Shulou(Shulou.com)11/24 Report--

On August 26, Meituan released the second quarter and half-year results of 2022. In the second quarter of this year, Meituan achieved a revenue of 50.9 billion yuan, an increase of 16.4% over the same period last year, a net loss of 1.12 billion yuan, a narrowing of 67% over the same period last year, and an adjusted net profit of 2.06 billion yuan to turn losses into profits.

Behind the improvement in performance in this quarter, Meituan has adopted a sound business strategy to pursue high-quality growth and effectively control costs. The sales cost rate decreased by 2.0 percentage points to 69.4% from 71.4% in the same period last year, and the marketing expense rate also dropped 7.2 percentage points to 17.6% from 24.8% in the same period last year.

"in this quarter, Meituan continued to improve quality and efficiency, and all businesses achieved high-quality growth." Meituan CEO Wang Xing said, "Meituan will firmly focus on the 'retail + technology' strategy, promote the deep integration of the digital economy and the real economy through scientific and technological innovation, and strive to contribute more to China's stable economic growth and help everyone eat better and live a better life."

New path of local life: it is worth noting that starting from the second quarter of this year, Meituan has readjusted the disclosure of various business income, changing the original three parts of "catering takeout, to hotel wine travel, and new business" to "core local business" and "new business".

After the adjustment, the core local business includes the original catering takeout and arrival, hotel and tourism branches, as well as Meituan flash shopping, residential accommodation and transportation ticketing; new businesses include Meituan selection, Meituan shopping, catering supply chain (fast donkey), online car hailing, shared bikes, shared motorcycles, portable battery, restaurant management system and other new businesses.

According to the financial report, in the second quarter of 2022, the revenue of Meituan's core local business division increased by 9.2% from 33.7 billion yuan in the second quarter of 2021 to 36.8 billion yuan in the same period in 2022. The revenue of the new business division increased by 40.7% from 10.1 billion yuan in the second quarter of 2021 to 14.2 billion yuan in the same period of 2022, accounting for 72% and 28% of the total revenue, respectively.

As for the reasons for this adjustment, Meituan CEO Wang Xing explained at the earnings call that the new business disclosure method can better reflect the business strategy, development stage and financial performance of each business, and is better consistent with resource allocation.

Specifically, catering takeout and inbound wine travel are Meituan's relatively mature business. After many years of operation, it has achieved a leading position in the market, as well as a sound business model, which is also the main source of the company's operating profits and operating cash flow. In addition, accommodation and ticketing have been merged into the wine and travel section, while Meituan flash purchase reuses the take-out user base and distribution system, which has the same profit model and potential, all of which belong to the home category.

More importantly, home and store-to-store business has natural stickiness on the merchant side, which can achieve effective transformation between merchants and have the potential of cross-selling. Under the epidemic, many platform-to-store merchants have been hindered by offline business activities and turned to online transformation. For example, in April and May this year, affected by the epidemic, some high-end offline restaurants with no experience in takeout operations began to choose to serve consumers through takeout. On May 1 alone, 473 catering merchants in Beijing applied for online takeout through the green channel, including Gaoxing Hotel and high-end catering brands. The local supply of real-time retail, especially those retailers, brands or warehousing outlets that have physical warehousing and service capabilities in the region, as well as small and micro formats such as convenience stores and grocery stores, as well as medium and large supermarkets, brand offline direct stores, and so on, are all online takeout platforms to join the army of real-time retail formats.

On the other hand, the new business segment belongs to the new areas that are still being explored, and the operation chain is relatively long, so it takes more time to iterate and optimize its business model. Wang Xing said that in the future, the development of each new business will be evaluated, and the corresponding resources will be allocated and invested.

In fact, Alibaba, JD.com and other companies have repeatedly adjusted the caliber and division of financial disclosure according to business development. For example, in February this year, when Alibaba announced his financial results for the third quarter of fiscal 2022 (October-December 2021), he split the original core e-commerce business into four parts: domestic e-commerce, international e-commerce, local life and rookies. began to disclose the profit performance of these four parts independently.

Meituan divides the business into two categories: the basic plate of local life services and the exploration business, with similar business logic and a clearer focus strategically.

With the growth of takeout profits, the industry has entered a mature and stable stage, and the catering takeout business has always been Meituan's largest source of revenue. In this quarter, Meituan's catering takeout business was negatively affected by the epidemic and control measures, especially in some first-tier cities where takeout orders accounted for a large proportion. Orders were severely affected in April and May, but recovered quickly after the outbreak was effectively brought under control in June.

"despite external challenges, our catering takeout business has shown resilience, and our high-frequency users contributed higher orders in the quarter." Meituan said in the financial report.

According to the disclosed data, Meituan's revenue from catering delivery business grew faster than the growth rate of orders in that quarter, which means that the average unit price of catering takeout business increased; at the same time, the operating profit and operating profit margin of catering takeout increased significantly compared with the same period last year and month-on-month.

Meituan CFO Chen Shaohui said that on the one hand, there are seasonal reasons, the second quarter is usually the best economic season for takeout business units.

In 2021, for example, Meituan's takeout profit margins in the first, third and fourth quarters were 5.4 per cent, 2.2 per cent and 6.9 per cent respectively, compared with 10.4 per cent in the second quarter. Behind this is the seasonal reason. Meituan provides higher subsidies for riders in the third and fourth quarters because of extreme weather, so the cost of distribution will be higher. The climatic factors in the second quarter are relatively good, and the impact in this aspect is relatively small.

On the other hand, during the epidemic in the second quarter of this year, a large number of small and medium-sized businesses temporarily suspended business, while more restaurants with high unit prices launched online takeout services. At the same time, since June this year, Meituan has launched the "must-point list" with many high-quality merchants and provided citywide delivery services in many cities, which has also contributed to the contribution of long-distance orders in this quarter. The higher proportion of high customer unit price orders promoted the year-on-year growth of commission and distribution service revenue, resulting in a significant increase in operating profit and operating profit margin of takeout compared with the same period last year and month-on-month.

Chen Shaohui predicts that as small and medium-sized catering businesses with lower orders resume business in the third and fourth quarters, customer unit prices may fall.

From an external point of view, after more than a decade of rapid development, the takeout industry has entered a mature and stable stage, users' consumption habits have been gradually formed, and the industry as a whole has bid farewell to the extensive subsidies in the past. The pursuit of high-quality growth is the common choice of the takeout platform in the new stage, the competition pattern has become more rational, and the industry environment is healthier.

Alibaba's latest quarterly earnings report revealed the data on the economic benefits of ele.me units. And it is clear in the financial report that the economic benefits of ele.me units become regular, mainly due to the increase in the unit price of customers compared with the same period last year, as well as the continuous reduction of user subsidies.

Instant retail demand erupts, becoming a new driving force for growth. According to the financial report, in the second quarter of this year, Meituan continued to further promote the "retail + technology" strategy and continued to increase investment in China's consumer market. In order to meet the growing real-time demand of domestic consumers, Meituan relies on various real economy market players and provides Chinese consumers with 30-minute "everything to home" goods and services through the development of real-time retail new business type.

The spread of the COVID-19 epidemic this quarter has catalysed consumers' reliance on real-time distribution services, especially under emergency controls, which require consumers to quickly stock up on fresh food and daily necessities from local stores in a short period of time. The financial report revealed that Meituan's flash purchases continued the trend of rapid growth, with the increase in the number of users and transaction frequency leading to a significant increase in orders, with an average daily order volume of 4.3 million in the second quarter of 2022.

Driven by related business, in the second quarter of this year, the number of trading users of Meituan platform increased by 8.9% to 684.7 million compared with the same period last year, the per capita transaction frequency of users increased by 16.2% to 38.1, and the number of annual active merchants on Meituan platform increased by 18.5% to 9.2 million, a record high.

The growing real-time retail orders have also created new momentum for the recovery and development of local brick-and-mortar merchants. From January to July this year, the transaction volume of convenience stores and supermarkets on Meituan's platform increased by 54% compared with the same period last year, of which small husband and wife stores increased by 110%.

Wang Xing said at the earnings call that in the past few years, Meituan Flash Buy has established its own core competitiveness, reused Meituan's distribution network all over the country, and accumulated the largest local merchant base in the industry. with the most diverse local supply.

It is reported that Meituan Flash Shopping also accelerated the coverage of innovative lightning warehouses in this quarter to meet the richer and more cost-effective consumption needs of young people. Compared with traditional stores, Lightning Warehouse has more diverse category selection and more effective performance ability. As of June 2022, the Meituan lightning warehouse project has expanded to more than 100 cities, with more than 1000 warehouses.

When talking about Meituan's long-term goal of flash purchase, Wang Xing mentioned that the long-term economic benefit potential of Meituan's flash purchase is similar to that of takeout, and it is believed that they can exert greater synergy in the future.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.