Dingdong (Cayman) Limited Announces Fourth Quarter 2021 Financial Results

SHANGHAI, Feb. 15, 2022 /PRNewswire/ -- Dingdong (Cayman) Limited ("Dingdong" or the "Company") (NYSE: DDL), a leading and fastest-growing on-demand e-commerce company in China, with advanced supply chain capabilities, today announced its unaudited financial results for the fourth quarter ended December 31, 2021.

Fourth Quarter 2021 Highlights:

• GMV for the fourth quarter of 2021 increased by 59.6% year over year to RMB 6,004.0 million (US$ 942.2 million) from RMB 3,762.5 million in the same quarter of 2020.
• Total revenues for the fourth quarter of 2021 increased by 72.0% year over year to RMB 5,483.5 million (US$ 860.5 million) from RMB 3,187.5 million in the same quarter of 2020.
• Total number of orders fulfilled for the fourth quarter of 2021 increased by 63.1% year over year to 100.1 million  from RMB 61.4 million in the same quarter of 2020.

Mr. Changlin Liang, Founder and Chief Executive Officer of Dingdong, stated,

"In fact, Q4 was our best quarter since inception, marking year-over-year revenue growth of over 70% and significant efficiency optimization. In December, the overall Non-GAAP net loss margin narrowed to less than 13%, and Shanghai was fully profitable. At the end of Q4, we had RMB 5.2 billion in cash reserves. We are on the fast track of quality development, and we have sufficient cash to last us before full profitability in the near future.

Shanghai is the first city we entered and has continued innovating and iterating, constructing precedents and experiences for our nationwide operations. We have found the path to profitability in this city and expect the whole Yangtze River Delta to be the next, and the whole company will follow suit soon.

We have two firm beliefs: consumption upgrade and product capabilities being our primary growth driver. Many internet retailers adopt a low pricing strategy, and the idea of consumption downgrade has been widespread. However, we maintain strong confidence in the consumption upgrade trend for the younger generations, who pursue quality life, especially when it comes to food. Therefore, we are committed to meeting that need. In addition, in the internet industry, traffic operation was the core competitiveness in the first half of the game. As a result, several monopolistic traffic platforms were created with marketing activities such as the "Double 11" that marked the peak of traffic operation. But in the second half of the game, product capabilities that take us back to the nature of shopping are the primary driver of growth.

2021 has had its ups and downs, and 2022 is also destined to be extraordinary. We do not comment much on stock prices, but we agree with Benjamin Graham: the market was a voting machine in the short term but a weighing machine in the long run. In this sense, Dingdong is committed to building substance. Specifically, it is substantial to develop product capabilities, win over customers with quality products, develop a supply chain and physical R&D and processing capabilities, and invest long-term in infrastructure. On the contrary, focusing on traffic operations, price wars, retail platforms, or short-term profitability is trivial. Having a couple of champion products or marketing successes is of much less substance than striving for a better life for the customers in the long run.

Substantiality is what matters. It is our core competitiveness and will create long-term value. So let's be patient because time will tell."

Ms. Le Yu, Chief Strategy Officer of Dingdong, stated,

"Overall, we achieved solid revenue growth in Q4 and greatly optimized the operation efficiency with net loss narrowed substantially. As we advance, we will be committed to building robust product capabilities, making them our core strengths that drive Dingdong to meet the growing needs of the people for a better life.

Lastly, guidance for Q1 2022. Q1 is typically a slow season for the urban grocery market because of the Chinese New Year, which may lead to a decline in revenue on a sequential basis. In addition, the overtime labor costs incurred during the CNY may impact the fulfillment costs. Despite these factors, we still expect a small dip in the net loss and a substantial improvement of the operating cash outflow in Q1 from Q4 2021."

Fourth Quarter 2021 Financial Results

Total revenues were RMB 5,483.5 million (US$ 860.5 million), representing an increase of 72.0% from the same period of 2020, primarily driven by the robust growth in the Company's GMV.

• Product Revenues were RMB 5,413.9 million (US$ 849.6 million), an increase of 72.1% from RMB 3,145.5 million in the same quarter of 2020, primarily driven by the increase in the number of orders.
• Service Revenues were RMB 69.6 million (US$ 10.9 million), an increase of 65.6% from RMB 42.0 million in the same quarter of 2020, primarily driven by the increase in the number of customers subscribing to Dingdong membership.

Total operating costs and expenses were RMB 6,523.2 million (US$ 1,023.6 million), an increase of 47.7% from RMB 4,415.8 million in the same quarter of 2020, with a detailed breakdown as below.  

• Cost of Goods Sold were RMB 3,964.8 million (US$ 622.2 million), an increase of 46.4% from RMB 2,707.7 million in the same quarter of 2020, primarily driven by the increase in total revenue.  Gross margin was 27.7%, significantly improved from 15.1% in the same quarter of 2020.
• Fulfillment expenses were RMB 1,786.3 million (US$ 280.3 million), an increase of 47.3% from RMB 1,212.6 million in the same quarter of 2020, primarily driven by the increase in total revenues.  
• Sales and marketing expenses were RMB 358.0 million (US$ 56.2 million), an increase of 38.3% from RMB 258.9 million in the same quarter of 2020, mainly due to the increased spending on sales and marketing activities to acquire new customers.
• General and administrative expenses were RMB 129.4 million (US$ 20.3 million), an increase of 22.9% from RMB 105.3 million in the same quarter of 2020, mainly due to the increased business scale of the Company.
• Product development expenses were RMB 284.7 million (US$ 44.7 million), an increase of 117.0% from RMB 131.2 million in the same quarter of 2020, mainly due to the increased investments in: i) the Company's supply chain system to further improve efficiency and reduce operating costs; ii) the agricultural technology to empower upstream partners. 

Loss from operations was RMB 1,039.7 million (US$ 163.1 million), compared with operating loss of RMB 1,228.3 million in the same quarter of 2020.

Net loss was RMB 1,096.3 million (US$ 172.0 million), compared with net loss of RMB 1,245.5 million in the same quarter of 2020.

Non-GAAP net loss, which is a non-GAAP measure that excludes share-based compensation expenses, was RMB 1,034.1 million (US$ 162.3 million), compared with non-GAAP net loss of RMB 1,238.8 million in the same quarter of 2020.

Basic and diluted net loss per share were RMB 3.38 (US$ 0.53), compared with RMB 20.57 in the same quarter of 2020. Non-GAAP net loss per share, basic and diluted, was RMB 3.19 (US$ 0.50), compared with RMB 20.47 in the same quarter of 2020. The weighted average number of ordinary shares outstanding used to compute the basic and diluted net loss per share and non-GAAP net loss per share was 64,908,700 in the fourth quarter of 2020. All the then outstanding convertible redeemable preferred shares were not included in the computation until July 2021 when converted into ordinary shares after the Company's IPO.

Cash and cash equivalents and short-term investments were RMB 5,231.1 million (US$ 820.9 million) as of December 31, 2021, compared with RMB 2,382.4 million as of December 31, 2020.

Conference Call

The Company's management will hold an earnings conference call at 7:00 A.M. Eastern Time on Tuesday, February 15, 2022 (8:00 P.M. Beijing Time on the same day) to discuss the financial results. The presentation and question and answer session will be presented in both Mandarin and English. Listeners may access the call by dialing the following numbers:

A live webcast of the earnings conference call can be accessed at https://ir.100.me. An archived webcast will be available through the same link following the call. A replay of the conference call will be available through February 22, 2022 by dialing the following numbers:

Please visit Dingdong's Investor Relations website at https://ir.100.me on February 15, 2022 to view the earnings release and accompanying presentation prior to the conference call.

About Dingdong (Cayman) Limited

Dingdong (Cayman) Limited is a leading and fastest-growing on-demand e-commerce company in China providing users with fresh produce, meat and seafood, and other daily necessities through a convenient and excellent shopping experience supported by an extensive self-operated frontline fulfillment grid. From its core product category of fresh groceries, Dingdong has expanded to provide other daily necessities to grow into a leading one-stop online shopping destination in China for consumers to make purchases for their daily lives. At the same time, Dingdong is working to modernize China's traditional agricultural supply chain through standardization and digitalization, empowering upstream farms and suppliers to make their production more efficient and tailored to actual demand.

For more information, please visit: www.100.me.  

Use of Non-GAAP Financial Measures

The Company uses non-GAAP measures, such as non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, non-GAAP net loss per share, basic and diluted, non-GAAP fulfillment expenses, non-GAAP sales and marketing expenses, and non-GAAP general and administrative expenses in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, which are non-cash charges and do not correlate to any operating activity trends. The Company believes that the non-GAAP financial measures provide useful information about the Company's results of operations, enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP. The Company's definition of non-GAAP financial measures may differ from those of industry peers and may not be comparable with their non-GAAP financial measures.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company's performance.

For more information on the non-GAAP financial measures, please see the tables captioned "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this announcement.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB 6.3726 to US$ 1.00, the exchange rate on December 31, 2021 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "confident," "potential," "continue," or other similar expressions. Among other things, business outlook and quotations from management in this announcement, as well as Dingdong's strategic and operational plans, contain forward-looking statements. Dingdong may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its interim and annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Dingdong's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Dingdong's goals and strategies; Dingdong's future business development, financial conditions, and results of operations; the expected outlook of the on-demand e-commerce market in China; Dingdong's expectations regarding demand for and market acceptance of its products and services; Dingdong's expectations regarding its relationships with its users, clients, business partners, and other stakeholders; competition in Dingdong's industry; and relevant government policies and regulations relating to Dingdong's industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company's filings with the Securities and Exchange Commission. All information provided in this announcement and in the attachments is as of the date of the announcement, and the Company undertakes no duty to update such information, except as required under applicable law.

For investor inquiries, please contact:

Dingdong Fresh
[email protected]  

SOURCE Dingdong (Cayman) Limited