On June 6, Meituan released its performance report for the first quarter of 2024, ending on March 31, 2024. Overall, benefiting from the sustained economic recovery and consumption revival, Meituan's performance in the first quarter was impressive, with all its businesses achieving steady growth.

During the reporting period, Meituan achieved a revenue of 73.276 billion yuan (RMB, hereinafter), a year-on-year increase of 25.0%; gross profit of 25.697 billion yuan, a year-on-year increase of 29.7%; a profit of 5.369 billion yuan during the period, a year-on-year increase of 59.9%; adjusted EBITDA was 8.070 billion yuan, a year-on-year increase of 28.9%; adjusted net profit was 7.488 billion yuan, a year-on-year increase of 36.4%.

Specific Performance

Core Local Business

In terms of business segments, Meituan's core local businesses (including food delivery, in-store dining, hotel and travel divisions, Meituan Flash Purchase, etc.) saw a revenue increase of 27.4% to 54.626 billion yuan compared to the same period last year. Among them, delivery services, commissions, and online marketing services increased by 24.6%, 26.7%, and 33.1% respectively. Operating profit was 9.699 billion yuan, a year-on-year increase of 2.7%.

Regarding food delivery, influenced by the "low-price" strategy, Meituan's active users in the first quarter increased to nearly 500 million, and the transaction frequency of medium and high-frequency users further increased year-on-year. Driven by this, the platform's instant delivery orders increased by 28.1% year-on-year to 5.465 billion.

The good performance growth is inseparable from the innovation in operational models.

• "Brand Satellite Store" model focuses on improving the operational efficiency for well-known chain restaurants. Relevant merchants only provide high-quality and cost-effective food delivery services, thereby streamlining the cost structure and providing consumers with low-cost, high-quality services on the premise of quality assurance. As of the end of May this year, a total of 45 brands have opened more than 560 brand satellite stores.
• "Pin Hao Fan" benefited from the improvement of consumer experience and the optimization of order scheduling system and operation. The model achieved a new peak in daily order volume in the first quarter. Next, the group will expand this business to more cities, attract more merchants, and provide consumers with "value for money" to achieve volume expansion and increased revenue.
• "Shen Qiang Shou" significantly optimized Meituan's supply and online marketing strategies. The willingness of merchants to advertise on the Meituan platform has further increased. Through launching multiple promotional activities in collaboration with merchants, Meituan has also made significant progress in innovation.

As an important part of instant retail, Meituan Flash Purchase has shown rapid growth momentum. With the trend of "everything to your doorstep", more and more food delivery users are turning to Meituan Flash Purchase. The business achieved an average daily order volume of 8.4 million during the period, and both the number of active users and transaction frequency increased significantly year-on-year.

On the other hand, the business has cooperated with well-known brand merchants such as Decathlon to cover consumers' high-quality and diversified needs in various categories such as department stores, electronics, cosmetics, clothing, and pets.

Meituan's in-store dining and travel business continued to grow steadily, with GTV in the first quarter increasing by over 60% year-on-year, and the number of annual transaction users increasing by over 37% year-on-year. The number of transaction users, merchants, and annual active merchants all reached historical highs.

• In terms of strategic layout, Meituan has already completed its layout in the sinking market and mid-to-low-end hotels, thus seizing the opportunity under the recent trend of niche tourism "popularization".
• In terms of product supply, Meituan continues to expand its merchant base and cater to diversified consumer demands through options such as "hotel + X" packages. With the support of industry position, user base, and conversion frequency, it has maintained a good growth rate.
• In terms of brand marketing, Meituan has increased its brand promotion efforts during holidays, providing various customized marketing solutions (such as popular IP special live broadcasts, special group purchases, and joint promotions), increasing brand awareness, while consolidating the market share of many low-star hotels, it has also strengthened the position of high-star hotels.

New Business

Financial reports show that revenue from new business (including Meituan Select and Xiaoxiang Supermarket, etc.) increased by 18.5% year-on-year to RMB 18.65 billion, with operating losses narrowing by 45.2% year-on-year to RMB 2.8 billion, and the operating loss rate improving to 14.8%.

At the performance conference in March this year, Meituan clearly outlined its strategic adjustment plan for 2024, with a goal to significantly reduce operating losses. To achieve this, Meituan increased the markup rate for goods this quarter, reduced the average fulfillment cost per item by optimizing warehouse operations, and improved marketing efficiency.

Regarding Meituan Buy, this business has been struggling since its launch in 2020 and has performed mediocrely even with increased subsidies within the group last year. In response, the group will adjust business operations by reducing subsidies, closing underperforming warehouses and stores, but will not abandon the community e-commerce market, focusing instead on the natural retention of core users.

In December last year, "Meituan Buy" was officially upgraded to "Xiaoxiang Supermarket", which has now been launched in cities such as Beijing, Shanghai, Suzhou, Hangzhou, Wuhan, Shenzhen, and Guangzhou. Since 2024, it has entered cities like Wuxi and Dongguan.

For the new business sector, Meituan affirmed its strategic value, stating that the synergies with the core local business will bring more surprises in the future. During the financial conference call, Meituan CEO Wang Xing said, "The company will actively lead the digital transformation and upgrade of the commodity retail and service retail industries, and believe that there will be more synergies between various businesses in the future."

Organizational Restructuring

This February, Wang Xing announced in an internal email the commencement of a new round of organizational restructuring, with Wang Puzhong overseeing the core local business operations.

In March, Wei Wei, the company's vice president, was promoted to head the in-store dining division, while Zhang Ruoyu took over as head of the delivery fulfillment platform, and Xue Bing was appointed head of the delivery division.

In April, it was further announced that the Meituan platform, in-store business group, home business group, and basic research and development platform would merge into the "core local business" sector, with Wang Puzhong as CEO.

It is evident from this that there has been significant upheaval in Meituan's internal structure since the beginning of the year, marking the latest large-scale adjustment following the "Retail + Technology" strategy in 2021.

In response, the group's executives stated that this restructuring aims to achieve synergies between core local business, in-store hotel, and tourism operations; considering operational strategic adjustments to achieve better resource allocation and gain better traffic support from the platform.

Meituan also stated that it will continue to dynamically assess the progress of Meituan Optimal's business, maintain flexibility in iterating business strategies, strengthen core capabilities, and enhance user experience.

In recent years, Meituan has faced multiple strong challenges from TikTok, prompting the company to deeply rethink its strategic arrangements. In the current macro environment, consumers are more price-sensitive, with the per capita spending on in-store and travel services both declining year-on-year, but the demand for local services remains strong.

Therefore, while Meituan is enhancing the merchant base of its traditional model and its price advantages, it is also transitioning the agency model of its in-store business to a direct-operated model to better capture the demand in the sinking market.

Chen Shaohui believes that as industry competition matures, major participants will gradually shift from growth strategies driven by subsidies to those driven by reasonable return on investment. Amid strong pressure from competitors, Meituan should still focus on its long-term advantages rather than just fighting for immediate market share. As for the performance of GTV in 2024, the group remains confident.

Overseas Expansion

Last May, Meituan Keeta officially entered the Hong Kong market and has since become the largest local food delivery platform.

According to the latest data released by Measurable AI, based on the number of orders in March 2024, KeeTa holds a market share of 44%, while Foodpanda and Deliveroo account for 35% and 21% respectively.

The development of KeeTa has also brought many favorable factors to the Hong Kong market. Data shows that in the first quarter of 2024, the demand for online groceries delivery in the Hong Kong market has significantly increased, with orders rising by over 40% year-on-year and GMV increasing by approximately 22% year-on-year.

While making significant progress in the Hong Kong market, Meituan's attention has also turned to overseas markets. It was recently reported that Meituan KeeTa may launch in the Middle East market in the coming months, with Riyadh, the capital of Saudi Arabia, being the first destination.

It is reported that Meituan is continuously evaluating various markets globally, with the Middle East being one of them, but there hasn't been much substantial progress yet, while Europe and Southeast Asia are also within the company's scope of consideration.

Wang Xing emphasized that Meituan is currently in the early exploration stage of overseas expansion, but overseas expansion is undoubtedly an important part of long-term growth. From a financial perspective, Meituan will carefully evaluate opportunities, maintain financial discipline, and allocate capital with a higher investment return rate as the guiding principle.