Meituan’s revenue in the first half of the year was nearly 126.60 billion yuan, and the growth rate in the second quarter was better than Quarter 1.

On August 24, Meituan (stock code: 3690.HK) released the second quarter and half-year results of 2023. The company’s revenue in the first half of the year was 126.582 billion yuan, an increase of 30.2% year-on-year; the adjusted profit was 13.151 billion yuan, and the adjusted net loss was 1.528 billion yuan in the same period last year. Meituan benefited from the recovery of consumption in the first half of the year, and the growth of various businesses was stable.

Among them, Meituan achieved revenue of 68 billion yuan in the second quarter of this year, an increase of 33.4% year-on-year, and the growth rate exceeded Quarter 1. Among them, the core local business in the second quarter increased by 39.2% year-on-year, also exceeding Quarter 1. However, restricted by cold chain and logistics expenses, Meituan’s new business revenue in the second quarter increased by 18.4% year-on-year, lower than the growth rate of the business in the first quarter.

"Thanks to the arrival of the traditional peak consumption season, the company’s various businesses achieved healthy growth in this quarter," said Wang Xing, CEO of Meituan. "With the local lifestyle market showing a good trend of steady recovery, we will continue to focus on the’retail + technology ‘strategy to meet the increasingly diverse consumer needs of users, and use technology to promote the efficiency of local commodity retail and service retail."

The recovery of core local businesses accelerated in the second quarter, growing faster than in the first quarter

In 2022, Meituan adjusted and updated the statistical caliber, and adjusted the original catering takeaway, to stores, hotels and tourism, new business and other sectors to core local business and new business.

After the adjustment, the core local business segments mainly include the original catering takeaway and delivery, hotel and tourism segments, as well as Meituan flash sale, homestay and transportation ticketing.

Meituan continued to focus on meeting local consumer demand. Driven by this, Meituan’s core local business achieved steady growth in the first half of the year, with revenue of 94.085 billion yuan, an increase of 32.6% year-on-year.

Among them, Meituan’s core local business revenue reached 51.20 billion yuan in the second quarter, an increase of 39.2% year-on-year. Operating profit increased by 34.8% year-on-year to 11.10 billion yuan, and operating profit margin was 21.8%.

Meituan Quarter 1’s core local business revenue reached 42.90 billion yuan, an increase of 25.5% year-on-year. Operating profit was 9.40 billion yuan, an increase of 100.7% year-on-year; while operating profit margin increased to 22.0% from 13.8% in the same period in 2022. Second quarter revenue growth was significantly faster than Quarter 1.

Meituan’s instant retail scene and richness continue to expand. In the second quarter, the number of instant delivery orders increased by 31.6% year-on-year to 5.40 billion orders. By strengthening supply and optimizing subsidy strategies, the stickiness between users and platforms has further increased. In this context, Meituan’s monthly takeaway orders reached a record high in August.

Stimulated by numerous holiday consumption and marketing activities in the second quarter, the online penetration rate of electronic products and home appliances in second- and third-tier cities accelerated significantly, and categories such as daily necessities, beauty and personal care, and maternal and infant products all showed strong quarterly growth.

Meituan’s "Little Yellow Light Health Guardian Alliance" plans to launch digital pharmacies that can see a doctor 24 hours a day to buy medicine in 1,000 counties this year, and is expected to meet the needs of county residents 100 million times this year.

The peak order volume of Meituan flash sale exceeded 11 million orders again in the second quarter, and the demand side in turn promoted the richness of the supply side on the platform. The number of active merchants in Meituan flash sale increased by 30% year-on-year.

Meituan helps serve the digital transformation of the retail industry. The number of new merchants entering Meituan takeaway in the quarter more than doubled year-on-year, of which the growth rate of brand merchants was particularly strong; the transaction volume of the wine and hotel business increased by more than 120% compared with the same period last year, and the number of annual active merchants and annual transaction users also reached a new high.

Meituan’s hotel and tourism business saw strong growth in the second quarter as the domestic tourism industry continued to pick up. "Hotel + X" package products were enriched for leisure travel and vacation scenarios. Deepen cooperation with more hotel brands to improve pricing power. Increase the supply of overseas hotels and expand the outbound travel customer base. In terms of homestays, enhance the experience of consumers and landlords, and better match demand and supply.

New Business Second Quarter Revenue Growth Slower Than Quarter 1

The new businesses mainly include Meituan Preferred, Meituan market, catering supply chain (fast donkey), online car-hailing, shared bicycles, shared motorcycles, power banks, restaurant management systems and other new businesses.

Meituan’s new business revenue in the first half of the year was 32.497 billion yuan, an increase of 23.8% year-on-year. The operating loss was 10.222 billion yuan, and the operating loss in the same period last year was 15.243 billion yuan.

Among them, the second quarter revenue of new business 16.80 billion yuan, an increase of 18.4%. Operating loss narrowed 23.5% year-on-year to 5.20 billion yuan, and the operating loss rate improved to 31.0%.

New business Quarter 1 revenue rose 30.1% year-on-year to 15.70 billion yuan. Operating loss narrowed 40.5% year-on-year to 5 billion yuan, while operating loss ratio continued to improve to 32.0%. From this point of view, the second quarter recovery of new business is not as good as Quarter 1.

In the second quarter, Meituan Preferred transaction volume and revenue continued to grow year-on-year, but the growth rate declined due to the lower-than-expected growth rate of the overall market. Operational efficiency improved significantly compared to the same period last year. Meituan Preferred revenue, recognized on a net basis, declined quarter-on-quarter, mainly due to higher subsidies, which led to lower average price of pieces.

Meituan’s quarterly operating loss widened quarter-on-quarter, mainly due to business expansion, increased subsidies to drive growth, spending on cold chain and logistics to cope with the upcoming hot weather, and seasonal product portfolio changes.

Meituan said that although it faces difficulties in optimizing its business model in the short term, it believes that the online process of groceries will continue, and remains confident in the long-term potential of Meituan Preferred. As of the end of June, Meituan Preferred has reached 470 million cumulative trading users.

Despite a high base in the same period last year, Meituan market recorded a solid year-on-year growth in the second quarter and achieved a higher market share. The proportion of transactions of standard products and private brands continued to increase, effectively increasing the frequency of users.

In June, Wang Huiwen resigned as a non-executive director of Meituan due to personal health reasons. Subsequently, Meituan announced the completion of the acquisition of 100% of the shares of domestic and foreign entities outside the light year, and the purchase price was about 2.065 billion.

In July, Meituan drone fourth-generation new models were released. Meituan drone has been operating in multiple cities such as Shenzhen and Shanghai, and has delivered nearly 170,000 orders in two years. The financial report shows that Meituan’s R & D expenditure in the second quarter increased to 5.40 billion yuan year-on-year.

Meituan’s sales and marketing expenses increased from 9 billion yuan in the second quarter of 2022 to 14.60 billion yuan in the same period in 2023. This was mainly due to the recovery in consumption and changes in the business environment, resulting in higher transaction user incentive, promotion and advertising expenses, and higher employee benefits expenses.

The company’s general and administrative expenses decreased from $2.50 billion in the second quarter of 2022 to $2.10 billion in the same period in 2023, mainly due to lower employee benefit expenses and improved operating leverage.

Meituan CFO Chen Shaohui said that in the first half of this year, the local life sector benefited from the vigorous growth momentum of commodity retail and service retail, meeting more new demand and creating more new supply. In the future, Meituan will further promote the digital upgrade of the commodity retail and service retail industry.

Chen Weicheng, Shell Financial Reporter, Beijing News

Editor, Chao Xu

Proofreading, Liu Baoqing