Dingdong (Cayman) Limited has released its first financial report following MEITUAN's announcement of its acquisition of Dingdong's China business. In the first quarter, Dingdong's GMV reached RMB 6.333 billion, a year-on-year increase of 6.3%; total revenue was RMB 5.893 billion, up 7.5% year-on-year. This marks the ninth consecutive quarter of year-on-year growth in both GMV and revenue. During the reporting period, Dingdong's total net profit was RMB 165 million, with a Non-GAAP net profit of RMB 172 million. However, due to accounting treatment related to the MEITUAN transaction, the company classified long-term assets related to its China business as held for sale, ceasing depreciation and amortization, which increased net profit by approximately RMB 138 million. Excluding this impact, the net profit generated from actual operations was approximately RMB 28 million, an increase of about 2.4 times compared to RMB 8 million in the same period last year. This financial report thus carries a distinct transitional character. Currently, MEITUAN's acquisition of Dingdong's China business for an initial consideration of $717 million is still pending approval from the State Administration for Market Regulation's anti-monopoly review. Under U.S. GAAP, Dingdong has classified its China business as a discontinued operation and its overseas business as a continuing operation; related assets and liabilities of the China business are classified as held for sale. In other words, before the transaction is completed, the China business remains the primary source of Dingdong's revenue and profit; however, from an accounting presentation and future structure perspective, this part of the business is already on the path to being divested. In Q1, Dingdong's China business revenue was RMB 5.753 billion, a year-on-year increase of 5.9%. The overall gross margin was 29.9%, flat compared to the same period last year; the fulfillment expense ratio decreased from 22.9% in the same period last year to 20.6%. The company stated that the growth in the China business primarily came from an increase in the average number of monthly transacting users, higher order frequency driving order volume growth, and further improvements in site density and market penetration following the opening of new front-end warehouses in East China. However, the decline in CPI for major categories such as pork partially offset the revenue growth rate. This aligns with the strategic adjustments Dingdong has made over the past few years. The advantage of the front-end warehouse model lies in its proximity to consumers and faster fulfillment, making it suitable for high-frequency fresh produce demand; the challenge is the heavier costs associated with rent, labor, delivery, and wastage. If order density is insufficient, revenue growth can easily be eroded by fulfillment costs. In recent years, Dingdong's shift from nationwide expansion to regional focus essentially represents a rebalancing of scale and efficiency. East China is Dingdong's long-term core market, with relatively mature user habits, supply chain organization, warehouse network density, and fulfillment efficiency. This is also part of the context for MEITUAN's acquisition of Dingdong's China business. For MEITUAN, Dingdong's value lies not only in being a fresh produce e-commerce brand but also in a front-end warehouse network and fresh produce supply chain capabilities that have been operating in the East China market for years with certain order density. If the transaction is completed, these assets are likely to be integrated into MEITUAN's instant retail system, enhancing its fresh produce fulfillment capabilities. The overseas business, though still small in scale, is experiencing rapid growth and has begun to serve as an important clue for observers to gauge Dingdong's post-transaction direction. In Q1, Dingdong's overseas business revenue increased by 195.2% year-on-year to RMB 139 million, but the net loss also expanded by 199.6% year-on-year to RMB 71.4 million, indicating it remains in a phase of high growth and high investment. Based on public information, Dingdong's overseas business roughly includes two categories: import supply chain, which involves introducing overseas products to the domestic market through a global direct sourcing system; and channel expansion abroad, selling products such as pre-made meals, fresh produce, and refrigerated foods to overseas markets. The company previously selected Saudi Arabia as the first stop for its overseas expansion, attempting to sell pre-made meals, fresh produce, refrigerated foods, and general merchandise to the local market. This essentially replicates the product development, supply chain organization, and front-end warehouse operation experience accumulated domestically in overseas markets. With the China business awaiting completion of the transaction and the overseas business yet to fully take shape, Dingdong remains in a genuine transitional period.
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