Meituan Announces Financial Results for the Three Months Ended March 31, 2022

Rhea-AI Summary

Meituan (HKG: 3690) reported a 25% revenue increase to RMB46.3 billion for Q1 2022, compared to RMB37.0 billion in Q1 2021. Despite growth in food delivery and hotel segments, operating losses in new initiatives widened, affecting overall performance. Operating profit for food delivery rose to RMB1.6 billion, while in-store and travel revenue increased by RMB7.6 billion. Cash equivalents stood at RMB35.4 billion. CEO Xing Wang emphasized resilience amidst COVID challenges, while CFO Shaohui Chen projected short-term headwinds, reaffirming commitment to a 'Retail + Technology' strategy.

Positive

• Revenue growth of 25% to RMB46.3 billion in Q1 2022.
• Food delivery segment revenue increased by 17.4% to RMB24.2 billion.
• Operating profit in food delivery rose 41.3% to RMB1.6 billion.

Negative

• Operating loss for new initiatives widened to RMB9.0 billion.
• Short-term headwinds projected due to COVID resurgence affecting business.

HONG KONG, June 2, 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 months ended March 31, 2022.

Company Financial Highlights

During this quarter, our revenues increased by 25% to RMB46.3 billion from RMB37.0 billion for the same period of 2021. Our food delivery and in-store, hotel & travel segments achieved an aggregate operating profit of RMB5.1 billion for the first quarter of 2022, up from RMB3.9 billion for the same period of 2021, while the operating loss for new initiatives and others segment widened on a year-over-year basis but narrowed on a quarter-over-quarter basis. Our adjusted EBITDA and adjusted net loss improved on both year-over-year and quarter-over-quarter basis to negative RMB1.8 billion and RMB3.6 billion for the first quarter of 2022, respectively. We held cash and cash equivalents of RMB35.4 billion and short-term treasury investments of RMB68.0 billion as of March 31, 2022.

"We achieved healthy growth across various business lines in Q1, despite the spread of Omicron to more regions in China since March. Our long-term investments in our technological capabilities coupled with our nationwide on-demand retail system have enabled Meituan to play a unique role during the COVID resurgence. We have been able to make positive contributions in meeting people's basic needs, provided daily necessities, promoted industry and stabilized employment," said Meituan Founder and CEO Xing Wang.

"Meituan aims to focus on our 'Retail + Technology' company strategy, drive innovation and improve the quality of our products and services. This will develop a better ecosystem for the growth of new industries, new businesses and new models for China's retail sector. In addition, we will continue to deliver greater value to our merchants and consumers," concluded Wang.

Meituan CFO Shaohui Chen said, "Our businesses, especially food delivery, in-store and hotel booking will continue to face short-term headwinds on the back of the resurgence of COVID cases and the weaker macro environment. Nevertheless, we believe that short-term impacts are temporary and all of our businesses will resume normalized growth post strict pandemic control periods. We will firmly implement our company strategy of 'Retail + Technology', and continue to contribute to social responsibility in terms of supply-side digitization, consumption expansion, innovation for industrial upgrading, and employment opportunity expansion."

Company Business Highlights

Food delivery

We achieved healthy growth for the food delivery segment for the first quarter of 2022, despite the external challenges. Segment revenue increased by 17.4% year over year to RMB24.2 billion. The increase in revenue was primarily attributable to increases in the order volume and average order value. Operating profit increased by 41.3% year over year to RMB1.6 billion, and operating margin improved to 6.5%.

For the first quarter of 2022, both quarterly Transacting Users and transaction frequency increased year over year. In particular, transaction frequency of medium- and high-frequency users grew more rapidly than average. Our business performance had been resilient in the first two months of the quarter, before it was severely affected in March due to the spread of Omicron in many regions. We further strengthened consumer mindshare in food delivery and accumulated more premium consumers with high consumption power. During the Chinese New Year, as more people "stayed put", we broadened our selections by increasing the number of merchants that served Chinese New Year meals, so that people could enjoy convenience and variety when ordering food delivery for family gatherings and holiday celebrations. As a result, orders with high order value contributed to a higher percentage of total order volume, and new categories such as beverages and desserts were particularly popular during the holidays. Since March, due to the spread of Omicron and strict control measures in certain regions, a large number of merchants suspended operations and many of our couriers were quarantined. Our business was largely impacted by the limited supply and restrained delivery capacity. Nevertheless, we were able to provide consumers with food, drinks and necessities in locked-down cities, leveraging our strong organisational and execution capabilities. For example, we quickly launched community group meal services and "emergency helper" services, to help those people in need in Shanghai. We also offered commission rebates, "Food Delivery Manager" services, and smart operational equipment for free, to help merchants undergo difficult times, especially small and medium-sized merchants. All these new service models and support measures are strong testament to our execution capability and flexibility. Although our short-term business performance is affected, we are more confident than ever about the long-term value we build and the growing mindshare from consumers.

Couriers are at the core of our food delivery business. To ensure sufficient delivery capacity and safe working environment for couriers, we offered couriers free COVID-19 testing alongside local governments and free accommodations or rest stations for those living in locked-down communities. In addition, we provided smart safety helmets for couriers in more cities, as couriers' safety is always of utmost importance. The second-generation smart helmets that we introduced in February are lighter-weight and more user-friendly. For occupational injury insurance, we cooperate with government authorities and follow their guidance in policy execution, so that pilot programs can be launched in a timely manner. We focus on couriers' welfare and security in every part of our business operations and decision-making to ensure a safer working environment with better cares and benefits for couriers.

In-store, hotel & travel

In the first quarter of 2022, segment revenue increased by 15.8% year over year to RMB7.6 billion, and operating profit increased by 26.4% year over year to RMB3.5 billion, with operating margin being at 45.6%. The growths in revenue and operating profit for the segment were robust in January and February, before they were adversely affected in March due to the spread of Omicron.

For the in-store services, both annual Active Merchants and annual Transacting Users increased, as we further expanded our service categories, launched promotional campaigns, and leveraged holidays to stimulate consumption. We continued to optimize our online marketing and transaction-based products and services, helping merchants acquire consumers and improve operating efficiency. On the consumer side, we strengthened the consumer mindshare of Meituan as the "go-to destination for local services". Inspired by the evolving consumption trends among younger generations, we continued to focus on light-meal and fast food categories for the in-store dining business, and continued to bring diverse and trendy services to our nearly 200 existing categories for the other in-store business. In March, our business was affected by the Omicron spread and strict control measures, especially in some high-tier cities. Despite short-term headwinds, we are confident that consumption will recover and our business will resume normal growth when the pandemic is over, and we will actively cooperate with local governments to promote consumption recovery.

The hotel and travel business was significantly disturbed by the Omicron spread and travel restrictions in March. During the first quarter of 2022, our domestic hotel room nights decreased by a single-digit percentage year over year. Demand for local accommodations continued to outpace inter-city travel scenarios, and we further improved our service quality to cope with the rising demand for local travels. Room night contribution from high-star hotels reached new record high of 17.4%, thanks to our continued improvement in products, services, and marketing capabilities. For low- and medium-star hotels, we continued to optimize our products and services to help hotel merchants operate with higher efficiency.

New initiatives and others

For new initiatives and others, the goods retail businesses remained and will continue to be our key investment area. In the first quarter of 2022, segment revenue increased by 47.0% year over year to RMB14.5 billion, mainly driven by the expansion of the goods retail businesses. Operating loss for the segment narrowed sequentially to RMB9.0 billion, with operating margin improving to negative 62.3%, primarily attributable to stronger cost control and operating leverage in the goods retail businesses.

Meituan Select showcased another quarter of high-quality growth. During the quarter, we strengthened our core capabilities in digital operations and fulfillment. On the supply side, we deepened collaborations with merchants to offer consumers more quality SKUs and diverse selections. Notably, the mix of agricultural products from "direct sourcing" or "centralised nationwide procurement" programs increased. Moreover, we optimised our cold-chain logistics, expanded network coverage, and ensured quality control throughout the supply chain. We iterated our smart warehousing systems and fulfilment methods to further improve efficiency. We also actively supported farmers by not only helping promote their products, but also providing job opportunities through our new vocational training programs in lower-tier markets, as corporate social responsibility remained a top priority for us. In addition, we actively participated in the COVID- 19 prevention and control measures under the government's guidance, and ensured supply at reasonable prices for consumers.

Meituan Instashopping continued to post stellar growth in the first quarter of 2022, with order volume increasing by almost 70% year over year, thanks to increases in user base and transaction frequency. We continued to convert high-quality food delivery users into Meituan Instashopping users, and leveraged various marketing and promotional campaigns to incentivise consumption. When people "stayed put" during the Chinese New Year, we collaborated with supermarkets, chain stores, convenience stores and specialty stores on promotions, allowing consumers to enjoy a more diverse range of goods delivered to their doorsteps. During the Chinese New Year and Valentine's Day, an increasing number of consumers ordered holiday gifts, such as flowers, electronics and cosmetics from our platform for their loved ones. As a result, both GTV and order volume grew notably during the holiday season compared to the same period of last year. On the merchant side, we continued to onboard more merchants and expanded offering diversity to fulfill the evolving demand from consumers. In March, consumer demand to stock up food and supplies surged in the regions affected by the spread of Omicron. Leveraging our platform capability, Meituan Instashopping met the consumer needs of stockpiling by providing diverse SKU selections with broad merchant base and convenient on-demand delivery services, which effectively helped ensure the supply of grocery and necessities. We also worked with a number of pharmacies to deliver antigen testing kits and ensure sufficient supply of medicines. In the future, we will further improve operations for large specialty store and supermarket accounts, and strengthen consumer mindshare as a trusted partner that delivers "everything now" to their doorsteps.

Meituan Grocery achieved stellar growth in the first quarter of 2022, with order volume increasing by almost 120% year over year and daily transaction volume reaching a new high. By continuously improving product selections and marketing strategies, we not only stimulated holiday consumption demand, but also helped consumers to stock up food and supplies at short notice. During the lockdown in Shanghai, we made our utmost effort to ensure stable supply of daily necessities, and launched a community group purchase feature for the residents in lockdowns. In addition, we significantly increased our inventory at the front distribution centers, extended our business hours, and increased staffing for sorting and delivery. We also sent autonomous delivery vehicles to Shanghai to provide contactless delivery and increase delivery capacity. Going forward, we will continue to improve the operational efficiency and continue to use technology to empower the digital transformation of the industry.

As a technology-empowered local retail company, we proactively responded to the government's guidance around pandemic control measures, to fulfill our social responsibilities and create value for the broader society. Our on-demand delivery network played a crucial role in providing meals, groceries, medicines and other services for consumers in the affected areas. Meanwhile, we continued to assist small and medium-sized merchants, provide better service to solve their operational pain points, and help them navigate through difficulties. We are proud of the seamless cooperation across the company in exploring safe and creative solutions for the consumers and merchants during the tough times. In addition, we continually invested in advanced technologies, especially in autonomous delivery vehicles and drones, to provide people with consistent and high-quality services and improve user experience. As of March 31, 2022, our autonomous delivery vehicles had fulfilled over 1.5 million delivery orders in total, with the accumulated delivery mileage exceeding 1 million kilometers. We also pioneered in leveraging autonomous delivery to help fight against COVID-19. During the recent Omicron spread since March, we distributed autonomous delivery vehicles in Shanghai and Beijing to ensure supply and provide delivery of meals, daily products and necessities for residents under lockdown. Going forward, we will continue to build on the mutual trust forged strongly among consumers, merchants, couriers, and all other industry participants along the journey, and fulfill our mission: "We help people eat better, live better".

For the full announcement of Meituan for the first quarter of 2022, please visit:

https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0602/2022060201378.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 692.9 million Annual Transacting Users and 9.0 million Annual Active Merchants as of March 31, 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 the key financial results for Meituan in Q1 2022?

Meituan reported a 25% revenue increase to RMB46.3 billion and an operating profit of RMB5.1 billion.

How did COVID-19 impact Meituan's business in Q1 2022?

COVID-19 led to short-term headwinds and affected the performance of food delivery and hotel segments, particularly in March.

What is Meituan's strategy moving forward after Q1 2022 earnings?

Meituan aims to focus on its 'Retail + Technology' strategy to drive innovation and improve service quality.

What is the current cash position of Meituan?

As of March 31, 2022, Meituan held cash and cash equivalents of RMB35.4 billion.

How has the food delivery segment performed in Q1 2022?

The food delivery segment saw revenue growth of 17.4% to RMB24.2 billion and an operating profit increase of 41.3%.