Meituan Dianping Announces Financial Results for the Three and Six Months Ended June 30, 2020

Rhea-AI Summary

Meituan Dianping reported a resilient performance for Q2 2020 despite ongoing impacts from the COVID-19 pandemic. Total revenues reached RMB 24.7 billion, up 8.9% year-over-year. Operating profit surged 95.5% to RMB 2.2 billion, with an operating margin of 8.8%. Adjusted EBITDA and net profit also grew, reaching RMB 2.6 billion and RMB 2.7 billion, respectively. The food delivery segment saw revenues increase by 13.2% to RMB 14.5 billion, while in-store, hotel, and travel revenues dropped 13.4% to RMB 4.5 billion. Cash equivalents stood at RMB 13.9 billion as of June 30, 2020.

Positive

• Total revenues increased by 8.9% year-over-year to RMB 24.7 billion.
• Operating profit rose 95.5% year-over-year to RMB 2.2 billion.
• Food delivery revenues grew 13.2% year-over-year to RMB 14.5 billion.
• Operating profit from food delivery business turned positive at RMB 1.3 billion, compared to a loss in Q1 2020.
• Cash and cash equivalents were RMB 13.9 billion, up from RMB 14.1 billion at the end of Q1 2020.

Negative

• In-store, hotel, and travel revenues decreased by 13.4% year-over-year to RMB 4.5 billion.
• Operating loss in new initiatives expanded by 7.0% quarter-over-quarter to RMB 1.5 billion.

HONG KONG, Aug. 21, 2020 /PRNewswire/ -- Meituan Dianping (HKG: 3690) (the "Company" or "Meituan"), 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, 2020.

Company Financial Highlights

Although the COVID-19 pandemic continued to impact the daily operations of our merchants, including restaurants, hotels and other local services merchants, our businesses demonstrated resilience and recovered at a gradual pace. Total revenues for the second quarter of 2020 increased by 8.9% year-over-year to RMB 24.7 billion from RMB 22.7 billion for the same period of 2019. Operating profit improved to RMB 2.2 billion in the second quarter of 2020, increasing by 95.5% year-over-year, while operating margin increased from 4.9% to 8.8%. Both adjusted EBITDA and adjusted net profit experienced positive year-over-year growth and improved to RMB 2.6 billion and RMB 2.7 billion, respectively. Our operating cash flow also turned to positive RMB 5.6 billion for the second quarter of 2020 from negative RMB5 .0 billion for the first quarter of 2020. We had cash and cash equivalents of RMB 13.9 billion and short-term investments of RMB44.5 billion as of June 30, 2020, compared to the balances of RMB 14.1 billion and RMB 42.4 billion, respectively, as of March 31, 2020.

"Although we continued to see impacts from the outbreak of COVID-19 in the second quarter, our business demonstrated resilience and recovered at a good pace," said Xing Wang, Chairman and CEO of Meituan. "During the quarter, we helped our merchants to weather the storm, which created value for our vast community of consumers and merchants, and, as a result, stimulated the progressive recovery of the local services industry from the pandemic. We further boosted the competitive advantages of our core businesses while enhancing our ecosystem during our business recovery process. In the second quarter, we utilized advanced digital operations tools to enable more merchants, enhanced our on-demand delivery infrastructure to better facilitate the digital lifestyle of consumers, and accelerated the online penetration and digitization of essential local services on both the demand and supply side."

"As the leading e-commerce platform for services, Meituan will continue to fulfill our social responsibilities," Wang said. "We will help to further boost consumption growth and to recover local economies to the best of our abilities despite the uncertainties and challenges in the next few quarters. We believe that our philosophy of focusing on the long-term growth and rewards will continue to yield positive results for all participants in the Meituan ecosystem."

Company Business Highlights

Food delivery

For the second quarter of 2020, GTV of our food delivery business increased by 16.9% year-over-year to RMB108.8 billion. The daily average number of food delivery transactions increased by 6.9% year-over-year to 24.5 million. The average value per order of our food delivery business increased by 9.4% year-over-year. Monetization Rate^[i] of our food delivery business decreased to 13.4% for the second quarter of 2020 from 13.8% for the same period of 2019. As a result, revenues of food delivery business increased by 13.2% year-over-year to RMB 14.5 billion for the second quarter of 2020. Operating profit from our food delivery business turned to positive RMB 1.3 billion for the second quarter of 2020, compared to operating loss of RMB70.9 million for the first quarter of 2020, while operating margin turned to positive 8.6% from negative 0.7%. Moreover, operating profit from the food delivery business increased by 65.7% year-over-year, while operating margin improved by 2.7 percentage points year-over-year.

Despite the pandemic's continuous impact, we further demonstrated the unique competitiveness of our business model and validated the essential needs for food delivery services from both consumers and merchants. Especially, our immediate response to the COVID-19 new cases that occurred in Beijing showcased our increasing experience in managing the recurring outbreaks of COVID-19. To ensure the safety of our delivery riders and consumers, among other measures, we immediately organized nucleic acid testing for all of our delivery riders in Beijing, expanded the use of "intelligent lockers" in the city, and further upgraded our contactless delivery process. For merchants, we rolled out targeted support and commission rebate programs to help them better survive the COVID-19 new cases that occurred in Beijing. We also created a portal for merchants to upload their green COVID-19 testing results so as to provide consumers with extra food safety assurance.

In the second quarter of 2020, we continued to launch various promotional campaigns to stimulate the recovery of our food delivery business. For example, we rolled out the "June 18 Food Delivery Festival" and engaged around 4,000 reputable restaurants and brands to provide consumers with a wide variety of attractive promotions in the period. We were also spot-on in identifying consumers' behavioral changes and used targeted promotions to actively increase the consumption of afternoon tea and late-night snacks. Moreover, we have further stepped up the portion of subsidies allocated to targeted repeat consumers through our effective food delivery membership program. As a result, the order volume of our food delivery business experienced positive year-over-year growth in the second quarter of 2020, with the daily average number of food delivery transactions increasing by 6.9% year-over-year to 24.5 million.

On the merchant side, a further recovery in merchant operation and consumer consumption led to the strong marketing demand from merchants in the second quarter of 2020. Meanwhile, the pandemic has accelerated the restaurants' online migration, increasing the mix of high-quality merchants on our platform during the period. Notably, the number of newly-onboard branded merchants increased by more than 110% in the second quarter as compared to the prior year period. Their increased demand for online traffic has accelerated their adoption of our online marketing services. As a result, online marketing services revenues experienced rapid growth in the second quarter of 2020, increased by 62.2% year-over-year.

On the delivery front, we further improved our delivery efficiency in the second quarter of 2020, attributable to the refinement of our proprietary dispatching system algorithms and the continuous improvement of the operation of our delivery network. In addition, the sufficient delivery capacity and the favorable weather condition across the country enabled us to reduce the amount of seasonal incentives paid to delivery riders on a quarter-over-quarter basis. These factors together have allowed us to better control delivery cost per order on both a quarter-over-quarter and a year-over-year basis. Meantime, the importance of our on-demand delivery network as a critical component of society's broader logistical infrastructure has been substantially elevated post the outbreak of COVID-19. Our delivery network helped to ensure continuity in people's daily lives during the pandemic and served as a stabilizing force for society by creating abundant employment opportunities. We will continue to explore diversified delivery models and invest in the cutting-edge technology for autonomous delivery to further improve our operating efficiency and enlarge our capacity while striving to serve the needs of our merchants and consumers in more service categories.

In-store, hotel & travel

Revenues from our in-store, hotel & travel businesses decreased by 13.4% year-over-year to RMB4.5 billion in the second quarter of 2020. Operating profit of our in-store, hotel & travel businesses decreased by 11.9% year-over-year, but increased by 178.1% quarter-over-quarter to RMB 1.9 billion in the second quarter of 2020, while operating margin increased by 0.7 percentage points year-over-year and by 19.6 percentage points quarter-over-quarter to 41.6%.

During the second quarter of 2020, the in-store segment continued to recover at a slower pace than the food delivery business as consumers needed more time to rebuild confidence in certain discretionary in-store consumptions. In order to stimulate local services consumption and restore local economies, we cooperated with local governments to launch the "Safe Consumption Festival" in more than 60 cities and issued e-Vouchers during this quarter. These e-Vouchers were mainly for in-store dining initially, but we have since expanded them to cover hotels, shopping, and other local services. We also launched a series of promotional campaigns in the second quarter of 2020, including Labour Day promotions, Dragon Boat Festival promotions, and June 18 Marketing Festival promotions. These events covered all the aspects of our in-store services and helped to accelerate our collaborations with popular merchant brands to further improve our merchant base and offer consumers a wider variety of choices in turn. As a result, the recovery of transaction volume and merchants' marketing demand of our in-store segment was on the right track. The year-over-year decline in commission revenues and online marketing services revenues were significantly narrowed from the first quarter of 2020. Moreover, we published a new 2020 version of our reputable "Must List Series." This series has evolved into a comprehensive and professional local services guide over the years. During the COVID-19 pandemic, we noticed that consumers became more price-sensitive and conscious of hygiene factors, which further compounded the ability of our trusted Must List Series to attract user traffic and guide consumers to quality merchants. It also created a positive feedback loop for merchants to upgrade their services and better meet the emerging needs of consumers.

Our hotel business continued to be significantly affected by the pandemic, with the number of domestic room nights consumed on our platform in the second quarter of 2020 decreasing by 17% year-over-year. Nevertheless, we kept increasing our partnership with more hotels via our "Safe Stay" program to provide travelers with accommodation options that are more conducive to their desires and the quarantine environment. Meantime, in light of the increasing demand for intra-city and short-distance local travel, we also launched the "Safe Travel" program to help expedite the recovery of the industry. More notably, the pace of development for our high-star hotel partnerships also picked up, and we established a significant increase in relationships with these types of hotels in the second quarter of 2020 by increasing their non-lodging revenues through our "hotel + x" program. As a result, the contribution from high-end hotels further increased year-over-year.

New initiatives and others

Revenues from the new initiatives and others segment increased by 22.1% year-over-year to RMB5.6 billion in the second quarter of 2020. On a sequential basis, operating loss from the new initiatives and others segment expanded by 7.0% to RMB1.5 billion for the second quarter of 2020 from RMB 1.4 billion for the first quarter of 2020, while operating margin improved by 6.8 percentage points to negative 25.9% for the second quarter of 2020 from negative 32.7% for the first quarter of 2020. Operating loss from the new initiatives and others segment narrowed by 11.3% on a year-over-year basis, while operating margin improved by 9.8 percentage points year-over-year.

The COVID-19 pandemic was a catalyst for several of our new initiatives, and we saw a noticeable shift in the online shopping behavior on the consumer side and accelerated online penetration of traditional offline service businesses during the pandemic. During the second quarter of 2020, we maintained the rapid expansion of our key businesses, especially grocery retail business. Our marketplace model "Meituan Instashopping" achieved stellar revenue growth during the second quarter of 2020 on a year-over-year basis as we expanded our product variety and SKU categories to significantly grow our merchant base. "Caidaquan," our relatively nascent fresh produce-focused brand under "Meituan Instashopping," enabled more than 300 traditional wet markets to sell online and operate digitally. Our self-operated model, "Meituan Grocery," not only significantly expanded its coverage in key cities, such as Beijing and Shenzhen, but also began operations in new cities, such as Guangzhou, in July 2020. During the second quarter of 2020, we also established a new business division for community group purchase services, rolling out the "Meituan Selected" service brand accordingly in Jinan, Shandong in July 2020, which offers carefully selected fresh produce and daily necessities at attractive prices for local consumers living in different communities. Group leaders are appointed by us in each community to promote our discounted grocery products via WeChat groups. Group members can place orders through our WeChat Mini Program and pick up their products the next day at self-pickup points located in nearby convenience stores.

For bike-sharing services, we replaced around 1.5 million old bikes with new "Meituan Bikes" during the second quarter of 2020. The average turnover rate per bike improved incrementally and the unit economics also improved. Additionally, we launched more than 290,000 electric bikes. During this period, the average turnover rate per electric bike achieved better unit economics as compared to traditional bikes and demonstrated a clear path to independent profitability.

For the full announcement of Meituan 2020 interim results, please visit:
http://meituan.todayir.com/attachment/202008211704561761848748_en.pdf

About Meituan Dianping

Meituan Dianping (HKG: 3690) (the "Company" or "Meituan") 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 457.3 million Annual Transacting Users and 6.3 million Annual Active Merchants as of June 30, 2020. 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 Dianping
pr.global@meituan.com   
ir@meituan.com

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

[i] Monetization rate equals the revenues for the period divided by the Gross Transaction Volume for the period.

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SOURCE Meituan Dianping

FAQ

What were Meituan's revenue results for the second quarter of 2020?

Meituan reported total revenues of RMB 24.7 billion for Q2 2020, an increase of 8.9% year-over-year.

What is the operating profit of Meituan for Q2 2020?

Meituan's operating profit for Q2 2020 was RMB 2.2 billion, representing a year-over-year increase of 95.5%.

How did Meituan's food delivery business perform in Q2 2020?

The food delivery segment's revenues increased by 13.2% year-over-year to RMB 14.5 billion, with an operating profit of RMB 1.3 billion.

What impact did COVID-19 have on Meituan's business in Q2 2020?

COVID-19 continued to affect Meituan's operations, particularly in the in-store, hotel, and travel segments, where revenues decreased by 13.4%.

What was Meituan's cash position as of June 30, 2020?

As of June 30, 2020, Meituan had cash and cash equivalents of RMB 13.9 billion.