The Zhitong Finance App learned that on the evening of May 13, Dingdong Grocery Shopping (DDL.US) released the performance report for the first quarter of 2024. According to the data, in the process of continuing to advance the “prioritize efficiency and balance scale” strategy, Dingdong Grocery Shopping achieved both GMV and profit increases in the current quarter through measures such as optimizing link efficiency and improving product competitiveness, and achieved profits under non-GAAP standards for six consecutive quarters. At the same time, it also achieved profit under GAAP standards once again during the quarter.

On the basis of the optimistic growth momentum, Dingdong Grocery Shopping also raised expectations for future profits and scale.

Achieving six consecutive quarters of non-GAAP profits, entering a new phase of growth in 2024

Specifically, Dingdong Grocery Shopping achieved GMV of 5.53 billion yuan in the quarter, an increase of 1.4% year on year; revenue of 5.02 billion yuan, up 0.5% year on year. The gross margin for the quarter was 30.6%, which continued to be at a reasonable and healthy level. Dingdong Grocery Shopping said it will continue to give back more to consumers and maintain price competitiveness by deepening the value brought by its commodity power.

Regarding the profit situation, Dingdong Grocery Shopping achieved a net profit margin of 0.8% under non-GAAP standards in the quarter, with a net profit of 41.482 million yuan, 6.8 times that of the same period last year; the net profit margin under GAAP standards was 0.2%, and net profit increased by 64.666 million yuan over the same period last year.

On the basis of the resumption of growth in the general market, some dominant regions of Dingdong Grocery Shopping also showed more impressive performance: the GMV in the Jiangsu and Zhejiang regions achieved 16.6% and 14.8% year-on-year growth, respectively, and continued to maintain overall profits. Shanghai GMV also achieved a 2.7% year-on-year increase in the quarter, while in March, which was less affected by the epidemic and more indicative during the same period, Shanghai alone had a year-on-year increase of nearly 10%.

It is worth noting that many business indicators of Dingdong Grocery Shopping also showed considerable growth this quarter. For example, with Dingdong Grocery Shopping's rational optimization of link efficiency, the penetration rate and the degree of refined operation in advantageous regions are constantly increasing. By the end of the first quarter, it had added 15 new front warehouses in Jiangsu and Zhejiang, and through mature replication experience, these new warehouses had quickly reached the average level in a short period of time.

In the quarter, the average daily order volume of Dingdong's pre-grocery warehouses increased 16.0% year over year; the GMV of stock stores increased 4.4% year over year. Meanwhile, the layout optimization of the sorting center warehouse network completed in the second half of last year will also continue to benefit the improvement of link operation efficiency this year.

Furthermore, the company's net operating cash flow for the quarter was 95 million yuan. As of the end of Q1, the balance of cash and cash equivalents, short-term restricted funds and short-term investments was $4.51 billion.

Overall, Dingdong Grocery Shopping has responded to questions about viability from the market and has steadily begun a new stage of higher quality growth.

Product strength has been verified once again, and supply chain capacity is required to grow in the future

In addition to the role played by improving link efficiency, the increase in corresponding performance indicators is actually the result of continuous improvement in product capacity. In this quarter, Dingdong Grocery Shopping focused on the development of fresh food categories and casual food. As it continues to expand its product range and expand the scale of direct procurement and in-house production, it explores growth methods for “opportunity categories.” For example, in this quarter, sales of categories including fruit, dairy, alcohol, leisure department stores, and bakery exceeded 100 million yuan. In March, the fruit category increased by more than 14% year on year; in addition, sales of the four categories of fresh beef, organic vegetables, black pork, and chilled aquatic products exceeded 400 million yuan, an increase of about 40% year on year.

In addition, Dingdong Grocery Shopping's product capabilities are also being further verified in the market. For example, in addition to its own channels, Dingdong Grocery Shopping products have also entered more external channels and markets. Obviously, this allows more consumers to know and try Dingdong Grocery Shopping products, achieve more exposure, and influence the mentality of more users.

Next, it is expected that Dingdong Grocery Shopping will continue to increase the scale in terms of link efficiency and product and service quality in a two-pronged manner. Its executives also revealed at the results conference that this year they will continue to increase their efforts to open positions in Jiangsu, Zhejiang, and Shanghai regions, increase their coverage density in advantageous regions, and further increase market penetration. Furthermore, at the product level, we will continue to focus on the “eating scene” to meet the needs of users in more diverse life scenarios, continue to strengthen the product strength of our own brands, and continue to provide users with better quality products.

It can be said that Dingdong Grocery Shopping is comprehensively forming advanced supply chain capabilities in the industry through a complete link of “source procurement—production processing—warehousing—fulfillment and distribution”, combined with strict quality control standards and self-developed Chinese and Taiwanese management systems to ensure the stability of product supply, while improving end-to-end efficiency and gross margin levels, and ultimately helping the company achieve scale growth.

Liang Changlin, founder and CEO of Dingdong Grocery Shopping, said at the performance conference that for the fresh food industry, the traditional principle of obtaining scale through low prices and then reducing procurement prices and operating costs through scale has now failed. What Dingdong Grocery Shopping is doing is continuously improving end-to-end efficiency, improving supply chain capabilities, and seeking profit and competitiveness from the supply chain. Ultimately, by improving supply chain capabilities to serve more consumers, scale growth can be achieved.

And the advantages of Dingdong Grocery Shopping's current supply chain capabilities have also been directly reflected in more performance figures. Its executives also revealed at the performance meeting that during the “May 1st” Labor Day period that just passed, GMV still increased 17% year over year when there was a lot of consumer travel and the number of visitors sent from Jiangsu, Zhejiang, and Shanghai increased year-on-year. Looking at the subregions, the Jiangsu, Zhejiang and Shanghai regions grew by 24% year on year, and the Beijing region increased by 5% year on year.

Dingdong Grocery Shopping has also raised profit and scale expectations: net profit and scale are expected to increase significantly this year and in the second quarter, and non-GAAP and GAAP profits will be achieved in both the second quarter and the whole year.