Dpc Dash Ltd

Ladies and gentlemen, welcome to DPC-Limited Full Year 2025 Earnings Conference Call. All participants will be in listen-only mode during management's prepared remarks, and there will be a question-and-answer session to follow. Today's conference call will be recorded. At this time, I would like to turn the call over to Kathy Zong, IR Director of DPC-DASH, who will share the process for today's call and provide some important disclosures. Please go ahead, ma'am.

Thank you, Operator. Hello, everyone, and thank you for joining us on today's call. Again, as a reminder, you are all currently on mute. We will open up the floor during Q&A session after management's prepared remarks. We will try to answer as many questions as time allows. Today, you will hear from Eileen Wang, Executive Director and CEO of DPC-DASH, Helen Wu, CFO of DPC-DASH, and Michael Xu, CPO of DPC-DASH. Eileen will provide insights into company's overall performance and share recent developments, and Helen will go a bit deeper into the financial results. The management team will address your questions after their remarks. Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable security laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical facts, including but not limited to statements about the company's beliefs, plans, and expectations are forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the Hong Kong Stock Exchange. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcement and annual report to be published in accordance with the rules governing the listing of securities on the Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures. All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Eileen Wong, Executive Director and CEO of DPC Dash. Eileen, please go ahead.

Hello everyone, thank you for joining us today as we reveal the BC Dash Limits results for the full year of 2025. Domino's Pizza Inc. stands as one of the world's largest pizza companies, operating more than 22,100 stores in over 90 markets as of December 31, 2025. As their exclusive master franchisee in mainland China, Hong Kong SAR and Macau SAR, We continue to capitalize on China's underpenetrated pizza market through our proven 4D strategy, development, delicious pizza value, delivery, and digital. In 2025, we continue our strong growth trajectory, generating total revenue of RMB 5.38 billion, a 24.8% increase compared with 2024, fueled by 307 net new store openings and expanding our store base to 1,315 across 60 cities. We have consistently delivered revenue growth above 20% since 2020, reflecting both the effective execution of our growth strategy and the compelling potential of Chinese KSR market. As of December 31, 2025, we stood as the third-largest international market in Domino's global system by number of stores. Our profitability remains strong at both the group and store levels. Store-level EBITDA increased 20.4% year-on-year to RMB1 billion, with a margin of 18.6% compared to 19.3% in 2024. Store-level operating profit grew 18.5% to RMB739.7 million, with a margin of 13.7%. compared with 14.5% a year earlier. The modest margin compression at the store level was largely driven by incremental investments to support our ongoing network and market share expansion and temporary increased delivery-related costs due to aggregator platform dynamics. These incremental store-level investments were more than offset by sustained corporate efficiency gains. At the group level, adjacent EBITDA rose 28.2% to RMB 634.6 million, with margin expanding to 11.8%. from 11.5%, adjusted net profit grew 43.3% to RMB 187.9 million, with margin improving to 3.5% from 3.0% in 2024, and the reported profit attributable to owners of the company more than doubled to RMB 141.5%. Together, these results underscore the operating leverage in our model and our ability to enhance profitability while scaling rapidly across mainland China. Let me now walk through the key drivers of the performance along our 4D pillars. On development, we continue to follow a disciplined expansion strategy, strategically deepening our penetration in existing cities and broadening our reach into new markets. During 2025, we added a net 307 stores and entered 21 new cities. bringing our total city coverage to 60, further extending our presence into high potential regions across China. As of year end of 2025, we operated 517 stores in Tianwen cities and 798 stores in Nan Tianwen cities, compared with 509 and 499 respectively at the end of 2024. Our evolving revenue mix reflects this disciplined execution of the strategy. In our two-room city markets, including Beijing, Shanghai, Shenzhen, and Guangzhou, revenue grew 5.2% year-over-year, from RMB 2.11 billion in 2024 to RMB 2.22 billion in 2025, driven primarily by positive same-store sales growth and slightly helped by incremental store openings in 2025. This performance reflects strong customer loyalty and the sustained strength of the brand. Tailwind Cities contributed 41.2% of total revenue in 2025 compared with 48.8% in 2024. In non-tier city markets, revenue grew 43.4% year-over-year from RMB 2.21 billion to RMB 3.17 billion, mainly due to 299 net new stores and strong performance in newly entered markets. As a result, non-tier one markets contributed 58.8% of total revenue, up from 51.2% in 2024. This mixed shift underlies how non-T1 cities have become our main growth engine, while T1 cities provide a resilient, high-quality base with proven unit economics. We also continue to observe strong performance in our new stores in new gross markets, particularly those entered since the 2024 December holiday season. In December 2024, we opened 6 new cities. During 2025, we entered another 21 new cities, and in total opened 111 stores across these 27 markets during the year. These 111 stores delivered average daily sales of RMB 26,849 during the period, with an actual or expected average cash payback period of about 12 months. This is ahead of our historical averages and clearly demonstrates the attractive unit economics and capital efficiency of our development model. Our momentum also further accelerated in Domino's global sales rankings. As of January 31, 2026, our company held all of the top 50 positions for the first 30-day sales across Domino's global network. In addition to the global request set by our first store in Shenyang in the first half of 2025, several new stores opened in the second half, including our first stores in Xuzhou, Handan, and Wuhan Haotei. also entered the global top 50 for the first 30-day sales, demonstrating strong brand momentum and demand in newly entered markets. Both group same-store sales growth and average daily sales per store moved in the same direction in 2025, reflecting the same underlying evolution in our post-December 2022 markets. Group SSG was an extra 1.5% for the year, in line with the modest 5.3% year-over-year decrease in average daily sales per store to RMB 12,428 in 2025. Such evolution in the post-December 2022 markets was a result of our sales record-setting stores gradually spreading sales to other stores, amid increasing store counts in these cities as we look to capture more market share. This has significantly raised the prior year comparison base and created near-term pressure on both same-store sales and average daily sales per store. Importantly, our fundamentals behind these metrics remain strong. Average daily sales in the post-December 2022 markets continue to be at a solid level and above our overall average, contributing positively to profitability and reinforcing the scalability of our model. If we exclude the stores opened in these post-December 2022 markets, group same-store sales remain positive for the full year. Our T1 markets delivered positive simple sales for the year and also for the first half and second half of 2025, and our pre-December 2022 markets taken together also delivered positive simple sales in 2025 and in each half-year period, despite the elevated sales space built over the past few years. This resilience underscores the strengths of our core business and reinforces our confidence in our long-term growth trajectory. Turning to delicious pizza at value, we further enhanced our menu and value propositions through new product launches and upgrades, which supported healthy traffic in both Tier 1 and Tier 1 markets. In 2025, we launched many popular new products, such as Sicilian-inspired beef and bamboo shoot pizza, the Tuscany-inspired cheese salmon pizza, the Madrid-inspired beef and shrimp pizza, and the cocoa volcano crust. These localized and globally-inspired offerings resonated strongly with consumers across regions and supported positive seemso sales in arterial markets and pre-December 2022 markets, even within a soft-to-consumption environment and highly competitive landscape. We also continue to pair product innovation with compelling value-for-money campaigns and smart promotions tailored to local preferences and locations. This combination of innovation and value helped us attract 15.4 million new customers over the past 12 months and deepen relationships with existing consumers, underpinning both our revenue growth and resilience of our sales performance in older markets. On delivery, we maintain our high service standards and continue to uphold our well-known 30-minute delivery promise. For the full year, our overall delivery on time rate remained above 93% of all delivery orders. In tier 1 cities, delivery penetration increased meaningfully from 70.7% of sales in 2024 to 76.2% in 2025. This meaningful increase was supported by the ongoing consumer adoption of food delivery, amplified by the near-term competitive dynamics among aggregated platforms. while our reliable 30-minute service further strengthens consumer preference for our efficient delivery proposition. We believe the aggregated platform activities bring in high volume of new customers, and we, as a delivery expert, will benefit from the increased delivery penetration in the longer term. We're still in the early stage of realizing our full delivery potential in then-Tierman markets. As our footprint increases in these cities, we're rolling out delivery services in a targeted, systematic way, balancing service quality with capacity and cost efficiency. As of December 2025, delivery services are available across nearly 76% of our existing city footprint, and we're excited to provide our delivery expert service to the customers in more markets as we expand the market share. Digital remains a key competitive advantage for us. Our loyalty program reached 35.6 million members as of December 31, 2025, up from 24.5 million a year earlier. Rapid store network expansion coupled with strong digital adoption has enabled us to broaden our consumer base significantly while deepening our understanding of consumer preferences. During the year, we demonstrated resilient profitability at the store level. Store level EBITDA increased by 20.4% year-over-year, with the store level EBITDA margin moderating slightly from 19.3% to 18.6%. Store-level operating profit increased by 18.5% year-over-year, with the cost-bounding margin at 13.7% compared with 14.5% in 2024. These movements reflect our strategic decision to invest in network and market share expansion and temporary delivery-related cost increase amid the aggregator platform dynamics. At the same time, we continue to drive efficiencies. Take one example. Cash-based compensation for the corporate-level staff decreased from 5.7% to 5.1% of revenue as we improved operating efficiency and benefited from scale at headquarters, while share-based compensation expenses declined from RMB 76 million to RMB 46 million and from 1.8% to 0.9% of revenue. We received quite some awards within the Domino's global system and externally in 2025. Among them, on December 19, 2025, we were named a 2025 Best Employer by Mercer for the fourth consecutive year and received the Star Employee Award for the first time. This recognition reflects our focus on the people culture. Looking ahead, we will continue to expand with discipline and confidence. In 2026, we plan to open 350 stores. On January 1, 2026, we open 62 stores in 46 cities on a single day. the highest daily opening record in our history. As of March 20, 2026, we have opened 140 new stores with 14 stores under construction and 65 sites signed, putting us well on track to deliver our full-year target. With further strength in brand equity and rising brand momentum, we will continue to execute our go deeper and go broader network expansion strategy entering more new cities while further penetrating existing markets. At the same time, we look to further improve cost efficiency as we continue to scale. Our strong execution track record, attractive store economics, and operation efficiency enable us to deliver robust performances in a dynamic and competitive environment. We're confident in our ability to further enhance our market leadership and drive sustainable long-term value creation for our shareholders. With that, I'll hand the call over to Helen Wu, our CFO, to discuss the financial details.