FAST NEWS: Dingdong’s revenue dips, but it maintains non-GAAP profit

The latest: Leading online grocer Dingdong (Cayman) Ltd. (DDL.US) last Friday said it recorded a non-GAAP adjusted net profit of 6.1 million yuan ($880,000) in the first quarter, significantly better than its 422 million yuan adjusted loss a year earlier.

Looking up: The company’s total operating costs and expenses decreased by 14.4% year-over-year to 5.04 billion yuan for the quarter, much of that on a 10.7% reduction in cost of goods, which accounted for nearly 70% of total expenses.

Take Note: The company’s gross merchandise volume (GMV) declined 6.8% to 5.45 billion yuan, and its total revenue decreased 8.2% to approximately 5 billion yuan, as China lifted most of its Covid-control restrictions and demand for its home-delivered fresh foods declined.

Digging Deeper: Founded in Shanghai in 2017 and listed in New York in 2021, Dingdong is China’s leading online grocer with extensive distribution and delivery networks in most major cities. The company achieved its first profits on an adjusted and net basis in the fourth quarter of last year due to increased demand for its services caused by widespread Covid restrictions, the closure of its main competitor Missfresh, and the company’s own cost control measures. CFO Yu Le said he expects the company will achieve a non-GAAP profit for all of 2023, excluding costs related to employee-based stock compensation.

Market Reaction: Dingdong’s shares plunged 17.8% after the announcement to close at $3.32 in trading last Friday in New York. The stock now trades near the lower end of its 52-week range.

Translation by Jony Ho

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