Li_DanLi_Dan ・ Jun. 7, 2024
Meituan Q1 Profit Beats Estimates with 36% Growth
Meituan's mainstay business local-commerce including food delivery and the in-store, hotel and travel businesses maintained more than 20% growth of revenue in Q1, and revenue from the New Initiatives rose 18.5%.

TMTPost --  China’s largest delivery platform Meituan beat both the top and bottom line  in the beginning quarter of the year, showcasing strong demand from Chinese consumers.

Credit:Meituan

Credit:Meituan

Meituan reported revenue of RMB73.28 billion (US$1.0 billion) in the quarter ended March 31, 2024, compared with Wall Street expectation of RMB69 billion. The revenue represents a 25% year-over-year (YoY) increase, maintaining more than 20% of growth for the previous quarter. On non-IFRS basis, the adjusted net profit surged 36.4% YoY to RMB7.49 billion and operating profit increased to RMB5.29 billion, up 45.9%, whereas analysts projected RMB6.0 billion and RMB4.03 billion, respectively.  The net profit just reversed decline in the fourth quarter with RMBRMB2.2 billion from a loss of RMB1.08 billion a year ago.

Meituan’s mainstay business maintained double-digit growth in the March quarter. Its 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 RMB54.63 billion with a 27.4% YoY growth, topping analysts expected RMB50.74 billion. And operating profit increased 2.7% YoY to RMB9.7 billion with a margin of 17.8%. Revenue from delivery services rose 24.6% YoY to RMB21.07 billion, and revenue from commission, online marketing services and other services and sales grew to RMB20.66 billion, RMB10.31 billion and RMB21.16 billion, up 26.7%, 33.1% and 33.1% YoY, respectively.

The revenue growth in delivery services and commission was primarily due to the substantial growth of GTV, or gross transaction volume, as a result of increase in the number of transactions, partially offset by the lower average order value of its food delivery and Meituan Instashopping businesses, Meituan said. The revenue growth in online marketing services was mainly attributable to the increases in the number of online marketing Active Merchants and average revenue per online marketing Active Merchant.

Meituan said its on-demand delivery business recorded robust growth in the first quarter. For food delivery, it penetrated deeper into the industry value chain and explored innovative business models, including Branded Satellite Stores , a new model that focuses on elevating efficiency for well-known chain restaurants. In this model, merchants do not offer in-store dining, but rather they only provide high-quality and value-for-money food delivery services. Meituan Instashopping maintained rapid growth trajectory in the first quarter, driven by significant increase in Transacting Users and even higher growth in transaction frequency.

Meituan said it refined operations to meet needs for holiday gifting and travel. During the Chinese New Year, or the Spring Festival, from February 10 to 17, many consumers ordered holiday products and gifts Meituan’s our on-demand channel. GTV from categories such as liquor and beverages, holiday gifts and daily necessities recorded remarkable growth, bringing higher revenue to offline retailers. Meituan also expands continued to expand its new supply formats. By the end of the first quarter, the company had around 7,000 Meituan InstaMarts, orders from which contributed to a larger portion of the total order volume. Meituan InstaMarts accelerated online penetration in lower-tier markets with expanding categories.  In the first quarter, Meituan’s in-store, hotel and travel businesses experienced strong growth as the company launched dedicated live streaming campaigns during holidays. For hotel and travel, it achieved robust YoY growth in both domestic hotel room nights and GTV during the first quarter.

Revenue from the New Initiatives rose 18.5% YoY to RMB18.7 billion, slightly more than analysts forecast of RMB18.23 billion. Operating loss for the segment narrowed 45.2% YoY to RMB2.8 billion, and operating margin improved sequentially to negative 14.8%. Meituan said it refined its business strategies in Meituan Select to focus more on operational enhancement and high-quality growth. Specifically, it increased its price mark-up ratio, lowered the average fulfillment cost per item as we enhanced warehouse operations, and improved marketing efficiency. Therefore, operating loss narrowed significantly on both quarter-over-quarter and YoY bases. The company vowed to further enhancing its operational efficiency, and strengthening our capabilities in product selection and fulfillment.

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