Dingdong(DDL) - 2023 Q4 - Annual Report

Filing Information SEC Filing Details This section outlines the Form 6-K filing details for November 2023, confirming the company's status as a foreign private issuer - Filing Type: Form 6-K for November 2023[1] - Annual Report Form: Form 20-F[1] Signature The report is officially signed by Changlin Liang, Director and Chief Executive Officer of Dingdong (Cayman) Limited, on November 17, 2023 - Signed by Changlin Liang, Director and Chief Executive Officer[2] - Date of Signature: November 17, 2023[2] Third Quarter 2023 Financial Results Announcement Overview Dingdong (Cayman) Limited announced its unaudited Q3 2023 financial results, reaffirming its position as a leading fresh grocery e-commerce company in China - Company: Dingdong (Cayman) Limited (NYSE: DDL)[3] - Business: Leading fresh grocery e-commerce company in China, leveraging advanced supply chain capabilities[3] - Report Scope: Unaudited financial results for the quarter ended September 30, 2023[3] Key Financial and Operational Highlights The company achieved GAAP net income of RMB 2.1 million and non-GAAP net income of RMB 15.5 million, marking its second GAAP profitability and fourth consecutive non-GAAP profitability, with GMV increasing 6.4% sequentially and positive operating cash flow Key Financial and Operational Metrics | Metric | Q3 2023 (RMB million) | Q3 2023 (US$ million) | Sequential Change | | :----- | :-------------------- | :-------------------- | :---------------- | | Net Income (GAAP) | 2.1 | 0.3 | Profit for another quarter since Q4 2022 | | Non-GAAP Net Income | 15.5 | 2.1 | Fourth consecutive quarter of profitability | | GMV | 5,665.4 | 776.5 | +6.4% (primarily due to +6.0% order volume, +0.5% AOV) | | Net Cash from Operating Activities | 130.1 | 17.8 | Positive inflow | Management Commentary CEO Changlin Liang emphasized sustained non-GAAP profitability and corporate adaptability, while Senior VP Song Wang highlighted sequential revenue and GMV growth, improved gross profit margin, and optimized expense ratios - CEO Changlin Liang reported Q3 non-GAAP net income of RMB 15.5 million with a 0.3% margin, marking the fourth consecutive quarter of non-GAAP profitability despite challenging macro-economic and competitive environments[4] - Senior VP Song Wang highlighted Q3 GMV of RMB 5.67 billion and revenue of RMB 5.14 billion, representing sequential increases of 6.4% and 6.2% respectively, driven by a 6.0% increase in order volume and a 0.5% increase in AOV[4] - Gross profit margin increased by 0.4 percentage points year-over-year to 30.4%, supported by optimized expense ratios and a positive operating cash inflow of RMB 130.1 million[4] Detailed Financial Performance Revenues Total revenues for Q3 2023 were RMB 5,139.7 million, a decrease from Q3 2022, primarily due to city/station withdrawals and a shift towards offline consumption post-COVID-19 Revenue Breakdown | Revenue Type | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change | | :----------- | :-------------------- | :-------------------- | :--------- | | Total Revenues | 5,139.7 | 5,942.5 | -13.5% | | Product Revenues | 5,082.5 | 5,872.4 | -13.5% | | Service Revenues | 57.2 | 70.1 | -18.4% | - Total revenues decreased primarily due to city and station withdrawals in 2022 and Q2 2023, alongside increased consumer interest in offline consumption post-COVID-19[5] - Order volumes increased by 6.0% sequentially, driven by higher monthly order frequency and rapid growth in Jiangsu and Zhejiang provinces[5] Operating Costs and Expenses Total operating costs and expenses decreased by 17.6% year-over-year to RMB 5,163.7 million, with significant reductions across all categories, reflecting improved efficiency Operating Costs and Expenses Breakdown | Expense Category | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change | As % of Revenues (Q3 2023) | As % of Revenues (Q3 2022) | | :--------------- | :-------------------- | :-------------------- | :--------- | :------------------------- | :------------------------- | | Total Operating Costs & Expenses | 5,163.7 | 6,267.8 | -17.6% | - | - | | Cost of Goods Sold | 3,577.5 | 4,157.0 | -13.9% | 69.6% | 70.0% | | Fulfillment Expenses | 1,199.3 | 1,595.3 | -24.8% | 23.3% | 26.8% | | Sales and Marketing Expenses | 98.2 | 127.2 | -22.8% | - | - | | General and Administrative Expenses | 89.3 | 133.3 | -33.0% | - | - | | Product Development Expenses | 199.3 | 255.0 | -21.8% | - | - | - Gross margin increased slightly to 30.4% from 30.0% in Q3 2022[6] - Fulfillment expenses as a percentage of total revenues decreased to 23.3% from 26.8%, indicating continuous operational improvement[7] - Reductions in sales & marketing, general & administrative, and product development expenses resulted from city withdrawals, improved staff efficiency, and R&D human resources optimization[7][8] Profitability Metrics The company achieved a GAAP net income of RMB 2.1 million, a significant improvement from a net loss of RMB 344.9 million in Q3 2022, with non-GAAP net income reaching RMB 15.5 million Profitability Overview | Metric | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Loss from Operations | (8.6) | (353.8) | +97.6% (reduction in loss) | | Net Income (GAAP) | 2.1 | (344.9) | Turnaround to profit | | Non-GAAP Net Income | 15.5 | (285.2) | Turnaround to profit | | Non-GAAP Net Income Margin | 0.3% | -4.8% | +5.1 percentage points | Per Share Data and Cash Position Basic and diluted net loss per share improved to RMB 0.00, with non-GAAP net income per share at RMB 0.04, while cash and short-term investments decreased to RMB 5,631.8 million Per Share Data | Metric | Q3 2023 (RMB) | Q3 2022 (RMB) | YoY Change | | :----- | :------------ | :------------ | :--------- | | Basic & Diluted Net Loss Per Share | (0.00) | (1.07) | Significant improvement | | Non-GAAP Net Income Per Share (Basic & Diluted) | 0.04 | (0.89) | Turnaround to profit | Cash and Investments | Metric | As of Sep 30, 2023 (RMB million) | As of Dec 31, 2022 (RMB million) | Change | | :----- | :------------------------------- | :------------------------------- | :----- | | Cash & Cash Equivalents & Short-term Investments | 5,631.8 | 6,493.0 | -13.26% | Corporate Information Conference Call Information Dingdong held an earnings conference call on November 16, 2023, to discuss Q3 2023 financial results, with replay and webcast access available - Conference call held on November 16, 2023, at 7:00 A.M. Eastern Time[10] - Replay accessible through November 23, 2023[11] - Live and archived webcast available at **https://ir.100.me**[12](index=12&type=chunk) About Dingdong (Cayman) Limited Dingdong is a leading fresh grocery e-commerce company in China, utilizing a self-operated fulfillment grid to provide fresh produce and private label products - Business Model: Leading fresh grocery e-commerce in China, operating with a self-operated frontline fulfillment grid[13] - Product Offering: Direct provision of fresh produce, prepared food, and other food products[13] - Strategic Focus: Emphasizes private label products developed through food innovation, often produced at Dingdong plants for quality and efficiency[13] Use of Non-GAAP Financial Measures The company uses non-GAAP measures, excluding share-based compensation, to evaluate operating results and highlight underlying business trends, acknowledging their limitations - Non-GAAP measures include non-GAAP net (loss)/income, non-GAAP net (loss)/income margin, non-GAAP net (loss)/income attributable to ordinary shareholders, and non-GAAP net (loss)/income per share[14] - Purpose: To identify underlying business trends by excluding non-cash share-based compensation expenses[14] - Limitations: Not defined under U.S. GAAP, not a substitute for GAAP measures, and potentially not comparable with industry peers[15] Exchange Rate Information The report translates RMB amounts to U.S. dollars at a rate of RMB 7.2960 to US$ 1.00, based on the Federal Reserve Board's H.10 release on September 29, 2023 - Exchange Rate: RMB 7.2960 to US$ 1.00[17] - Date of Rate: September 29, 2023[17] - Source: H.10 statistical release of the Federal Reserve Board[17] Safe Harbor Statement This section contains forward-looking statements subject to risks and uncertainties under the U.S. Private Securities Litigation Reform Act of 1995, with no duty to update - Contains forward-looking statements under the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995[18] - Potential factors causing actual results to differ include business development, financial conditions, market outlook, demand, relationships, competition, government policies, and general economic conditions[18] - The company undertakes no duty to update such information, except as required by applicable law[18] Investor Relations Contact Investors can direct inquiries to Dingdong Fresh via the provided email address - Investor Contact Email: ir@100.me[19] Unaudited Condensed Consolidated Financial Statements Balance Sheets As of September 30, 2023, total assets decreased to RMB 8,032.8 million, primarily due to reductions in current assets, while total liabilities also decreased and shareholders' equity increased Condensed Consolidated Balance Sheets | Balance Sheet Item | As of Sep 30, 2023 (RMB million) | As of Dec 31, 2022 (RMB million) | Change (RMB million) | | :----------------- | :------------------------------- | :------------------------------- | :------------------- | | Total Assets | 8,032.75 | 9,381.91 | (1,349.16) | | Current Assets | 6,509.05 | 7,496.25 | (987.20) | | Cash and cash equivalents | 1,296.56 | 1,856.19 | (559.63) | | Short-term investments | 4,335.27 | 4,636.77 | (301.50) | | Total Liabilities | 7,524.10 | 8,964.24 | (1,440.14) | | Total Shareholders' Equity | 394.80 | 310.18 | 84.62 | Statements of Comprehensive Loss For Q3 2023, total revenues were RMB 5,139.7 million, with a net income of RMB 2.1 million, a significant improvement from a net loss of RMB 344.9 million in the prior year Condensed Consolidated Statements of Comprehensive Loss | Income Statement Item | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change (RMB million) | | :-------------------- | :-------------------- | :-------------------- | :----------------------- | | Total Revenues | 5,139.68 | 5,942.53 | (802.85) | | Total Operating Costs and Expenses | (5,163.67) | (6,267.81) | 1,104.14 (reduction) | | Loss from Operations | (8.63) | (353.77) | 345.14 (reduction in loss) | | Net (Loss) / Income | 2.10 | (344.85) | 346.95 (turnaround to profit) | | Basic and Diluted Net Loss Per Share | (0.00) | (1.07) | Improvement | Statements of Cash Flows In Q3 2023, net cash generated from operating activities was RMB 130.1 million, a positive shift from a net cash used of RMB 407.5 million in Q3 2022 Condensed Consolidated Statements of Cash Flows | Cash Flow Item | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change (RMB million) | | :------------- | :-------------------- | :-------------------- | :----------------------- | | Net cash (used in) / generated from operating activities | 130.11 | (407.50) | 537.61 (turnaround to inflow) | | Net cash used in investing activities | (380.25) | (362.73) | (17.52) (increased outflow) | | Net cash generated from financing activities | 18.45 | 158.76 | (140.31) (decreased inflow) | | Net decrease in cash and cash equivalents and restricted cash | (232.47) | (595.30) | 362.83 (reduced decrease) | Unaudited Reconciliation of GAAP and Non-GAAP Results Non-GAAP Reconciliation Non-GAAP net income for Q3 2023 was RMB 15.5 million, after adding back RMB 13.4 million in share-based compensation expenses to the GAAP net income of RMB 2.1 million Reconciliation of GAAP to Non-GAAP Financial Measures | Metric | Q3 2023 (RMB million) | Q3 2022 (RMB million) | YoY Change (RMB million) | | :----- | :-------------------- | :-------------------- | :----------------------- | | Net (Loss) / Income (GAAP) | 2.10 | (344.85) | 346.95 | | Add: Share-based compensation expenses | 13.41 | 59.68 | (46.27) | | Non-GAAP Net (Loss) / Income | 15.51 | (285.17) | 300.68 | | Non-GAAP Net (Loss) / Income Margin | 0.3% | (4.8%) | +5.1 percentage points | | Non-GAAP Net (Loss) / Income Per Share (Basic & Diluted) | 0.04 | (0.89) | Improvement | - Share-based compensation expenses were recognized across fulfillment, sales and marketing, product development, and general and administrative expenses[34]