Online grocery Dingdong Maicai posted mixed results for the second quarter ended June in its first-ever quarterly report published on Monday.
Why it matters: After a downsized IPO, the Chinese online grocer faces souring market sentiment. Investor enthusiasm toward the online grocery delivery industry has cooled as the sector grows more competitive and attracts regulatory scrutiny.
Details: Dingdong Maicai recorded second quarter revenue of RMB 4.6 billion ($719.6 million), climbing 77.9% year-on-year.
- The company’s gross merchandise volume for the reporting period reached RMB 5.4 billion, increasing 80.8% year-over-year from RMB 2.9 billion in the same quarter of 2020.
- However, Dingdong’s net loss more than doubled to RMB 1.7 billion, compared with RMB 714.5 million a year ago.
- The number of average monthly users on the delivery platform reached 8.4 million, up 39.1% from a year ago.
- Dingdong Maicai manages its own warehouses in residential neighborhoods for quick delivery. The company operated 1,136 such facilities as of June, more than double the 625 warehouses of rival MissFresh.
- “Geographically speaking, we achieved 49.8% year-over-year growth in our GMV from our most mature markets in the Yangtze Delta region,” said Liang Changlin, founder and chief executive officer of Dingdong, in an emailed statement, referring to the area along Yangtze River in eastern China which includes Shanghai, as well provinces of Jiangsu, Zhejiang, and Anhui.
- Growth was mainly driven by a rise in customers and an increase in purchase frequency from existing users.
- In the third quarter, the company expects a 100% year-on-year revenue increase and improved gross margin. Dingdong also expects its net losses to narrow over the next two quarters.
- Shares in Dingdong closed at $21.31 in overnight trading in the US on Monday. The company’s offering price was $23.5 apiece.
Context: Dingdong Maicai raised $95.7 million after making its New York debut in late June. The company downsized its IPO by more than 74% from its initial $357 million target set earlier in the month. MissFresh, which filed for a US IPO on the same day as Dingdong, raised $273 million in a Nasdaq IPO on June 26.