Q3 2024 Dingdong (Cayman) Ltd Earnings Call
Thank you for being here dusk and dawn. Have a nice evening. Good-night.
Speaker Change: Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to the Ding Dong Limited third quarter 2024 earnings conference call.
Speaker Change: At this time, all participants are in a listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to the first speaker today, Nicky Zheng, Director of Investor Relations. Please go ahead, sir.
Speaker Change: Thank you for watching!
Nicky Zheng: Thank you, hello everyone and welcome to DingDong's 3rd quarter 2024 NISCO With me today are Mr. Changlin Liang, our founder and CEO and Mr. Song Wang, our CFO
Speaker Change: You can refer to our third quarter 2024 financial results on our IR website at ir.me. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion.
Speaker Change: For today's call, management will go through their prepared remarks, which will be followed by a question and answer session.
Speaker Change: Before I continue, I would like to refer you to our safe harbor statement in your earnings press release, which also applies to this call.
Speaker Change: Thanks for watching!
Speaker Change: as we will be making forward-looking statements.
Speaker Change: Please note that all numbers stated in the following management prepared remarks are in RMB terms.
Speaker Change: And we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earliest press release, and findings with the SEC.
Nicky Zheng: I will now turn the call to our first speaker today, the founder and CEO of Dingdong, Mr. Liang.
Speaker Change: Thanks for watching!
Mr. Liang: Thank you, investors.
Speaker Change: Income has grown on record throughout three seasons both cash and net profit This season also performed great based on the continued optimized deep foundation
Speaker Change: Through the encryption of the existing market layout, we continue to provide better products and services to new and old users, helping us to achieve scale and profit.
Speaker Change: Thank you for joining Dingdong Earnings Call for Q3 2024. I'm pleased to report that we achieved non-gap profitability for the 8th consecutive quarter and gap profitability for the 3rd consecutive quarter.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Thanks for watching!
Speaker Change: Thanks for watching!
Speaker Change: In Q3 2024, we generated GMV of 7.27 billion renminbi.
Speaker Change: a 28.3% year-over-year increase.
Speaker Change: Gap net profit was 133 million RMB, an increase of more than 62 times from the same period last year, with a gap net profit margin of 2%, up 2 percentage points year over year.
Speaker Change: In terms of users, QCAN has over 8.2 million users
Speaker Change: 其中会员月均下单7.6次 同比提升9.8%
Speaker Change: On the basis of user growth and review improvement
Speaker Change: Thanks for watching!
Speaker Change: This rapid growth was primarily attributable to the growing scale of our user base, increases in our pool, and higher user penetration rate in our existing markets. Average number of active transacting users reached approximately 8.22 million, a 24.5% year-over-year increase.
Speaker Change: A wallet share per customer also continued to grow during the quarter with average monthly ARPU increasing 6.4% and average monthly ARPU for a member increasing 8.8% year-over-year to 540 RMB.
Speaker Change: As our user base rapidly expands, user stickiness is also on the rise.
Speaker Change: Users placed 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%.
Speaker Change: Furthermore, retention rates among new users are strengthening, with a 12-month retention rate of 57.3% for transacting members.
Speaker Change: 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.
Speaker Change: In the region, Jiangsu and Zhejiang are still the core sources of our growth. In this quarter, the GDP of Shanghai and Jiangsu-Zhejiang regions increased by 24.5% and 40% respectively. In a single day, the number of military orders in Changjin was nearly 1,700. In Jiangsu and Zhejiang, the number of military orders exceeded 1,000.
Speaker Change: Thanks for watching!
Speaker Change: Geographically, Jiangsu, Zhejiang and Shanghai continue to be the primary growth drivers.
Speaker Change: Shanghai's GMV increased by 24.5% year-over-year during the quarter, while Jiangsu and Zhejiang increased by approximately 40% each.
Speaker Change: 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.
Speaker Change: The above growth is mainly due to, first, the continuous optimization of the front compartment layout in the Jiangsu and Zhejiang regions. As of the end of Q3, 80 new front compartments have been opened. 40 new front compartments were opened in the third quarter.
Speaker Change: Thank you all.
Speaker Change: We have 866 orders, and we are maintaining a steady climb. Our plan is to further improve the opening of all-year-old warehouses. We expect to open about 110 new warehouses all year round. The layout of the warehouses in the core area continues to be encrypted and optimized, which will further improve our delivery efficiency and optimize delivery costs.
Speaker Change: will set a good foundation for the scale of growth in 2025.
Speaker Change: Thanks for watching!
Speaker Change: The growth mentioned above was primarily driven by the following factors. We continued to refine our network of frontline fulfillment stations in Jiangsu, Zhejiang and Shanghai. 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 duty order volume for these new stations steadily ramped up to 866 orders during the quarter.
Speaker Change: Looking ahead, we're increasing our target for new fulfillment stations openings in 2024 to approximately 110.
Speaker Change: 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.
Speaker Change: Our robust fresh grocery supply chain capabilities in Shanghai have now expanded into Jiangsu and Zhejiang, allowing us to begin offering an expanded
Speaker Change: array of categories such as leisure products.
Speaker Change: dairy, beverages, and coffee table top products.
Speaker Change: 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.
Speaker Change: In addition, Beijing and Guangzhou-Shenzhen areas' GNVs this quarter, even under the influence of power outages at the beginning of the year, are still 14.6% and 2.9% respectively. These two areas have achieved the goal of steady growth on the basis of large-scale reduction of losses.
Speaker Change: Thanks for watching!
Speaker Change: Additionally, even under the impact of Frontline Fulfillment Station's 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 reduced losses in these two regions but also hit our goal of driving sustainable growth at scale.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: This year, we focused on 45 strategic categories with significant opportunities.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: In the 4th quarter, net profit and size will still maintain the same growth as in the previous quarter and continue to achieve non-GAAP and GAAP-based profits. We are confident in the rapid development of this year's and future company business.
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: This is the end of my speech. Thank you. Next, I would like to invite CFO Wang Song to introduce the company's financial situation.
Speaker Change: This concludes my prepared remarks. Thank you all for listening. I would like to turn the call over to our CFO, Wang Feng, to go over our financials.
Wang Feng: Thank you, Mr. Liang. Hello, everyone. Before I introduce our financial situation to you, I would like to explain that all of our numbers are in the RMB unit.
Wang Feng: 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 renminbi.
Speaker Change: Thanks for watching!
Speaker Change: 冷淡的标准下我们继续保持盈利
Speaker Change: 2.5%
Speaker Change: The total net profit is 1.6 billion yuan, which is 9 times higher than the growth rate. At the same time, under the GEPP, we also continue to maintain a profit of 2% of net profit, which is 2% higher than the growth rate. The total net profit is 1.33 billion yuan, which is 1.3 billion yuan higher than the growth rate.
Speaker Change: In Q3, cash flow and net inflow was 4 billion yuan, and the growth was 2.7 billion yuan. This is the cash flow and net inflow that we have maintained for five consecutive quarters.
Speaker Change: The significant growth also allowed us to achieve a new historic high in profitability with a non-gap net profit of $160 million, over 9 times higher than the same period last year. Non-gap net profit margin was 2.5%, an increase of 2.2 percentage points from the same period last year.
Speaker Change: Gap net profit was 133 million RMB, an increase of 131 million RMB year-over-year, with net profit margin expanding 2 percentage points from the same period last year to 2%.
Speaker Change: Operating net cash inflow in Q3 reached 400 million RMB, an increase of 270 million RMB compared to the same period last year. This marks the fifth consecutive quarter of net cash inflow from operating activities.
Speaker Change: Thanks for watching!
Speaker Change: The growth of JD.com is due to our commitment to the original intention and mission. At the same time, it is also a strong reflection of our continued development based on our supply chain capability.
Speaker Change: Next, let's take a look at Q3's financial situation. Q3's GNV is 727 billion yuan, which is 28.3% higher than the previous year.
Speaker Change: 除了前面已经提到的各区域的情况以外,除了前面已经提到的各区域的情况以外, 我们全国有14个城市获得了50%以上的同比增长。我们全国有14个城市获得了50%以上的同比增长。 在湖州、南通、温州等城市,年同增长更是在70%以上。 在湖州、南通、温州等城市,年同增长更是在70%以上。
Speaker Change: Our high-quality growth is fuelled by our commitment to our original goals and mission and reflects our continued sustainable development of our business.
Speaker Change: anchored in our robust supply chain capabilities.
Speaker Change: Let's now go into further detail. GMV was 7.27 billion RMB, 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 surpassed 70%.
Speaker Change: Thanks for watching!
Speaker Change: Although we have carefully increased the width of the product supply, Q3's overall re-deployment rotation time is 10.7 days, which is 1.3 days faster than before.
Speaker Change: Thanks to our ability to predict and operate, and the efficient cooperation between teams,
Speaker Change: Thanks for watching!
Speaker Change: Gross profit margin was 29.8%, a 0.6 percentage point 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.
Speaker Change: Moreover, enhancements made to our supply chain and operational efficiency have
Speaker Change: to 10.7 days, 1.3 days less than the same period last year.
Speaker Change: Our ability to implement intelligent forecasting and operational scheduling system, along with effective team collaboration, has strengthened our supply chain management capabilities.
Speaker Change: While maintaining a stable loss rate, we have also reduced the out-of-stock rate of our top products by 1.4 percentage points compared to the same period last year.
Speaker Change: Q3's profit margin is 21.4%
Speaker Change: Tongpi optimized 1.8% last year
Speaker Change: 同比提升了27.9% 同时,我们借助算法和供应链运营能力 不但提升我们的服务力 Q3的30分钟内送达的订单占比 同比提升了3.5个百分点
Speaker Change: Thanks for watching!
Speaker Change: Our fulfillment expense rate improved to 21.4%, a 1.8 percentage point decrease compared to the same period last year.
Speaker Change: With Average Order Value, or ALV, remaining stable year-over-year, we achieved significant efficiency gains from an increase in Average Order Volume per fulfillment station.
Speaker Change: As a result, the proportion of orders delivered within 30 minutes in Q3 increased by 3.5 percentage points year-over-year.
Speaker Change: which is 0.2% higher than last year.
Speaker Change: It continues a stable course of inflationary operations on a marketing fee and helps you infiltrate in the dominant market for larger-scale growth.
Speaker Change: Our marketing expense rate was 2.2%, an increase of 0.2% 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.
Speaker Change: Q3's management and R&D costs combined with the income ratio decreased by 0.9% compared to the same period last year This is mainly due to the scale effect We will continue to invest in food R&D, agricultural technology and technical data algorithms as before
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: Thanks for watching!
Speaker Change: In 2020 Q3, we achieved a 2.5% net profit rate under the Nangai Standard, a net profit amount of 1.6 billion yuan. At the same time, we also achieved a 2% net profit rate under the Nangai Standard, a net profit amount of 1.3 billion yuan.
Speaker Change: Non-GAAP net profit margin was 2.5% on the back of 160 million RMB in non-GAAP net profit. Additionally, GAAP net profit margin was 2% with net profit of 130 million RMB.
Speaker Change: In the past 12 months, the free cash flow has increased by 2.7 billion yuan to 7.8 billion yuan at the end of the second quarter.
Speaker Change: Thanks for watching!
Speaker Change: As of the end of Q3, the balance of cash and cash-equivalent short-term restricted funds and short-term investments amounted to 4.3 billion renminbi.
Speaker Change: We continue to optimize CapEx efficiency in our financing structure.
Speaker Change: Excluding short-term loans, our balance of funds was 2.64 billion renminbi. Additionally, free cash flow over the past 12 months increased by 270 million renminbi as of the end of Q3 to reach 780 million renminbi.
Speaker Change: This concludes my prepared remarks. Operator, we can now start the question and answer session.
Speaker Change: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then want on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw it, please press star then 2.
Speaker Change: When asking a question, please state it in Chinese first and then repeat it in English for the convenience of everyone on the call.
Speaker Change: At this time, we will pause momentarily to assemble the roster.
Speaker Change: Thanks for watching!
Speaker Change: And the first question comes from Thomas Chong with Jefferies.
Thomas Chong: Good evening. Thank you for introducing my question. Congratulations on achieving such excellent results this quarter. May I ask how you achieved this?
Thomas Chong: and predications of audience questions, which not only includes financial results, but also brings more practical results.
Speaker Change: Thank you to all for your great work and for 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 results shared, what other operational achievements has been made. Thank you.
Speaker Change: In addition, in Tonglu, Hangzhou, Huangyan and other areas in Taizhou, the newly opened tobacco factory has further improved our local success rate.
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: The military-to-soldier ratio has also improved For example, under the same lens, the military-to-soldier ratio of snacks has increased by 9%
Speaker Change: Second, we continue to enhance our product structure and categories.
Speaker Change: Since the beginning of the year, we have expanded our offerings for the coffee tabletop category, including fruits, dairy, wine, snacks, and baked goods.
Speaker Change: 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.
Speaker Change: As we broaden our product variety, average daily transaction volume also has grown. For example, average daily transactions in the Snacks category increased 9% year over year.
Speaker Change: Third, the efficiency of single-to-single is further improved. On the one hand, we have improved the prediction system, improved the accuracy of the storage information of the front-end warehouse, and improved the delivery rate and delivery rate. On the other hand, we have improved the delivery efficiency by improving the response speed in special weather and holidays, and optimized the shortest possible time for two minutes. These have brought better user experience. The order conversion rate has also increased by five percent.
Speaker Change: 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 expiration.
Speaker Change: I love you. I love you.
Speaker Change: Further improving delivery efficiency, we've also optimized the soonest available appointment time, reducing it by 2 minutes compared to the same period last year. These enhancements have contributed to a better user experience, leading to a 5 percentage point increase year-over-year in order conversion rates.
Speaker Change: These improvements have led to rapid growth in low-tier cities in Jiangsu and Zhejiang Provinces. In this quarter, in addition to the top three cities in Shanghai, Suzhou, Hangzhou, and Jiangsu and Zhejiang Provinces, other cities' GNVs have grown by more than 40%.
Speaker Change: 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.
Speaker Change: For the achievement of this season, I would like to talk about some insights and ideas. Dingdong Buying and Selling is a start-up company that makes good food. We firmly believe that progress and development are the hard truth. Only by continuing to make progress and win battles can we have the confidence to deal with a society that not only changes, but also a business environment full of competition. We will never be satisfied with our current achievements. Just like what we share and demand internally, we are always on the verge of success, but we can achieve nothing. We can fight against weakness and fight against injury, and we will always be on the way to start-up.
Speaker Change: Thanks for watching!
Speaker Change: I'd like to share some additional thoughts on our performance this quarter. We're still in the early growth phase and are focused on providing quality fresh groceries.
Speaker Change: We firmly believe that development is the only way forward. Continuous progress and consistent success are vital for us to adapt to an ever-changing market and competitive environment. We'll not stop here, however, and still have a long way to go.
Speaker Change: As I have emphasized internally, we must always set higher goals for ourselves and aspire to great ideals while remaining attentive to small details.
Speaker Change: We should cultivate resilience against fragility and entropy, ensuring that we always adopt a startup mindset.
Speaker Change: Thanks for watching!
Speaker Change: Thank you.
Speaker Change: Thank you and the next question comes from Yong Bai with CICC
Yong Bai: 谢谢管理层,我想问一个有关步兵链的问题 Thank you, Mr. Changlin, I'd like to ask a question about步兵链
Yong Bai: The company set up food development and production processing early on in the supply chain. And we see that the company's supply chain capacity has begun to expand to other sales channels. Can you introduce us to the construction of the free supply chain of Dingdong Maitai this year?
Yong Bai: I will translate that 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.
Speaker Change: Could you please introduce the supply chain development of Dingdong's self-developed factory this year? Thank you
Speaker Change: 好商品
Speaker Change: The ability to produce and develop our own products is a necessary condition for us to achieve our goals. Our factory's industrial capacity has been constantly increasing. Based on our constantly increasing consumer demand and observation capacity, we need to pay more attention to the continuous investment in product development and innovation capacity, while at the same time improving production efficiency. At present, we have 12 self-operated factories, which cover meat processing, antiques, bean products, and jade dishes.
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: 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. By gaining deeper insights into consumer demand, we can better focus our ongoing investment on product development and innovation, while also enhancing product efficiency.
Speaker Change: Currently, we have 12 self-operated factories that specialize in meat cutting and processing grain and bean products as well as prepare meals.
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: Currently, we operate five factories with capacity to produce 500,000 boxes.
Speaker Change: Thanks for watching!
Speaker Change: Thanks for watching!
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: Blackpink's
Speaker Change: thrive in the mountainous environment of this region, often referred to as natural oxygen tanks.
Speaker Change: These pigs are raised using comprehensive and refined methods resulting in better taste and a higher lean meat ratio and improved health. Our strategic partnership with a black pig breeder boasting nearly 30 years of experience enables us to collaborate closely throughout.
Speaker Change: through otter breeding. This partnership ensures consistent quality and supply with an anticipated volume of 80,000 pigs next year.
Speaker Change: Thanks for watching!
Speaker Change: 今年Q3,我们的黑猪品牌黑钻石家近为约6000万元,同比增长了近45%,而且我们计划今年开4到5家黑猪肉线下门店,10月份已经开了两家。
Speaker Change: so that we can serve different consumers in more channels and through better products serve consumers' growing needs for a better life.
Speaker Change: We also design products that align with consumer demand and refine product segmentation, processing, and packaging for various pork cuts.
Speaker Change: In addition to our basic fresh grocery offerings, we partnered with Cai Chengqing, one of our self-owned brands, to create prepared meals featuring black pork.
Speaker Change: We also innovatively developed 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.
Speaker Change: In Q3, GMV of Black Diamond family, our black pork brand was approximately 60 million renminbi, a year-over-year increase of nearly 45%.
Speaker Change: Additionally, we plan to open 4 to 5 Black Pork physical stores this year, with 2 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.
Speaker Change: Finally, our external sales channels are growing very fast. This year, Q3, Roli, Guli and Yuzhizai, three major categories, the foreign exchange revenue is nearly 100 million yuan, and the growth rate is 180%. It also proves our ability and potential for free supply and demand. Thank you.
Speaker Change: This substantial growth underscores the strength and potential of our supply chain. Thank you.
Speaker Change: Thank you, and once again, please press star then 1 if you would like to ask a question.
Speaker Change: Thanks for watching!
Speaker Change: And the next question comes from...
Speaker Change: and Xingxin Li with CMS.
Xingxin Li: I have noticed that the communist cash situation is improving significantly. Can you provide a more detailed introduction to the communist cash situation? Thank you.
Speaker Change: Thank you for your question. This question is for Song Wang from CFO.
Speaker Change: Thank you for your question. I'll pass the question on to our CFO, Wang Feng.
Wang Feng: Okay, thank you, Mr. Liang. As you can see, as our scale and profits continue to grow in high quality, our cash situation continues to improve. I will start with four aspects, and briefly introduce the overall situation of the company's funds to you.
Wang Feng: 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.
Wang Feng: eh
Wang Feng: As mentioned earlier, we will open around 110 warehouses this year. The capital expenditure is around 60 million RMB. So we have sufficient funds to support our opening plan.
Wang Feng: Thanks for watching!
Wang Feng: 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. In Q3, net inflow reached 400 million RMB, an increase of 270 million RMB from the same period last year, and the highest level in the past two years.
Wang Feng: Free cash flow over the past 12 months was 780 million RMB, another recent historic peak.
Wang Feng: 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 60 million RMB. We have ample cash on hand to expand our Fulfillment Station network.
Wang Feng: Second, we continue to optimize the storage management ability through data algorithms to improve the efficiency of operating funds. Q3's re-spin cycle time is 10.7 days, which is 1.3 days faster than before.
Wang Feng: In addition, we have always striven to build a good upstream and downstream ecology. Based on the relatively short supply chain in the industry, in order to give our partners more support and benefits.
Wang Feng: We are still optimizing the debt period. Q3's debt period is 32.4 days on average, which is reduced by 3.8 days.
Wang Feng: through advanced data algorithms.
Wang Feng: In Q3, inventory turnover days were decreased to 10.7 days, 1.3 days less than the same period last year. Additionally, we're committed to fostering a robust ecosystem among our upstream and downstream partners.
Wang Feng: 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.
Wang Feng: 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.
Wang Feng: Thanks for watching!
Wang Feng: At the end of September, our game debt amounted to 16.6 billion yuan, which was reduced by 55.2% at the end of September last year, which greatly reduced the company's financial expenses. Our Q3 interest income amounted to 13.11 million yuan, which was increased by 83.5%.
Wang Feng: Thanks for watching!
Speaker Change: Third, to improve capital efficiency, we're actively optimizing our financing structure. As of the end of September, our interest-bearing debt balance was 1.66 billion RMB, a decrease of 55.2% from the same period last year.
Speaker Change: This decrease has significantly lowered our financial expenses. Additionally, net interest income in Q3 increased by more than RMB 13 million compared to the same period last year, an impressive increase of 83.5%.
Speaker Change: Finally, on the basis of the company's optimization of the structure of the farm, after deducting the above-mentioned game liabilities, our self-funded balance is 26.4 billion yuan.
Speaker Change: has achieved a gold increase of five consecutive quarters and increased by 320 million yuan at the end of last quarter and reached the highest point in recent years.
Speaker Change: This shows that the company's cash reserves are very sufficient. In addition, as mentioned earlier, the company's business is developing healthily. The efficiency of funding and financing structure are constantly improving. We have sufficient bullets to support our future development.
Speaker Change: Thanks for watching!
Speaker Change: 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.
Speaker Change: As of September 30, 2024, it stood at 2.64 billion RMB, an increase of 320 million RMB sequentially and the highest level recorded in recent years, demonstrating the strength of our balance sheet.
Speaker Change: 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.
Speaker Change: Xièxiè.
Speaker Change: Thank you.
Speaker Change: Thank you for watching!
Speaker Change: Alright, as there are no further questions, I would like to return the call to our management.
Speaker Change: 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.
Speaker Change: We look forward to speaking with everyone in our next earnings call. Have a good day and have a good night.