Dingdong (DDL) 1 Sep 232023 Q2 Earnings call transcript

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Dingdong Limited Second Quarter 2023 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 Zheng, Director of Investor Relations. sir. ahead, go Please

everyone, With to Changlin us CEO; Founder Hello, XXXX Liang, second earnings and Mr. call. today and and you. Dingdong's welcome quarter our Thank are Mr.

Wang, Song Vice Senior President. our

IR to our XXXX on You can website second ir.XXX.me. refer at financial quarter results our

website after also replay its IR conclusion. can becomes available call on of You it this a access our a when few hours

and call, For question-and-answer provide then first, we will remarks a will management today's session. prepared hosting be their

like to statement would you to press Before which harbor I we to refer our safe in release, continue, earnings our this also applies call.

As which following please release note management's are SEC. and reconciled more will discuss most terms, that the are making the remarks will in RMB thoroughly measures earnings in explained stated we our forward-looking the reported in prepared and and to be today, all comparable with measures statements, filings we numbers non-GAAP

to CEO the turn today, our the speaker will Dingdong, I of call now first the Mr. and Founder Liang.

[Interpreted] Language] [Foreign

everyone a and providing by XXXX. to start earnings quarter our I'll -- by, second providing I'll XXXX stand overview performance call. in by of operating QX Hello brief Dingdong’s welcome

X.X%, operating flow has our This consecutive positive. which cash were of three second we basis. net strong billion our we scale a QX with first RMBX.XX profitability. efficiency In to profit same we time, one-time the were quarters in At the excluding in due with of steadfast in reflects issued margin exclude revenue quarter, the profitable impact recorded on commitment bonuses GAAP of if consideration expenses, year-end resulted non-GAAP approach, non-GAAP a we performance if of

month operations, demand height we managed for surging surpassing year, at a successfully year increase a reached and strong per to our which RGMV in consumer RMBX.XX QX adapting set time. the X order resulted in the monthly frequency, the a we in pandemic, Our performance. quickly high Despite year-on-year across effect chain the achieve times to difficulties of supply last base met in ago, operational billion first by QX, X%

improvements X% capacity, penetration Thanks our This capabilities of also member even normalized our quality addition, overall the order our we operational commitment This made to XX-percentage improved increase. with our continuous and year-on-year of product user to the ARPU with increased evolving optimizing by to efficiency full-chain contributing In development reflects retail greatly, year-on-year, XX% stickiness, operational point and total our post-pandemic. environment needs the to meet GMV. is members and a users. rate

the me our product on Next, front. let progress review

key Our are development to key exceptional robust capabilities a advantages. growth product establish driver competitive enabling us

our We are unique is have Dingdong and developed among products that users. popularity brand to numerous gaining

highlights of This users growth amount opportunities including for and which quarter, our everything, Delicious [Indiscernible] rated by products launched feature we creating assessing the top reviewed select been This additives. experts ranking, have any uniqueness, deliciousness, is that Kylin products. significant

more and label revenue future. one Chicken in Since this channel Free-Range increased to average that new will by confident of month we’re Fueled the private more than weekly added In Bausbakery. it’s it’s XX% products the more appreciate doubled. weekly Silkie space the Kylin is Mochi Striped our Roll ranking just Delicious by exposure was and average and quality high discover by our consumers promotional

to of needs team nearly products experience We're our XXX meet at has unique exclusively the our high been East members in to quality our members, customizing constantly striving the user improve hard valued China. for work,

percentage points We're the our points member this member discounts, that by member and to X.X exclusive products, such just increased year, incentivize of super member proud We'll second as even percentage introducing dishes, share benefits sequentially. exclusive loyal Our existing free XX to continue in the reward are GMV days beginning. member more members. year-on-year benefits quarter and and

more frequency While the member their year-on-year. pandemic sequentially. increased X% increased year, last created by effect high XX% quarterly and ARPU by year-on-year by the order than Despite base X.X%

Next, chain. I update progress would like to supply in you made on we the have our

improvements profitability, been our alongside a chain of development key capabilities. product leasing Our driver our have supply

adopted a long-term to always and our every from warehousing, through manage people, continuous of and supply and and in aspect operations R&D production, logistics, investment have fulfillment now upgrades can We approach goods, everything digitally covering distribution, every procurement, to in warehousing. the link Technology processing, we sustained chain,

we millions technology, SKUs processing predict frontline category replenish of order stations recommendations, optimize our manage to nearly planning, years. in improvement to the of a FDC fulfillment rate proprietary provide of X and with algorithms Our percentage size supplies, manage resulting to AI daily, search the in loss thousands three efficiency, chain in pricing, perform operational in upgrade point enable of Even categories of consistent us still algorithm with past full drive all each inventory. to decrease

X.X%, than the Our achievement goods down of in been industry. loss food e-commerce a rate managed carefully less fresh unusable rare to has

volume confident growth stations. order Our that existing additional optimize region are frontline hard is the China still working for X.X% room the up we're there and to layout network fulfillment was East our sequentially, in of

has year, stations efficiency. volume saw optimized the nearly both out frontline we of daily XXX stations upgraded in fulfillment East average in rate a of fulfillment China X% which order sequentially. China, our In Our and first-half improved of layout stock split East the in increase frontline this and fulfillment

year. and we quality we that healthy full-year maintain high profitability XXXX and that can the confident throughout will We're achieve growth in non-GAAP

Thank you all. remarks. my That concludes

would Wang performance., the like invite and I to our to review financial Senior Song, Finance Vice President Next, Head company's of

[Foreign Language] [Interpreted]

Hello, Liang. Thank you, Mr. everyone.

I figures all our are please Before of that performance, RMB. note our in review financial

to remained strategy. first of efficiency growth due we During following quality with our high consideration scale committed achieving by QX,

improve achieved non-GAAP and ongoing efficiency have our We through quarters for three expenses. profitability optimize and costs consecutive efforts operational to

We also of non-GAAP a margin profit achieved X.X%. net

Additionally, on GAAP a we profitable one-time exclude expenses, if we basis. were

time last let's year, while same was XX%. the QX decrease GMV Now a dive billion, In RMBX.XX from billion, of revenue a in. was drop of RMBX.XX XX.X%

primary other regions. the created Liang, Mr. effect was were year, the by for and decrease Shanghai when restrictions base the the pandemic high mentioned reason the impacting during period last same previously As

chain we and period, surge operational demand. that supply consumer successfully to fulfill in During the challenges navigated

and the decrease AOV headwinds, order effect we sequential macro and in Given basis. average experienced a or on value base short-term a year-on-year

the of confident However, with offerings our room that continued and product for improving still we substantial optimization AOV has remain a environment, growth. gradually macroeconomic

We continue points achieve this advantage as Although as gross and and operational our percentage product To X.X long-term. deepen margin resulting our on stronger improve plan algorithms decreased at profitability development core engagement, focusing by XX%. driver our to help upgrading in in chain, increased remained stable growth, our aim in systems it establish competitive in overall profitability. year-on-year to sustainable optimizing we efficiency and supply will chain and supply lower our the cost QX,

this, Fulfillment AOV X.X created by transportation costs Despite by basis which committed fulfillment fulfillment efficiency X.X% efficiency and mainline ratio across improvement effect. in fulfillment pandemic, by a year-on-year. our year-on-year average to expense the continued costs points to logistics process, improved percentage per in our the XX.X%. side. which enhancing on of aspect increased of year's indicating order every Average mainline decreased X.X% We're reflected dropped logistic the high last units. is order was This to our efficiency due year-on-year significantly

cost and consumables in Additionally, about of achieved per packaging we're a conservation protection XX.X% and passionate environmental order. the year-on-year reduction

G&A year. highlights as percentage compared success product using main distinctive was points, is that X.X% We're year that our the This X.X%. to and pleased time down user and traffic ratio same boost attract expense ratio points, X.X of percentage our at expense source last X.X now retention. in target by number our unique products to also compared a Marketing greater report of customers decreased creating by and last development to

points to investing while by in technology X.X% we X.X our ratio R&D, and percentage Our our expense food, year-on-year to remain expense R&D -- algorithms. agricultural increased R&D committed

competitive advocating will protection. for in long and investments our run. our environmental These the advantage While conservation strengthen

infrastructure areas efficiency have already reduce our and supply e-commerce applications has to cloud costs. also improvements adopted Our optimize in chain systems [Indiscernible], these and and we yielded computing, investment significant

quality service system maintaining in result, As and XX.X% costs by stability. a our QX, while consistent decreased year-on-year service IT

QX, profit X.X%. a non-GAAP margin net During achieved we of

basis. and environment. our previously a one-time after operational in were leading better to even a can expenses, As demonstrates conveniently mentioned, development capabilities profitability GAAP This on post-pandemic the chain profitable we and improve product full efficiency excluding we that

Operating year-end bonuses million, of the was we XXXX. for $XXX flow when outflow achieved payment cash excluding positive operating cash

financial Our cash of investments end and and short-term the loans, cash We million. QX. financing chain equivalents, structure short-term cash our at billion short-term restricted decreased loan by $XXX which supply totaled and the optimized by reducing proactively balance $X.XX

the to Although we serve balance operating supply for chain was in insured finance. suppliers with our the decrease reason of funds sufficient cash, this have our main

the full-year today. we XXXX. the our profitability our in We Q&A in remaining non-GAAP concludes the quarters enter for to ability Operator, are attain and confident speeches This now can session. highly of

from question Jefferies. question-and-answer now begin will We comes ahead. Thomas first session. Chong Instructions] the with Please [Operator go The

Language] [Foreign

Hello, three development Mr. focus specific on Can different the in Thank of the Liang, congratulations you. non-GAAP current profitability. is quarters of your consecutive regions? introduce you in different What achieving company regions?

[Interpreted] [Foreign Language]

for address and shifted our of efforts by progressed presented the To as Jiangsu questions. pandemic, last the we into and you we your first-half QX, focus year, our QX during Shanghai Thank challenges in we the Zhejiang. prioritized strategically to

then margin to expanding to density stabilized ROI areas gross East expanding and in the our plan we new and further operational China could existing order increase North in concentrate cities. on optimize indicators and improving before Our efficiency, enhance profit focus China, in was once South

steady retrospect, for founded, year-on-year, operational and and profits in These increased Shanghai experienced indicators auto all volume Jiangsu have to proven China. in contributing daily strategic Zhejiang growth, approach performance XX% consecutive demonstrate regions ongoing quarters. XX% key Zhejiang also Jiangsu, East success has and by have each Based with In on the our stable respectively. our data, three well be

capabilities feedback regions. ability iterate Our rapidly contributed to developed continue has to this significantly our analyze ability to and achieve have results user different This in across product accordingly. the to development we improve, region and

support for our and consolidating markets growth focus sum, operations market share will Since in in the and of to in our time these regions. development North that provide potential a those will in significant to presence us East and operations some up in South see expect we ramp mature began the for Nevertheless, it take we China. economics strong on these establish In for East South in North after areas. China, unit China, we China in

next America. comes The with Ju Please from question of go Bank ahead. Joyce

[Foreign Language]

and regions are We late. evening. the noted that exit the Chongqing Good company Jiangsu off

-- on check region, direction Just the up direction you. given market wanted company Southwest the if we and understand in going strategic to should has strategy the the Thank forward? how

[Foreign Language] [Interpreted]

services evaluation The not was surrounding anytime extensive and of year, our We to Chengdu business the overall our determined we in May be short-term. volume to Moreover, operations your chain return from of the portion following business that Thank in [Indiscernible] profitable will expected city the the this supply small Chongqing not and our you a overall for region. question. comprised hubs suspend decided from in area Chongqing soon. large-scale support the of

a to As temporarily. decided result, the exit region we

to now [Indiscernible] corporation profitable and improvement. expansion stable regions with leading a is focus food we companies you. and business in new in Chongqing. and existing Our cost efficiency focus the and [indiscernible] will into markets We'll continue consider building on exit, afterwards. core on maintain reduction Despite Thank continue our to

[Foreign Language]

Leung next with question Please Daiwa. Robin ahead. from The go comes

Language] [Foreign

understand Difficulty], elaborate efforts Thank been advertising Mr. and Dingdong your the Hello, quality has [Technical area? Liang. on capabilities you. development this I in you can that

[Interpreted] Language] [Foreign

for you question. your Thank

driver. core our Our To as specific made primary product optimization. focus on competitive growth achieve advantage this, capability we is following have and the development

on We the through of cover including fresh products section contract chain, We extensive have supply supply the the chain directly in comprehensive production over sourcing long a from origin, efforts the areas. and XX% forming front. made of

to use specifying ensure We planting fertilizer to standards volumes, before stability. while season controlling fixed for and have quality things, place the and established allows price GAAP This us quality. and product among at testify upstream other growers orders protocols for

technology, in sales. blueberries one success, online This planting to farming our contract packaging. instance, and management, was Red resulting season. nearly month XXX with production and XX River tremendous our success For extensive over through generating just control, Valley purchases We products of taste the to and achieved our acres of growers attributable best-selling quality of XXX,XXX collaboration optimal purchases million GMV in ensure secured

efficiency, rely production approach have who over and in-house label and our R&D a from as company, usually taken production rhythm. greater product prioritize as That private We in better OEMs. quality, resulting unique peers, production, our us distinguishing we well products, differentiation higher on to control

is Language] us feedback. a Now prime price connecting [Foreign and based ends of front a to business and user the customer the promptly back on our success. data to unit enables example low product demand respond of

and products nearly total XX%, the aim our quarter, a label GMV With repurchase accounted XX% of in to a of to this and rate last private quarterly year that increase GMV RMBX for million XX% we of quarterly and XX% future.

own product same increased X compared period gross by year. Additionally, percentage our last over points margin to profit the

we prioritized consumption with bakery Third, food R&D. product investment unit by developing categories innovation new and gross higher offer These and users prepared trends also in not higher beer. have cross margins. attract meals, We but always prices, better and align advocated like can only categories command new profit items

categories result, a these is As GMV the in on rise.

we business prepared meals this and nutrition demands around in X.X to with our year, high-quality officially launched differentiated meals develop meet Specifically, trend. and Meals growing Prepared Healthy prepared health, line aiming customer this will distinctive

maintaining focusing we live enhancing a range greater category while our structure some products. We've incorporated older our to have also accentual high-end to optimize taken of commodities, categories, specifically business steps on mid

our of For a performer. top consisted everyday for LX has primarily category Previously, vegetable use. guests been it instance,

However, medium products to and the such high-end and additions longevity Jiangsu. higher Village relatively we LX have of with categories are and These in organic altitude specialty now prices. from unit vegetables as Rugao, high LX vegetables expanded and

vegetables, quarterly specialty RMBXX nearly and GMV has reached our local meat poultry for million. Additionally,

ratio. utilization we year, successfully past source reduced attributed we're on In profit moat. of in essence, Thank margin external overall and Reflecting as traffic. the capabilities competitive on narrowed traffic, continuous the in This product increase gross to a a primary cost of to a thrilled have established successful a reliance our be can resulting development achievement report you. our

Jiajing Chen next CICC. from comes with go The question Please ahead.

Language] [Foreign

seen future? been myself. in profitable Dingdong opportunity Liang, quarters. for translate me three We've you. me What that Mr. strategy profitability to for sustained the your Hello giving Let ensure thank you to the the consecutive has is Thank ask question.

[Interpreted] Language] [Foreign

your question. you Thank for

question. take Head of Our this going to Finance is

All Mr. you, right. Thank Liang.

scale consecutive continue to this is improving development Chongqing As to adjustment we We've non-GAAP profitability capacity strategy, better. first achieved QX since with efficiency have the we mainly Sichuan, honing serve of continued our execute three quarter. consideration of one-time XXXX. capabilities due our user GAAP achieved profitability of product on also quarters and to impact our This focus operational our excluding due

Our and user we overall optimize efficiency. improving order loyalty operational as are quality

[Foreign Language] [Interpreted]

have Specifically, adjusted our since mix. our XXXX, in category strategic we adjustment

and of has XX this of X proportion a points, X by In whose the points percentage private increase particularly proportion point available increased the meals, whose to prepared terms label of and percentage percentage increased GMV, to led consumers. range in proportion non-fresh products foods products nearly by emerging

new station Additionally, compared X,XXX seeing around are meals the and an XXXX. products. SKUs Shanghai The number by of XXX with nationwide prepared of SKUs, non-fresh increase per additions to mainly over has increased

RMBXX.X With first-half the nationwide RMBXX.X. Shanghai to these GMV an increased of the to year, changes, in has with the seeing increase

XX% since While the gross stable has at profit remained around last margin nationwide year.

there. since consecutive QX Shanghai of While three and increasing profitability quarters restructuring Jiangsu market, QX and achieved China East in since overall expanding achieved XXXX, focused and national region have on Zhejiang the profitability the XXXX. we profitability

market terms pandemic X,XXX. Despite mature in recorded of year-on-year double-digit reaching average impact positive to had a order growth, year, per daily growth of Shanghai order Zhejiang and In station. QX, last volume an the daily volume X,XXX Jiangsu

compared average and the in order expanding profitable, Shanghai. for China room to and on more we're As Jiangsu focused order it. penetration is There improvement station per East in becomes region volume Zhejiang

in our Additionally, of North we second and in plan operating South to year. the improve China capabilities the half China

already some one hand, the this. And operational boost improve that in and Meanwhile, seen working investing results we early full to have we can end-to-end chain our innovation we algorithms from promising operational systems IT capability. efficiency. our are improve are On to

loss loss, to stabilized X.X% the above, platform's processing mentioned narrow As XXXX. and end-to-end has including continues within in

adjusted post-pandemic year, algorithms we and end-to-end efficiency As layout, with our this improved situation the fulfillment fulfillment. stock mainline optimized stabilized network regional for delivery order station frontline

during the both costs points pandemic, pandemic, year-on-year decrease X.X improved. year impact Frontline Despite personnel, initial frontline order. and station first-half resulting impact X.X% improving. per costs steadily the excluding operational and a inside a of in in of and year-on-year year, has continuously of fulfillment on the After capabilities percentage cost the are also outside the the the adjustment decrease throughout improved this efficiency

company operational continue the and That China in the improving efficiency China structure, efficiency optimize in prioritize to will North market said, while and South East markets. product the regional

and Our on continue and we'll product full non-GAAP Based remain focus are QX confident we profitability on and the will in chain this, of full-year that development building operational for capacity. QX achieving XXXX.

are further to to for I'd back our no like remarks. conference there closing As hand the management questions,

for again call Thank joining today. you our

feel please next questions, We speaking us further IR earnings look everyone to forward in our request with or have good website. through free a call. Have you If day. us contact to our

conference Thank presentation. today's now attending for you The concluded. has

disconnect. now may You