Meituan Doubles Earnings in Q2, Remains Confident in Consumption Despite Macro Headwind

BEIJING, August 30 (TiPost)— China’s largest delivery platform Meituan posted strong performance despite of macroeconomic headwind.

Credit：Visual China

Meituan’s revenue rose 33.4% year-over-year to RMB68 billion in the quarter ended June 30, beating analysts’ estimated RMB67.2 billion. Profit that quarter turned around with RMB4.7 billion, compared with a loss of RMB1.1 billion the same period a year ago. Adjusted EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, about doubled YoY to a quarterly record of RMB7.68 billion, well above the expectation of RMB6.66 billion for the June quarter. 

The second quarter saw healthy growth across all the business lines. Meituan’s core local-commerce segment, which includes food delivery and the in-store, hotel and travel businesses, as well as non-food delivery service Meituan Instashopping, generated RMB51.2 billion with a 39.2% YoY increase, topping analysts’ expected RMB49.84 billion. Operating margin of the segment remained relatively flat at 21.8%, compared to 22.5% in the same period last year. Revenue from the New initiatives segment grew 18.4% YoY to RMB16.7 billion, roughly in line with analysts’ projection of RMB16.83 billion. Operating loss of the segment decreased 23.5% YoY to RMB5.2 billion and operating margin improved sequentially to negative 31.0%.

Meituan suggested its performance reflected China’s local services market experienced a robust recovery as offline consumption continued to rebound. Number of on-demand delivery transactions increased 31.6% YoY in the second quarter, and number of newly onboarded merchants more than doubled, largely driven by higher growth from tier-count and city-tier-count merchants. Meituan Instashopping maintained robust growth trajectory, with peak daily order volume reaching 11 million for the second time, thanks to the enhancement in user base and purchase frequency. 

“In addition to our shop and search-based business model, we have also piloted short-form videos and live streaming, providing merchants with a more diversified set of marketing tools to reach consumers,” Meituan founder and CEO Wang Xing said  at an earnings call. He added that his company recently unveiled the next-generation unmanned aerial vehicle, and the autonomous delivery vehicles have also been more widely applied in more scenarios. Looking forward, Wang said Mieetuan is confident that technology will further empower us to achieve greater success, and will continue to fulfill its mission to help people eat better, live better.

Wang told analysts the negative impact from the macro economy is only temporary. “We remain confident in China’s economy growth and the consumption,” the chief executive said. He said Meituan felt confident that its food delivery business will grow healthier this year than other consumer sectors. In the longer run, he expected the growth potential of food delivery remains unchanged. Wang believed the supply will continue to recover and grow, and it will drive the whole industry growth. He said Metituan is especially confident in the resilience of small and medium-sized mergers, which represent the vitality of the Chinese economy, and their recovery will enable us to penetrate deeper into lower ticket size supply and serve a broader population.  Overall, Meituan has confidence in the long-term potential of food delivery business. Wang forecasted the penetration rate of food delivery will continue to grow for many years to come.

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