On June 7th, Cailianshe reported (Reporter Xu Cihao) that on June 6th, Meituan released its Q1 2024 earnings report, with revenue reaching 73.3 billion yuan, a 25% YoY growth; net profit was 5.4 billion yuan, compared to 3.4 billion yuan in the same period last year, and adjusted net profit was 7.488 billion yuan, market expectations were 6 billion yuan, and this number was 5.491 billion yuan last year.

During the earnings conference call, Meituan Founder and CEO Wang Xing also discussed the progress of the company's overseas business. According to him, Meituan is evaluating and studying various global markets, and the Middle East is one of them, but there is currently little substantive progress. Meituan is also evaluating other markets, including Europe or Southeast Asian countries.

"Internationalization is an important direction for Meituan's long-term development. From a financial perspective, Meituan will carefully evaluate opportunities, maintain financial discipline, and invest based on higher returns." said Wang Xing.

The YoY loss of the new business has narrowed by 45.2%.

Specifically, Meituan's core local commerce (including catering delivery and dining-in, hotel and travel divisions, and flash purchase) revenue was 54.6 billion yuan, a YoY growth of 27.4%, operating profit increased by 2.7% to 9.7 billion yuan, and operating profit margin was 17.8%.

Among them, the number of active users for its delivery services has increased to nearly 500 million, with a further increase in transaction frequency for mid- to high-frequency users. Driven by this, the same-day delivery order volume for the platform in this quarter increased by 28% YoY to 5.46 billion; due to the significant increase in the number of trading users and the faster growth in trading frequency. It is reported that the daily order volume of Meituan flash purchase reaches 8.4 million.

As for Meituan's in-store hotel business, it continues to show steady growth, with GTV in the first quarter increasing by over 60% YoY and the annual number of trading users increasing by over 37% YoY.

It is worth mentioning that at the earnings conference held in March of this year, Meituan's management explicitly stated that it will carry out strategic adjustments in 2024, aiming to significantly reduce operating losses in its new business division (including Meituan Select, Little Elephant Supermarket, among others).

Meituan's Q1 report showed that new business revenue increased 18.5% YoY to 18.7 billion yuan, and the operating loss of this segment narrowed YoY by 45.2% to 2.8 billion yuan.

Meituan explains that it has raised the markup rate of its products, reduced the average cost of fulfillment through improved warehouse operations, and improved marketing efficiency.

It is worth mentioning that in the first quarter of this year, the daily order volume peak of Meituan's delivery service’s new business "Pinghao Fan" also hit a new high. The growth of county-level consumption prompted Meituan to expand its county-level merchant network. The daily order volume has now reached nearly 5 million, which is close to 10% of Meituan's Q4 2023 daily order volume of 57 million.

Meituan CFO Chen Shaohui said during the conference call that iterative updates of the model will help to more efficiently meet the needs of price-sensitive users, and the scale of "Pinghao Fan" has steadily expanded in the past few quarters. User base and purchase frequency have both increased rapidly, and unit economic benefits have continued to improve. "We will continue to optimize the supply, innovate the business model, and improve operations to capture demand from all scenarios."

The structural adjustments for the organization have taken effect.

In fact, at the beginning of this year, Meituan experienced its darkest moment in the capital market, with its stock price falling to 61.1 Hong Kong dollars, the lowest point since August 2019.

However, Meituan's multiple large-scale buybacks boosted market confidence, and the company continued to adjust its organizational structure to improve operational efficiency. Meituan's Hong Kong stock price turned upwards, reaching a recent high of 129.2 Hong Kong dollars on May 17th, an increase of 111.46% compared to its low point of 61.1 Hong Kong dollars in February, and as of yesterday (June 6th), Meituan's Hong Kong stock closing price was 112.7 Hong Kong dollars.

At the beginning of February of this year, Wang Xing released an internal email announcing a new organizational structure, kicking off Meituan's organizational restructuring.

The restructuring is as follows: the home goods business group, in-store business group, Meituan platform, basic R&D and other business groups report to the S-team member Wang Puzhong, Meituan's senior vice president and former in-store business group president Zhang Chuan will be responsible for Dianping, saas, cycling, and charging treasure businesses. Meituan's exploration-oriented businesses in internationalization and technology will report directly to Wang Xing.

Later on in March, Meituan promoted Vice President Wei Wei to lead the in-store catering business division, the delivery fulfillment platform was taken over by Zhang Ruoyu, and Xue Bing, a fresh graduate recruit, became the head of the delivery business division.

In April, Meituan announced a new round of organizational adjustments through internal emails: the establishment of a city operation business department under the Meituan delivery department, appointing Huang Xiaoqin as the person in charge; the establishment of a chain business department, appointing Li Jiayi as the person in charge; the establishment of a supply exploration department, appointing Chu Zheng as the person in charge. The above persons in charge all report to Xue Bing, the person in charge of the Meituan delivery department.

One week later, Wang Xing announced in another internal email that the previously integrated Meituan platform, in-store business group, at-home business group, and basic research and development platform will be merged into the "Core Local Business" sector, with Wang Putong appointed as CEO of the Core Local Business.

During a financial results analyst call, Wang Xing acknowledged the effect of multiple adjustments and stated that Meituan hopes to cover all scenarios and categories of local services and provide complete solutions through these adjustments. "In particular, better synergy between the core local business, in-store, hotel, and tourism sectors, to better meet consumer needs, and to strengthen our platform's supply."

"We are still in the process of organizational restructuring," Wang Xing emphasized during the call, insisting that the adjustment was to better support and integrate the Core Local Business sector.

Overseas expansion is important for long-term growth.

In addition to local life adjustments, Meituan's international expansion has also received recent attention.

According to the latest data from research firm Measurable AI, as of March 2024, Meituan's KeeTa food delivery business in Hong Kong had a 44% market share by order volume, while the other two food delivery platforms, Foodpanda and Deliveroo, had market shares of 35% and 21%, respectively.

Measurable AI pointed out that KeeTa, as a newcomer to the Hong Kong food delivery market, has a positive effect on stimulating healthy growth of the Hong Kong food delivery market. Data shows that by Q1 2024, compared to Q1 2023, Hong Kong's online food and grocery delivery demand has increased significantly, with a year-on-year increase of over 40% in order volume and a year-on-year increase of about 22% in traded commodity volume (GMV).

"The success of KeeTa in Hong Kong is inevitable." Zhu Kelin, founding dean of the National Research Institute of New Economic Research, told a Caixin reporter that Meituan has accumulated rich experience in the domestic market and has a deep insight into consumer demands. Applying this insight to the Hong Kong market and rapidly gaining consumer favor through measures such as optimizing services and improving user experience.

In the view of Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, Meituan can further expand its market share, enhance its brand influence, and lay a solid foundation for future global strategies through successful deployment in the Hong Kong market.

Previously, Wang Xing has made it clear that the business pilot in Hong Kong is the first step in exploring international markets. In Wang Xing's view, Hong Kong is similar to the mainland in terms of culture, language, and basic infrastructure, making it a suitable location for the first overseas business and future international expansion.

While achieving great success in Hong Kong, there have been recent market rumors that Meituan may launch its international food delivery platform KeeTa in the Middle East in the coming months, with Riyadh, the capital of Saudi Arabia, as the first stop.

"We have made very good progress in Hong Kong over the past year, which gives us great confidence to further expand overseas," Wang Xing said candidly during the financial results call. He also stated that Meituan has not launched any products and services in the Middle East before and has studied other markets including European countries and Southeast Asian countries. The potential for greater development was identified when evaluating the Middle East or Gulf countries, including competition and average product value and cost structure.

"It must be emphasized that we are still in the early exploratory phase of overseas expansion, but there is no doubt that overseas expansion will be a very important part of our long-term growth." Wang Xing said during the analyst call that Meituan will explore overseas expansion with a very cautious attitude and maintain financial discipline, rather than blindly investing money. In other words, Meituan will have different criteria for entering potential new markets, including the level of market openness, service penetration, competitive landscape, average product value, and cost structure.