The Shanghai-based fresh e-commerce company saw its revenue drop nearly 20% in the fourth quarter as it focused on its most profitable markets
This article was written by Yu Tri.
A fresh food store headquartered in ShanghaiDingdong grocery shopping（ddl.us).ThursdayAnnouncing results, the company achieved a non-GAAP annual profit of RMB45.4 million (US$6.3 million) for the first time in 2023 by focusing on the most profitable markets, its former competitorsDaily freshness(mflty.US) collapsed in mid-2022 due to a strategic blunder, in stark contrast to that.
But along with this profit milestone, there is an important note that the company is phasing out the smaller and unprofitable markets that used to be a major part of its growth story, so the company's revenue is also shrinking at an accelerated pace.
"On a non-GAAP basis, we achieved our first full-year profit in 2023, which is an important milestone for Dingtone and the industry as a whole," Dingtone founder and CEO Liang Changlin said at the company's earnings conference. He added: "This is a reflection of how we have successfully navigated the extremely challenging macroeconomic and competitive environment in which many have expressed concerns about the sustainability of the company. ”
In the fourth quarter of last year, Dingdong's revenue was close to 5 billion yuan, a decrease of 19 percent from the same period in 20225%。The decline was attributed to lower bookings following the easing of pandemic restrictions. In addition, Dingtone withdrew from several cities with lower margins starting in the second quarter of 2023, which further negatively impacted the quarter's revenue.
For the whole year, Dingdong's operating income was 199700 million yuan, a decrease of about 17% from 24.2 billion yuan in 2022. However, the average order value in 2023 has increased from 586 yuan increased to 721 yuan, the average monthly order frequency increased to 4 orders.
Despite these positive developments, investors are more focused on the ongoing revenue decline than on their earnings milestones. After the release of this results, Dingdong's stock price increased by 10%. Since the company's public offering more than two years ago, Dingdong's share price has shrunk by more than 90%.
In terms of profitability, Dingtone achieved a non-GAAP net profit margin of 02%, which is the second to a negative net profit margin of 2 in 20224% and minus 30 in 2021Positive change after 4%.
On a quarterly basis, the company achieved non-GAAP net profit of $16.3 million in the fourth quarter of last year, which was the fifth consecutive quarter of non-GAAP profit. However, the company still recorded a net loss of $4.4 million in the quarter, although this was a significant improvement from the loss of $49.9 million in the same period last year.
"We expect to be non-GAAP profitable again in the first quarter of 2024," Leung said, adding, "Remaining profitable in the current environment underscores the viability of our business model and provides additional resources for our future growth." ”
The company expressed confidence in regaining growth momentum and maintaining non-GAAP profitability this year, and said it will continue to execute its new strategy of focusing on the premium segment, positioning itself as a high-quality service provider and achieving the highest cost efficiency.
The company just announced a $20 million share buyback program at the end of January to support its share price.
Dingtone was founded in Shanghai in 2017 and listed in New York in 2021. The Company operates an extensive distribution and delivery network in major cities, providing consumers with fresh produce, delicatessen and other food products. It also operates a higher-margin private label business in its own facilities, covering a variety of food categories.