Dingdong Q2 2026 Earnings: Revenue Rises as Held-for-Sale Accounting Lifts Profit

Dingdong (NYSE: DDL) reported Q2 2026 aggregate revenue of RMB6,487.3 million, up 8.6% year over year, while diluted EPS increased to RMB0.87 from RMB0.33. GMV rose 11.8% to RMB7,265.3 million, and net income reached RMB271.7 million. However, reported profit included a RMB199.1 million benefit from suspending depreciation and amortization for the China business classified as held for sale.

Core Financial Results

The unaudited results cover the quarter ended June 30, 2026. Revenue growth was supported by more transacting users, higher monthly order frequency, additional fulfillment capacity in Eastern China, and expansion of the overseas customer base.

The figures below are aggregate amounts combining the continuing overseas business and the discontinued China business. Amounts are in RMB millions except margins and per-share data.

Non-GAAP net income excludes only share-based compensation. It does not remove the benefit arising from the suspension of depreciation and amortization for the held-for-sale China assets.

Business and Segment Performance

China revenue, reported within discontinued operations, increased 8.3% to RMB6,414.1 million. The company attributed the increase to more orders, growth in average monthly transacting users, higher order frequency, and new frontline fulfillment stations that improved density and market penetration in Eastern China.

Those gains were partially offset by lower consumer prices in categories including pork and the closure of inefficient stations in Beijing and the Guangzhou-Shenzhen area. China remained the primary contributor to Dingdong’s aggregate revenue and generated net income of RMB334.9 million, including the held-for-sale accounting benefit.

Overseas revenue increased 36.2% to RMB73.2 million as the company expanded into additional markets and grew its customer base. However, the overseas net loss widened 166.3% to RMB63.2 million from RMB23.7 million. The segment therefore delivered faster revenue growth but remained a drag on consolidated profitability and cash flow.

Profitability, Cash Flow, and the Balance Sheet

Cost of goods sold increased 7.4%, slower than revenue, and gross margin improved to 29.6% from 28.8%. Fulfillment expense fell 7.0% to RMB1,207.0 million, while its share of revenue declined to 18.6% from 21.7%, providing an important contribution to reported operating income.

Sales and marketing expense increased 22.8% as Dingdong spent more on promotional activities, lifting the expense ratio to 1.9% from 1.7%. General and administrative expense rose 3.1%, primarily because of staff costs, while product development expense increased 6.9% as the company continued investing in agricultural technology, data algorithms, and AI capabilities.

Total operating cash flow increased to RMB126.6 million, but its composition was uneven. The discontinued China business generated RMB196.6 million, while continuing overseas operations used RMB69.9 million, compared with RMB19.9 million used a year earlier.

Cash and cash equivalents, restricted cash, and short-term investments totaled RMB4,880.9 million at June 30, up from RMB3,820.0 million at March 31. Dingdong’s broader net liquidity measure—including long-term deposits and deducting short-term borrowings—increased to RMB3,284.0 million from RMB3,210.6 million.

Short-term borrowings associated with the discontinued China operations totaled RMB1,646.8 million. This included a US$157 million short-term loan arranged to transfer funds to Dingdong Cayman before fixed-term wealth management products matured at the end of August; the company said the loan would be repaid with those proceeds.

Held-for-Sale Accounting Drove Most of the Profit Increase

Dingdong agreed on February 5, 2026, to divest its China business to Meituan. The transaction remained pending at the time of the results release, subject to customary closing conditions including antitrust approval from China’s State Administration for Market Regulation.

After the China business was classified as held for sale, Dingdong stopped recording depreciation and amortization on its long-lived China assets. This increased Q2 net income by RMB199.1 million and also affected cost of goods sold and the company’s operating expense categories.

The accounting benefit exceeded the RMB164.5 million year-over-year increase in reported net income. Consequently, improved fulfillment efficiency and order growth contributed to the quarter, but they do not by themselves explain the reported profit increase. Because Dingdong’s non-GAAP measure excludes only share-based compensation, the same RMB199.1 million factor also remains embedded in non-GAAP earnings.

Management Commentary

CEO Song Wang attributed the company’s revenue growth and profitability to more average monthly ordering users among loyal members, increased monthly order frequency, and continued efforts to improve product quality and address more consumption occasions.

Management also said growth accelerated after the quarter ended. Since July, monthly GMV reached a record, and single-day GMV exceeded RMB100 million multiple times. These comments provide an operating update rather than quantified financial guidance.

Separately, Senior Finance Director Zhou Chen resigned for personal reasons, with the company stating that the departure did not result from a dispute or disagreement. Senior Director Yikun Zhu assumed responsibility for the listed company’s financial affairs.

Risks Investors Need to Watch

• Meituan transaction uncertainty: The China divestiture still requires regulatory approval and satisfaction of other closing conditions. Until completion, held-for-sale accounting will continue affecting quarterly earnings comparisons.
• Limited profit comparability: The RMB199.1 million depreciation and amortization benefit materially increased GAAP and non-GAAP profit, making reported year-over-year growth less representative of recurring operating improvement.
• Losses in the continuing overseas business: Overseas revenue grew 36.2%, but its net loss expanded to RMB63.2 million and continuing operations used RMB69.9 million of operating cash.
• Pricing and network pressure in China: Lower prices in categories such as pork and station closures in Beijing and the Guangzhou-Shenzhen area partially offset order and user growth.

Summary

Dingdong delivered higher GMV and revenue in Q2 2026, supported by increased user activity, order frequency, and fulfillment expansion. Lower fulfillment costs improved operating efficiency, but the sharp rise in reported profit primarily reflected the suspension of depreciation and amortization for the China business. The next key issues are completion of the Meituan transaction and whether the overseas continuing operation can translate rapid revenue growth into narrower losses and improved cash flow.

More Questions

Why does Dingdong report aggregate revenue when the China business is discontinued?

Dingdong presents aggregate operating figures to show the combined scale of its China and overseas businesses. Under the financial statements, however, the RMB6,414.1 million of China revenue is included in discontinued operations, while RMB73.2 million of overseas revenue represents continuing operations.

Does Dingdong’s non-GAAP net income exclude the held-for-sale accounting benefit?

No. Dingdong’s non-GAAP calculation excludes only share-based compensation. The RMB199.1 million benefit from stopping depreciation and amortization on the China assets remains included in non-GAAP net income.