight quarters of profitability. Its operating net cash inflow was RMB190 million resulting in positive net cash inflow for six consecutive quarters. Through high quality growth and sustained profitability, we have validated our fresh grocery e commerce business model which is supported by a network of frontline fulfillment stations. This has demonstrated our efficiency and quick capabilities. As the consumer industry transitions to a buyer centric China's retail sector is experiencing significant structural changes Highly efficient businesses are increasingly replacing inefficient ones. Presenting both opportunities and challenges. Our past successes have built a strong infrastructure and provided us with valuable experience. With this foundation, we found ourselves at a new starting point. Jengdong will continue to tackle challenging tasks with a pragmatic approach. Aimed to satisfy consumers with excellent products and services while establishing our own differentiated path, through stable quality and supply capabilities. Let's break down the results for Q4. Revenue reached RMB5.91 billion an increase of 18.3% compared to the previous year. Meanwhile, GMV totaled RMB6.55 billion, and 18.4% year over year rise We remain committed to producing high quality products that attracts consumers and improved order conversion rates and repeat purchases.

Additionally, Q4 MAU experienced a year over year increase of 4.7% The conversion rate of 63.6%. Increase of 4.7 percentage points year over year. Furthermore, the number of users placing orders more than eight times a month Essentially, those who shop about twice a week grew by 19.6% year over year. Gross profit margin was 32 was 30.2%, a decrease of 0.4 percentage points year over year. We plan to enhance our investment in the supply chain to improve overall industry efficiency by shortening the supply chain. The proportion of direct sourcing of fresh groceries has consistently increased each year, stabilizing at around 85% in 2024. Leveraging our ability to build intelligent forecasting and operational scheduling systems, we can better match user needs and improve the efficiency and defect management of our products. In 2024, the average turnover days for short term products was sealable life of less than twenty eight days was two point three days. Demonstrating our efficiency increase of 6.4% year over year. While the loss rate remained stable the out of stock rate for our top products decreased by 1.3 percentage points from the previous year. In Q4, the fulfillment cost rate was 21.7%, an improvement of 1.8 percentage points year over year.

The fulfillment cost optimization in 2024 was primarily driven by a significant increase in the average number of orders per frontline station and improved operational efficiency. Throughout the year, we opened 130 new frontline fulfillment stations with an average daily order volume of nearly 1,000 orders per station. Which represented a 22.2% year over year increase. Additionally, we have continued to deliver excellent service to our users by leveraging our algorithms and supply chain capabilities.

In Q4, we reduced the fulfillment time for instant orders by two minutes compared to the previous year, bringing it down to thirty four minutes. The marketing expense rate was 2.3% an increase of 0.2 percentage points compared to the previous year. Looking ahead, we plan to boost our investment in promoting good products on its mindshare leveraging high quality products to drive traffic and will continue to enhance the efficiency of our advertising conversion. The combined management and R and D expense accounted for 0.5 percentage points of revenue, reflecting the larger scale effect we will continue to invest in food R and D, agricultural technology and technical data algorithms. This ongoing investment will enhance our product development capabilities and full chain digital capabilities, ultimately improving supply chain efficiency. Non GAAP net profit margin was 2% resulting in a net profit of RMB120 million. Additionally, GAAP net profit margin was 1.6% which amounted to a net profit of 90,000,000. As of the end of Q4, the total balance of cash and cash equivalents short term restricted funds and short term investments stood at RMB4.45 billion, We're continually optimizing the efficiency of our capital utilization and financing structure. After deducting the balance of short term loans, our actual balance of self owned funds was RMB 2,850,000,000.00 B. Reflecting an increase of RMB $840,000,000 from the end of twenty twenty Furthermore, to strengthen long term partnerships and maintain our services to upstream suppliers, we have shortened the account payable period for the entire year of 2024 by eight point six days year over year.

Bringing it down to thirty five days. This concludes my prepared remarks. Operator, we can now start the question and answer session. [indiscernible] At this time, we will pause momentarily to assemble a roster. The first question today comes from Thomas Chong with Jefferies. Please go ahead. I transfer myself. Thanks management for taking my question and first congratulations for the result this quarter. I would like to ask about the importance of producing quality products for the company and all those strategy implementing for developing high quality items. Could you provide examples of how you have collaborated with suppliers to create these quality products? Thank you for your question. In Q4, we continued to achieve strong results compared to the previous quarter and the ongoing profitability has given us greater confidence to try and make changes. In a vast and ever evolving market with diverse consumer demand, we recognize that our own strengths are not enough to Therefore, we're eager to collaborate with line minded partners to create greater value for consumers. We aim to move beyond the traditional supplier retailer relationship and foster deeper, more cooperative partnerships where we can support one another effectively. In terms of our business model, we plan to open up key categories for collaboration with our partners.

This approach will allow us to leverage the strength of both parties leading to mutually beneficial and successful outcomes. On the technical side, we're committed to investing in and sharing our IT capabilities with our partners. This will enhance our cooperative efficiency and facilitate the digital transformation of our business operations. Regarding financial support, we're dedicated to increasing our investment innovating supply chain, financing models and providing our partners with stronger financial backing. [indiscernible] For example, a professional breeding corporate [indiscernible] to supply fresh chicken. This collaboration has flourished through ongoing communication, feedback, strategic alignment and professional cooperation between Signals product center and its suppliers. Their efforts have span from product research and development to aligning sales strategies ensuring quality feed sourcing and introducing advanced production processes. This approach has led to share success for both parties. In 2024, sales of the Ding Dong customized Qijun Dingdong Free Range Chicken reached RMB40 million, a 30% year over year increase. We invest in and trust our upstream partners working together in Harmony to achieve mutual progress creating value for consumers together. This is the foundation of our cooperative development strategy with the upstream supply chain.

The next question comes from Wu Hungwei with CICC. Please go ahead. Thanks to management for taking my question.

Congratulations to the company for good quarterly results. I have a follow-up question. Does the company have examples of developing strong product using its own supply chain, given that it has its own factory for food research, development, production and processing, Thank you for your question. Dino's core strategy has always centered around product development capabilities. Which serves as the driving force behind our development. Are dedicated to continuously creating a unique and high quality product system for our consumers.

To achieve this goal, we have established a comprehensive independent production and R and D system. A crucial support for this is the supply chain development of our self operated factories. Which has led to an operating mechanism focused on continuous optimization and upgrading. Over the past year, our Goyu factory has been transitioning from a supply chain company to a product brand company. [indiscernible] For example, our private label Liangxinjiang Ren carefully developed and recreates regional specialties, chocolate flavors and products that evoke traditional memories to give them emotional value. Moreover, our entire product development process begins with understanding consumer needs and concludes with the final consumption of the product. This process includes research and development product design, formula replication, pilot production at our factory and mass production. Our ability to maintain a close loop in the entire process and continuously iterate products enhances the dynamics of this brand's innovation. Our products manufactured in our own factory channels, but can also be exported This allows us to compete more effectively in a wider and more direct market environment. Currently, our products are available in over 30 countries and regions worldwide. In China, we distribute them through KA channels such as Bianhua, JD7 Fresh, We're committed to showcasing our high quality products on a larger stage so that more consumers can experience our dedication and efforts.

Our goal is for everyone to achieve their aspirations for a better life. This concludes our question and answer session. I would like to turn the call back over to management for closing remarks.

Thank you again for joining our call Today, If you have any further questions, please feel free to contact us. Our request is through our website. We look forward to speaking with everyone in our next earnings call. Have a good day and have a good night.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.