Once again, the results greatly exceeded expectations.

Meituan announced that his income in the second quarter was 22.7 billion yuan, and the market is expected to be 21.9 billion yuan, compared with 15.07 billion yuan in the same period last year. The adjusted profit in the second quarter is 1.492 billion yuan, and the market is expected to have an adjusted net loss of 648 million yuan, compared with a loss of 7.7 billion yuan in the same period last year.

Bloomberg expects:

Benefiting from strong revenue growth in all business segments, total revenue increased by 50.6 per cent year-on-year and 18.4 per cent month-on-month to 22.7 billion yuan.

It is worth noting that the company's adjusted EBITDA reached 2.3 billion yuan and adjusted net profit of 1.5 billion yuan, achieving overall profit for the first time.

II. Overall improvement in gross profit margin and expense rate

Due to the expansion of the business scale, the continuous improvement of the gross profit margin of catering takeout and the narrowing of the loss of new business, Meituan's total gross profit in this quarter increased by 179.5% compared with the same period last year, up 56.6% from the previous quarter to 7.9 billion yuan, and the gross profit margin reached 35%, a substantial improvement.

The expense rate was also fully controlled, with sales and marketing expenses as a percentage of total revenue falling to 18.3% from 25.7% in the same period in 2018, as Meituan further strengthened the operating leverage of all business divisions and optimized brand and marketing expenses.

III. Continuous improvement in user data and operational efficiency

From the perspective of business, the continuous improvement of the operational efficiency of the two main businesses of catering takeout, arrival and wine travel is an important reason for the company's overall profit.

In the second quarter, Meituan's total transaction value of catering takeout business increased by 36.5% to 93.1 billion yuan, operating income was 12.8 billion yuan, gross profit doubled, and adjusted operating profit became a regular employee for the first time. This is mainly due to sufficient capacity in the second quarter and good weather conditions across the country, which helps minimize the amount of seasonal incentives paid to takeout riders, so the second quarter is usually the most profitable catering takeout season. In the 12 months to June 30, 2019, the number of Meituan catering takeout transactions increased by 34.6% year-on-year to 2.1 billion.

In the hotel and wine travel business, Meituan's income in the second quarter increased by 42.8% to 5.2 billion yuan from 3.7 billion yuan in the same period in 2018. In the "must series" list released by the platform, the consumer flow and participation of the businesses on the list have been substantially improved. It is worth noting that during the 618 Promotion Festival, medical and beauty trading users achieved a transaction volume of 670 million yuan in 6 days.

In addition, the second-quarter revenue of Meituan's new business and other divisions, including taxi-hailing, increased by 85.1% to 4.6 billion yuan from 2.5 billion yuan in the same period in 2018, and the overall gross profit reached 420 million yuan, from negative to positive. Meituan's taxi-hailing aggregation model has been launched in 42 cities across the country. Meituan's grocery shopping, which is explored in the field of fresh retail, has made progress in Beijing and Shanghai, and has recently been extended to Wuhan. The operating efficiency of the bicycle business has been greatly improved, and the operating losses have narrowed significantly compared with the same period last year and month-on-month.

In terms of user data, the number of Meituan's active merchants and trading users reached 5.9 million and 420 million respectively in the 12 months to June 30, 2019. Among them, the average number of transactions per transaction user increased to 25.5 per year. Meituan Takeout launched the membership system in the second half of 2018, offering exclusive discounts. By the end of the second quarter, the average purchase frequency of monthly active users was more than three times that of ordinary monthly active users.

Conclusion

From the listing business model is questioned, the stock price continues to decline to the lowest 40, to the current stock price 70, return to the offering price level, what on earth has Meituan experienced?

Meituan CEO Wang Xing believes that Meituan achieved the overall profit of the company for the first time in this quarter, thanks to the continuous improvement of brand penetration on the supply side and the demand side, leading to the continuous growth of the business scale of many service categories. Meituan will continue to focus on the "Food+Platform" strategy, from a longer-term perspective, through continuous investment in strategic areas and technological innovation, to provide users with richer consumption scenarios, promote business growth and operational efficiency, and promote the sustained prosperity of the consumer market.

In fact, Meituan has established a platform to connect "people and services", which is different from Tencent's "people and people" and Baidu, Inc. 's "people and information". BABA's "people and things" track, "people and services" is also a track that can give birth to trillions of market capitalization enterprises.

Previously, people were worried that Meituan won the market by subsidies, that the takeout industry might be "diseconomies of scale", and that Meituan and BABA had a direct competitive relationship in many areas, such as ele.me increasing subsidies. Meituan's profit level is bound to deteriorate. However, competition has slowed this quarter, leading to a further sharp increase in profitability.

Meituan's moat lies in that Meituan continues to expand his horizontal coverage in other areas of local life, such as takeout, movies, wine and travel, and his diversified layout gives him more flexible means and lower flow costs in the competition with ele.me. Be able to capture the needs of users at multiple levels, and constantly cultivate and strengthen users' habits.

Looking to the future, from the perspective of AI, Meituan Dianping, as an absolute leader in the life service industry, has seized multiple life service scenarios and accumulated a large amount of high-value big data, which will help it produce compound interest effect in the data-critical artificial intelligence era, provide higher-value services and products, and further strengthen its own competition barriers.