Dingdong (Cayman) Limited (NYSE:DDL) shares gained 2.18% in premarket trading on Thursday after the fresh grocery e-commerce company delivered strong profit growth in the second quarter, helping offset revenue that fell short of analyst expectations.
The company reported adjusted earnings per share of RMB0.90 ($0.13), while revenue reached RMB6.49 billion ($956.1 million), below the analyst consensus of RMB6.9 billion.
Despite missing forecasts, revenue increased 8.6% year on year from RMB5.98 billion in the second quarter of 2025.
China business grows as customer activity improves
Revenue from Dingdong’s China operations increased 8.3% year on year to RMB6.41 billion ($945.3 million).
Growth was supported by a higher average number of monthly transacting users and increased order frequency, particularly among loyal customers. These gains were partially offset by lower prices across important product categories, including pork.
The company’s overseas operations expanded at a considerably faster rate, with revenue climbing 36.2% to RMB73.2 million ($10.8 million).
“Our steady revenue growth and consistent profitability are mainly attributed to the growth in average monthly ordering users among our loyal members and the increase in average monthly order frequency,” said CEO Song Wang.
Adjusted net income more than doubles
Profitability improved substantially during the quarter, with adjusted net income surging 120.2% year on year to RMB281.3 million ($41.5 million), compared with RMB127.8 million a year earlier.
The performance marked Dingdong’s fifteenth consecutive quarter of adjusted profitability.
Reported net income reached RMB271.7 million ($40.0 million), up from RMB107.2 million in the corresponding period of 2025.
Dingdong noted that the cessation of depreciation and amortisation on assets classified as held for sale boosted quarterly net income by RMB199.1 million ($29.3 million).
Margins strengthen as operating profit surges
Dingdong also recorded an improvement in underlying operating metrics.
Gross margin expanded to 29.6% from 28.8% in the same quarter last year, while operating income jumped 209.6% year on year to RMB252.8 million ($37.3 million).
The combination of stronger margins, higher customer engagement and increased ordering frequency helped the company deliver significantly faster profit growth than revenue growth.
Thursday’s positive share-price reaction suggests investors placed greater emphasis on the improvement in profitability than on the headline revenue shortfall.
Meituan deal awaits regulatory approval
Attention also remains on Dingdong’s planned divestiture of its China business to Meituan (HKEX:3690).
The transaction remains subject to anti-monopoly approval, making regulatory clearance an important upcoming milestone for the company and its shareholders.
For now, Dingdong’s latest results show continued revenue expansion alongside a substantial improvement in profitability. While the revenue miss and pricing pressure in key grocery categories remain areas to watch, fifteen consecutive quarters of adjusted profitability and rapidly expanding operating income provided support for the stock following the results.
Dingdong stock price
