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Meituan Announces Record-Breaking Growth and Market Leadership

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Michael Chen

March 22, 2024 - 09:17 am

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Meituan's Year of Triumph: Financial and Operational Milestones Reinforce Market Dominance

HONG KONG, March 22, 2024 /PRNewswire/ -- Meituan (HKG: 3690), an eminent technology-powered retail behemoth domiciled in China, today has proudly asserted the rigorous financial outcomes for the entire tenure concluding on December 31, 2023, punctuating the company's potency and consistent growth trajectory.

Financial Performance: Robust Growth In Core Sectors

During the fiscal year 2023, Meituan witnessed a remarkable 25.8% surge in income, amassing RMB276.7 billion, a substantial leap from RMB220.0 billion registered in the prior year. The principal local commerce division of the firm observed an operating surplus rise of 31.2% to RMB38.7 billion in 2023, climbing from RMB29.5 billion a year earlier. Concurrently, the operational deficit in the New initiatives section diminished to RMB20.2 billion in 2023, down from RMB28.4 billion in 2022. The year's profit pinnacle was an impressive RMB13.9 billion, in stark contrast to a RMB6.7 billion loss documented for 2022. Other fiscal health indicators – adjusted EBITDA and adjusted net income – both soared to RMB23.9 billion and RMB23.3 billion, respectively. To top off the successful year, the company achieved an operating cash flow of RMB40.5 billion and reported holdings of RMB33.3 billion in cash and equivalents, plus short-term treasury investments totalling RMB111.8 billion as of December 31, 2023.

Visionary Leadership: Adapting and Innovating

Xing Wang, the Founder and CEO of Meituan, remarked that China's local service industry had eclipsed other retail sectors in 2023 with accelerated growth rates. He acclaimed the company's strategic adaptability in the face of shifting market evolutions and its capacity to satiate the multifaceted proclivities of consumers and vendors. Through business evolution, Meituan stimulated local spending and forged employment opportunities, securing its position at the vanguard of the industry. With a firm stance on the 'Retail + Technology' strategy, Wang underscored Meituan's dedication to hastening the industry's digital revolution and improving the quality of life for consumers.

Shaohui Chen, Meituan's Chief Financial Officer, stated that amidst the progressive consumer service consumption in China, Meituan's industry expertise enabled prompt strategic realignment, fostering steady growth within the novel consumption environment. Looking to the future, Meituan intends to persist in iterating its core business, capturing burgeoning growth prospects, and solidifying long-term defences. Chen reinstated faith in the foundational business principles and projected long-term growth potential.

Core Local Commerce: A Decade of Food Delivery Excellence

The core local commerce sector of Meituan celebrated a revenue hike of 28.7% in 2023 to RMB206.9 billion, thanks to the lively restoration of local businesses. Notably, operating profits jumped by 31.2% to RMB38.7 billion, with a slight enhancement in operating margin to 18.7% from 18.4% in 2022. As it marked a milestone of 10 years in food delivery, Meituan fortified its market leadership and intrinsic strengths over this period. With an expansion in annual transacting users and a steady climb in purchasing frequency of mid-to-high-frequency users, having meals delivered within 30 minutes has been embraced as an emerging lifestyle preference, satisfying broader consumer categories and encompassing a larger demographic.

In response to the evolving customer preferences through 2023, Meituan recalibrated business strategies and refined operations across various product segments, marketing, and supply initiatives. The company enlarged its Pin Hao Fan reach, catering to value-for-money selections, and polished its high order value offerings. It accentuated the twin competences of product presentation and promotional strategies. Meituan augmented content creation across various mediums, forming a dynamic content ecosystem and simplifying its membership program for equitable use by consumers and merchants. These enhancements, alongside an effective shelf-based model, stimulated consumer demand more proficiently.

Meituan Instashopping: Reshaping Retail

Meituan Instashopping, another sector within core local commerce, boasted over 40% increase in order volume for the year. It's established as an indispensable component in on-demand retail, uniting millions of local vendors and brands with a prolific consumer base. Compared to the traditional food delivery users, Instashopping's clients showcased higher loyalty and purchasing clout with a significant contingent of younger users. The purchasing frequency and expenditure on Meituan Instashopping rose consistently. With close to a 30% increase in Annual Active Merchants, the platform offered an improved supply quality and range. Nearly 400 brands were assisted in transitioning online, while Meeraintaining more than 200 cities. The platform's supply capability led to better user experiences and a robust order volume growth.

Likewise, Meituan has ensured the revival of offline consumption, propagating growth over 100% year-over-year for in-store, hotel, and travel sectors. Iterations in business operations and industry transformation were prominent throughout the year. The company improved the promotion of value-for-money items, enriched its video content range, and boosted order volumes through Special Deals sessions. The introduction of live streaming programs emerged as part of Meituan's strategic innovation, catering to consumers' convenience and shopping essentials.

Enhanced efficiencies in search models and merchant collaborations strengthened the company's competitive prowess. Subsidies were reduced and merchant subscriptions eased to foster an expanded merchant base. Theme-based marketing initiatives and varied promotional efforts like the reputable "Must-Eat List," "Must-Eat Festival," and "Black Pearl List" augmented merchants' brand recognition and transactions. Moreover, direct operations nationwide replaced the agency model, thus enabling market penetration in lower-tier regions and the offering of novel consumer-oriented measures, such as meal combo add-ons and varied delivery service options.

For hotel and travel businesses, Meituan captured the robust industry rebound by enhancing platform supplies, live streaming capabilities, and assisting merchants in operational efficiency and consumer acquisition. Also, localization of hotel offers and accommodations led to record reservations during peak holiday seasons, while digitalization initiatives promoted high-star hotel collaborations.

New Initiatives and Reshaping Strategies

Meituan's New initiatives segment saw an 18.0% year-over-year revenue increase to RMB69.8 billion in 2023. The operational efficiency improvements across the segment's businesses contributed to a reduced operating loss to RMB20.2 billion, and a better operating margin at negative 28.9%.

Growth within Meituan Select found resistance as the community e-commerce market plateaued. The focus then shifted towards refining the business model, prioritizing key competencies and user experience enhancements over market share. Strategic changes await Meituan Select in 2024, with an agenda set on reducing operational loss, and an emphasis on price adjustments and subsidy reductions to nurture a natural customer retention rate.

The former Meituan Grocery evolved into Xiaoxiang Supermarket, an online supermarket brand transition emphasizing growth in GTV by approximately 30% year over year. The company focused on expanding its product variety and private label capabilities, leading to sales uptick. Operational efficiency was keyed on through supply chain refinement and fulfillment cost reductions, invoking steady user base growth and purchasing behaviors.

2024 Outlook: A Resolute 'Retail + Technology' Strategy

Projecting into 2024, Meituan perceives the domestic consumption market brimming with potential, placing the company in an advantageous position to harness growth opportunities. Committed to enriching its product and service offerings, the company stresses the ubiquitous on-demand delivery culture and the inevitable digital transformation of the local service industry. As a leading entity, Meituan plans to employ its knowledge base, consolidate its core competencies, and bolster capabilities to facilitate this digital transition effectively. The firm aspires to amplify the well-being of ecosystem participants, create substantial employment, and deliver substantial social value.

To review the complete announcement of Meituan for the year concluded on December 31, 2023, please visit: Meituan 2023 Financial Results.

About Meituan: A Beacon of Technology-Driven Retail in China

Meituan (HKG: 3690) distinguishes itself as a prominent technological retail company with its mission to ameliorate individual lifestyle aspects, encouraging "eating better, living better." It utilizes advanced technology to bridge the gap between consumers and businesses, tackling fundamental daily needs and broadening horizons to accommodate lifestyle and travel services. As a global forerunner in on-demand food delivery and China's preeminent in-store dining e-commerce platform, Meituan is synonymous with innovation in fulfilling consumer demands, enabling informed decision-making, and facilitating on-demand service fulfillment. Housing recognized brands like Meituan Waimai for instant delivery and Meituan Bikes for shared mobility, the company persists in its expansive journey across over 2,800 cities and counties within the nation.

Disclosure and Contact Information

This document contains forward-looking statements about the company's future business expectations, plans, and strategies which are based on information currently available, including assumptions and judgments that may change in future. These statements are accompanied by potential risks and uncertainties that could cause actual results to diverge. Detailed risk information is available in the company's public documents.

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SOURCE: Meituan