HONG KONG, March 26, 2021 /PRNewswire/ -- Meituan (HKG: 3690) (the "Company"), China's leading e-commerce platform for services, today announced the audited consolidated results of the Company for the year ended December 31, 2020.
Company Financial Highlights
As China's economic recovery accelerated as a result of the effective containment of the COVID-19 pandemic, our businesses recovered steadily during 2020. Total revenues increased by 17.7% year over year to RMB114.8 billion from RMB97.5 billion in 2019. Although the operating loss for new initiatives and others segment expanded as we further accelerated our business expansion efforts to satisfy consumers' growing needs, our food delivery and in-store, hotel & travel segments achieved an aggregate operating profit by segment of RMB11.0 billion in 2020, an increase from RMB9.8 billion in 2019. Both adjusted EBITDA and adjusted net profit experienced negative year-over-year growth and decreased to RMB4.7 billion and RMB3.1 billion in 2020, respectively. Our operating cash flow increased to RMB8.5 billion in 2020 from RMB5.6 billion in 2019. We had cash and cash equivalents of RMB17.1 billion and short-term treasury investments of RMB44.0 billion as of December 31, 2020, compared to the balances of RMB13.4 billion and RMB49.4 billion, respectively, as of December 31, 2019.
"As we look back at 2020, our nation has successfully mitigated the residual impacts of the pandemic, achieved commendable economic growth, and cultivated a conducive environment for both individual and corporate developments," said Xing Wang, Chairman and CEO of Meituan. "We are a beneficiary of such developments and are therefore thankful for all of the positive changes that we have all experienced over the past year. Our most important tasks were helping the broader society to fight COVID-19, meeting the daily needs of consumers and help the business recovery of merchants in this very tough period."
"We remained committed to accelerating the digitization of the broader industry over the long-term, increasing our investments in new opportunities and building new foundations for our long-term growth," Wang said. "We will also commit to investing in future technology and driving innovation on every front to ensure our continued progress and the creation of more unique societal values."
Company Business Highlights
Food delivery became an increasingly essential service throughout the COVID-19 pandemic in 2020. Meanwhile, our strength in consumer base, merchant base and delivery network remained strong and continued to generate powerful network effects during 2020, enabling us to achieve solid growth. In 2020, GTV of our food delivery business increased by 24.5% year over year to RMB488.9 billion. The growth rate for the number of food delivery transactions continued to surge year over year, with the daily average number of food delivery transactions increasing by 16.0% year over year to 27.7 million. The average value per order of our food delivery business increased by 7.0% year over year to RMB48.2. Monetization Rate of our food delivery business decreased to 13.6% from 14.0% in 2019. As a result, revenue increased by 20.8% year over year to RMB66.3 billion. Operating profit from food delivery business increased to RMB2.8 billion in 2020 from RMB1.4 billion in 2019, while operating margin increased to 4.3% from 2.6%. Our solid business performance in 2020 was a testament to our resilient business model and strong execution capabilities.
For the fourth quarter of 2020, GTV of our food delivery business increased by 39.4% year over year to RMB156.3 billion. The daily average number of food delivery transactions increased by 33.0% year over year to 36.2 million. The average value per order of our food delivery business increased by 4.8% year over year to RMB46.9. Monetization Rate of our food delivery business decreased to 13.8% from 14.0% in the same period of 2019. As a result, revenue increased by 37.0% year over year to RMB21.5 billion. Operating profit from our food delivery business increased to RMB882.4 million for the fourth quarter of 2020 from RMB482.8 million for the fourth quarter of 2019, while operating margin increased to 4.1% from 3.1%.
Thanks to our continuous effort to implement our effective food delivery membership program, refine the efficiency of our consumer marketing and operations, and augment the variety and quality of food delivery supplies on our platform, both the demand and supply sides continued to evolve into their next phases of growth during 2020. Lower-tier cities continued to be the main driver of our user growth in 2020, with a majority of new users still from third-tier cities and below. In the fourth quarter, quarterly transacting users and their purchase frequency both achieved healthy growth year over year. Meanwhile, monthly transacting users and their average transaction frequency also reached new highs during the quarter. Our food delivery membership program continued to ramp up the transaction frequency of high-potential consumers, while our monthly average membership subscribers more than doubled year over year. Certain consumption scenarios, such as breakfast, afternoon tea, and night-time snacks, continued to grow at a faster pace than other consumption scenarios such as lunch and dinner in the fourth quarter. Long-distance orders from more than 3 kilometers away also accounted for an ever larger share of our total delivery orders. Our consumer base and transaction frequency growth not only reflects consumers' increasing preferences for food delivery and more consumption scenarios, but also demonstrates consumers' ongoing trust in and recognition of our food delivery services.
On the merchant side, the COVID-19 pandemic accelerated business digitization for more restaurants and made online operation improvement more important to them. Consequently, in 2020, the overall quality of restaurants on our platform improved, while the number of high-quality restaurants on our platform also grew meaningfully. Driven by the upgraded supply, the average value per order of our food delivery business increased by 7% year over year in 2020. Helping merchants accelerate digitalization and improve operations are critically important to us as we strive to better cater to consumers' ever increasing demands and diversified consumption needs. In the fourth quarter, we launched the "New Restaurant Manager" program. Through this program, over the next three years, we plan to discover and train over one million restaurant owners or managers and to help them embrace the trend of digitization while increasing their profitability. By recognizing and solving merchant pain points, we have launched systems for merchant services, merchant growth, and talent training, respectively.
In terms of our delivery network, we faced an unexpected and challenging situation from the outset of the COVID-19 pandemic. Nevertheless, we remained committed to providing delivery riders, consumers, and merchants with the appropriate solutions. During the COVID-19 pandemic, for example, we quickly organized various teams to ensure that our delivery network maintained sufficient capacity. Meanwhile, we rolled out our pioneering "contactless delivery" method and organized nucleic testing for our delivery riders to provide our delivery riders and consumers with better protection. These measures reflected our quick emergency response capabilities as well as the ability of our delivery network to handle unexpected situations. By the end of 2020, a total of 9.5 million delivery riders had earned income on the Meituan platform. Among them, around 2.3 million came from impoverished counties and had therefore been effectively lifted out of poverty through their work with Meituan. Moreover, we launched "Tongzhou Project" in the fourth quarter, which is a project focusing on delivery riders that aims to improve their job security, work experiences, career paths, and social well-being. We also organized numerous discussion panels with our delivery riders to listen to their feedback and better understand their needs and challenges. As we advance into 2021, we will continue to develop this project as our delivery riders' work and personal well-being remains a top priority.
In-store, hotel & travel
Benefitting from the effective containment of the COVID-19 pandemic, local consumption in China experienced a steady recovery, and our in-store, hotel & travel businesses, which were the most impacted businesses in 2020, gradually ramp back up, but has yet to fully recover to normal levels. Revenues from our in-store, hotel & travel businesses decreased by 4.6% year over year to RMB21.3 billion in 2020. Operating profit from our in-store, hotel & travel businesses decreased to RMB8.2 billion in 2020 from RMB8.4 billion in 2019, while operating margin increased to 38.5% from 37.7%.
For the fourth quarter of 2020, revenues from our in-store, hotel & travel businesses increased by 12.2% year over year to RMB7.1 billion, despite the reoccurrence of the COVID-19 pandemic in several cities. Operating profit from our in-store, hotel & travel businesses increased to RMB2.8 billion from RMB2.3 billion for the fourth quarter of 2019, while operating margin increased to 39.5% from 36.7%.
For our in-store dining business, we introduced more options for quality light meal restaurants to our platform during 2020, which helped to further expand our merchant base and increase both orders and revenues. For top national and local chain restaurants, we have designed innovative transaction-based products and supported their unique advertising needs. The number of these types of restaurants significantly increased throughout our ecosystem, with their sales also growing considerably as a result of our tailored services. By optimizing the operation system, we further leverage the merchant base of our food delivery business to expand our in-store dining merchant base. As a result, more high potential restaurants have adopted our in-store marketing products and our platform captured more cross-selling opportunities. For other in-store services, we effectively managed multiple service categories and improved our multi-dimensional operational capabilities in 2020 by correctly identifying the changes in consumer habits and future consumption trends. After the most severe periods of the COVID- 19 pandemic, some new categories have proven to be quite popular, such as auto-related services and escape rooms, with both of these categories achieving relatively high year-over-year growth rates in GTV in the period to outpace their pre-pandemic growth. Other critical categories also maintained their high-growth trajectories, including medical aesthetics, healthcare, petcare, and more. For example, our medical aesthetics sales grew by more than 70% year over year in the fourth quarter. Meanwhile, we advanced our operational capabilities and better organized theme-based consumption festivals around holiday seasons, helping to better satisfy consumer demands and encourage local spending during 2020. For example, during the fourth quarter of 2020, we launched a series of promotional campaigns during Mid-Autumn Festival, National Day, Christmas and other festivals, such as "Double 11 Carnival," "Double 12 Carnival," "Wedding Festival," "Mid-Autumn and National Day Food Festival" and more, all of these theme-based promotional campaigns were exceptionally well received by the market.
With respect to our hotel booking business, domestic room nights consumed on our platform declined by 9.7% year over year in 2020 due to the impact from the COVID-19 pandemic. Nonetheless, we took this opportunity to further solidify our advantages in consumer base, domestic supply and execution capabilities. During the year, the pent-up demand for overseas and long-distance domestic travel continued to spill over into domestic travel and weekend trip activity. In the fourth quarter, despite the reoccurrence of the COVID-19 pandemic in several cities hampered the recovery of consumption in these regions, consumer demand for hotel booking services in other cities continued to unleash, with domestic room nights consumed on our platform increasing by 8.8% year over year. We also effectively brought more offline users onto our platform and channeled them into online hotel booking during the quarter. Meanwhile, our platform's high-star hotel supply and bookings both expanded, with high-star hotels accounting for an increasing share of our total hotel supply and our number of high-star hotel room nights accounting for more than 15% of our total room nights in the fourth quarter. Our expansion of five-star hotels was particularly successful as we became an increasingly attractive channel for these hotels to grow their customer bases and sales. Notably, among total domestic room nights consumed on our platform, the number of room nights from five-star hotels increased by more than 110% year over year in the fourth quarter.
New initiatives and others
During 2020, we continued to ramp up our investments in new initiatives, especially in areas that we believed to have promising long-term growth potential and fit well into our "Food + Platform" strategy. Revenues from the new initiatives and others segment increased by 33.6% year over year to RMB27.3 billion in 2020. Operating loss from new initiatives and others segment expanded to RMB10.9 billion 2020 from RMB6.7 billion in 2019, while operating margin decreased 6.7 percentage points year over year. For the fourth quarter of 2020, revenues from the new initiatives and others segment increased by 51.9% year over year to RMB9.2 billion. Operating loss for the segment increased both year over year and quarter over quarter to negative RMB6 billion in the fourth quarter of 2020, while the operating margin decreased to negative 64.9%.
The digitization of the broader local retail industry accelerated during 2020. Retail business has important strategic value to us and was the key investment area. During the fourth quarter, we quickly expanded our community e-commerce model "Meituan Select" in around 2,000 cities and counties. As a result, Meituan Select now covers more than 90% of the cities and counties in China. While this business is still at an early stage, we believe that it can create tremendous value for consumers and up-stream suppliers, including farmers. Through our efforts to build out our supply chain and "next-day" delivery capabilities, this business model provides users with broader SKU selections, much more convenient shopping experience and lower prices, and in turn allows us to acquire vast new user base in less accessible and rural areas. During the fourth quarter, through cooperation with many local governments across the country, we launched the "Agricultural Produce Direct Sourcing" program in some pilot areas such as Yunnan, Jilin, and Guangxi, to source produce directly from farmers to reduce intermediary costs, improve our supply chain efficiency, help farmers generate additional revenues, and lower product prices for consumers. Meanwhile, we also made upfront planning and investment in infrastructure including warehousing and fulfillment during the quarter, to ensure that we can handle large volumes of agricultural products smoothly and deliver them in optimal condition timely even to lower-tier markets. Our marketplace model "Meituan Instashopping" achieved stellar growth as we continued to broaden and diversify merchant base, build out our marketplace capabilities, and convert more food delivery consumers into non-food categories consumers. High-potential verticals, such as flowers, medicine and more, continued to achieve rapid growth as we continued to bring more quality suppliers and merchants online and encourage user consumption through effective marketing. As a result, Meituan Instashopping's daily peak orders reached around 4.5 million in the fourth quarter. 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 the fourth quarter.
Overall, our food delivery and in-store, hotel & travel businesses continued to deliver solid results, demonstrated their unique values and have increasingly become a new infrastructure for peoples' daily life in this challenging year of 2020. We reaffirm our belief that our food delivery and in-store, hotel & travel businesses have a significant runway for future growth and operation optimization over the long term. While our significant investments in new initiatives hampered our overall profitability in 2020, these new initiatives are also creating increasing value for consumers, merchants, our business partners, and the broader society. We remain committed to making investments in big opportunities that are capable of delivering long-term growth and providing consumers and all participants with more value. We believe community e-commerce is one of such big opportunities, and we will allocate sufficient resources to accelerate its development in 2021 while continuously improving its operating efficiency. Increasing investments in new initiatives may continue to cause significant negative impacts on our overall financial results, and the Company may continue to record operating losses in the next few quarters as we ramp up our community e-commerce business. However, we have always focused on long-term growth rather than short-term profits, adhering to a long-term oriented investment philosophy. More importantly, we remain optimistic about the prospects of China's economic development. We believe that our determination to accelerate the digitization and online operation of the boarder industry over the long term will allow us to benefit from the digitization trend and industry growth. As such, we will continue to help merchants enhance operational efficiency across industries through innovations and better services, provide more convenience, as well as quality products and services at affordable cost for consumers, and create more value for the society with the help of technology, fulfilling our mission that "We help people eat better, live better."
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 510.6 million Annual Transacting Users and 6.8 million Annual Active Merchants as of December 31, 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.