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On June 6th, Meituan released its financial report for the first quarter of 2024. Meituan stated that, benefiting from the continuous economic recovery and consumer resurgence, the company's revenue reached 73.3 billion yuan, a year-on-year increase of 25%. The operating profit was 5.21 billion yuan, a year-on-year increase of 45.3%. The adjusted EBITDA was 8.1 billion yuan, a year-on-year increase of 28.9%. In the first quarter, Meituan launched multiple low-price related activities to stimulate consumption.

In addition, Meituan attracted attention in the first quarter due to frequent adjustments to its business structure.

"Low-price" strategy

It is not only the e-commerce industry that revolves around low-price competition, but Meituan's latest quarterly financial report also shows that "low-price" has become a driving force for Meituan's business growth.

In the first quarter, the core local commerce division's revenue was 54.6 billion yuan, a year-on-year increase of 27%, and the operating profit increased by 2.7% year-on-year to 9.7 billion yuan. The average annual transaction frequency of platform annual transaction users in the first quarter stabilized at more than 50 times. Meituan stated that the number of annual active users of the food delivery business increased to nearly 500 million, and the transaction frequency of medium and high-frequency users further increased year-on-year. The number of instant delivery orders on the platform in this quarter increased by 28% year-on-year to 5.46 billion. In addition to food delivery and catering, Meituan's daily order volume of Meituan Flash Purchase reached 8.4 million in the first quarter, with both the number of annual active users and transaction frequency achieving strong year-on-year growth. Meituan's in-store travel business in the first quarter saw a GTV increase of more than 60% year-on-year, and the number of annual transaction users increased by more than 37% year-on-year. The number of transaction users, merchants, and annual active merchants all reached historical highs.

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The high growth is related to Meituan's launch of multiple low-price activities. Meituan mentioned in the financial report that the "Meituan Official Live Broadcast" expanded to more regions in the first quarter, Meituan strengthened its support measures for merchants, and launched joint online and offline promotional activities, with the number of participating merchants growing rapidly. In addition, merchants are more willing to offer deep discounts in the "special group purchase" activities, further deepening consumers' perception of the platform's high cost-performance supply.

During the Spring Festival, Meituan cooperated with more than 10,000 scenic spot restaurants, thousands of "Must-eat List" restaurants, and nearly 6,000 high-quality merchants in lower-tier cities, providing consumers with choices through "special group purchase," "live broadcast," "thematic promotion," and other forms. The average daily consumption scale of the service industry during the Spring Festival holiday increased by 36% year-on-year, and increased by more than 155% compared to 2019.

The financial report shows that the average price of Meituan's food delivery has indeed decreased. The operating profit margin of the core local commerce division in the first quarter decreased by 4.2 percentage points year-on-year to 17.8%. The decrease in the operating profit margin was mainly due to the decrease in the average price of food delivery and Meituan Flash Purchase, as well as the increase in transaction user incentives, promotion, and advertising expenses.

The revenue of the new business division increased by 18.5% year-on-year to 18.7 billion yuan, and the operating loss of the division narrowed by 45.2% year-on-year to 2.8 billion yuan, with the operating loss ratio subsequently improving to 14.8%.

Meituan stated that in the first quarter, it optimized the business strategy of Meituan Youxuan, focusing more on operational improvement and high-quality growth. Specifically,Increased the markup rate of goods, reduced the per-unit fulfillment cost by improving warehouse operations, and enhanced marketing efficiency. As a result, the operating losses have narrowed significantly on a quarter-over-quarter and year-over-year basis.

Multiple Adjustments in Response to Changes

Since the beginning of this year, Meituan has undergone significant changes in its personnel structure.

On April 2nd, Meituan CEO Wang Xing sent an internal email stating that co-founder Wang Huiwen was gradually recovering his health and would take on the role of a Meituan advisor part-time.

On April 11th, Meituan Waimai announced a new round of organizational adjustments through an internal email: under the Waimai Business Division, the City Operations Business Department, Chain Business Department, and Supply Exploration Department were established, with the heads of the relevant departments reporting to the head of the Waimai Business Division, Xue Bing.

On April 18th, Meituan CEO Wang Xing sent an internal email announcing the progress of the integrated organizational iteration. According to the email content, the previously integrated Meituan platform, In-Store Business Group, Home Delivery Business Group, and Basic Research and Development Platform will be merged into the "Core Local Commerce" segment, with Wang Puzhong appointed as the CEO of Core Local Commerce. Meituan will "no longer set up the In-Store Business Group and Home Delivery Business Group, and the original departments under the two business groups will be adjusted to be directly under 'Core Local Commerce'."

The aforementioned adjustments are a further deepening of Meituan's core local commerce business structure since the beginning of this year. In February of this year, Wang Xing announced a new organizational structure adjustment in an internal email. Meituan integrated multiple businesses related to core local commerce and further elevated the priority of technology and internationalization-related businesses.

Meituan's further integration of local core businesses is also due to significant impact from external competition. Since last year, Meituan has faced challenges in local businesses from multiple platforms such as Douyin and Gaode, leading to a continuous decline in stock prices. Since February, Meituan's stock prices have been on the rise.

On March 20th, Bank of America Securities published a report downgrading Meituan's target price from 152 yuan to 132 yuan, reflecting the still weak market sentiment. Investors are concerned that Meituan will continue to pay costs for promoting live broadcasting, short video, and other businesses. Citigroup pointed out in a report last year that effective merchant penetration and services (such as live broadcasting, group buying, and scenic spot tickets) could affect net profits.

IiMedia Consulting CEO Zhang Yi said to Yicai that Meituan is in the process of changing from the early entrepreneurial stage to the current transformation stage, and this process must change because in the past, Meituan's business, like other internet companies, was developing the incremental market. However, it has now become a stock market, and Meituan is facing the iteration of new products and business forms, as new consumption and entertainment habits are being formed, such as the impact of Douyin, Xiaohongshu, and Kuaishou on the original local life consumption habits. Currently, Douyin is the biggest threat and challenge, especially in the fields of group buying and food delivery.Meituan's adjustments are also reflected in its financial reports. The financial report shows that Meituan's sales and marketing expenses increased by 33.1% from 10.4 billion yuan in the first quarter of 2023 to 13.9 billion yuan in the same period of 2024, accounting for 19.0% of revenue, up by 1.2 percentage points from 17.8% year-on-year. Meituan stated that the increase in both the amount and the percentage of revenue is mainly due to the development of the business, changes in the business environment, and changes in business strategies, which led to an increase in transaction user incentives and promotional expenses. In addition, employee compensation expenses have also increased.