Dingdong (Cayman) Ltd (DDL) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amid ...

GuruFocus News

Sat, May 17, 2025, 1:03 AM 5 min read

Revenue: RMB5.48 billion, a 9.1% year-over-year increase.
GMV (Gross Merchandise Value): RMB5.96 billion, a 7.9% increase from the previous year.
Non-GAAP Net Profit: RMB30 million with a non-GAAP net profit margin of 0.6%.
GAAP Net Profit: RMB8 million with a GAAP net profit margin of 0.1%.
Operating Net Cash Inflow: RMB85 million.
Cash and Cash Equivalents: RMB4.29 billion, with a net balance of funds at RMB2.89 billion after accounting for short-term loans.
Gross Profit Margin: 29.9%, down 0.7 percentage points from last year.
Fulfillment Cost Rate: 22.9%, up 0.1 percentage points from the previous year.
Sales and Marketing Expense Rate: 2%, a decrease of 0.2 percentage points year-on-year.
Management and R&D Expenses: 5.7% of revenue, a 0.2 percentage point decrease year-over-year.
Average Daily Order Volume Increase: 5.3% year-on-year at established stations.
Average Turnover Days: Improved to 11.7 days, a 2.8% increase in efficiency year-on-year.
Order Volume: Rose by 12.1% year-on-year.
Average Daily Active Users: Surpassed 2 million, a 4.5% increase year-on-year.
Average Daily Transaction Users: Exceeded 830,000, an 11.1% year-on-year increase.
Conversion Rate for Ordering Users: Improved by 2.4 percentage points year-on-year.
Average Monthly Order Frequency: Increased to 4.1 times, a 2.4% year-on-year increase.
Regional Growth: Shanghai GMV rose by 5%, Zhejiang by 17.8%, and Jiangsu by 13.9% year-on-year.
New Frontline Fulfillment Stations: 14 new stations established by the end of Q1.

Warning! GuruFocus has detected 4 Warning Signs with DDL.

Release Date: May 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Dingdong (Cayman) Ltd achieved non-GAAP profitability for 10 consecutive quarters and GAAP profitability for five quarters.
The company reported a year-on-year revenue growth of 9.1% in Q1 2025, reaching RMB5.48 billion.
Order volume increased by 12.1% year-on-year, with average daily active users surpassing 2 million.
Dingdong's 4G strategy focusing on good users, good products, good services, and good mindshare has shown promising results.
Strategic partnerships with international companies like DFI Group and HKTVmall highlight Dingdong's robust supply chain capabilities.

Negative Points

The gross profit margin decreased by 0.7 percentage points year-on-year, primarily due to increased investment in high-quality products.
The fulfillment cost rate rose to 22.9%, partly due to overseas investments.
The company is facing transitional challenges as it implements its 4G strategy, impacting rapid scaling and profit margins in the near term.
The instant retail sector is highly competitive, raising concerns about maintaining profitability.
Despite positive growth, the company acknowledges the need for ongoing strategic adjustments to address market saturation and competition.

Q & A Highlights

Q: Can you elaborate on the 4G strategy and its long-term advantages? A: Changlin Liang, CEO: The 4G strategy focuses on good users, good products, good services, and good mindshare. It aims to differentiate Dingdong from competitors by emphasizing quality over price. This strategy aligns with our original goal of providing healthy and safe food. We have restructured our organization to support this strategy, focusing on quality products and user satisfaction rather than just GMV and profit margins. This approach is expected to enhance our competitiveness and profitability over time.

Q: Can you provide an overview of the Gui Food Group's current business situation? A: Song Wang, CFO: Gui Food Group, incubated in 2020, focuses on meat, pre-prepared meals, and grains. It has grown rapidly, with a GMV of RMB5 billion in 2024 and export revenues reaching RMB300 million. Gui operates 12 factories and emphasizes quality in product development. It has expanded internationally, distributing products to over 30 countries. Gui's evolution showcases Dingdong's full industry chain capabilities and supports our narrow and deep strategy.

Q: How has Dingdong's financial performance been in Q1 2025? A: Song Wang, CFO: Dingdong reported a revenue of RMB5.48 billion, a 9.1% year-over-year increase. Non-GAAP net profit was RMB30 million, and GAAP net profit was RMB8 million. The company achieved positive operating net cash inflow of RMB85 million. The conversion rate of transacting users reached a record high, and cities like Wenzhou and Jinhua showed strong growth. Despite a slight decline in gross profit margin, we continue to focus on quality products and supply chain optimization.

Q: What are Dingdong's core advantages in the competitive retail market? A: Changlin Liang, CEO: Dingdong's core advantages include robust supply chain capabilities, distinct positioning, and a strong organizational ability. We focus on quality ingredients and products, unlike competitors who rely on price wars. Our strategic partnerships, such as with DFI in Hong Kong, enhance our supply chain efficiency. Our narrow and deep strategy allows us to maintain competitiveness and achieve higher profit margins than typical retail enterprises.

Q: What is the outlook for Dingdong in Q2 2025? A: Changlin Liang, CEO: We anticipate maintaining year-on-year growth in scale and achieving non-GAAP profitability in Q2 2025. Although we are in a transitional phase, we expect Dingdong's advantages to become more evident by the end of the year, leading to significant growth in performance scale and profit margin.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info