As of the close on November 22, Dingdong Maicai’s stock price stood at $2.07 per share, representing a year-to-date decline of 51.52%, with a current total market value of $491 million.
Researcher Zhuoma, The Investment Times
Dingdong Maicai recently released its unaudited financial results for the third quarter of 2023, which ended on September 30.
The financial report shows that Dingdong Maicai achieved total revenue of 5.14 billion yuan in the third quarter of this year, a year-on-year decrease of 13.51%. The Gross Merchandise Volume (GMV) reached 5.67 billion yuan, a quarter-on-quarter increase of 6.4%. The company posted a net profit of 2.1 million yuan, compared to a loss of 345 million yuan in the same period last year. The Non-GAAP (Non-Generally Accepted Accounting Principles) net profit was 16 million yuan, compared to a loss of 285 million yuan in the same period last year. Notably, this marks the fourth consecutive quarter that Dingdong Maicai has achieved Non-GAAP profitability since the fourth quarter of 2022.
Dingdong Maicai’s founder and CEO, Liang Changlin, stated during the earnings call that the continuous profitability was due to the company’s strategy of “prioritizing efficiency and maintaining a moderate scale.” He also mentioned that Dingdong Maicai was one of the earliest companies in the industry to achieve profitability, describing the journey as “a long and challenging one.”
Profitability has long been a significant challenge for many fresh food e-commerce platforms, and stabilizing profitability is an issue that many companies must address. Amidst the backdrop of declining capital inflows, increased market competition, and rising costs, Dingdong Maicai has adopted a series of measures, including withdrawing from certain cities, reducing costs, and improving efficiency, sacrificing scale for sustainable profitability. These efforts seem to be bearing fruit so far.
However, in terms of stock price, the market has not yet recognized Dingdong Maicai’s efforts. As of the close on November 22, Dingdong Maicai’s stock price stood at $2.07 per share, representing a year-to-date decline of 51.52%, with a current total market value of $491 million.
Dingdong Maicai’s Stock Price Performance Since Listing (USD)
Source: Wind
Revenue Declined Year-on-Year in the Third Quarter
The financial report shows that Dingdong Maicai achieved total revenue of 5.14 billion yuan (RMB, the same below) in the third quarter of this year, compared to 5.943 billion yuan in the same period last year, a decrease of 13.51% year-on-year. GMV for the quarter was 5.67 billion yuan, a quarter-on-quarter increase of 6.4%.
Dingdong Maicai attributed the revenue decline to its withdrawal from multiple cities and sites in 2022 and the second quarter of this year. Additionally, the significant increase in consumer travel activities and offline consumption post-pandemic contributed to the year-on-year decline in Dingdong Maicai’s third-quarter sales.
Regarding the GMV growth, the company stated that it was due to a quarter-on-quarter increase in order volume and average order value (AOV) of 6.0% and 0.5%, respectively. The increase in order volume was mainly driven by higher monthly order frequency and rapid growth in orders from the Jiangsu and Zhejiang regions.
In terms of revenue composition, Dingdong Maicai’s income is derived from product revenue and service revenue, with product revenue being the primary source.
In the third quarter, Dingdong Maicai’s product business generated 5.083 billion yuan in revenue, compared to 5.872 billion yuan in the same period last year, a year-on-year decrease of 13.45%. This decline in product revenue was the main reason for the overall revenue drop in the third quarter. During the same period, service business revenue was 57 million yuan, compared to 70 million yuan in the same period last year, a year-on-year decrease of 18.45%, mainly due to a temporary surge in membership numbers in 2022 during the pandemic.
The financial report also shows that Dingdong Maicai’s total operating costs and expenses for the third quarter of this year amounted to 5.164 billion yuan, a year-on-year decrease of 17.62% from 6.268 billion yuan in the same period last year. Specifically, the company’s cost of sales for the quarter was 3.577 billion yuan, down 13.94% year-on-year from 4.157 billion yuan in the same period last year. The cost of sales as a percentage of total revenue also decreased from 70.0% last year to 69.6% this quarter.
Meanwhile, the company’s delivery expenses for the third quarter were 1.199 billion yuan, compared to 1.595 billion yuan in the same period last year, a year-on-year decrease of 24.82%. The delivery expenses as a percentage of total revenue also dropped from 26.8% in the same period last year to 23.3%.
Additionally, Dingdong Maicai’s third-quarter sales and marketing expenses were 98 million yuan, a year-on-year decrease of 22.75% from 127 million yuan in the same period last year, mainly due to the company’s withdrawal from a few cities in 2022 and the second quarter of this year. General and administrative expenses were 89 million yuan, a year-on-year decrease of 33.0% from 133 million yuan in the same period last year, mainly due to improved employee efficiency. Product development expenses were 199 million yuan, a year-on-year decrease of 21.84% from 255 million yuan in the same period last year, mainly due to increased efficiency among the company’s R&D personnel.
In terms of profitability, Dingdong Maicai achieved a net profit of 2.1 million yuan in the third quarter of this year, compared to a loss of 345 million yuan in the same period last year. The Non-GAAP net profit was 16 million yuan, compared to a loss of 285 million yuan in the same period last year. The gross profit margin for the quarter slightly increased from 30.0% in the same period last year to 30.4%.
As of the end of September this year, Dingdong Maicai had cash and cash equivalents and short-term investments totaling 5.632 billion yuan, compared to 6.493 billion yuan at the end of December 2022.
Four Consecutive Quarters of Non-GAAP Profitability
Dingdong Maicai was founded in 2017 and went public on the New York Stock Exchange in June 2021.
Previous financial reports and the prospectus showed that Dingdong Maicai had been in a long-term loss-making state. From 2019 to 2021, Dingdong Maicai generated total revenue of 3.88 billion yuan, 11.336 billion yuan, and 20.121 billion yuan, respectively, with corresponding net losses of 1.873 billion yuan, 3.177 billion yuan, and 6.429 billion yuan.
In 2022, Dingdong Maicai’s performance saw a turning point, with Non-GAAP profitability of 116 million yuan in the fourth quarter of that year. In the first and second quarters of this year, Dingdong Maicai achieved Non-GAAP net profits of 6.1 million yuan and 7.5 million yuan, respectively. With the third quarter included, Dingdong Maicai has now achieved Non-GAAP profitability for four consecutive quarters.
During the earnings call, Liang Changlin emphasized that the company’s continuous profitability was due to its strategy of “prioritizing efficiency and maintaining a moderate scale.” He also stated, “It has been a long and challenging journey to get here, but our adherence to our principles and vision has kept us on the right path.” Additionally, regarding this year’s performance, Liang Changlin expressed confidence in achieving Non-GAAP profitability in the fourth quarter and the entire year of 2023.
Post time: Sep-01-2024