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spk06: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Ding Dong Limited First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this event is being recorded. I will now turn the conference over to the first speaker today, Nicky Zhang, Director of Investor Relations. Please go ahead.
spk00: Thank you. Hello, everyone, and welcome to Dingdong's first quarter 2024 earnings call. With me today are Mr. Changlin Liang, our founder and CEO, and Mr. Song Wang, our CFO. You can refer to our first quarter 2024 financial results on our IR website at IR100.me. You can also access a replay of this call on our IR website when it becomes available a few hours after 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-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'll now turn the call to our first speaker today, the founder and the CEO of Dingdong, Mr. Liang.
spk04: Welcome to the Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Good morning and good evening, ladies and gentlemen.
spk07: Welcome to Dingdong's first quarter 2024 earnings conference call. In the first quarter of 2024, we achieved non-GAAP profitability for the sixth consecutive quarter. Notably, we recorded a substantial increase in our net profit margin and revenue growth in March 2024. This success can be largely attributed to Dingdong's world-leading fresh grocery supply chain capabilities. These capabilities will not only contribute to Dingdong's continued expansion and profitability within the domestic market, but also position the company to make a substantial impact on the overseas market, generating greater and lasting value. My remarks today will be divided into three sessions. First, I'll review our Q1 performance. Then, I'll introduce Dingdong's capabilities and advantages in the fresh grocery supply chain. Finally, I'll provide a brief overlook on our future development and performance.
spk04: First of all, I would like to briefly introduce the performance of Q1 of 2024. In Q1 of 2024, Dingdong Grocery achieved a net profit of 55.3 billion yuan. Under the standard of Long Gap, it achieved a net profit of 4,138 billion yuan. 48.2 million yuan. to achieve a net profit of 4,145 million yuan under the Nangai standard, which increased by 76.8%. The net profit rate of Nangai reached 2.3%. Especially in Jiangzhou and Shanghai, in March 2020, the unit price increased by 10.5%. In Zhejiang, the growth rate increased by 11.6%. In Jiangsu, the growth rate increased by 14.5%. In Guangzhou and Beijing, the loss rate quickly decreased.
spk07: Let's begin with a quick rundown of our performance in Q1 2024. The company managed to achieve a GMV of 5.53 billion RMB and a non-GAAP net profit of 41.482 million RMB. Both increased year over year, though it's worthwhile to note that the performance of Q1 2023 was heavily impacted by the pandemic, which only ended in January and February of last year. Taking that into account, it wouldn't be meaningful to make a direct comparison of those months, so we'll only compare the performance of March 2023 with March 2024. In March 2024, GMV reached 1.97 billion RMB, an increase of 6.5% year-over-year. Non-GAAP net profit was 41.45 million RMB, representing a year-over-year increase of 76.8%. the non-GAAP net profit margining reached 2.3%. If we look at the figures coming out of Shanghai, Zhejiang, and Jiangsu regions, we can see that in Shanghai, the order volume per station increased by 10.5% year over year. In Zhejiang, it increased by 11.6% and in Jiangsu by 14.5%. In Guangzhou, Shenzhen, and Beijing area, the company has been experiencing a rapid reduction in losses.
spk04: Our world-leading fresh grocery supply chain capabilities have proven to be instrumental in driving Dingdong's robust growth and profitability. I'll now provide a thorough introduction to our strengths in this area. Since the launch of DingDong, we have continued to understand the freshness industry that we are engaged in. We found two characteristics. The first is that traditional retail low-end principles are obtained through low prices and scale, and then reduce the purchase price through scale, thus maintaining a higher price. However, fresh products are original agricultural products, and are limited to supply and demand relations and growth cycle. They do not have a large-scale effect. Therefore, the traditional retail low-end principles do not play a role in the freshness industry. Second, traditional retail will also reduce operating costs by a large scale. However, the pre-sale model we are using requires a certain sum of costs, and as the scale grows, it will not drop significantly. In summary, the retail low-end principle that has been verified since the WAMA era has failed in the raw materials industry. The low-end principle in the raw materials industry is to continue to improve the efficiency of the end-to-end. This is the power of raw materials. At Dingdong, we have been studying the fresh grocery industry and its unique features since day one.
spk07: We've identified two intrinsic factors that set it apart from traditional retail. Firstly, the first principle of traditional retail is achieving scale by offering low prices, which then allows for further reductions in purchase prices. However, fresh groceries, being primarily agricultural products, are limited by supply and demand dynamics as well as seasonality and so do not benefit significantly from economies of scale. Secondly, in traditional retail, increasing scale can help reduce operating costs. However, our frontline fulfillment grid model requires a delivery fee that will not decrease substantially as scale increases. we have realized that the first principle of traditional retailing that has been successful since the Walmart era is not complementary to the fresh grocery industry. In our industry, the first principle for success is to continuously enhance end-to-end efficiency. To achieve growth at scale, seek profitability, and bolster competitiveness, it is crucial that we focus on consistently improving our supply chain capabilities. With these capabilities, we'll be able to serve a larger customer base and meet their evolving needs.
spk04: With these capabilities, we'll be able to serve a larger customer base and meet their evolving needs. Over the past seven years, we have strived to improve the quality, efficiency, and stability of our procurement processes to drive this
spk07: we have focused on direct sourcing and order-based farming from production areas. We've also invested in food R&D as well as production and processing capabilities to give our products a more competitive edge. Our self-developed DGAP standards, WMS, TMS, Intelligent Forecasting and Operation Systems, and Warehousing Automation Systems have enabled us to improve the efficiency and flexibility of our agricultural product procurement and central warehouse production and processing. As a result of these efforts, we've successfully established world-leading fresh grocery supply chain capabilities evident in the following three areas.
spk04: Through the ability of supply chain, we ensure the stability of the product quality. As you all know, the original intention of Bindong Grocery is to make the best food available to the general public, just like tap water. In order to achieve this original intention, we have deep-rooted supply chain. While we have deep-rooted production, built our own warehouse, and built our own production and processing capabilities, we have also established a 7 plus 1 quality control system. Especially, we have investigated and found that there are 29 kinds of ingredients that are prone to miscarriage and heavy weight transplants, and other quality issues. Through the improvement of technology and order planting, First, we ensure a high caliber of product quality through our supply chain capabilities. Dingdong's primary goal is to make high-quality food as accessible to everyone as tap water.
spk07: We've taken this mission to heart and have invested in our own production and processing facilities as well as regional processing centers to ensure that our supply chain is efficiently organized. To guarantee that the food we provide is of the highest quality, we've implemented a 7 plus 1 quality control system. Our investigations have shown that 29 types of ingredients are prone to quality issues, like chemical residues and excessive heavy metals. We've addressed these very concerns by fine-tuning our technological processes and implementing more methodical and safer cultivation practices. Since we're involved in every aspect of the food supply chain, from production to delivery, we can guarantee that our fresh products are consistently of the highest quality. We're proud to say that upholding such proactive measures has paid off, given that we've substantially reduced customer complaints and boosted user loyalty at Dingdong.
spk04: Second, through our supply chain capabilities, we've improved end-to-end efficiency and increased gross profit margins.
spk07: Our current turnover period for fresh groceries is around five days, with an end-to-end loss of 1.5%. By utilizing intelligent forecasting and scheduling systems, we've been able to maintain a steady balance between out-of-stock rates and loss rates while ensuring a quality-buy ratio. This has resulted in a higher gross profit margin. Additionally, our credit periods are very short, with a 7 plus 7 payment model utilized for fresh groceries. We're actively focused on enhancing our supply chain capabilities to foster a stronger ecosystem together with our upstream partners.
spk04: Third, the leading supply chain has expanded the space for Dingdong to buy vegetables. Today, our good products are not only sold on the Dingdong to buy vegetables app, but also entered more channels. Some peers are also starting to purchase Dingdong products. In addition, by looking at the world, our advanced digital supply chain system can enrich the traditional retail, trade, agricultural and food industries. It can be predicted that our supply chain will continue to expand Dingdong's space of development, greatly increasing our scale and profit growth sources and opportunities.
spk07: Third, our innovative supply chain capabilities broaden the scope of our development potential. Our high-quality products are now available not only on our app, but also through various other channels. Some of our competitors have also begun purchasing our products. Moreover, our cutting-edge digital supply chain system can support traditional retail, trade, agriculture, and a multitude of food industries. It is evident that the development of our supply chain capabilities has and will continue to contribute to our growth potential, creating substantial opportunities for scaling our operations and driving profit growth.
spk04: Finally, let me briefly talk about the performance of the entire year of 2024. Referring to the growth in March of 2024, we believe that the advantage of the supply chain is becoming more and more obvious. Under the premise that it can play a greater role, the performance of the next few months will be better. So we have increased the expectation of profit and scale. This year and the second quarter, the net profit and scale will grow more and more. In Q2 of 2024 and the whole year, the profit will be achieved in terms of non-GAAP and GAAP.
spk07: Looking ahead to the remaining months of 2024, and based on the growth we have already observed, we forecast a tangible, sustained improvement in our performance. We think that the strategic advantages of the supply chain capabilities will only become more apparent and will play a crucial role in boosting our profits and scale. With this in mind, we've raised our expectations for both net profit and scale. and are anticipating considerable year-over-year growth for Q2 and this year. We're looking to achieve both non-GAAP and GAAP profits in Q2 and for the entire year of 2024. Thank you all for listening.
spk04: Now, I would like to invite our CFO, Wang Song, to go over the company's financials. Thank you, Ms.
spk07: Liang.
spk05: Thank you, Mr. Lang, and hello, everyone. Before I review our financial performance, please note that all our figures are in renminbi. 2024 QE, Dingdong Maicai实现营收50.2亿元,同比增长0.5%, non-GAAP净利润率0.8%,同比增长0.7个百分点。 The net profit is 6.8 times that of the same period last year. At the same time, we have achieved a profit of 0.2% of GAAP. The net profit is 1.3%. The net profit is 6466.6 million yuan. The operating cash flow is 0.95 billion yuan. This is the profit under the non-GAAP standard of the sixth consecutive quarter and the operating cash flow of the third consecutive quarter. In the first quarter of 2024, Dingdong achieved a revenue of 5.02 billion RMB, marking a year-over-year increase of 0.5%.
spk07: The company's non-GAAP net profit margin rose to 0.8%, with a year-over-year increase of 0.7 percentage points, while its non-GAAP net profit surged 6.8 times year-over-year. Jingdong also accomplished GAAP profitability in the same period, posting a net profit margin of 0.2%, up by 1.3 percentage points year-over-year, with a net profit growth of 64.666 million RMB. Besides that, the company's operating cash flow net inflow was 95 million RMB, marking its third consecutive quarter of net operating cash inflow. After deducting short-term borrowings at the end of Q1, Dingdong's actual self-owned fund balance reached 2.09 billion RMB, a net increase for the third consecutive quarter. These results show that the company has entered a new stage of growth after consolidating its competitive advantages. With simultaneous growth in revenue and profit, and a continuous net inflow of operating cash flow.
spk05: We will continue to build up our products by focusing on the construction of a clean and fresh supply chain. We will provide consumers with more accurate and fresh food. On the other hand, we have continued to improve our product structure over the past year, especially in fruit, dairy products, leisure goods, and baking. In March, the sales of these four categories increased by about 8% in total. At the same time, we will continue to strengthen the construction of free brand products and continue to provide better quality products to users. We will better accommodate consumers and improve the user base plate.
spk07: We have been focusing on improving our product development capabilities, quality control, and end-to-end supply chain capabilities for the cold chain of fresh groceries. Our aim is to provide consumers with fresh groceries of the highest quality. We've also been fine-tuning our product structure, notably in categories like fruit, dairy drinks, convenience goods, and bakery products. In March, the total sales of these categories increased by approximately 8% year-over-year. We're also actively working on improving our private label product development capabilities. In doing so, we'll continue to provide users with better quality products with cost benefits. Our ultimate objective is to engage a wider consumer base and expand our user reach.
spk05: Let's take a look at QE's specific financial situation. QE's GMA is 55.3 billion yuan. It has increased by 1.4%. After eliminating the impact of Sichuan fish and Guangsheng door stores, the number of door stores has increased by 4.4%. The revenue has increased by 50.2 billion yuan, which has increased by 0.5%. This is mainly due to the growth of our order volume, which increased by 3.5% in the same way. The GNV in Shanghai region has returned to the normal growth, which increased by 2.7% in the same way. In March and January, it increased by nearly 10% in the same way. The growth in Jiangsu and Zhejiang continues to run. The GNV in QE has achieved a growth of 16.6% and 14.8% in the same way. This year, we will continue to increase the coverage and penetration of Jiangsu and Zhejiang areas. In the end of the first quarter, we added 15 new pre-employment warehouses in Jiangsu. These new warehouses' number of Japanese and Japanese troops has reached an average of more than 650 in April. At the same time, the loss of Guangzhou and Beijing areas continues to shrink. The company's overall loss continues to improve in the area layout.
spk07: In Q1, our GMV reached 5.53 billion RMB, marking a year-over-year increase of 1.4%. After accounting for the impact of store closures in Sichuan, Chongqing, Guangzhou, and Shenzhen, we saw a 4.4% year-over-year increase in existing stores. Our revenue also grew to 5.02 billion RMB, a yearly increase of 0.5%. This growth may be mainly attributed to the rise in the number of orders by 3.5% year-over-year. Emerging from the pandemic's aftermath, our Shanghai market rebounded and achieved a year-over-year growth of 2.7%. In Q1 GMV, almost 10% year-over-year growth in March. Furthermore, growth in Jiangsu and Zhejiang continue to lead, with GMB achieving year-over-year growth of 16.6% and 14.8% respectively. This year, we plan to expand our coverage and increase the density of our frontline fulfillment stations in Shanghai, Zhejiang, and Jiangsu regions. As of the end of Q1, we've added 15 new frontline stations in Jiangsu and Zhejiang. The average daily order volume of these new stations has quickly ramped up to more than 650. Additionally, we've significantly reduced regional losses in the Guangzhou, Shenzhen, and Beijing areas. Dingdong has been consistently achieving balanced development across multiple regions.
spk05: Q1's model rate is 30.6%. Gross profit margin was 30.6%, 0.1 percentage point lower than last year.
spk07: Going deeper into each aspect of the supply chain, including procurement, production, processing, warehousing, fulfillment, and distribution, increases our gross profit margin. We're committed to maintaining price competitiveness while providing consumers with high-value products.
spk05: QE的履约费用率为22.8%,同比去年优化了1.1个百分点。 Our fulfillment expense rate improved by 1.1% year-over-year to 22.8%, thanks to an increased order volume, which boosted operational efficiency.
spk07: the average daily order volume at the front lines of humanization rose by 16% year-over-year. In addition, we optimized the layout of the regional processing centers in the second half of last year, a development which will undoubtedly continue to improve operational efficiency this year.
spk05: QE's sales rate is 2.2%, which increased by 0.4% compared to last year. 在优异的财务表现和充分现金储备的前提下,我们会进一步加大用户侧的营销投入,持续加大在优势区域的用户渗透,促进规模的增长。 Our marketing expense rate increased by 0.4 percentage points year over year and reached 2.2%. Because of our strong financial performance and sufficient cash reserve, we have decided to increase our marketing investment on the user side.
spk07: We aim to expand our user base in key areas and drive growth at scale.
spk05: Our administrative expense and R&D expense rate remained at similar levels as the previous year.
spk07: As always, we remain committed to research and development in the fields of food, agricultural technology, and technical data algorithms.
spk05: As always, we remain committed to research and development in the fields of food, agricultural technology, and technical data algorithms.
spk07: Non-GAAP net profit margin was 0.8%, with a profit of 41.48 million RMB. This marks our sixth consecutive quarter of non-GAAP profits. We also had a GAAP net profit margin of 0.2% this quarter.
spk05: After the first quarter of GAAP net profit margin, we still achieved a net profit margin of 0.95 billion RMB. This is the third consecutive quarter of GAAP net profit margin. After the end of the first quarter, We have been optimizing the efficiency and financing structure of funds. After deducting the short-term fund balance, our actual free fund balance is 20.9 billion yuan. The double growth in income and profits will add up to the wealth reserve. Our wealth performance will be better and better. Based on this, we are very confident to complete the growth and profit goals this year.
spk07: In the first quarter, our company achieved a net operating cash inflow of 95 million RMB, despite incurring costs and expenses by staying open during the Chinese New Year holiday. This is the third consecutive quarter during which we've maintained a net operating cash inflow. As of the end of Q1, we had 4.51 billion RMB in cash and cash equivalent, short-term restricted cash, and a short-term investment. We've been working diligently to optimize our capital usage and financing structure, and our actual self-owned fund balance after deducting the balance of our short-term borrowing is $2.09 billion. Our financial performance is improving with simultaneous growth in revenue and profits. We have sufficient financial reserves. With all of this in mind, we're confident that we'll achieve this year's growth and profit targets.
spk05: Finally, I would like to update you on our recent performance. During May 1st, our GNV increased 17% in the same ratio. After removing the impact of the flu, it increased by 20% in the same ratio. In terms of areas, the GNV in Jiangsu and Zhejiang regions increased by 24% in the same ratio. The GNV in Beijing also increased by 5%. Considering that during the long holiday of May 1st this year, the number of tourists sent abroad in Jiangsu and Zhejiang has increased by the same ratio, our performance in these areas is even better. In addition, as of yesterday, in the eight days of the 55 shopping festival and the Mother's Day, our GNV increased by 20% and the order volume increased by 21%. After the transfer, the GNV increased by 24% and the order volume increased by 26%. Among them, the GNV of the leisure department increased by about 35%, and the GNV of the water production increased by nearly 30%. On Mother's Day, the GNV increased by 26%, Finally, I would like to share an update on our recent performance. During the Labor Day holiday, our GMV increased by 17% year-over-year. When we exclude the impact of Sichuan and Chongqing, the GMV increased by 20%.
spk07: By region, GMV in Shanghai, Zhejiang, and Jiangsu regions increased by 24% year-over-year, and GMV in Beijing also increased by 5%. These results are remarkable considering that during the holiday, Jiangsu, Zhejiang, and Shanghai saw a year-over-year increase in outbound tourists. In addition, as of yesterday, during the eight days of this year's May 5th shopping festival and Mother's Day, our GMV increased by 20% year over year, and our order volume increased by 21% year over year. When we exclude Sichuan and Chongqing, GMV increased by 24% year over year. and our auto volume increased by 26% year-over-year, among which the GMV of convenience goods increased by approximately 35% year-over-year, and the GMV of aquatic products increased by nearly 30% year-over-year. On Mother's Day, GMV increased by 26% year-over-year, and auto volume increased by 24%. And again, when excluding Sichuan and Chongqing, GMV increased by 30%, and auto volume increased by 29%. Among them, the flowers that we mainly push on festivals have increased by about 45% in GMV, and fruits have increased by about 40% in GMV.
spk05: Our speech today ends here. Operator, you can enter the question section below.
spk07: This concludes our speech today. Operator, we can now start the Q&A session.
spk06: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. please state it in Chinese first and then repeat it in English for the convenience of everyone on the call. The first question today comes from Thomas Chong with Jefferies. Please go ahead.
spk02: Let me translate myself. A few days ago on May 8th, Dingdong celebrated its 7th anniversary. Congratulations to Dingdong on its successful development over the past eight years, achieving growth in both scale and profit. Mr. Liang, I'm curious to know, as you reflect on the past seven years, what have been some of the biggest lessons and accomplishments for you and your team? Thanks.
spk04: 好的,谢谢您关注到丁东买菜7周年庆典日。 回国7年,很难说有成功经验,但是我们一直坚持这些原则,可以跟大家分享一下。 Thank you for acknowledging Ding Dong's 7th anniversary.
spk07: As we look back on the past 7 years, we humbly admit that we have not achieved any significant accomplishments. However, we would like to share with you some principles that we have always adhered to. 第一
spk04: We insist on doing things that are difficult and right. For example, it is easy to increase the scale through low prices. It is difficult to build a strong supply chain. It is easy to get users through marketing. It is difficult to continuously increase user contact and raise user loyalty. It is easy to simply replicate the experience of the industry. It is difficult to understand the changes in the industry and the big environment and to adjust yourself in time. In the past seven years, we have found that things that are right and difficult are often the same thing. We insist on doing things that are difficult and right.
spk07: It's important to stick to doing what's right, even when it's challenging. For instance, it's easy to grow our business by offering low prices, but it's tough to build and strengthen your supply chain. It's also easy to attract new users through marketing campaigns, but it's difficult to keep them engaged and loyal. Simply copying industry practices is easy, but it's hard to analyze and then adapt to changes in a market. Over the past seven years, we've learned that the right things are always harder to do, and Subsequently, we've made it a point to always do what's right, even when it's hard.
spk04: In the past seven years, we have also entered the capital winter from the time of the wild growth of capital. After the arrival of the winter, we actually adjusted the strategy, from the original high-end momentum to the constant expansion, adjusted to the scale of the small flow line, to today, we have achieved a total of six consecutive seasons of profit, and there is an abundant cash flow. In the past seven years, we have experienced seven spring festivals, experienced many typhoons, rainstorms, snowstorms, and other bad weather. Every time the client needs us, we can stand up and say,
spk07: Over the past seven years, we have given swift responses to various challenges, including the three years comprising the pandemic. During the pandemic, we fulfilled our responsibilities and maintained a reliable supply while also achieving our own growth despite headwinds. We have adapted to changes in the capital market, shifting from a focus on expansion to prioritizing efficiency while still keeping scale top of the mind. As a result, we have attained substantial profits for six consecutive quarters and have ample cash flow. We've also successfully navigated challenging situations like Chinese New Year or severe weather conditions such as typhoons, heavy rains, and snowstorms. Our ability to deliver rapid responses has ultimately strengthened our supply chain capabilities and is a testament to our adaptability.
spk04: As mentioned earlier, our primary goal is to make quality food as accessible as tap water
spk07: To achieve this, we focus on creating value for consumers instead of engaging in zero-sum games or prize wars with our peers. We continuously strive to improve the end-to-end efficiency of our supply chain and develop better, more cost-effective food products for the public. Our commitment to creating value for our customers remains steadfast. It's important to have a long-term perspective. The business of fresh groceries is challenging and time-consuming, and we're only at the beginning of our journey. So no matter what obstacles come our way, we're committed to seeing this journey through.
spk04: Thank you.
spk06: The next question comes from Robin with Daiwa. Please go ahead.
spk01: 谢谢管理层介绍我的提问。 我的问题是我记得去年底, 丁东买菜也运营了线下的生鲜奥菜店。 经过Q1这些奥菜店发展的状况如何, 有什么记得跟我们分享的认知和判断? I recall that Ding Dong had physical grocery outlets last year. Can you provide an update on their progress since Q1? Additionally, do you have any insights to share? Thank you.
spk04: Okay, thank you. We launched the new service model based on the change of the times. We found that China is entering the ageing society. The ageing people rely more on the offline shopping and care more about the cost. So in order to meet the ageing people's shopping needs, to provide the ageing people with healthy and delicious fresh food, we launched Shengxian Olai. We currently have 4 Shenzhen e-commerce stores. Each store is about 350 square meters. Now the single store is selling at more than 40,000 yuan. It is still on the rise. Shenzhen e-commerce stores, on the one hand, have expanded our consumer group, realized our original intention, to meet the needs of more consumers for a better life. On the other hand, it is also a manifestation of our supply chain capability. As long as the supply chain capability is strong, it can serve more consumer groups, serve more channels, and have greater growth space.
spk07: We have launched a new service model with these physical fresh grocery outlets to cater to the evolving times and also to meet the shopping needs of the elderly in China. We've observed that China is becoming an aging society and the elderly tend to prefer offline shopping and they value cost effectiveness more. Therefore, we've opened fresh grocery outlets to provide them with healthy and delicious fresh groceries right in their neighborhoods. Currently, we have four stores, each covering an area of about 350 square meters. The daily sales per store are more than 40,000 renminbi, and the sales are still increasing. These stores serve to expand our consumer groups, meet the needs of a broader range of consumers, and reflect our supply chain capabilities. With a robust supply chain, we can expand our reach, serve more customers, and fuel growth.
spk04: Thank you.
spk07: Thank you.
spk06: The next question comes from Jai Jing Chen with CICC. Please go ahead.
spk03: Hello, Mr. Chang. Congratulations on your good performance this quarter. I saw that the cash balance of this quarter compared to the end of last quarter was slightly reduced. I would like to ask what the main reason is. Hi, Mr. Liang. Congratulations for the outperforming results this quarter. Could you please tell us why the company's cash balance decreased compared to the last quarter? Thank you.
spk04: Thank you for your question.
spk07: Our CFO, Wang Song, is better suited to answer your question. I'll defer to him.
spk05: Thank you, Ms. Liang. As we introduced earlier, since the end of the first quarter, our cash and cash payments Thank you, Mr. Leung.
spk07: We want to update you on our financial status. As of the end of Q1, we had a balance of cash and cash equivalent short-term restricted cash and short-term investment amounting to 4.51 billion RMB. This is approximately 800 million RMB lower than our balance at the end of the previous quarter. 首先想强调的是,
spk05: This part of the reduction is not caused by business activities. It is the result of our continued initiative to regulate the structure of asset debt. In the first quarter, our competitive cash flow is already the third quarter's cash flow. In the first quarter, we usually have a lot of cost costs that are not related to the Spring Festival. In this case, we still achieved positive competitive cash flow in the first quarter. The cash flow is about 100 million yuan. At the same time, our scale and profits are also growing. We have become a company that continues to make profit and self-study.
spk07: First and foremost, the decrease in our balance sheet is not due to our operational activities. Instead, we took proactive measures to adjust our balance sheet structure. Despite costs and expenses incurred in the first quarter to stay open during the Chinese New Year, we still achieved a positive operating cash flow and a net inflow of around 100 million RMB. It's worth noting that this is our third consecutive quarter with a net inflow. Moreover, we're thrilled to report that our scale and profits are growing, and we've now become a continuously profit-making and self-generating enterprise. 运营资金充足的情况下,我们主动优化融资结构,提升资金运营的效率,用自由资金偿还了一部分短期借款,尤其是与银行合作的应付票据融资和供应链金融贷款。
spk05: During the quarter, we took the initiative to optimize our financing structure, improve capital efficiency, and use our own funds to repay some of our short-term borrowings. We worked with banks to repay the notes payable and reverse factoring arrangements.
spk07: which is supply chain finance loans, resulting in a decrease of 880 million RMB in our net short-term borrowings. After deducting these short-term borrowings, our actual self-owned fund balance increased by approximately 80 million RMB from the end of the previous quarter to a total of 2.09 billion RMB. 同时,为 了好服务我们的供应商实现行业上下游的供应,
spk05: In order to provide our partners with more support and support, we have been continuously optimizing the balance period since 2024. The turnover rate for the first quarter has increased by 2.6 days compared to the previous quarter, and by 7.9 days compared to the first quarter of 2023. After the main debt of the two companies, Qdao Short-Term Loan and InfoBank, our free funds have actually increased by 1.9 billion yuan compared to the previous quarter.
spk07: We've been actively working towards building a very strong relationship with our suppliers by providing them with more support and empowering them. As the original supplier's credit period is relatively short in the industry, we've further optimized the credit period since the start of 2024. This has yielded positive results. as seen in Q1, where our accounts payable turnover days accelerated by 2.6 days compared to the previous quarter and by 7.9 days compared to Q1 in 2023. Additionally, after deducting short-term borrowings and accounts payable, our own funds have increased by 190 million RMB compared to the end of the previous quarter.
spk05: To sum up, through a series of financial resources integrations, our operating cash flow has achieved a flow rate of about 100 million yuan. In summary, with a series of financial resource integrations, our operating cash recorded a net inflow of approximately 100 million RMB.
spk07: This, combined with our scale and profit growth, is a clear indication that our financial and capital structures are becoming more stable. As we continue to become financially healthier, we'll have access to more funds to support our growth throughout the year and the necessary capital expenditure to build new stations in Shanghai, Zhejiang, and Jiangsu regions.
spk06: Thank you. As a reminder, if you would like to ask a question, please press star, then 1 to be joined into the queue. To ask a question, please press star, then 1. As there are no further questions, I'd like to return the call to the management for closing remarks.
spk00: Thank you again for joining our call today. If you have any further questions, please feel free to contact us or request through our website. We look forward to speaking with everyone in our next earnings call. Have a good day.
spk06: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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