Dingdong (Cayman) Ltd ADR

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Ding Dong Limited Fourth 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 Jang, Director of Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to Ding Dong's fourth 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 fourth quarter 2024 financial results on our IR website at ir.100.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 earliest 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 most thoroughly explained and reconciled to the most comparable measures reported in our earnings release and filings with the SEC. I will now turn the call to our first speaker today, the founder and CEO of Dingdong, Ms. Talian.

Thank you, investors, analysts, and friends of Dingdong Maicai. Welcome to the Q4 financial analysis meeting of Dingdong Maicai in 2024. By Q4 of 2024, Dingdong Maicai has achieved profit under the non-GAAP standard for nine consecutive seasons, and has achieved profit under the GAAP standard for four consecutive seasons. Income has also achieved the same growth for four consecutive seasons. Hello, everyone.

Thank you for joining the Dengdao earnings call for Q4 2024. 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 2024 performance, followed by an analysis of our operating data, and conclude with a brief outlook on future development and performance.

In Q4 of 2024, Jindong Maicai achieved a GDP of 65.5 billion yuan, with a net growth of 18.4%. The income of 59.1 billion yuan is increased by 18.3%. The net profit of 1.2 billion yuan is increased by 0.16 billion yuan. The net profit rate is increased by 1.7%. The net profit of 0.9 billion yuan is increased by 1.6%.

In Q4 2024, Ding Dong reported a GMV of 6.55 billion RMB, an 18.4% year-over-year increase. The company's revenue grew to 5.91 billion RMB, an 18.3% year-over-year increase. Under non-GAAP standards, Ding Dong achieved a net profit of 120 million RMB, more than six times the 16 million RMB reported in Q4 2023. 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 90 million RMB, a turnaround from a loss of 4.39 million RMB in Q4 2023, leading to a net profit margin of 1.6%.

. . . . .

For the full year of 2024, Dingdong reported a GMV of 25.56 billion RMB, year-over-year increase of 16.3%. Revenue reached 23.07 billion RMB, a 15.5% increase compared to the previous year. Under the non-GAAP standard, Dingdong reported a net profit of 420 million RMB, marking an increase of more than eight times compared to 45 million RMB in the 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, Dingdong reported a net profit of 300 million RMB, a significant turnaround from a loss of 91 million RMB in the same period last year. resulting in a net profit margin of 1.3%.

Q4月均下单用户数约774万,同比提升16.1%,用户月均交易转化率为63.6%,同比提升4.7个百分点, The user's monthly up value increased by 3.7% in the same period as last year. As the scale grows faster, the user's annuality also continues to increase. Q4, the user's monthly downfall was 4.2 times, which increased by 3%. Among them, the member's monthly downfall was 7 times, which increased by 4.5%. This continued the strong performance of Q3. We see that our user group continues to show high flow. Directed 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 transacting users reached approximately 7.74 million, 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 user scale continued 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 continues 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 enhancements, improved user experience, and data-driven strategies.

On the other hand, in the area, the growth rate in Jiangzhou is still faster, which is the core source of our growth. This year, the GDP in the Shanghai area increased by 16.8%, and the GDP in Jiangzhou area increased by more than 20%. The growth of J&V increased by more than 30% in 13 cities in the Jiangzhe-Hu area. The increase in the Jiangzhe-Hu area in this quarter is the highest in the whole year except Q3. We continue to accelerate the infiltration of the warehouse network in the Jiangzhe-Hu area. Then Q4, the company opened 130 new warehouses all year round, of which Q4 opened 50 new warehouses. This is more than what we did in Q3. Regarding regional performance, Jiangsu, Zhejiang, 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 16.8% year-over-year, while in Jiangsu and Zhejiang it grew more than 20% year-over-year. Notably, 13 cities within the Jiangsu, Zhejiang, and Shanghai regions 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. We accelerated the development of our frontline fulfillment station network in these 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, improve operational efficiency, and establish a solid foundation for 2025.

I would like to remind everyone of the performance of the spring harvest. During the first six months of the first month of the first month of the first month of the first month of the first month of the first month of the first month of the first month of the first month of

I would like to update you on Dingdong's performance during the Lunar New Year. From New Year's Eve to the sixth day of the first lunar month, the national 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, premixed alcoholic beverages, and traditional Lunar New Year's dishes, which saw a growth of 50% and even more than 120% year-over-year in some cases. These standout products are a key driving force behind Daino's continued growth.

We have been thinking about our business model and competition. In Duguan, Haosheng, I would like to introduce you to the development and creation of good products. First, we develop good products for the purpose of creating value for users by matching or digging up the real needs of good users. Second, we ensure that the products we develop have good and stable quality. We can't develop good products at a time. What we need to do is to pay attention to the feedback of users, and to make the products more and more perfect. Third, we develop products that are differentiated and of low structural price. Fourth, tell a good product story. Our products have good packaging, good quality, and good product stories. Fifth, be interesting and have a soul. Have a clear price proposition. If we want to attract valuable users, we must focus on having good products and good services. We must first let ourselves become an interesting soul. Build a garden that can attract butterflies. We've been reflecting on our business model and the competitive landscape.

Among the four key attributes 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 products 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 they don't customize 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 aspiration.

Finally, I would like to update everyone on the outlook for Q1 in 2025. We expect that Q1 in 2025 will be able to maintain a scale of growth and continue to achieve non-GAAP-like profits. However, the competition we are facing in 2025 will be more intense. We are also in a transition from pursuing short-term growth and profits to pursuing qualitative and long-term competitiveness. This may have some impact on us, but we are full of confidence in the long term.

Lastly, let's turn to our outlook for Q1 of 2025. We expect to achieve year-over-year scale growth and maintain non-gap profitability in the first quarter of 2025. However, in 2025, the competition we face will be more intense, and we're also in the process of transitioning 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.

我的发言到此结束,谢谢大家。下面请公司CFO王松介绍一下公司财务情况。 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.

谢谢两总,大家好。在向大家介绍我们的财务情况之前,先说明一下, 我们的所有数字都是以人民币为单位的。 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.

2024年,金钟买菜实现了高质量增长和全面盈利。 全年GNV 255.6亿元,收入230.7亿元, 同比分别增长16.3%和15.5%。 Of which, 22 cities' GNV has received a large double-digit growth. At the same time, our annual profit has also reached the highest level in history. Under the GAAP standard, the annual net profit rate of 1.8% has increased by 1.6%. The net profit of 4.2 billion yuan has increased by 8.3 times. Under the GAAP standard, the annual profit rate of 1.3% has increased by 1.8%. The net profit of 3 billion yuan In 2024, Dingdong achieved significant growth and profitability.

The annual GMV reached 25.56 billion RMB. while revenue amounted to 23.07 billion RMB, reflecting year-over-year increases of 16.3% and 15.5% respectively. 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 420 million RMB, an impressive 8.3-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 300 million RMB. Furthermore, our strong growth is evident in our cash flow. The full-year net operating cash inflow reached a historic high of 930 million RMB, a significant increase of 1.16 billion RMB year-over-year. For the first time in our history, the full-year free cash flow turned positive, amounting to 830 million RMB.

再看初始,电动买菜实现营收59.1亿元,同底增长18.3%, In Q4, Tingo reported revenue of 5.91 billion RMB and an 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 ninth consecutive quarter, while GAAP net profit margin stood at 1.6%, maintaining four straight quarters of profitability. His operating net cash inflow was 190 million RMB, resulting in positive net cash inflow for six consecutive quarters.

Through high-quality growth and continuous profit, we have verified the model of the pre-market fresh e-commerce, as well as our combat capability and rapid response capability. As the consumer industry moves towards the era of buying and selling, China's retail is undergoing structural changes. High-efficiency industries will continue to replace low-efficiency industries. Opportunities and challenges come together. The success of the past has built up strong infrastructure and valuable experience for us. In this context, we are standing on a new starting point. JDM will continue to work hard

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 response capabilities. As the consumer industry transitions to a buyer-centric era, 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 find ourselves at a new starting point. Dandong will continue to tackle challenging tasks with a pragmatic approach, aiming to satisfy consumers with excellent products and services while establishing our own differentiated path through stable quality and supply capabilities.

接下来我们来看一下Q4的具体财务情况。 Q4的营收为59.1亿元,同比增长18.3%。 GMA为65.5亿元,同比增长了18.4%。 我们会坚定地做好商品,用好商品吸引消费者, Let's break down the results for Q4.

Revenue reached 5.91 billion RMB, an increase of 18.3% compared to the previous year. Meanwhile, GMV totaled 6.55 billion RMB, an 18.4% year-over-year rise. We remained committed to producing high-quality products that attract 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 MAUs to monthly transacting users also hit a record high in recent years, averaging 63.6%, an 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.

出售的盲利率为30.2% We will increase our investment in the supply chain by expanding the supply chain to improve the efficiency of the entire industry chain. The original value ratio of fresh goods was steadily increased last year. In 2014, it was stable at 85%. It benefits from our ability to predict and operate the trend. We can accurately match the needs of users, improve the cycle efficiency of goods, and reduce the ability to balance. In 2014, the turnover of goods within 28 days can be collected on an average of 2.3 days. First profit margin 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 with a sealable life of less than 28 days was 2.3 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.

入市的履约费用率为21.7%,同比优化了1.8个百分点。 二十年履约费用率的优化主要来自于 仓军单量的大幅提升和运营效率的提升。 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 34 minutes.

Q4的营销费用率为2.3%,同比提升了0.2个百分点。未来,我们会持续加大对好商品在新制传播上的投入力度,

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 we'll continue to enhance the efficiency of our advertising conversion.

The combined management and R&D expense accounted for 0.5 percentage points of revenue,

Reflecting the larger-scale effect, we will continue to invest in food R&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.

2020 Q4, we achieved a 2% growth rate of 1.2 billion yuan. Non-GAAP net profit margin was 2%, resulting in a net profit of 120 million RMB.

Additionally, GAAP net profit margin was 1.6%, which amounted to a net profit of 90 million RMB.

截至Q4末,现金及现金等加入。 . . . . . As of the end of Q4, the total balance of cash and cash equivalent short-term restricted funds and short-term investment stood at 4.45 billion RMB.

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 2.85 billion RMB, reflecting an increase of 840 million RMB from the end of 2023. Furthermore, to strengthen long-term partnerships and maintain our services to upstream suppliers, we have shortened the accounts payable period for the entire year of 2024 by 8.6 days year over year, bringing it down to 35 days.

This concludes my prepared remarks.

Operator, we can now start the question and answer session.

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. When asking a question, please state it in Chinese first and then repeat it in English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster. The first question today comes from Thomas Zhang with Jefferies. Please go ahead.

感谢管理员接受我的提问。 首先恭喜公司这个季度取得优秀的成绩。 然后想问一下公司就之前介绍了好商品对于公司的重要性, 然后以及我们开发好商品的思路。 想问一下如果从供应商的角度, 我们这边是否有供应商合作开发好商品的案例可以给我们介绍? So I trust myself. Thanks, management, for taking my question. And first, congratulations for the excellent result this quarter. And I would like to ask about the importance of producing quality products for the company and also the strategy implemented for developing high-quality items. So could you provide examples of how you have collaborated with suppliers to create these quality products? Thanks.

Thank you for your question.

In Q4, we continue to achieve strong results compared to the previous quarter, and the ongoing profitability has given us greater confidence to try and make changes.

In the face of a wide-ranging market and the daily and daily demand for diversification and constant change, we even know that the power of self-reliance alone is far from enough. We are looking forward to more cooperative partners to work together to create greater value for consumers. We are no longer satisfied with the simple two-way relationship between traditional suppliers and retail channels, but we hope to break this model and achieve deep cooperation behind the scenes, and truly become a solid backing for each other. In the business model, we will further open up some core products and operate with cooperative partners. In a vast and ever-evolving market with diverse consumer demands,

We recognize that our own strengths are not enough to succeed. Therefore, we're eager to collaborate with like-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.

丁东商品中心和供应商的不断的沟通反馈,战略共享, For example, a professional breeding cooperative in Xinjiang has been partnering with Dingdong since 2019 to supply fresh chickens.

This collaboration has flourished through ongoing communication, feedback, strategic alignment, and professional cooperation between Vino's product center and its suppliers. Their efforts have spanned 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 fresh free-range chicken reached 40 million RMB, 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. Thank you.

The next question comes from Wu Hongwei with CICC. Please go ahead.

Thank you, Guanli, for accepting my question. Thanks to management for taking my question. Congratulations to the companies for good quarterly results. I have a follow-up question. Does the company have examples of developing strong products using its own supply chain? given that it has its own factory for food research, development, production, and processing. Thanks.

谢谢您的问题。 作为电动买菜的核心战略, 商品历史中是我们发展的首要驱动力, 致力于为消费者持续打造独具特色的优质商品体系, 为实现这些目标, 我们构建完整的自主生产研发体系, Thank you for your question.

Dingdong's core strategy has always centered around product development capabilities, which serves as the driving force behind our development. We're 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&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 GUI factory has been transitioning from a supply chain company to a product brand company.

For example, we have our own brand, Liang Xin Jiang Ren, in the area of specialties, food, food and taste, traditional and traditional products, to develop and review, so that the products have emotional value. In addition, the whole product development is based on consumption, medium consumption. In the middle, through the development of product design, recipe review, factory neutralization, and mass production,

For example, a private label carefully develops and recreates regional specialties, childhood 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 closed loop in the entire process and continuously iterate products enhances the dynamics of this brand's innovation.

In addition to selling our products in our free trade channels, we can also sell our products in a broader and more direct competitive market environment. Our products are now being sold to more than 30 countries and regions abroad. In China, we have also sold our products through the Lianhua, Jindong Qixian, Huazhou and other K-channels. 我们致力于将我们的优质商品推向更广阔的舞台,让更多消费者能够感受到我们的用心和努力,实现大众对美好生活的向往是我们一直坚持奋斗的目标。 All products manufactured in our own factories are not only sold through our own 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 Lianhua, JD7 Fresh, and Huazhou. 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.

Thank you.

Thank you.

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 or request us 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.