Nov 30, 2020, 05:33 ET
HONG KONG, Nov. 30, 2020 /PRNewswire/ -- Meituan (HKG: 3690) (the "Company"), China's leading e-commerce platform for services, today announced the unaudited consolidated results of the Company for the three months ended September 30, 2020.
Company Financial Highlights
As China's economic recovery accelerated during the third quarter of 2020 as a result of effective COVID-19 containment, our businesses continued to recover steadily and achieved positive growth across all segments. Total revenues for the third quarter of 2020 increased by 28.8% on a year-over-year basis and by 43.2% on a quarter-over-quarter basis to RMB35.4 billion. Operating profit increased from RMB 1.4 billion for the third quarter of 2019 to RMB6.7 billion for this quarter, including RMB5.8 billion in fair value gain on investment in listed entities. Operating margin increased from 5.3% in the same period of 2019 to 19.0% for this quarter. Both adjusted EBITDA and adjusted net profit experienced positive year-over-year growth and improved to RMB2.7 billion and RMB2.1 billion, respectively. Our operating cash flow decreased to RMB3.3 billion for the third quarter of 2020 from RMB5.6 billion for the second quarter of 2020 due to an RMB2.0 billion decrease in working capital change. We had cash and cash equivalents of RMB 19.7 billion and short-term treasury investments of RMB33.7 billion as of September 30, 2020, compared to the balances of RMB 13.9 billion and RMB44.5 billion, respectively, as of June 30, 2020.
"Overall, with COVID-19 well controlled and the economy firmly back on track in China, growth across all of our main businesses accelerated in the quarter on a sequential basis," said Xing Wang, Chairman and CEO of Meituan. "We continued to stick with our 'Food + Platform' strategy, providing consumers with a more diverse and convenient set of service offerings, helping merchants to recover and grow, and creating more job opportunities for society at large," Wang said.
"Going forward, we will remain focused on our consumers and merchants, stay patient for long-term growth, spearhead digital transformations, and continue to stay open and inclusive to achieve a win-win situation with our ecosystem partners."
Company Business Highlights
For the third quarter of 2020, GTV of our food delivery business increased by 36.0% year-over-year to RMB 152.2 billion. The daily average number of food delivery transactions increased by 30.1% year-over-year to 34.9 million. The average value per order of our food delivery business increased by 4.5% year-over-year. Monetization Rate[i] of our food delivery business decreased to 13.6% from 13.9% in the same period of 2019. As a result, revenue increased by 32.8% year-over-year to RMB20.7 billion for the third quarter of 2020. Operating profit from our food delivery business increased to RMB768.5 million for the third quarter of 2020 from RMB330.9 million for the third quarter of 2019, while operating margin increased to 3.7% from 2.1%.
Summer is generally the peak season in terms of order volume. In order to further stimulate the recovery of our food delivery business, help merchants grow their operations and accelerate consumers' lifestyle changes, we continued to expand our high-quality merchant base and increase the diversity of restaurants on our platform. We also continued to enhance our operating systems, increase the level of operational granularity from individual restaurants to individual dishes, and cooperate with millions of merchants on several summer promotional events. At the same time, we further optimized our marketing tools that enabled us to better collaborate with merchants on consumer targeting, providing merchants with more consumer traffic and higher order growth.
In addition, the popularity of different consumption categories, such as late-night snacks and afternoon tea, continued to increase during the summer, we thus adopted more tailored and differentiated operations for these categories by expanding our merchant supply, improving product quality and enhancing our category-specific marketing capabilities. For example, after accurately identifying the growing consumer preference for bubble tea, we leveraged festivals, such as Chinese Valentines' Day and bubble tea-themed marketing events, to provide consumers with a wide variety of attractive promotions during these periods. As a result, we further expanded our bubble tea product offerings and also drove the growth in the number of transactions for the afternoon tea category during the quarter. For late-night snacks, beyond broadening our merchant and product selections, we also prioritized the exposure of late-night snack merchants on our app at night to enhance their marketing efficiency, worked closely with merchants to roll out a wider range of late-night snack set menu and adopted more innovative marketing solutions during late-night hours. As a result, the number of transactions for the late-night snack category also grew significantly in the third quarter of 2020.
Meanwhile, we continued to improve our marketing efficiency by allocating more resources to repeat consumers especially membership subscribers as well as improving our intelligent recommendations to consumers for different consumption scenarios based on their preferences. Our ability to attract and engage with high-quality consumers improved significantly during this quarter. The scale of our membership subscribers reached new highs and our members contributed a larger proportion of orders towards our total food delivery orders in the third quarter. Our number of monthly transacting users and repeat user transaction frequency also grew to new record highs, driving the overall growth of our food delivery business.
On the delivery front, the strong foundation of our on-demand delivery network enabled us to ensure the timeliness and quality of delivery services throughout the busy summer season as well as under more extreme weather conditions. During this quarter, our on-demand delivery network continued to serve as a critical bedrock and basic infrastructure for our society. More importantly, the safety and social well-being of our riders remained of paramount importance to us and we continued to work towards a better understanding of our riders' needs in the context of business growth. During the third quarter, we further upgraded our delivery dispatch system to provide our riders with higher flexibility in terms of delivery time and task designations during unexpected situations, such as bad weather and heavy traffic. Furthermore, in order to develop algorithms and technologies capable of ensuring rider safety, we strengthened our research and development capabilities. Additionally, we improved our rider assessment model by taking safety indicators and other comprehensive factors into account to enable our riders to obtain reasonable compensation while also ensuring their safety. Moreover, we increased our investments to better support riders' families in areas such as healthcare and education. For example, during this year's "717 Riders Festival", we expanded the scope of our "Baby Kangaroo Charity Program" from healthcare to education for our riders' children.
In-store, hotel & travel
Revenues from our in-store, hotel & travel businesses increased by 4.8% year-over-year to RMB6.5 billion in the third quarter of 2020. Operating profit from our in-store, hotel & travel businesses increased to RMB2.8 billion for the third quarter of 2020 from RMB2.3 billion for the third quarter of 2019, while operating margin increased to 43.0% from 37.7%.
Due to the effective management of COVID-19 in China as well as the surging consumption demand during the summer period, both the transaction volume and GTV of our in-store segment experienced positive year-over-year growth during this quarter. Moreover, the recovery of merchants' marketing demand of our in-store segment was on the right track. As a result, the year-over-year growth in both commission revenues and online marketing service revenues of the in-store segment turned positive this quarter. For the in-store dining business, synergies between our food delivery and in-store dining businesses grew during this quarter as we converted more food delivery merchants into in-store dining merchants. At the same time, we also continued to stratify our merchant base and enhance our operational capability, while expanding our coverage of high-quality restaurants. On the demand side, we launched a series of promotional campaigns in the third quarter of 2020 to accelerate industry growth recovery. For the other local services, we launched "Season of Plays" and other marketing initiatives to accelerate our industry's revival and capitalize on peak user engagement levels during the summer holidays. Although consumer confidence in certain social gathering activities has not fully recovered yet, non-social events in categories such as beauty, parent & child and auto services all achieved positive year-over-year growth in the third quarter. Notably, the growth of a few consumption upgrade categories, such as medical aesthetics and pet care, further accelerated in the third quarter. Meanwhile, certain service categories targeting niche demographics also experienced rapid growth, including paid study rooms, interactive pet experiences and escape rooms.
With respect to our hotel booking business, as a result of China's effective control measures and stronger travelling demands during the summer, cross-city and business travels both recovered well in comparison to previous quarters, with the year-over-year growth of domestic room nights consumed on our platform turning to positive 3.7% in the third quarter of 2020. Notably, consumers' desire for leisure travel mostly recovered, while consumers' preferred travel destinations shifted from overseas to domestic destinations, which allowed us to leverage our competitive advantages domestically. In the meantime, as we continued to strengthen our cooperation with high-star hotels, the number of high-star hotels that we worked with increased substantially quarter over quarter. Our "Hotel+X" program also continued to expand, utilizing our differentiated value proposition to cover more hotel groups in the period. As a result, the contribution from high-end hotels further increased year-over-year. In addition, we increased our investments in customer service for consumers seeking low- to high-end hotels while also setting up a special, dedicated service team for consumers seeking high-end hotels, enabling us to better cater to each group's specific needs and improve our ability to better serve a broader group of consumers.
New initiatives and others
Revenues from the new initiatives and others segment increased by 43.5% year-over-year to RMB8.2 billion in the third quarter of 2020. On a sequential basis, operating loss from the new initiatives and others segment expanded by 39% to RMB2.0 billion for the third quarter of 2020 from RMB 1.5 billion for the second quarter of 2020, while operating margin improved by 1.2 percentage points to negative 24.7% for the third quarter of 2020 from negative 25.9% for the second quarter of 2020. Operating loss from the new initiatives and others segment expanded by 68.8% on a year-over-year basis, while operating margin decreased by 3.7 percentage points year-over-year.
During the third quarter of 2020, we continued to ramp up our investments in new initiatives, especially in areas that we believe to have promising long-term growth potential and fit well into our "Food + Platform" strategy. Grocery retail business continued to be our top priority. Our marketplace model "Meituan Instashopping" achieved stellar transaction volume growth during the third quarter of 2020 on a year-over-year basis, as a result of steady user traffic growth, strong momentum in key SKU categories and improved marketing efficiency. Notably, as part of our efforts to deliver everything to consumers' homes, we successfully expanded our category coverage while growing our key categories, such as flowers and medicine, during this quarter, with both medicine sales and flower sales ramping up substantially year-over-year. In particular, by utilizing our online platform and on-demand delivery network, we aimed to provide more convenient solutions to consumers and create values within the medical system for our society at large, with the number of pharmacies operating on our platform increasing rapidly during this quarter. Moreover, by leveraging our instant delivery infrastructure, we were able to deliver medicines in a timely manner to better satisfy the increasingly diverse healthcare needs of Chinese consumers. For our self-operated model, "Meituan Grocery," as we continued to increase coverage density across Beijing, Shanghai, Guangzhou and Shenzhen, both the quarterly transacting users and transaction volume grew rapidly during this quarter. During this quarter, we launched our community group-purchase model, "Meituan Select", and continued to expand during the quarter. We remained focused on iterating its business model and building our key capabilities. We also explored different methods of improving our warehouse efficiency and group leader management capabilities, while accumulating experiences with a wider variety of SKU products. At the same time, we leveraged our existing supply chain resources and offline business development capabilities to further accelerate our pace of expansion, improve operating efficiency and enhance SKU management. As a result, we were able to instill unique brand awareness with both consumers and group leaders as we ramp up our business scale.
For the full announcement of Meituan 2020 third quarter results, please visit: http://meituan.todayir.com/attachment/2020113016400244929528043_en.pdf
Meituan (HKG: 3690) (the "Company") is China's leading e-commerce platform for services. With the mission of "We help people eat better, live better," the Company's platform uses technology to connect consumers and merchants. Service offerings on the platform address people's daily needs for food, and extend further to broad lifestyle and travel services. Meituan is the world's leading on-demand food delivery service provider and China's leading e-commerce platform for in-store dining services. Meituan helps consumers discover merchant information, make informed decisions, complete online and offline transactions and enjoy on-demand delivery. The Company currently owns several household brands in China, including Meituan, China's leading online marketplace for services, Dianping, China's leading online destination for discovering local services, Meituan Waimai for on-demand delivery services, and Meituan Bikes for bike-sharing services. Meituan has 476.5 million Annual Transacting Users and 6.5 million Annual Active Merchants as of September 30, 2020. The Company operates in over 2,800 cities and counties in China.
This press release contains forward-looking statements relating to the business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.
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[i] Monetization Rate equals the revenues for the period divided by the Gross Transaction Volume for the period.
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