Meituan Announces Financial Results for the Three and Six Months Ended June 30, 2022

Rhea-AI Summary

Meituan (HKG: 3690) reported a 16.4% increase in revenues to RMB50.9 billion for Q2 2022, compared to RMB43.8 billion in Q2 2021. The Core local commerce segment saw an operating profit rise of 39.7% to RMB8.3 billion. Adjusted EBITDA and net profit turned positive at RMB3.8 billion and RMB2.1 billion respectively. Challenges included the pandemic's impact on the New initiatives segment, which reported a narrowed operating loss of RMB6.8 billion. The company maintains confidence in future growth amidst ongoing recovery in consumer demand.

Positive

• Revenue rose 16.4% to RMB50.9 billion in Q2 2022.
• Core local commerce segment operating profit increased by 39.7% to RMB8.3 billion.
• Adjusted EBITDA reached RMB3.8 billion, up from loss positions.

Negative

• New initiatives segment reported an operating loss of RMB6.8 billion.
• COVID resurgence negatively impacted offline operations in tier-1 cities.

HONG KONG, Aug. 26, 2022 /PRNewswire/ -- Meituan (HKG: 3690) (the "Company"), China's leading e-commerce platform for services, today announced the unaudited consolidated results of the Company for the three and six months ended June 30, 2022.

Reportable Segment Update

Starting from this quarter, our chief operating decision makers ("CODMs") started to review information under a new reporting structure, and segment reporting is updated to conform to this change. We think the new segment disclosure better reflects our business strategies, the development phases of various businesses and the financial performance, and better aligns with our resource allocation. The first segment is Core local commerce, which includes the former Food delivery and In-store, hotel & travel segments, as well as Meituan Instashopping (美團閃購), alternative accommodations and transportation ticketing. The second segment, New initiatives, includes Meituan Select (美團優選), Meituan Grocery (美團買菜), B2B food distribution (快驢), ride sharing, bike sharing, e-moped sharing, power banks, RMS and other new initiatives. Food delivery and in-store, hotel & travel both have proven monetisation models, as well as industry-leading positions. Meituan Instashopping not only shares the user base and the existing on-demand delivery network of food delivery, but also has a clear path to profitability and similar unit economics model. Alternative accommodations and transportation ticketing are classified into hotel & travel as they belong to the same broader industry and have mature business models. On the other hand, all the businesses in New initiatives require iterations on business models and more resources. Our management will periodically review their developments, and dynamically adjust resource allocation and strategies.

Company Financial Highlights

During this quarter, our revenues increased by 16.4% to RMB50.9 billion from RMB43.8 billion for the same period of 2021. Our Core local commerce segment achieved an operating profit of RMB8.3 billion for the second quarter of 2022, up from RMB5.9 billion for the same period of 2021, while the operating loss for our New initiatives segment narrowed on both year-over-year and quarter-over-quarter basis to RMB6.8 billion for the second quarter of 2022. Adjusted EBITDA and adjusted net profit were RMB3.8 billion and RMB2.1 billion for this quarter, turning from loss positions to profit positions on both year-over-year and quarter-over-quarter basis. We held cash and cash equivalents of RMB25.5 billion and short-term treasury investments of RMB82.0 billion as of June 30, 2022.

"During this quarter, Meituan continued to improve business quality and efficiency, and our various businesses delivered stable operating results in Q2," said Meituan Founder and CEO Xing Wang. "As a technology and online retail company in China, Meituan deeply senses the resilience of China's economic fundamentals and great potential of domestic consumption capabilities. Meituan will firmly continue to execute our strategy 'Retail + Technology', integrate online digital technologies and the real economy through technology and innovations, and make contributions to China's economic growth, helping people eat better, live better," concluded Wang.

Meituan CFO Shaohui Chen said, "The ongoing pandemic has presented continuous challenges to every member of our ecosystem, including ourselves. We responded to these challenges by focusing on high-quality growth and improving our operating efficiency over the past several quarters, which is reflected by our results in this quarter. More importantly, we did not act only in regard to our own needs; we reaffirmed our commitment to creating more value for consumers, helping merchants maintain their operations, and providing our couriers with better welfare and working conditions in the current challenging environment. We are still confident that our businesses will resume normalized growth when pandemic control measures loosen, and our long-term business objectives remain unchanged."

Company Business Highlights

Core Local Commerce

In the second quarter of 2022, we achieved 9.2% revenue growth for the Core local commerce segment, despite negative impacts from the spread of Omicron. Operating profit increased by 39.7% year over year to RMB8.3 billion, and operating margin improved to 22.5%.

During the quarter, the total orders of our food delivery and Meituan Instashppoing businesses increased by 7.6% year over year. Our food delivery business was negatively impacted by the pandemic and the control measures, especially in some tier-1 cities, which usually contribute higher percentages of the total food delivery order volume. Order volume was heavily affected in April and May but swiftly recovered in June as the pandemic became effectively under control. Our food delivery business was resilient in spite of external challenges, and our high-frequency users contributed even higher order volume during the quarter. People recognised food delivery as an important source to get food. In Omicron-affected regions, we did our best to fulfill consumer needs, and launched multiple measures to ensure supply and delivery capacity. For example, we launched the community group meals and emergency helper services in Shanghai, and increased our delivery capacity and ensured cross-city deliveries for consumers in Beijing. On the merchant side, we rapidly onboarded many fine dining and high-end restaurants and helped them launch food delivery services on Meituan. In Shanghai, we launched our first "Must-Order" list in June, allowing consumers to enjoy high-quality food at home, while helping restaurants increase food delivery order volume. Going forward, we will launch "Must-Order" lists in more key cities nationwide. When dine-ins were restricted, food delivery became an important revenue driver for restaurant merchants and helped them recover after the pandemic subsided. We also continued to provide support measures, offering commission discounts to small- and medium-sized merchants who have experienced difficulties in business operations due to the pandemic, and assisting them with online operations. Moreover, we collaborated with certain restaurants to register their employees as couriers, which effectively stabilised their personal income while supplementing our delivery capacity during the pandemic. All these measures showcased our strong organisational and execution capabilities, and further helped accelerate the digital transformation of the traditional offline restaurant industry.

Meituan Instashopping continued its rapid growth trajectory, with daily average orders reaching 4.3 million in the second quarter of 2022. Growths in user base and transaction frequency led to a notable increase in the order volume. During the quarter, the spread of Omicron catalysed an increase in consumer reliance on on-demand delivery, especially in case of imminence control measures when consumers have to quickly stock up groceries and daily necessities from local stores at short notice. Average ticket size increased as a result of this surging demand, and led to improvement in the unit economics. We continued to onboard more merchants across different categories, and acutely captured the emerging consumption trends to offer more diverse selections to our consumers. Leveraging our strong and flexible delivery network, we effectively met the increasing demand of consumers, and on-demand retail has become a new form of online shopping. During the quarter, we worked with well-known brands to launch shopping festivals and marketing campaigns, through which we not only deepened the merchant penetration and our collaborations, but also helped stimulate local consumption recovery. In addition, we introduced more Meituan InstaStore (美團閃電倉) into our supply, launched city-wide pharmacy services, and extended delivery distance for medicines. All these measures successfully enhanced consumer mindshare on Meituan Instashopping that delivers everything to their doorsteps.

The in-store, hotel & travel business was heavily impacted by the COVID resurgence, with revenues decreasing meaningfully in the second quarter of 2022. During April and May, offline operations of many merchants were significantly affected by the spread of Omicron in many mid-and high-tier cities, including Shanghai and Beijing. Nevertheless, our business began to recover in June, as control measures were relaxed, and we supported local governments to distribute consumption vouchers to further stimulate economic recovery.

For in-store dining, as offline operations were largely impacted in Shanghai, Beijing and many other cities, we were dedicated to help restaurant merchants withstand the difficulties. We offered discounted online marketing services to temporarily closed restaurants, introduced food delivery options and self-pickup services to merchants, including many fine-dining restaurants, and launched themed promotions to boost consumption recovery. We also took this opportunity to expand and refine our own products and services, facilitate the growth of light meals, and help accelerate the digital transformation of the overall industry.

For other in-store services, although group activities and gathering events were negatively affected, consumption trend evolved dynamically and new consumption categories emerged. For example, as outdoor activities became more popular, we promptly adjusted our platform's offerings and services to cope with the new trend, allowing consumers to efficiently find the products and services needed when browsing on our platform. Fitness, pets and life services also maintained strong growth during the quarter. We are confident on the post-pandemic recovery of local services and the consumption growth. Our strong brand awareness among both consumers and merchants, our unparalleled execution capability, and our deep industry insights will render us growth potential in the long run.

For hotel & travel, the spread of Omicron and strict control measures in April and May caused sharp decline in travel activities, and our domestic room nights experienced notable decrease before a gradual recovery in June. High-star hotels were more heavily impacted than low-star hotels, yet we continued to optimise supply, improve service qualities and upgrade packaged deals in the high-star domain. For alternative accommodations, we onboarded more supplies from Airbnb after their announcement to exit the China domestic market, and we guided the hosts through a smooth transition on our platform.

New Initiatives

In the second quarter of 2022, revenues from the New initiatives segment increased 40.7% year over year to RMB14.2 billion, mainly driven by growths from the goods retail businesses. Operating loss narrowed on the sequential basis to RMB6.8 billion, while operating margin improved to negative 48.0%, primarily attributable to improvement in operating efficiency from the goods retail businesses.

For Meituan Select, we continued to focus on high-quality growth and operating efficiency improvement. We partnered with more brands and further expanded our product selections to provide consumers with more high-quality and value-for-money products. Through these partnerships, we also helped evoke some traditional local brands to innovate and launch their products online so that they can reach a broader consumer base. Moreover, we enhanced our direct sourcing, centralised procurement, and sorting solutions to improve supply chain efficiency, and we further optimised our cold-chain logistics across the entire supply chain to ensure stable offerings of frozen products during summer. In the regions that were impacted by the COVID resurgence and extreme weather conditions, such as Shanghai, Jilin, and Guangdong, we actively supported local governments to ensure sufficient supplies of necessities for consumers and fulfilled our social responsibilities.

For Meituan Grocery, both quarterly Transacting Users and order volume broke records in the second quarter of 2022. We are proud that Meituan Grocery played an important role to ensure supplies of daily necessities for consumers during the COVID resurgence. We responded to the pandemic in Shanghai by quickly locking in sufficient product supply from major suppliers, increasing volume of direct sourcing, and preparing in advance on alternative suppliers. We also accumulated know-hows from our operational experience in Shanghai and quickly launched similar models in Beijing when the city was under strict control measures. We supported Shanghai government with the resumption of work and productions after the COVID situation became under control. Looking forward, we will continue to optimise supply and fulfillment and strive to bring better experience to consumers.

Although the pandemic has brought short-term difficulties, we are confident that as it becomes under control, local consumption will recover and our Core local commerce segment will resume its normal growth trajectory. Leveraging our strong on-demand delivery network, we will continue to provide meals, groceries, necessities, and medicines for consumers. We will also cope with the evolving consumer demand on local goods and services and further strengthen consumer mindshare. Meanwhile, we will assist local merchants to recover, especially those small- and medium-sized merchants, through better products and solutions that can effectively help them improve operating efficiency. Our investment in New initiatives, especially the goods retail businesses, also allows us to reach broader consumers and bring more convenience to people's lives. We will continue to execute our strategy of "Retail + Technology" while providing more diverse, value-for-money goods and services. We are fully committed to accelerating the digital transformation of the retail industry and creating more value for our society.

For the full announcement of Meituan for the second quarter and first half of 2022, please visit:
http://media-meituan.todayir.com/20220826164002628610401079_en.pdf

About Meituan

Meituan (HKG: 3690) (the "Company") is China's leading e-commerce platform for services. With the mission of "We help people eat better, live better," the Company's platform uses technology to connect consumers and merchants. Service offerings on the platform address people's daily needs for food, and extend further to broad lifestyle and travel services. Meituan is the world's leading on-demand food delivery service provider and China's leading e-commerce platform for in-store dining services. Meituan helps consumers discover merchant information, make informed decisions, complete online and offline transactions and enjoy on-demand delivery. The Company currently owns several household brands in China, including Meituan, China's leading online marketplace for services, Dianping, China's leading online destination for discovering local services, Meituan Waimai for on-demand delivery services, and Meituan Bikes for bike-sharing services. Meituan has 684.7 million Annual Transacting Users and 9.2 million Annual Active Merchants as of June 30, 2022. The Company operates in over 2,800 cities and counties in China.

Forward-Looking Statements

This press release contains forward-looking statements relating to the business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.

For media inquiries, please contact:
Meituan 
pr.global@meituan.com
ir@meituan.com

Edmond Lococo
ICR Inc.
Email: Edmond.Lococo@icrinc.com
Tel: +86 138-1079-1408

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SOURCE Meituan

FAQ

What were Meituan's financial results for Q2 2022?

Meituan reported revenues of RMB50.9 billion in Q2 2022, a 16.4% increase from RMB43.8 billion in Q2 2021.

What is the operating profit for Meituan's Core local commerce segment?

The Core local commerce segment's operating profit increased to RMB8.3 billion in Q2 2022, up 39.7% year-over-year.

How did Meituan's New initiatives segment perform?

The New initiatives segment experienced an operating loss of RMB6.8 billion, although it showed improvement in operating efficiency.

What is Meituan's outlook given the recent pandemic impacts?

Meituan remains confident in recovering business growth as the pandemic control measures loosen.