With me today are Mr. Changling Liang, our Founder and CEO and Mr. Song Wang, our CFO. You can refer to our first quarter twenty twenty five financial results on our IR website at ir.m100.me. You can also access a replay of this call on our IR website. When it becomes available a few hours update its conclusion. For today's call, management will go through their prepared remarks which will be followed by a question and answer session. Before we continue, I would like to refer you to our Safe Harbor statement in our earnings press release. Which also applies to this call. As we will be making forward looking statements please note that all numbers stated in the following management's prepared remarks are in RMB terms. And we will discuss non GAAP measures today which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release. And the filings with the SEC. I will now turn the call to our first guest speaker today, the Founder and CEO of Dingdong. Mr. Liang.

Hello, everyone. Thank you for joining the Dingdong earnings call for Q1 twenty twenty five. As of the first quarter of twenty twenty five, we have achieved non GAAP profitability for ten consecutive quarters and GAAP profitability for five quarters. Additionally, we've seen positive year on year revenue growth for five straight quarters. This consistent growth in both scale and profitability has undoubtedly laid a strong foundation for our future development. In today's call, I'll outline our operating performance in Q1, offer a thorough analysis of our product status and discuss recent strategic insights. In the first quarter of twenty twenty five, Dingdong reported a GMV of 5,000,000,000, a 7.9% increase compared to the previous year. Revenue for the same period reached RMB5.48 billion, a rise of 9.1% year on year. Non GAAP net profit stood at RMB30 million with a non GAAP net profit margin of 0.6%. GAAP net profit was RMB8 million with a GAAP net profit margin of 0.1%. Building on the profits from 2024, we successfully achieved both profitability and growth in scale in the first quarter. The first quarter of twenty twenty five marked the commencement of Dingdong's implementation of the four gs strategy which emphasizes good users, good products, good services and good mindshare.

Significant adjustment have been made to the company's objectives. Organizational structure and evaluation methods. And we continue to experience transitional challenges. Nevertheless, amidst these difficulties, we have achieved year on year performance growth. The growth in performance was primarily fueled by higher user engagement in existing markets and our continued improvement in product development capabilities and optimization efforts. This quarter, the order volume rose by 12.1% year on year with the average JV active user count surpassing 2,000,000. A 4.5% increase year on year. This reflects strong market demand, enhanced appeal of Dingdong's products and our upgraded product development capabilities. Regarding user conversion, the average daily transaction users exceeded 830011.1% year on year increase. Owing to our effective strategies in user acquisition and traffic conversion. This conversion rate for ordering users improved by 2.4 percentage points year on year, thanks to the continued enhancement in product development operational efficiency, app based recommendations as well as the appeal of our offerings. This has created a more seamless transition from browsing to purchasing. User stickiness continue to increase with average monthly order frequency rising to 4.1 times, an increase of 2.4 times percent year on year driven by our superior shopping that includes both products and services, which helps users cultivate a habit of frequent repurchases.

The growth in these metrics mark a promising start of our four gs strategy, which emphasizes good users, good products, good services and good mindshare. People often say that a good start is half the battle. We firmly believe that we are undertaking the difficult yet right course of action, which will undoubtedly activate a positive development flywheel and deliver better performance. Regionally, the Jiangsu, Zhejiang and Shanghai regions remain our primary primary growth drivers. In this quarter, Shanghai's GMV rose by 5% year on year, while Zhejiang and Jiangsu saw increases 17.813.9% respectively. All cities within these regions reported positive year on year growth. Notable mentions include Wenzhou, Wuzhou, Nantong and Jinhua each surpassing 50% growth. Additionally, Huizhou and Fushan in the Guangzhou Shenzhen area experienced over 40% year on year growth. This year, we are further accelerating the deployment of our frontline fulfillment stations in Jiangsujiang and Shanghai. By the end of Q1, we had established 14 new frontline stations By strategically optimizing the layout and density of our frontline fulfillment network in key areas, we aim to create a more efficient fulfillment system and enhance our cost structure thereby continually improving overall operational efficiency. In the last quarter of twenty twenty four, the entire company aligned around a share understanding, which is we work together to improve product quality and develop differentiated products After determining the four gs strategy of good users, good products, good services and good mindshare, we establish performance goals and organizational structures that support these strategic objectives.

As a result, in the first quarter, more and more differentiated and good products appeared on our app and gained user popularity. Driven by methods such as restructuring the product business unit establishing an incentive scheme that rewards the development of differentiated and good products creating a product lifecycle accountability system having core executives visit product sources and requiring product developers to respond to consumers' negative reviews personally. For instance, our meat products showcase the strength of our six self operated meat factories which drive our product innovation. After establishing the trusted Daily Fresh brand, we introduced the He Hua Tian brand, emphasizing health and taste along with the premium black pig Pork label, Black Diamond family. Furthermore, we began expanding our focus on the deep processing sector within the leisure goods segment. Emphasizing health trends, selecting premium raw materials and craft crafting healthy tasty daily preparations and snacks. For example, our Hokwatian Australian grain fed Wagyu beef ribs recently won the Golden Carrot Award during our Good Product Competition. Thanks to its top quality Australian Wagyu beef and distinctive cheese flavor. Since its early March launch, it has rapidly gained popularity among consumers achieving sales of around RMB3.4 million.

Orders that include this item recorded an average order value of RMB139, outperforming the company average by nearly 100%. Demonstrating how good products attract good users Our product development team prioritizes quality and the tick meticulously examines every stage to ensure that each product needs stand high standards. Moreover, our product developers have won over users with their dedication and professionalism. For instance, our users fondly refer to our product creators as Guava Sister and Sorry Fish Brother on social media because they developed the acclaimed tree ripe rich cream guava and Yangxin Jiangren spring fresh Wontons and Sorry Fish and Shepherd's Purse, both of which won awards in our product competition. It is widely acknowledged that in the present consumer environment, encounters substantial challenges. The instant retail sector has become markedly saturated with competitors resulting in heightened competition. There's a common concern about Dingdong maintaining profitability amidst fierce rivalry. And there are apprehensions regarding the sustainability of Dingdong as a viable entity. Based on these competition? What advantages and opportunities do we possess? Firstly, we're fortunate that in previous rounds of competition, we did not simply follow trends, rather we stay true to the fundamental of business particularly developing a comprehensive model, enhancing our supply chain and focusing on key regions.

Throughout each stage of competition, we make consistent advancements delving deeply into our strategies and ensuring adequate resources Today, we not only possess a robust technological accumulation, and a solid foundation within our supply chain, but also our cash reserves are healthy, enabling us to sustain profitability. All of these factors have established a strong foundation for us to keep succeeding in this new phase of competition. In conclusion, in the context of today's intense competition, we have identified the following core advantages robust supply chain capabilities. The company was founded to provide consumers with healthy and high quality food ingredients. From the inception of our operations. We recognize that our role could not be limited to merely serving as an intermediary or sales channel Rather, we had to delve deeply into each aspect of the supply chain to enhance quality and improve efficiency. We engaged comprehensively in every stage of the process, including cultivating and producing food ingredients sourcing, logistics and warehousing, grading and packaging, food research and development, distribution operations and delivery to consumers. We refer to the strategic approach as narrow and deep as narrow as an inch yet as deep as a mile. Our operational product categories and revenue scale may not highlight a competitive event but we have a substantial lead in enhancing and strengthening the supply chain.

Importantly, throughout the transformation and upgrading of our supply chain, we have established a robust IT system that enables us to continuously optimize costs, enhance efficiency and replicate our supply chain capabilities across various regions and sectors. Recently, we have formed a strategic partnership with the DFI Group based in Hong Kong. DFI is a recognized leading global trading and retail company. While they have previously explored cooperation with numerous Chinese companies they ultimately chose to partner with Dingdong. Their decision to Their decision is driven by Dingdong's robust fresh grocery supply chain capabilities and advanced IT system capabilities. This in turn is a testament to our supply chain effectiveness. These are our robust supply chain capabilities. We have evolved beyond a conventional retail company thus positioning ourselves to withstand the intense competition within the instant retail market As time progresses, the advantages of our supply chain will be increasingly apparent generating profit margins that substantially surpass those of instant retail enterprises. Distinct positioning, our competitors are most mostly positioned as online supermarkets, while Dingdong focuses on quality ingredients and products. They mostly follow a strategy that is wide as a mild yet as shallow as an inch. In contrast with our approach of being narrow as an inch yet deep as a mile, competitors rely on price wars for a customer traffic whereas we prioritize quality and service to attract users.

Operational data shows that we outperform competitors in key metrics of user trust and quality such as AOV, repurchase rate gross profit margin and satisfaction. While some see us as a basic retail service, we are a full chain first grocery supply chain company driven by digital technology. Third, a robust ecosystem. As mentioned, we have established a strategic partnership with DFI in Hong Kong Concurrently in the international markets, we are fostering in-depth cooperation with HKTV Mall in Hong Kong Fairprice in Singapore and retail groups in Central Asia and The Middle East. On one hand, we provide events IT capabilities to these excellent retail partners to enhance their fresh grocery supply chain efficiencies Simultaneously, we also introduced China's high quality ingredients and culinary offers to overseas markets. In the domestic market, we have formed strategic partnerships with numerous agricultural and food research and development institutions and agricultural and food companies. We use our retail and supply chain capabilities to empower these organizations to foster and foster collective growth. Internally, we have incubated Guiyu Food Group, a leader in China for the R and D and production of pre prepared meals, meats, grains and soy products Guiyu's products are distributed through various channels beyond Dingdong, showing consistent rapid revenue growth and profit margins.

Nikon Key, a world renowned food seasoning company has traditionally sold its products to retailers. Now we are the sole provider of pre prepared meals to Li Kom K, facilitating broader overseas distribution of our products This collaboration highlights our product capabilities and future development potential. Organizational ability and implementation Since its inception, Dingdong has faced fierce competition from both startups and large companies. Eight years later, most rivals have vanished. While giants with similar businesses continue to incur losses. Dingdong not only survived but also achieved profit for ten consecutive quarters demonstrating our competitive and vitality. It's been eight years since we started our business and the colleagues who joined us on the journey are still actively working alongside us today. Over time, we face various challenges that have required us to make some strategic changes. As part of evolving our strategy, we have also restructured our organization to help our management team adapt quickly to the changing needs of the business. This year to strengthen our supply chain and create competitive advantages, we have introduced the the four gs strategy focusing on good users, good products, good services and good mindshare. This shift has led to a significant overhaul of our structure where we are where our core executives have taken on new roles in product development and improving our supply chain capabilities.

Everyone on the team is focusing on the big picture, embracing the new responsibilities with enthusiasm. After five months of hard work with begun to see some great results. Dingdong is rolling out more unique and high quality products Our users are happier than before and our supply chain efficiency is steadily improving. As we continue moving forward, these benefits are becoming even more obvious This really highlights our strong organizational ability to adapt and bounce back in the face of adversity. Dingdong's distinct positioning and unique advantages we're confident that we can remain competitive in various competitive landscape. Over time, our advantages will become increasingly evident. Particularly as this strategic adjustment is progressing progressively implemented, we anticipate a swift recovery from the short term challenges induced by the transition, leading to a substantial enhancement in sales volume, increased innovation within our business practices and further optimization of our profit margins. Finally, I'll provide an update on the outlook for Q2, '25. We anticipate maintaining year on year growth in scale and achieving non GAAP profitability for the second quarter of twenty twenty five. We're still in transitional phase of transformation, but this period will pass quickly. By the end of the year, Dingdong's advantages will be distinctly evident We expect significant growth in both performance scale and profit margin by then.

This wraps up my speech. Thank you. Now, I would like to invite our CFO, Wang Song to discuss the company's financial performance. Thank you, Mr. Liang, and hello, everyone. Before I review our financial performance for the quarter for the first quarter, please note that all of our figures are in RMB. In the first quarter of twenty twenty five, Dingdong reported a revenue of RMB5.48 billion reflecting a 9.1% year over year increase and marking five consecutive quarters of positive growth. Non GAAP net profit was RMB30 million, and GAAP net profit was RMB8 million and operating net cash inflow reached RMB85 million. The company continued to demonstrate positive profitability alongside positive operating net cash inflow. By the end of Q1, after accounting for short term loans, our actual funds amounted to RMB 2,890,000,000.00, indicating a continued net increase. This year, we're committed to executing our narrow yet deep value proposition intensifying our efforts to satisfy consumers through quality products and services while establishing a unique path focused on quality, stability and consistent supply capabilities. Next, we'll analyze the first quarter's financial performance. Revenue reached RMB5.48 billion, a 9.1% year on year growth. GMV stood at RMB5.96 billion, a 7.9% increase from the previous year.

While the average daily GMV rose by 9.1% we leverage our products to attract more consumers and boost user engagement. The conversion rate of transacting users in Q1 reached a record high in recent years averaging 64% an increase of 4.8 percentage points year on year. The number of monthly transacting users rose by 10.3% year on year and monthly transacting members grew by 12.6% year on year. Additionally, cities such as Wenzhou, Huzhou, Nantong and Jinhua demonstrated a strong growth momentum achieving over 50% year on year growth. Furthermore, our 2B business has shown solid growth boasting a revenue increase of 64.6% year on year and a rise in revenue share of 1.4 percentage points year on year. Gross profit margin was 29.9%, down 0.7 percentage points from last year. This decline in gross profit largely stems from our increased investment in high quality products the introduction of more quality items and our commitment to removing less favorite products. Additionally, consumers benefited from our dedicated efforts in optimizing the supply chain. Moving forward, we'll persist in nurturing quality products focused on in-depth research with the craftsman dedication. And strengthen our core competitive edge. Moreover, by utilizing our intelligent forecasting and operational scheduling capabilities, we aim to better meet user needs and improve the efficiency of our inventory turnover and defect management.

The average turnover days improved to eleven point seven days a 2.8% increase in efficiency year on year. While the loss rate remained stable, the out of stock rate for our leading products decreased by 1.8 percentage points compared to last year. The fulfillment cost rate rose to 22.9% up 0.1 percentage points from the previous year. This increase primarily stems from the company's overseas investment representing about 0.4% of revenue. Meanwhile, the domestic frontline fulfillment stations further enhance their efficiency with a 2.6% year on year rise in average daily order volume per station for Q1. If we exclude the efforts, the effect of newly added stations since 2024, the average daily order volume had established stations saw a year on year increase of 5.3%. During the Lunar New Year in 2025, we also provided users with our non closing services leveraging algorithms and operational capabilities to deliver quality services. In Q1, the fulfillment time for ASAP orders was reduced by five minutes year on year, bringing it down to thirty four minutes. The sales and marketing expense rate was 2%, a decrease of 0.2 percentage points year on year. Moving forward, we aim to boost our investment in customer mindshare by utilizing high quality products to drive traffic and improve delivery conversion efficiency.

Management and R and D expenses represented 5.7% of revenue, a 0.2 percentage points decrease the over year primarily due to economies of scale We're committed to continuing our investment in food R and D agricultural technology and data algorithms, which will enhance our product development and full chain digital capabilities, thereby boosting supply chain efficiency. Non GAAP net profit margin was 0.6% resulting in net profit of RMB30 million. We also achieved a GAAP net profit margin of 0.1%. As of the end of Q1, our cash and cash equivalents along with our short term restricted funds and investments totaled RMB4.29 billion, We remain focused on optimizing capital use and our financing structure. After accounting for short term loans, our net balance of funds stands at billion. This concludes my prepared remarks. Operator, we can now start the Q and A session.

We will now begin the question and answer session. At this time, we will pause momentarily to assemble our roster. The first question comes from Thomas Chong with Jefferies. Please go ahead.

Thanks management for taking my questions and congratulations a solid set of results.

In the speech, Mr. Liang emphasized the those four gs strategy multiple times. Can you elaborate about the four strategy? What changes have Dingdong made to execute the strategy? I hope for the long term what advantages do the four gs strategy provide to us? Thank you. [indiscernible] Thank you for your question. As you are aware, we delivered a strong performance in 2024. Nevertheless, our team remains cautious At our strategic meeting at the end of twenty twenty four, we closely examined consumer trends, competition and Dingdong's unique strengths. We understand that to create genuine competitive barriers and secure long term growth opportunities, we must differentiate our approach compared to our current competitors Simultaneously, we need to maximize our supply chain advantages. Let's examine the current competitive landscape. Retail customers typically want more, faster, better and cheaper. However, in today's market, where supply is ample, more no longer holds an advantage. An industry standard of thirty minute delivery has erased the competitive edge of speed Many competitors are still fixating on cheaper. Dingdong takes a different approach. We don't excessively pursue cheaper anymore. Instead, we have introduced what we believe is a better strategy. This encompass good users, good products, good services and good mindshare.

Which we refer to internally as the four strategy. This strategy aligns with our original intention when we started the business. Right from the beginning our goal has been to provide children with healthy and safe food. Although circumstances have changed over time, our commitment to this principle remains steadfast. Furthermore, good quality is central to the food industry. The saying you are what you eat underscores the importance of healthy eating for children's growth, balanced development for adults and overall health and longevity for the elderly. It can even be said that quality food is essential for a nation's strong development. However, you get what you pay for. Reminds us that an excessive focus on low prices can compromise product quality and hinder healthy industry growth. However, when we consider our strength, our deep engagement and long term investment in the supply chain stand out, only companies like ours with deep root and dedication in this area can deliver on the promise of good quality. Achieving cheaper is straightforward. If you maintain low prices you can draw in consumers and boost sales However, striving for better is far more challenging and involves doing 10,000 things right and demands a systematic long term approach To facilitate this, we have repeatedly held internal brain sessions to develop a unified understanding.

We have adjusted our performance metrics and for a period of time we're focusing solely on the ratio of quality products and satisfied users [indiscernible] user repurchase rates and paying attention to negative reviews, instead of GMV and profit margin metrics, we also reshape our fundamental challenges to internal structure. We dismantle the original product development center and integrate product development, product operation and quality control teams to into independent business units, each led by a core executive. This setup empowers the product development team to abandon conventional thinking and focus on creating distinctive quality products. Additionally, this organizational adjustment fosters a genuine commitment across the company to fully understand and enhance products. Leveraging the supply chain in product development and create unique quality offerings. Furthermore, this restructuring enables each functional department to effectively support quality products. Continuously boost efficiency and create value throughout the product development process. Such a transition will entail a challenging period that compels us all to leave our comfort zones impacting our rapid scaling and profit margins in the near term. However, to truly succeed, we must embrace disruption and persevere through the tough times. Even though just five months have passed, we have noted an uptick in the proportion of quality products an increase in the number of good users arise in the user rate and more positive feedback on the Dingdong app and social media.

Unlike typical retail transformation that are often initiated, our approach is an inside out transformation. While this method may not be widely noticed externally and results may take time, it promises ongoing fundamental improvement over time substantial and transformative changes will occur significantly enhancing our scale, optimizing profit margins and fostering genuine core competitiveness that was then competition. Thank you.

The next question comes from Yang Bai with CICC. Please go ahead.

Mr. Liang also talk about internally incubated Gui Food Group in his speech. Can you give an overview of the current business situation?

Thank you.

Thank you for your question. Our CFO is better equipped to address this matter. Thank you, Mr. Liang. I can introduce Guiyu through four key aspects. Strategic positioning, scale growth, product development and export progress. First Guiyu is the strategic business unit that the company began to incubate. In early twenty twenty. Marking our transformation into a food supply chain company with a comprehensive industry layout. We achieved vertical integration of the supply chain through self build factories encompassing a closed loop from product research and development joint farming and planting of raw materials and ingredients, production processing to terminal cells, thereby strengthening our control over quota. Product quality, cost and timeliness. Currently, we have established three major business units meat, pre prepared meals and grains and have built 12 self operated factories spending more than 54,000 square meters across six cities. Equipped with automated production lines that strictly control food safety while enhancing the flavor and quality of products. In the future, we plan to position Guiyu as a benchmark for Dingdong and even the industry providing consumers with even more exceptional products. Second, over the past five years, GUI's production and processing capacity has grown rapidly with an average annual growth rate of over 40% In 2024, the GMV of Guiyu products on Dingdong was approximately RMB5 billion with a CAGR of nearly 200% accounting for about 20% of sales on Dingdong.

We officially began exporting in 2023. In just two years, export revenues in 2024 reached about RMB300 million. A year on year growth rate of about 150%. Revenue in Q1 of twenty twenty five surpassed RMB100 million. Year on year growth rate of nearly 120%. We anticipate that export revenues this year will reach 6,000,000 and expect that by 2027 exports will account for more than 50% of Guiyu's revenues. Third, we prioritize quality as our core value and meticulously refine our product development capabilities. Currently, we have established a product mix with distinctive features in meat grains and pre prepared meals. We currently operate six meat with a diamond cutting with a daily cutting capacity of 500,000 boxes making us the highest comprehensive production capacity in the country. As mentioned earlier, their products range from pork, beef, rocket beef, rocket mutton to various meat products Among them, our Black Diamond family brands focuses on high end black pork. We have established a black pig farming base in partnership with Kaixin Food engaging ourselves in source breeding, selecting high quality varieties and employing coarse grains for three hundred days low raising period. In 2024, the GMV of Black Diamond family reached about RMB200 million with an annual growth rate of 30%.

Meanwhile, the offline store of Black Diamond Family will also ramp up expansion. By 2025, we plan to increase the existing five Black Diamond Family stores to between fifteen and twenty. We have three grain factories producing rice flour and bean products. We have incubated brands such as Yangxin Jiangren and You Douzhu. For instance, Yangxin Jiangren has introduced intangible cultural heritage craft and collaborated with five star catering chefs universities and multinational companies, all while remaining the essence of traditional craftsmanship to make product innovation more dynamic. As a result, this label has skillfully created product that highlight regional traits, incorporate traditional craft and promote children's health among other features. Two of the factories have obtained FSSC 22,000 certification and U. S. FDA registration, which indicate that the production system has reached the highest level of international safety control and paves the way for entering the global high end market. In 2024, the GMV of Liangxin Jiangren was about RMB600 million with an annual growth rate of 22% and an average monthly repurchase rate of 40%. For pre prepared meals, we currently operate three factories that cover categories such as meat products, aquatic products and salads and fruit cuts.

With the Saicheng Xing brand as our foundation. We develop health prepare healthy prepared meals with regional flavors based on our insight into consumer trends and front end market data, advanced production capabilities and technology and over 3,000 flavored coats. Consumers greatly love many products such as boxing crayfish, which has had an annual sales exceeding RMB100 million for three consecutive years, and Tai Chongqing mouthwatering chicken with an annual sales surpassing RMB30 million. In 2024, the GMV of Tai Changjin was approximately RMB1.1 billion, with a year on year growth rate of 27% and an average monthly repurchase rate of 40%. Besides serving Dingdong, GUI's products are competitive directly in a broader market due to their high quality. Currently, our products are sold not only in domestic chain channels such as Lianghua Supermarkets, Jingdong seven Fresh and Huazhu but also in international market where we have distributed our products to over 30 countries and regions through partners like Lee Kum K, Hong Kong DFI and TNT Supermarkets from Canada. Furthermore, we are establishing in-depth cooperative relationships with HKTV Mall in Hong Kong, Fairprice in Singapore and retail groups in Central Asia and The Middle East. In the future, we will leverage our data production and R and D capabilities to develop products that cater to various channels.

The evolution of Guiyu serves as a testament to Dingdong's four industry chain capabilities and the genuine potential of our narrow and deep strategy and not only enhances Dingdong's product competitiveness but also effectively establishes a robust modern and internationally oriented rapidly developing, expanding and high quality food enterprise? Thank you.

As there are no further questions, I'd like to return the call to our management for closing remarks.

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

The conference has now concluded. You for attending today's presentation. You may now disconnect.