Shares of Dingdong (Cayman) Limited (DDL) tumbled 5.46% in pre-market trading on Friday following the release of the company's first quarter 2025 financial results. The sharp decline comes as the Chinese fresh grocery e-commerce firm reported mixed results that fell short of market expectations.

While Dingdong posted its tenth consecutive quarter of non-GAAP profitability, investors appeared to focus on several concerning metrics. Most notably, the company's Q1 revenue of $755.03 million significantly missed analyst estimates of $5.47 billion. Additionally, non-GAAP net income decreased by 26.8% year-over-year to RMB30.3 million ($4.2 million), and the gross margin slipped to 29.9% from 30.6% in the same quarter last year.

Despite reporting a 9.1% year-over-year increase in revenue and positive operating cash flow, the market's negative reaction suggests concerns about Dingdong's growth trajectory and profitability. The company's operating loss also widened to RMB21.2 million ($2.9 million) compared to RMB11.1 million in Q1 2024. As Dingdong continues to navigate a competitive Chinese e-commerce landscape, investors will likely watch closely for signs of improved financial performance in the coming quarters.