Dingdong (Cayman) Ltd (DDL) 2024 Q3 法說會逐字稿

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to the Dingdong Limited third-quarter 2024 earnings conference call. (Operator Instructions) Please note that this event is being recorded.

女士們、先生們，早安、晚上好。感謝您的支持，歡迎參加叮咚有限公司 2024 年第三季財報電話會議。（操作員指示）請注意，該事件正在被記錄。

I would now like to turn the conference over to the first speaker today, Nicky Zheng, Director of Investor Relations. Please go ahead, sir.

現在，我想將會議交給今天的第一位發言者，投資者關係總監 Nicky Zheng。先生，請繼續。

Thank you. Hello, everyone. Welcome to Dingdong's third-quarter 2024 earnings call. With me today are Mr. Changlin Liang, our founder and CEO; and Mr. Song Wang, our CFO.

謝謝。大家好。歡迎參加叮咚2024年第三季財報電話會議。今天與我在一起的有我們的創辦人兼執行長梁長林先生；以及我們的財務長王松先生。

You can refer to our third-quarter 2024 financial results on our IR website at ir.100me. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. For today's call, management will go through their prepared remarks which will be followed by a question-and-answer session.

您可以在我們的 IR 網站 ir.100me 上查看我們 2024 年第三季的財務表現。此次通話結束後幾小時，您也可以在我們的 IR 網站上觀看重播。在今天的電話會議上，管理階層將宣讀他們準備好的發言，然後進行問答環節。

Before we continue, I would like to refer you to our safe harbor statement in our earnings press release which also applies to this call. As we will be making forward-looking statements, please note that all numbers stated in the following management prepared remarks are in RMB terms and we will discuss non-GAAP measures today which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings press release and filings with the SEC.

在我們繼續之前，我想請您參閱我們收益新聞稿中的安全港聲明，該聲明也適用於本次電話會議。由於我們將做出前瞻性陳述，請注意以下管理層準備的評論中所述的所有數字均以人民幣計算，我們今天將討論非公認會計準則指標，這些指標將得到更徹底的解釋，並與我們的收益新聞稿和向美國證券交易委員會提交的文件中報告的最具可比性的指標相協調。

I will now turn the call to our first speaker today, the founder and the CEO of Dingdong, Mr. Liang.

現在請我們今天的第一位演講嘉賓，叮咚的創辦人兼執行長梁先生。

(spoken in foreign language) (interpreted) Thank you for joining Dingdong earnings call for Q3 2024. I'm pleased to report that we achieved non-GAAP profitability for the eighth consecutive quarter and get profitability for the third consecutive quarter.

（外文）（翻譯）謝謝您參加叮咚 2024 年第三季財報電話會議。我很高興地報告，我們連續第八個季度實現非公認會計準則獲利，並連續第三個季度獲利。

Revenue also increased on a year over year basis for three straight quarters. Both GMV and net profit also reached new quarterly highs. The key factors driving this progress include the ongoing optimization of our fresh grocery supply chain and the increased concentration of frontline fulfillment stations in our existing markets. These enhancements enable us to deliver better products and services to new and existing customers. This in turn supports sustainable growth in the scale and profitability of our business.

營收也連續三個季度年增。GMV和淨利也都創下季度新高。推動這項進步的關鍵因素包括我們生鮮雜貨供應鏈的持續優化以及現有市場中前線配送站集中度的提高。這些改進使我們能夠向新舊客戶提供更好的產品和服務。這反過來又支持了我們業務規模和盈利能力的可持續增長。

(spoken in foreign language) (interpreted) First, I'll present our Q3 2024 performance followed by an analysis of our operating data and conclude with a brief outlook on future development and performance.

（外語）（翻譯）首先，我將介紹我們 2024 年第三季的業績，然後分析我們的營運數據，最後簡要展望未來的發展和業績。

(spoken in foreign language) (interpreted) In Q3 2024, we generated GMV of RMB7.27 billion, a 28.3% year-over-year increase with revenue reaching RMB6.54 billion, an increase of 27.2% year over year. Non-GAAP net profit was RMB160 million, an increase of over nine times from the same period last year with non-GAAP net profit margin coming in at 2.5%, an increase of 2.2% points year over year.

(外語) (翻譯) 2024 年第三季度，我們實現 GMV 為人民幣 72.7 億元，年增 28.3%，營收達到人民幣 65.4 億元，年增 27.2%。Non-GAAP淨利為1.6億元，較上年同期成長逾9倍；Non-GAAP淨利率為2.5%，較上年同期上升2.2個百分點。

GAAP net profit was RMB133 million, an increase of more than 62 times from the same period last year with a GAAP net profit margin of 2%, up 2% points year over year.

GAAP淨利為1.33億元人民幣，較去年同期成長逾62倍，GAAP淨利潤率為2%，較去年同期上升2個百分點。

(spoken in foreign language) (interpreted) This rapid growth was primarily attributable to the growing scale of our user base increases in ARPU and higher use of penetration rate in our existing markets. Average number of active transacting users reached approximately 8.22 million, a 24.5% year-over-year increase.

(外語) (口譯) 這一快速增長主要歸因於我們用戶群規模的不斷擴大、ARPU 的提高以及現有市場的滲透率的提高。平均活躍交易用戶數達約822萬，較去年同期成長24.5%。

Our wallet share per customer also continued to grow during the quarter with average monthly ARPU increasing 6.4% and average monthly ARPU for member increasing 8.8% year over year to RMB540. As our user base rapidly expand user stickiness is also on the rise. Use users place an average of 4.4 orders per month, reflecting a year-over-year increase of 6.1%. This average was higher among members with 7.6 orders per month, reflecting a year-over-year increase of 9.8%.

本季度，我們的每位客戶錢包份額也持續成長，平均每月 ARPU 成長 6.4%，會員平均每月 ARPU 年增 8.8% 至人民幣 540 元。隨著我們的用戶群迅速擴大，用戶黏性也不斷上升。使用用戶平均每月下訂單4.4次，較去年同期成長6.1%。會員的平均每月訂單量較高，為 7.6 份，較去年同期成長 9.8%。

Furthermore, retention rates among new users are strengthening with a 12-month retention rate of 57.3% for transacting members. These metrics not only indicate that our user base is growing in number, its quality is also improving high retention rates and frequent repurchases are also key factors driving our business forward.

此外，新用戶的保留率正在增強，交易會員的 12 個月保留率為 57.3%。這些指標不僅顯示我們的用戶群在數量上正在成長，其品質也在提高，高留存率和頻繁回購也是推動我們業務向前發展的關鍵因素。

(spoken in foreign language) (interpreted) Geographically, Jiangsu, Zhejiang and Shanghai continues to be the primary growth drivers. Shanghai's GMV increased by 24.5% year over year during the quarter. While Jiangsu and Zhejiang increased by approximately 40% each. In Shanghai, average daily order volume processed per fulfillment station was nearly 1,700 orders with both Jiangsu and Zhejiang processing more than 1,000 orders.

（外語）（口譯）從地域來看，江蘇、浙江和上海繼續成為主要的成長動力。本季度，上海的商品交易總額較去年同期成長24.5%。江蘇、浙江兩省的增幅均約40%。在上海，每個配送站每天平均處理的訂單量接近 1,700 份，而江蘇和浙江處理的訂單量均超過 1,000 份。

(spoken in foreign language) (interpreted) The growth mentioned above was primarily driven by the following factors. We continue to refine our network of frontline fulfillment stations in Jiangsu, Zhejiang and Shanghai.

（外語）（翻譯）上述成長主要受下列因素推動。我們持續完善江蘇、浙江和上海的第一線配送站網路。

By the end of Q3, we successfully hit our target of opening 80 new frontline fulfillment stations in these regions this year with over 40 opening in the third quarter alone. Average daily order volume for these new stations steadily ramped up to 866 orders during the quarter. Looking ahead, we're increasing our target for new fulfillment stations openings in 2024 to approximately 110.

截至第三季末，我們成功實現了今年在這些地區開設 80 個新的一線配送站的目標，僅第三季就開設了 40 多個。本季度，這些新站點的日均訂單量穩定上升至 866 份。展望未來，我們將 2024 年新配送站開設數量目標提高到約 110 個。

This strategy will enhance our presence in these key areas, improve our fulfillment efficiency and processes, reduce delivery costs and establish a solid foundation to further expand our scale next year.

這項策略將增強我們在這些關鍵領域的影響力，提高我們的履行效率和流程，降低交付成本，為明年進一步擴大規模奠定堅實的基礎。

(spoken in foreign language) (interpreted) Our robust fresh grocery supply chain capabilities in Shanghai have now expanded into Jiangsu and Zhejiang, allowing us to begin offering and expanded array of categories such as leisure products, dairy beverages and coffee table top products.

（外語）（口譯）我們在上海強大的生鮮雜貨供應鏈能力現已擴展到江蘇和浙江，使我們能夠開始提供更多種類的商品，例如休閒產品、乳製飲料和咖啡桌頂部產品。

We've made significant progress in optimizing our operational capabilities with a focus on offering quality products and increasing user penetration in Jiangsu, Zhejiang and Shanghai. growth in GMV across 13 cities in these regions increased over 50% year over year during the quarter.

我們在優化營運能力方面取得了重大進展，重點是提供優質產品和提高江蘇、浙江和上海的用戶滲透率。本季度，這些地區 13 個城市的 GMV 年成長超過 50%。

(spoken in foreign language) (interpreted) Additionally, even under the impact of frontline fulfillment stations closure at the beginning of the year, GMV of the Beijing and Guangzhou Shenzhen regions increased by 14.6% and 2.9% year-over-year respectively. We not only significantly reduce losses in these two regions but also hit our goal of driving sustainable growth at scale.

（外語）（翻譯）此外，即使在年初受到一線配送站關閉的影響下，北京和廣州深圳地區的GMV仍然分別同比增長了14.6％和2.9％。我們不僅大幅減少了這兩個地區的損失，而且實現了推動規模永續成長的目標。

(spoken in foreign language) (interpreted) Our growth is closely linked to our growing array of high quality products. We're committed to expanding our offerings to strengthen consumer trust and loyalty in our brand. By concentrating on two key scenarios, dining and coffee tables, we are gaining deeper insights into user needs allowing us to cater to the demand for specific high-quality products.

（外語）（翻譯）我們的成長與我們不斷成長的高品質產品系列密切相關。我們致力於擴大我們的產品範圍，以增強消費者對我們品牌的信任和忠誠度。透過專注於餐廳和咖啡桌這兩個關鍵場景，我們對使用者需求有了更深入的了解，從而能夠滿足對特定高品質產品的需求。

This year, we focused on 45 strategic categories with significant opportunities such as fresh seafood, drinking water, sandwiches beverages and ice cream. These initiatives boosted both the frequency of purchases and total number of items per order in Q3, contributing to more than half of the year over year increase in total GMV.

今年，我們重點關注了 45 個策略類別，其中具有重要機遇，例如新鮮海鮮、飲用水、三明治飲料和冰淇淋。這些舉措提高了第三季的購買頻率和每筆訂單的商品總數，貢獻了總 GMV 年比成長的一半以上。

This achievement underscores the core value proposition, we offer no compromises on fresh grocery quality. We remain dedicated to our mission of making quality fresh groceries as accessible as tap water for everyone.

這項成就凸顯了我們的核心價值主張：我們對新鮮食品的品質絕不妥協。我們始終致力於我們的使命：讓每個人都能像自來水一樣享用優質的新鮮食品。

(spoken in foreign language) (interpreted) Lastly, let's turn to our outlook for Q4 and the full year of 2024. We're increasing our full year targets based on our current performance. We expect non-GAAP and GAAP net profit and the overall scale of our business to continue growing significantly on a year-over-year basis next quarter and for the year. We're confident in the rapid development potential of our business throughout the remainder of the year and going forward.

（外語）（翻譯）最後，讓我們來談談 2024 年第四季和全年的展望。我們將根據目前的表現提高全年目標。我們預計下個季度和全年非 GAAP 和 GAAP 淨利潤以及我們業務的整體規模將繼續同比大幅增長。我們對今年剩餘時間及未來業務的快速發展潛力充滿信心。

(spoken in foreign language) (interpreted) This concludes my prepared remarks. Thank you all for listening. I would like to turn the call over to our CFO, Wang Song to go over our financials.

（外語）（翻譯）我的準備好的發言到此結束。感謝大家的聆聽。我想將電話轉給我們的財務長王松，來討論一下我們的財務狀況。

(spoken in foreign language) (interpreted) Thank you Mr. Liang and hello everyone. Before I review our financial performance for the third quarter, please note that all of our figures are in RMB.

（外語）（翻譯）謝謝梁先生，大家好。在我回顧第三季的財務表現之前，請注意，所有數據都是以人民幣計算的。

(spoken in foreign language) (interpreted) In Q3, we generated revenue of RMB6.54 billion a year-over-year increase of 27.2%. The significant growth also allowed us to achieve a new historic high in profitability with a non-GAAP net profit of RMB160 million, over nine times higher than the same period last year.

（外語）（翻譯）第三季度，我們實現營業收入65.4億元人民幣，較去年同期成長27.2%。大幅成長也讓我們的獲利能力再創歷史新高，非美國通用會計準則淨利達人民幣1.6億元，較去年同期成長9倍多。

Non-GAAP net profit margin was 2.5%, an increase of 2.2 percentage point from the same period last year. GAAP net profit was RMB133 million, an increase of RMB131 million year over year, with net profit margin expanding 2% point from the same period last year to 2%.

非美國通用會計準則淨利率為2.5%，較上年同期增加2.2個百分點。GAAP淨利為1.33億元，較上年同期增加1.31億元，淨利率較上年同期增加2個百分點至2%。

Operating net cash inflow in Q3 reached RMB400 million, an increase of RMB270 million compared to the same period last year. This marks the fifth consecutive quarter of net cash inflow from operating activities.

第三季經營淨現金流入4億元，較去年同期增加2.7億元。這標誌著該公司連續第五個季度實現營運活動淨現金流入。

(spoken in foreign language) (interpreted) Our high quality growth is fueled by our commitment to our original goals and mission and reflects our continued sustainable development of our business anchored in our robust supply chain capabilities.

（外語）（翻譯）我們的高品質成長源自於我們對最初目標和使命的承諾，並反映了我們以強大的供應鏈能力為基礎的業務持續可持續發展。

Let's now go into further detail. GMV was RMB7.27 billion, an increase of 28.3% year over year. Notably, we saw GMV grow by over 50% year over year in 14 cities nationwide, with Huzhou, Nantong and Wenzhou in particular growing at rates that surpass 70%.

現在讓我們進一步詳細討論。GMV為人民幣72.7億元，較去年成長28.3%。值得注意的是，全國14個城市的GMV年成長超過50％，其中湖州、南通和溫州的成長率超過70％。

(spoken in foreign language) (interpreted) Gross profit margin was 29.8%, a 0.6% points decrease year over year, a result of our proactive operational strategy to pass along the benefits of our increasingly optimized supply chain to consumers as we scale. Moreover enhancements made to our supply chain and operational efficiency have accelerated growth in our bottom line.

（外語）（翻譯）毛利率為 29.8%，較上年下降 0.6 個百分點，這是我們採取積極主動的營運策略的結果，即在擴大規模的同時，將日益優化的供應鏈帶來的好處傳遞給消費者。此外，我們供應鏈和營運效率的提升也加速了我們的獲利成長。

Although we cautiously expanded the breadth of offerings in our supply chain, we managed to optimize overall inventory turnover days to 10.7 days, 1.3 days less than the same period last year. Our ability to implement intelligent forecasting and operational scheduling system along with effective team collaboration has strengthened our supply chain management capabilities. We may while maintaining a stable loss rate, we have also reduced the out of stock rate of our top products by 1.4% points compared to the same period last year.

儘管我們謹慎地擴大了供應鏈產品範圍，但我們仍成功將整體庫存週轉天數優化至10.7天，比去年同期減少了1.3天。我們實施智慧預測和營運調度系統的能力以及有效的團隊協作增強了我們的供應鏈管理能力。我們在維持穩定的損耗率的同時，也把主打產品的缺貨率比去年同期降低了1.4個百分點。

(spoken in foreign language) (interpreted) Our fulfillment expense rate improved to 21.4%, a 1.8 percentage points decrease compared to the same period last year. With average order value or AOV remaining stable year over year, we achieved significant efficiency gains from an increase in average order volume per fulfillment station.

（外語）（翻譯）我們的履行費用率改善至21.4％，比去年同期下降了1.8個百分點。由於平均訂單價值或 AOV 逐年保持穩定，我們透過增加每個履行站的平均訂單量實現了顯著的效率提升。

Our frontline fulfillment stations process over 1,100 orders daily in Q3 a year over year increase of 27.9%. Additionally, we enhance our service capabilities by deploying algorithms and optimizing supply chain operations. As a result, the proportion of orders delivered within 30 minutes in Q3 increased by 3.5 percentage points year over year.

我們的第一線履行站在第三季每天處理超過 1,100 個訂單，較去年同期成長 27.9%。此外，我們還透過部署演算法和優化供應鏈營運來增強我們的服務能力。第三季30分鐘送達訂單佔比年增了3.5個百分點。

(spoken in foreign language) (interpreted) Our marketing expense rate was 2.2%, an increase of 0.2 percentage points compared to the same period last year. Alongside our ongoing efforts to optimize user acquisition and improve conversion rates, we continue to carefully manage marketing expenses. The strategy aims to drive user penetration in key regions while supporting overall growth in scale.

（外語）（翻譯）我們的行銷費用率為2.2％，比去年同期增加了0.2個百分點。在我們不斷努力優化用戶獲取和提高轉換率的同時，我們繼續謹慎管理行銷費用。該策略旨在推動重點區域的用戶滲透，同時支持整體規模的成長。

(spoken in foreign language) (interpreted) As a proportion of total revenue, general and administrative and R&D expenses decreased by 0.9 percentage points compared to the same period last year. This was primarily attributable to greater economies of scale. As always, we remain committed to investing in food R&D, agricultural technology and advanced data algorithms to drive innovation.

（外語）（翻譯） 一般及行政開支和研發開支佔總收入的比例比去年同期下降了0.9個百分點。這主要歸因於規模經濟的擴大。與以往一樣，我們將繼續致力於投資食品研發、農業技術和先進的數據演算法來推動創新。

(spoken in foreign language) (interpreted) Non-GAAP net profit margin was 2.5% on the back of RMB160 million in non-GAAP net profit. Additionally, GAAP net profit margin was 2% with net profit of RMB130 million.

（外語）（翻譯）非公認會計準則淨利為1.6億元人民幣，非公認會計準則淨利率為2.5％。此外，GAAP淨利潤率為2%，淨利為人民幣1.3億元。

(spoken in foreign language) (interpreted) As of the end of Q3, the balance of cash and cash equivalent short term restricted funds and short term investment amounted to RMB4.3 billion. We continued to optimize CapEx's efficiency in our financing structure excluding short term loans. Our balance of funds was RMB2.64 billion.

（以外語說） （翻譯）截至第三季末，現金及現金等價物短期受限資金及短期投資餘額為43億元。我們繼續在不包括短期貸款的融資結構中優化資本支出的效率。資金餘額26.4億元。

Additionally, free cash flow over the past 12 months increased by RMB270 million as of the end of Q3 to reach RMB780 million.

此外，截至第三季末，過去12個月的自由現金流增加了2.7億元人民幣，達到7.8億元。

(spoken in foreign language) (interpreted) This concludes my prepared remarks. Operator, we can now start the question-and-answer session.

（以外語講） （口譯）我的準備好的發言到此結束。接線員，我們現在可以開始問答環節。

Yes, thank you. We will now begin the question-and-answer session. (Operator Instructions)

是的，謝謝。我們現在開始問答環節。（操作員指令）

Thomas Chong, Jefferies.

傑富瑞 (Jefferies) 的托馬斯張 (Thomas Chong)。

(spoken in foreign language) (interpreted) Congratulations on the company's outstanding performance this quarter, I would like to know how this success was achieved. Additionally, I heard about the company's summer campaign in Q3 beyond the financial resources share. What are the operational achievements have been made? Thank you.

（外語）（口譯）祝賀公司本季的出色業績，我想知道這一成功是如何取得的。此外，除了財務資源共享之外，我還聽說了該公司第三季的夏季活動。取得了哪些營運成果？謝謝。

(spoken in foreign language) (interpreted) Thank you for your question. Our Q3 results were impressive and we're due to a number of operational improvements. First, 80 new frontline fulfillment stations were opened this year, rapidly ramping up order volumes and contributing to growth and profitability.

（外語）（翻譯）感謝您的提問。我們的第三季業績令人印象深刻，我們進行了一系列營運改善。首先，今年開設了 80 個新的一線配送站，迅速增加了訂單量並促進了成長和利潤。

Daily average order volume at these newly opened fulfillment stations are also increasing. This increasing contribution trend is expected to last at least until the same period next year. In particular, the fulfillment stations open in new areas such as Tonglu in Hangzhou and Huangyan in Taizhou have further enhanced our penetration rate into local markets there.

這些新開設的配送站的每日平均訂單量也在增加。預計這種捐款增加趨勢至少將持續到明年同期。尤其是在杭州桐廬、台州黃岩等新地區開設的物流站，進一步提升了我們在當地市場的滲透率。

(spoken in foreign language) (interpreted) Second, we continue to enhance our product structure and categories. Since the beginning of the year, we have expanded our offerings for the coffee table top category including fruits, dairy, wine, snacks, and baked goods.

（外語）（翻譯）第二，我們繼續增強產品結構和品類。自今年年初以來，我們擴大了咖啡桌面類別的供應範圍，包括水果、乳製品、葡萄酒、零食和烘焙食品。

In Q3, Shanghai saw an increase of over 400 SKUs on the shelves per day per station in these four categories compared to the previous year. As we broaden our product variety, average daily transaction volume also has grown for example, average daily transactions in the snack category increased 9% year over year.

第三季度，上海地區上述四個品類單站日上架SKU較去年同期增加超過400個。隨著我們擴大產品種類，每日平均交易量也在增長，例如，零食類別的每日平均交易量比去年同期增長了 9%。

(spoken in foreign language) (interpreted) Lastly, we have significantly enhanced our end to end efficiency. We improved our forecasting system which increased the accuracy of inventory management in our frontline fulfillment stations resulting in low out of stock rates and fewer products near exploration.

（外語）（翻譯）最後，我們顯著提高了端到端的效率。我們改進了預測系統，提高了前線履行站庫存管理的準確性，從而降低了缺貨率並減少了即將勘探的產品數量。

Additionally, we enhance our delivery speed during extreme weather events and holidays. Further improving delivery efficiency. We've also optimized the soonest available appointment time, reducing it by two minutes compared to the same period last year. These enhancements have contributed to a better user experience leading to a 5% point increase year over year in order conversion rates.

此外，我們在極端天氣事件和假日期間也提高了送貨速度。進一步提高配送效率。我們也優化了最早可預約時間，比去年同期縮短了兩分鐘。這些改進有助於改善用戶體驗，使訂單轉換率年增 5%。

(spoken in foreign language) (interpreted) Recent improvements have also contributed to rapid growth in lower tier cities within Jiangsu and Zhejiang. This quarter excluding the top three cities, Shanghai, Suzhou and Hangzhou, GMV and other cities across these regions increased by over 40% year over year. Notably, 13 of these cities experienced a growth rate exceeding 50% year over year.

（外語）（翻譯）最近的改善也促進了江蘇和浙江省二、三線城市的快速成長。本季除上海、蘇州、杭州三大城市外，上述區域其他城市GMV年成長均超過40%。值得注意的是，其中13個城市的年增率超過50%。

(spoken in foreign language) (interpreted) I'd like to share some additional thoughts on our performances quarter. We're still in the early growth phase and are focused on providing quality fresh groceries. We firmly believe that development is the only way forward.

（外語）（翻譯）我想就我們的表演季度分享一些額外的想法。我們仍處於早期發展階段，專注於提供優質新鮮食品。我們堅信，發展才是唯一道路。

Continuous progress and consistent success are vital for us to adapt to an ever changing market and competitive environment will not stop here however, and still have a long way to go. As I have emphasized internally, we must always set higher goals for ourselves and aspire to grade ideals while remaining attentive to small details. We should cultivate resilience against fragility and entropy ensuring that we always adopt a startup mindset.

持續進步和持續成功對於我們適應不斷變化的市場和競爭環境至關重要，但競爭環境不會就此止步，我們還有很長的路要走。正如我內心所強調的，我們要時時為自己設定更高的目標，在追求理想的同時，也要注重細節。我們應該培養抵抗脆弱性和熵的韌性，確保我們始終保持創業思維。

(spoken in foreign language) (interpreted) Thank you.

（外語）（翻譯）謝謝。

Thank you. Yang Bai, CICC.

謝謝。白楊，中金公司。

(spoken in foreign language) I will translate by myself. The company has established its food, research and development, production and processing within the supply chain from early on. As a result, its supply chain capabilities have started to extend to other scale channels. Could you please introduce the supply chain development of Dingdong's self-developed factory this year? Thank you.

（外語）我自己翻譯。公司很早就建立了食品、研發、生產、加工等供應鏈體系。因此，其供應鏈能力開始延伸至其他規模通路。請您介紹今年叮咚自營工廠的供應鏈發展？謝謝。

(spoken in foreign language) (interpreted) Thank you for your question. We've always prioritized product quality as our primary driving force. Our goal is to provide users with differentiated high quality products. To achieve this, we focus on developing independent production and research and development capabilities and our factory direct supply chain is continuously evolving and improving.

（外語）（翻譯）感謝您的提問。我們始終把產品品質作為我們的主要驅動力。我們的目標是為用戶提供差異化的高品質產品。為實現這一目標，我們專注於發展自主生產和研發能力，我們的工廠直銷供應鏈也不斷發展和完善。

By gaining deeper insights into consumer demand, we can better focus our ongoing investment on product development and innovation while also enhancing product efficiency. Currently, we have 12 self-operated factories that specialize in meat cutting and processing grain and bean products as well as prepared meals.

透過深入了解消費者需求，我們可以更好地將持續投資集中在產品開發和創新上，同時提高產品效率。目前，我們擁有12家自營工廠，專門從事肉類分割和加工穀物和豆製品以及熟食。

(spoken in foreign language) (interpreted) Taking meat cutting and processing as an example, we began with the most basic product, white pork. Our daily fresh pork brand, which is widely recognized was built from the ground up and has now become a well-established brand in the market. Currently, we operate five factories with capacity to produce 500,000 boxes of white pork daily positioning us as the factory with the highest overall production capacity in the country.

（外語）（翻譯）以肉類切割和加工為例，我們從最基本的產品白豬肉開始。我們廣受認可的日鮮豬肉品牌是從零開始打造的，現在已成為市場上知名的品牌。目前，我們經營五家工廠，每天可生產 50 萬箱白豬肉，是全國整體生產能力最高的工廠。

(spoken in foreign language) (interpreted) This year we began acquiring and breeding black pigs to produce differentiated high-quality black pork. After extensive research into breeding bases, we selected the Sichuan Tibet region for its ideal conditions.

（外語）（翻譯）今年我們開始收購和飼養黑豬，以生產差別化的優質黑豬。經過對養殖基地的廣泛研究，我們選擇了條件理想的川藏地區。

Black pigs thrive in the mountainous environment of this region often referred to as natural oxygen tanks. These pigs are raised using comprehensive and refined methods resulting in better taste and a higher lean meat ratio and improved health.

黑豬在這個地區的山區環境中茁壯成長，該地區通常被稱為天然氧氣罐。這些豬隻採用全面而精緻的飼養方法，因此口感更好，瘦肉率更高，健康狀況更好。

Our strategic partnership with a black pig breeder boasting nearly 30 years of experience enables us to collaborate closely throughout the -- or through older breeding. This partnership ensures consistent quality and supply with an anticipated volume of 80,000 pigs next year.

我們與一家擁有近 30 年經驗的黑豬飼養商建立了戰略合作夥伴關係，這使我們能夠在整個飼養過程中或透過更早的飼養過程進行密切合作。此次合作確保了始終如一的品質和供應，預計明年的豬產量將達到 80,000 頭。

(spoken in foreign language) (interpreted) We also design products that align with consumer demand and refined product segmentation, processing and packaging for various pork cuts. In addition to our basic fresh grocery offerings, we partner with Cai Chongqing, one of our self-owned brands to create prepared meals featuring black pork.

（外語口語）（翻譯）我們也設計符合消費者需求的產品，並針對各種豬肉切塊進行精細化的產品細分、加工和包裝。除了基本的新鮮食品外，我們還與自有品牌之一菜重慶合作，推出以黑豬肉為特色的熟食。

We also innovatively develop products such as luncheon meat and lard residue. Notably, lard residue once considered valueless and destined for disposal has now transformed into a popular coffee table snack among consumers. In Q3, GMV of Black Diamond Family, our black pork brand was approximately RMB60 million, year-over-year increase of nearly 45%.

我們也創新開發了午餐肉、豬油渣等產品。值得注意的是，曾經被認為毫無價值並註定要被丟棄的豬油殘渣現在已變成了深受消費者喜愛的咖啡桌小吃。第三季度，黑鑽家族黑豬肉品牌GMV約6,000萬元，較去年同期成長近45%。

Additionally, we plan to open four to five black pork physical store this year with two already open as of October allowing us to better meet consumers' growing demand for a better life across more diverse channels and through improved products.

此外，我們計劃今年新開四到五家黑豬肉實體店，截至10月份已經有兩家開業，這將使我們能夠透過更多樣化的管道和更完善的產品來更好地滿足消費者日益增長的美好生活需求。

(spoken in foreign language) (interpreted) Lastly, our external sales channels are experiencing significant growth in Q3 external sales revenue from our three major product categories, meat, cereals and prepared meals reached nearly RMB100 million, a 180% year-over-year increase. This substantial growth underscores the strength and potential of our supply chain. Thank you.

（外語）（翻譯）最後，我們的外部銷售管道正在經歷顯著的增長，我們三大產品類別（肉類，穀物和預製食品）第三季度的外部銷售收入達到近人民幣 1 億元，同比增長 180％。這一大幅成長凸顯了我們供應鏈的實力和潛力。謝謝。

Thank you. (Operator Instructions) [Zing Zing Lee] CMS.

謝謝。（操作員指示）[Zing Zing Lee] CMS。

(spoken in foreign language) (interpreted) I have noticed that the company's cash situation is improving significantly. Can you provide a more detailed introduction to the company's cash situation? Thank you.

（外語）（翻譯）我注意到公司的現金狀況正在顯著改善。能否更詳細地介紹一下公司的現金狀況？謝謝。

(spoken in foreign language) (interpreted) Thank you for your question. I'll pass the question on to our CFO Wang Song.

（外語）（翻譯）感謝您的提問。我將把這個問題轉交給我們的財務長王松。

(spoken in foreign language) (interpreted) Thank you Mr. Liang. As you mentioned, the scale and profitability of our business is expanding which is positively impacting our cash position. I would like to highlight four key aspects to give a brief overview of our overall position of funds.

（外語）（翻譯）謝謝梁先生。正如您所說，我們的業務規模和盈利能力正在擴大，這對我們的現金狀況產生了積極影響。我想從四個關鍵方面來簡要介紹一下我們的整體資金狀況。

(spoken in foreign language) (interpreted) First, our operating cash flow has consistently improved with net inflow of five consecutive quarters. This trend indicates a strengthening ability to generate self-sustaining cash.

（外語）（翻譯）首先，我們的經營現金流持續改善，連續五個季度實現淨流入。這一趨勢顯示產生自給現金的能力正在增強。

In Q3 net inflow reached RMB400 million, an increase of RMB270 million from the same period last year and the highest level in the past two years. Free cash flow over the past 12 months was RMB780 million, another recent historic peak. As previously mentioned, we're increasing our target and plan to open approximately 110 frontline fulfillment stations this year with CapEx expected to be around RMB60 million. We have ample cash on hand to expand our fulfillment station network.

三季淨流入4億元，較去年同期增加2.7億元，為近兩年來最高水準。過去12個月的自由現金流為7.8億元人民幣，再創近期歷史新高。如前所述，我們正在提高目標，計劃今年開設約 110 個一線配送站，預計資本支出約為人民幣 6,000 萬元。我們有充足的現金來擴大我們的配送站網路。

(spoken in foreign language) (interpreted) Second, we continue to enhance inventory management capabilities and improve the efficiency of our net working capital through advanced data algorithms. In Q3, inventory turnover days were decreased to 10.7 days, 1.3 days less than the same period last year.

（外語）（口譯）第二，我們持續增強庫存管理能力，透過先進的數據演算法提高淨營運資本的效率。三季度，庫存週轉天數下降至10.7天，年減1.3天。

Additionally, we're committed to fostering a robust ecosystem among our upstream and downstream partners. Given the relatively short payment period for suppliers in the industry, we're working to provide greater support and empowerment to partners by continuously optimizing our payment terms. In Q3, the average payment period for accounts payable was 32.4 days, a decrease of 3.8 days compared to the same period last year.

此外，我們致力於在我們的上游和下游合作夥伴之間建立強大的生態系統。鑑於業界供應商的付款週期相對較短，我們致力於透過不斷優化付款條件，為合作夥伴提供更大的支援和授權。三季度，應付帳款平均付款週期為32.4天，年減3.8天。

(spoken in foreign language) (interpreted) Third, to improve capital efficiency, we're actively optimizing our financing structure. As of the end of September, our interest bearing debt balance was RMB1.66 billion. A decrease of 55.2% from the same period last year, this decrease has significantly lowered our financial expenses. Additionally, net interest income in Q3 increased by more than RMB13 million compared to the same period last year, an impressive increase of 83.5%.

（外語）（翻譯）第三，為提高資金效率，我們正積極優化融資結構。截至9月底，本行有息債務餘額為16.6億元。與去年同期相比下降了55.2%，顯著降低了我們的財務費用。此外，第三季淨利息收入較去年同期增加1,300多萬元，增幅高達83.5%。

(spoken in foreign language) (interpreted) Lastly leveraging our optimized financing structure, our actual self-owned funds balance after deducting the interest bearing debt increased for the fifth quarter in a row. As of September the 30, 2024 it stood at RMB2.64 billion, an increase of RMB320 million sequentially and the highest level recorded in recent years demonstrating the strength of our balance sheet.

（外語）（翻譯）最後，得益於我們優化的融資結構，扣除有息債務後，我們的實際自有資金餘額連續五個季度增加。截至 2024 年 9 月 30 日，該餘額為人民幣 26.4 億元，環比增加人民幣 3.2 億元，創近年來的最高水平，證明了我們資產負債表的強勁。

Coupled with the healthy development of our business and ongoing improvement in capital efficiency and financing structure, we have ample resources to support our future growth.

加上我們業務的健康發展以及資金效率和融資結構的持續改善，我們擁有充足的資源來支持我們未來的成長。

(spoken in foreign language) (interpreted) Thank you.

（外語）（翻譯）謝謝。

Thank you. (Operator Instructions) Alright. As there are no further questions, I would like to turn the call to our management.

謝謝。（操作員指令）好的。由於沒有其他問題，我想將電話轉給我們的管理階層。

Thank you again for joining our call today. If you have any further questions, please feel free to contact us or request through our website. We look forward to speaking with everyone in your next earnings call. Have a good day and have a good night.

再次感謝您今天參加我們的電話會議。如果您有任何其他問題，請隨時聯絡我們或透過我們的網站提出請求。我們期待在下次財報電話會議上與大家交談。祝您有美好的一天並度過美好的夜晚。

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

謝謝。會議現已結束。感謝您參加今天的演講。現在您可以斷開線路了。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。