Meituan Announces Financial Results for the Three Months Ended September 30, 2021

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Nov 26, 2021, 05:02 ET

HONG KONG, Nov. 26, 2021 /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, 2021.

Company Financial Highlights

For the third quarter of 2021, our total revenues increased by 37.9% to RMB48.8 billion from RMB35.4 billion for the same period of 2020. Our food delivery and in-store, hotel & travel segments realized solid growth, with an aggregate operating profit of RMB4.7 billion from these segments in the third quarter of 2021, up from RMB3.6 billion for the same period of 2020; while operating loss from the new initiatives and others segment expanded, as we continued to invest in areas that would bring long-term value to the Company. As a result, both adjusted EBITDA and adjusted net profit experienced negative year-over-year growth for the third quarter of 2021 and turned to negative RMB4.1 billion and adjusted net loss RMB5.5 billion, respectively. Our net cash flows from operating activities turned to an outflow of RMB4.0 billion in the third quarter of 2021 from an inflow of RMB3.3 billion for the same period of 2020. We had cash and cash equivalents of RMB50.9 billion and short-term treasury investments of RMB70.0 billion as of September 30, 2021, compared to the balances of RMB71.4 billion and RMB51.1 billion as of June 30, 2021, respectively.

"For the third quarter of 2021, we further enabled our small and medium merchants and supply chain partners to improve their digital and online operations, whilst also providing consumers with convenient, high-quality, and value-for-money goods and services. We continued to achieve healthy growth in annual transacting users and annual active merchants," said Meituan Founder and CEO Xing Wang.

"As a technology platform, we will continue to accelerate the digital transformation of the local lifestyle services and retail industries through technological innovation, creating long-term value for all ecosystem participants," said Wang. "We will also bear our social responsibility in mind, further contribute to the high-quality growth of the national economy, do our best to contribute to the development of the greater society, and support the objective of 'Common Prosperity' through carrying out our mission 'We help people eat better, live better,'" concluded Wang.

Meituan CFO Shaohui Chen said, "The national economy has entered into a new phase in which high-quality development will be prioritized. We will continue to promote digitalization and further integrate technology into every aspect of our business development, so that we can leverage technology to power high-quality growth. We adhere to the integration of creating both economic and social value by providing better services to our partners in the ecosystem, including consumers, merchants, and couriers."

Company Business Highlights

Food delivery

In the third quarter of 2021, we maintained resilient growth for the food delivery segment, despite the negative impact due to the Delta Variant, extreme weather and industry slowdown. During the quarter, GTV of our food delivery business increased by 29.5% year-over-year to RMB 197.1 billion. Daily average number of food delivery transactions increased by 24.9% year-over-year to 43.6 million. Revenue increased by 28.0% year-over-year to RMB26.5 billion. Operating profit increased by 14.0% year-over-year to RMB876.1 million in the third quarter of 2021, with operating margin decreasing slightly to 3.3% from 3.7%.

On the consumer side, we brought more diverse selections and higher-quality categories to our platform, addressing the evolving preference from consumers. Late-night snacks and afternoon teas were particularly popular during the summer, with order volume of each realizing around 30% 2-year CAGR in this quarter. We provided consumers with special promotions from quality merchants of late night snacks in over 15 cities, and we collaborated with many milk tea brands and launched seasonal promotions to stimulate milk tea consumption. Because of these operational tactics, both the quarterly transacting users and average order frequency reached record high, a strong showcase that our food delivery business not only became an indispensable service for the consumers, but also covered broader consumption scenarios.

On the merchant side, the number of quarterly active merchants continued to rise. As online operation has become an increasingly meaningful part for the restaurant business, we further expanded our service offerings, and introduced more online tools and solutions that would help restaurants improve their operational efficiency. We launched various training programs in areas including store decor, marketing, event organization, and analytics, to help merchants better adapt to the digital economy. We are proud to see that more merchants successfully embraced digitization and achieved higher business growth by using our services.

With respect to the welfare for our food delivery couriers, we are proactively responding to the government policy and guidance in launching an occupational injury protection pilot program to enhance the overall social welfare for our food delivery couriers. We will provide further welfare to our couriers from six aspects, including ensuring reasonable income, scientifically establishing standards for work intensity, improving social security benefits, implementing safety and health control, enhancing complaint procedures for our food delivery couriers, and promoting their career development. To better hear from our food delivery couriers, we hosted more than 110 courier feedback panel sessions across the country, and carefully listened to their opinions and collected their feedbacks. In addition, we also have been actively promoting and improving the openness and transparency of our order dispatch system. In September, we publicly disclosed the "estimated delivery time" algorithm, and experimented changing the estimated delivery time display from a specific point of time to an extended time period for complicated situations such as long-distance orders or in case of heavy order volumes. We also provided flexible compensation of time and subsidies for our couriers under unfavorable weather conditions, to reduce the tension and difficulties of the delivery. While we have made progress here, we are mindful of the fact that order dispatch system is complex and has many important variables. We will continue to explore and improve the system, as people are the most critical consideration of our operations. We will also make the algorithms and the systems more transparent, taking in feedback from different parties to iterate our process and promote healthy industry development.

In-store, hotel & travel

Our in-store, hotel & travel segment posted steady growth, despite negative impact from the Delta Variant and moderately weaker consumption environment during the quarter. Revenue increased by 33.1% year-over-year to RMB8.6 billion in the third quarter of 2021. Operating profit increased 35.8% to RMB3.8 billion in the third quarter of 2021 from RMB2.8 billion in the same period of 2020, with operating margin increasing slightly to 43.9% from 43.0%.

For in-store dining, we maintained solid growth, although facing slowdowns in August due to the Delta Variant. In this quarter, we enhanced our service quality and stratified operations, allowing us to deepen merchant penetration and to onboard more quality restaurants. Our comprehensive solutions helped direct user traffic to local restaurants amid this challenging environment. On the consumer side, we utilized festivals and promotional campaigns to incentivize consumption and cope with more diverse consumer preferences. During the Qixi Festival, our marketing events were effective in encouraging consumption, with GTV and transaction volume reaching record high. Restaurant reservations through our platform increased during the holiday, and consumers who make reservations ahead of time also tend to spend more. Subsequently, both transaction frequency and user stickiness improved during the quarter.

For other in-store services, we also maintained strong growth momentum, primarily driven by a few categories such as healthcare, pet-related services, parent-child, fitness, and leisure and entertainment. We enhanced merchant penetration and expanded coverage to broader lower-tier markets, and further refined our operations to provide more personalized products and services for consumers.

The hotel booking business was heavily affected by the Delta Variant and travel restrictions. Nevertheless, quarterly domestic room nights grew positively compared to the same periods in 2019 and 2020. We solidified our structural advantage in short-haul travel scenarios and localized accommodations, while leveraging promotional campaigns and packaged deals to enhance consumer mindshare.

New initiatives and others

In the third quarter of 2021, revenues from the new initiatives and others segment increased by 66.7% year-over-year to RMB13.7 billion, primarily driven by the growth in retail businesses and bike-sharing and moped services. Operating loss for the segment increased both year-over-year and quarter-over-quarter to RMB 10.9 billion in the third quarter of 2021, while operating margin decreased sequentially by 2.7 percentage points to negative 79.5% quarter-over-quarter.

For Meituan Select, the community e-commerce business, we focus on quality growth on the basis of regulatory compliance and ensuring reasonable pricing policy. We continued to provide convenience and value-for-money products with broader selection for the consumers, while enhancing our long-term capabilities in supply chain, warehousing, logistics and operations to guarantee the product and service quality. Thanks to our continued investments in cold-chain-logistics for the past few quarters, we were able to deliver fresh produce and frozen goods with stable quality in a timely manner during the summer. Moreover, in the spirit of "rural revitalization", we collaborated with regional authorities and offered local farmers "green distribution channels" to sell agricultural products. We also created employment opportunities and offered well-rounded training programs to farmers, group leaders, and e-commerce leaders from rural areas. In this effort, we not only optimized our business operation, but more importantly, created value for all the participants throughout the value chain.

For Meituan Grocery, our self-operated model, we continued to grow our user base and GTV, as we further enhanced consumer experience through shortened delivery time and expanded SKU selections in fresh produce and FMCG categories. After completing coverage of tier-1 markets, we also focused on operational iterations and efficiency improvement, which led to continuous improvement in unit economies and higher ROI for the business.

For Meituan Instashopping, our marketplace model, we achieved another strong growth for the quarter. On the consumer side, we leveraged Qixi and Mid-autumn Festivals to launch promotions that effectively cultivated consumer habits in shopping for local goods with on-demand delivery, and captured consumer mindshare. As we continued to broaden product categories and selections on our platform, we further met the increasing demands from consumers. During the Qixi Festival in particular, daily order volume reached record high, with popular categories expanded from flowers to gifts such as beauty products and 3C electronics. On the merchant side, we deepened our collaborations with high-quality local stores and offered online solutions and tools to help them adapt to the digital world. As a result, GTV from supermarkets and convenient stores realized the highest quarter-over-quarter growth. For the medicine category, we provided local pharmacies with support in online operations and launched the "24/7 smart pharmacies" program. We firmly believe that the end game of the online retail business will evolve from an "Everything Store" to "Everything Now", and we are well positioned to seize this opportunity and leverage our existing on-demand delivery network, platform capabilities, and transacting user base to facilitate such transformation.

We are satisfied with our progress made in retail business in this quarter. Our three business models meet the diverse needs of different types of consumer in different consumption scenarios. More importantly, using technology and innovations, we effectively helped strengthen the nodes and improve efficiency along the industry value chain, so that more value can be distributed to the market participants and the broader society. Going forward, we will continue to allocate resources in this area for the greater development of the industry.

In October, we received an administrative penalty decision on the anti-monopoly investigation and an administrative guidance from the State Administration for Market Regulation of the People's Republic of China (the "SAMR"). We accept this with sincerity and are determined to ensure compliance. We will operate in accordance with law, consciously maintain orderly fair competition, earnestly fulfill our responsibility to the society, better obey and serve the socioeconomic development, further contribute towards the high-quality development of the national economics, and support the objective of "common prosperity" through carrying out our mission that "We help people eat better, live better".

For the full announcement of Meituan 2021 third quarter, please visit:
https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1126/2021112600630.pdf

About Meituan

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 667.5 million Annual Transacting Users and 8.3 million Annual Active Merchants as of September 30, 2021. The Company operates in over 2,800 cities and counties in China.

Forward-Looking Statements

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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Meituan
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Edmond Lococo
ICR Inc.
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Tel: +86 138-1079-1408

SOURCE Meituan