HONG KONG, Aug. 24, 2023 /PRNewswire/ -- Meituan (HKG: 3690) (the "Company"), a leading technology-driven retail company in China, today announced the unaudited consolidated results of the Company for the three and six months ended June 30, 2023.
Company Financial Highlights
During this quarter, our revenues increased by 33.4% to RMB68.0 billion from RMB50.9 billion for the same period of 2022. Our Core local commerce segment achieved an operating profit of RMB11.1 billion for the second quarter of 2023, up by 34.8% from RMB8.3 billion for the same period of 2022. Meanwhile, the operating loss for our New initiatives segment narrowed on a year-over-year basis to RMB5.2 billion for the second quarter of 2023. We achieved profit of RMB4.7 billion for the second quarter of 2023, compared to a loss of RMB1.1 billion for the same period of 2022, turning from loss into profit on a year-over-year basis. Our adjusted EBITDA and adjusted net profit were both RMB7.7 billion for this quarter, reaching the highest level in history. We also achieved operating cash inflow of RMB10.9 billion for the second quarter of 2023. We held cash and cash equivalents of RMB27.0 billion and short-term treasury investments of RMB93.2 billion as of June 30, 2023.
"With the arrival of the peak-consumption holiday season, the local services industry rebounded rapidly and demand continued to be strong," said Meituan Founder and CEO Xing Wang. "Leveraging our 'Retail + Technology' corporate strategy, we made significant strides in enhancing the efficiency of both goods retail and services retail, invigorated the local consumption market, and deepened online penetration among merchants."
Meituan CFO Shaohui Chen said, "In the first half of this year, China's local service market, covering dining, hospitality, transportation, travel, shopping, and entertainment, experienced robust growth momentum thanks to the growth of goods retail and services retail. Meituan has given full play to its role supplying high-frequency essentials, meeting more new demand and creating more supply. In the future, Meituan will further promote the acceleration of the industry digital transformation and create value for all industry participants."
Company Business Highlights
Core Local Commerce
For the second quarter of 2023, segment revenue increased by 39.2% year over year to RMB51.2 billion, and operating profit increased by 34.8% year over year to RMB11.1 billion, with operating margin remained relatively flat at 21.8%, compared to 22.5% in the same period of 2022. Number of On-demand Delivery transactions increased by 31.6% year over year.
In the second quarter, food delivery experienced strong growth as consumption continued to recover. We satisfied consumers' increasingly diverse demand through supply enhancement and subsidy strategy improvement, especially in the high ticket-size and high-quality bands. In addition, supply and demand in the low-price range also recovered strongly. As the restaurant industry plays an important role in China's economic development and in people's livelihoods, we remain committed to helping restaurants in their recovery and digital operations. During the quarter, the number of newly onboarded merchants more than doubled on year-over-year basis, which helped broaden our merchant base and improve our supply quality. On the marketing front, we upgraded our monthly promotional event "Shen Quan Jie", and expanded "Shen Qiang Shou" in multiple cities, enabling merchants to offer low-price and high-quality dishes through flash sales, live streaming, and short-form videos. Merchants who participated in these events realized notable growth in both transaction volume and number of new customers acquired. Beyond selling mega-hit products during the events, merchants were able to enjoy long-lasting benefits from consumer repurchases. Moreover, consumers usually add other dishes at check out when they validate their vouchers, enhancing cross-sells and boosting sales of shelf-based products. We further expanded our high-quality merchant base and provided them with resources and traffic support. In June, we launched the "Must-Order List" for food delivery in more high-tier cities. The program helped attract more user traffic, provided long-distance delivery services, and expanded the consumer base for the merchants that are on the list. Going forward, we will continue to develop our food delivery ecosystem, enhance our content capabilities, and launch more innovative marketing strategies.
Nowadays, flexible workers have emerged as a crucial component of China's labor force. Besides providing job opportunities, we are also dedicated to improving the welfare and work experience for couriers. In June, we launched a Summer Courier Care program in over 100 cities. We refined our delivery route algorithm to minimize couriers' exposure to high temperatures in the summer season. Additionally, we provided couriers with subsidies and ensured stable income for individuals working under extreme heat conditions. During this year's July 17th Courier Festival, we also launched a program to support couriers' long-term personal development, covering professional, career, and educational development opportunities.
During the second quarter, 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. Leveraging promotional events and festivals, we strengthened consumer awareness of the diversity and convenience that we offer. We further increased the quantity and variety of supply, and annual Active Merchants grew by 30% year over year. We continued to assist merchants in online operations, providing traffic, subsidies, and access to various marketing tools for the merchants. We witnessed notable growth across categories during promotional holidays. For example, electronics and home appliances experienced accelerated online penetration in lower-tier cities. Daily necessities, beauty and personal care, and mother-and-child products all achieved robust growth throughout the second quarter. We expanded our "24/7 Smart Pharmacies" nationwide to provide medical consultations and medications to a broader consumer base. In collaboration with pharmacies and pharmaceutical companies, we launched the "Yellow Light" project, bringing medical resources and 24-hour medical services to more lower-tier markets.
As offline consumption continued to recover, our in-store, hotel & travel business grew robustly in the second quarter, with GTV increasing by over 120% compared to the same period last year. Annual Active Merchants and annual Transacting Users also hit new highs.
During the second quarter, GTV of our in-store business increased substantially year over year, as we continued to refine our product offerings, enhance consumer experience, and expand merchant services. We also lowered the threshold for subscription-based services, enabling more small- and medium-sized merchants to capture the benefits of online operations at a lower cost. We enhanced our content generation capability and encouraged consumers to stockpile deals. To provide merchants with more marketing tools and help broaden their traffic acquisition channels, we optimized our Special Deals and live streaming programs. These measures not only allowed merchants to do online promotions with higher efficiency, but also offered consumers a wider range of high-quality and affordably-priced products and services. In addition, we continued to improve our ability to create mega-hit products, optimized the content offerings, and addressed more diverse needs from consumers, thus reinforcing consumer mindshare of finding local stores and deals on Meituan. We explored collaborations with third parties for traffic acquisition, and integrated the online and offline operations to further drive traffic growth. We recently launched the "2023 Must-Eat List", expanded the coverage to more restaurants, and launched the "Must-Eat Set Meals" to provide consumers with more recommendations and discounted deals. Furthermore, we organized themed activities and encouraged group meal consumption around holiday gatherings and travel scenarios, and collaborated with local governments to invigorate local consumption.
Our hotel and travel business also experienced strong growth during the second quarter, as the domestic travel industry continued to rebound. We increased the supply of high-quality selections across consumption scenarios and price ranges. We also increased live streaming frequency and diversified our Special Deals. In addition, we enriched the "Hotel+X" package deal products for leisure travel and vacation scenarios during the peak season. In the high-star domain, we deepened our collaborations with more hotel brands, launched more joint-marketing events, optimized the joint-membership programs and improved our pricing capability. For Labor Day and Dragon Boat Festival, we focused on both external traffic acquisitions and internal cross-sells from other businesses. We also successfully capitalized on the recovery of outbound travel by increasing the supply of overseas hotels, and broadened our outbound travel customer base. For alternative accommodations, we enhanced the experience for both consumers and landlords and better matched demand with supply.
New Initiatives
For the second quarter of 2023, revenues from the New initiatives segment increased by 18.4% year over year to RMB16.8 billion. Operating loss for the segment decreased by 23.5% year over year to RMB5.2 billion, and operating margin improved sequentially to negative 31.0%.
In the second quarter, GTV and revenue of Meituan Select continued to grow year over year, but the growth rate decreased due to slower than expected growth of the overall market. Operational efficiency significantly improved on year-over-year basis. Revenue of Meituan Select, which is booked on net basis, declined on sequential basis primarily due to our increased subsidies which lowered price per item. Quarterly operating loss expanded on sequential basis. This was primarily due to a larger business scale, our increased subsidies to drive growth, our expenditure on cold chain and logistics in response to the upcoming hot weather, and seasonal product mix change. We believe the grocery digitization will continue and remain confident on Meituan Select' s long term potential despite short term difficulty in refining the business model. We remained as an industry leader and have accumulated 470 million transacting users as the end of June. Transaction frequency of existing users increased as we further enhanced consumer mindshare. We achieved industry-leading fulfillment efficiency, as we expanded the coverage of cold-chain logistics and smart warehousing, while continually enhanced operations, as well as our supply chain management capability. Moreover, we helped farmers increase their incomes, promoted the circulation of agricultural products on our platform, and continued to create local employment opportunities in lower-tier markets.
Meituan Grocery also delivered solid growth on a year-over-year basis in the second quarter, despite a high base in the same period of last year, and achieved higher market share. We diversified our supply, and GTV contribution from standardized products and private labels continued to rise. We also continued to cultivate consumer behavior, which effectively boosted user frequency. In addition, we increased the density of front-end warehouses in the major cities where we operate, leading to improvements in delivery efficiency and user experience. Moreover, we strengthened our collaborations with the suppliers and enhanced direct sourcing and procurement of fresh produce. As such, we continued to provide consumers with high-quality products at competitive prices.
As offline consumption and the local services industry in China continued to recover, we further enhanced our product and service offerings for both consumers and merchants, by leveraging our "Retail + Technology" corporate strategy. We continued to help millions of merchants on our platform to optimize online operations and provide comprehensive set of marketing tools to help them reach broader consumers. We have been continuously satisfying the growing consumer demands through higher quality, more affordable and more convenient products. We remain committed to accelerating the digital transformation process for the services industry and helping promote the integration of digital technology with real economy. We will further explore in the areas such as artificial intelligence, autonomous delivery, and other cutting-edge technologies by leveraging both our proprietary research and external investments. We will also shoulder our corporate responsibility, generate more job opportunities, create value for all the participants in our ecosystem, and continue to fulfill our mission that "We help people eat better, live better".
For the full announcement of Meituan for the three and six months ended June 30, 2023, please visit:
https://media-meituan.todayir.com/202308241711521792649756_en.pdf
About Meituan
Meituan (HKG: 3690) (the "Company") is a leading technology-driven retail company in China. With the mission of "We help people eat better, live better," the Company uses technology to connect consumers and merchants. Service offerings on its platform address people's daily needs for food and retail goods 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. 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.
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