Author | Liu Baodan
Editor | Zhou Zhiyu
In the face of Douyin's surprise attack on local life, Meituan has transitioned from a passive response to actively controlling the pace. Now, Meituan has finally begun to plan for a longer-term future.
On March 21, Meituan released its latest financial report, showing a significant increase in profitability. In 2024, Meituan achieved revenue of 337.6 billion yuan, a year-on-year increase of 22%; the total operating profit from its segments was 45.1 billion yuan, an increase of 143.6%, with an overall segment operating profit margin of 13.4%, achieving a doubling growth.
In the past year, Meituan merged its two business groups, Home Delivery and In-Store Services. The synergies brought about by this structural adjustment are gradually reflected in its performance. For example, Meituan has achieved growth in traffic and orders through low-price strategies such as &#34;Pin Hao Fan&#34; and &#34;Brand Satellite Stores.&#34; At the same time, Meituan continues to ramp up its instant retail business.
AI has become a key focus of Meituan's earnings call. Meituan founder Wang Xing stated that Meituan's strategy regarding AI is offensive, mainly reflected in work scenarios, product applications, and building self-developed large models. On February 28, Wang Xing emphasized in an internal meeting that the key directions for Meituan in the next ten years will be: in addition to the core local life business, food retail, globalization, and technology will become the three major focuses.
Last month, JD.com became another major player attacking Meituan after Douyin, and JD.com announced that it would pay social insurance and housing fund for full-time delivery riders. With Meituan announcing that it would also pay social insurance for riders, it will inevitably lead to increased costs. At the same time, Meituan is expanding into the Middle East market. Although it has initially achieved good growth in Riyadh, it will continue to face policy risks and competitive pressures in the future.
On March 21, Chinese concept stocks fell broadly, with Meituan ADR down 5.11% and Meituan's Hong Kong stock slightly down 0.30%.
In the past 15 years, Meituan has rarely entered an expansion state surrounded by strong competitors and fighting on multiple fronts like today, but this also means that Meituan, which has long been the king of local life, has begun to fight.
<h2>Making Money</h2>
On the local life battlefield, Meituan, which has stabilized against Douyin, continues to regain its competitive advantage, which is already reflected in the financial report. According to the report, in the fourth quarter, Meituan achieved revenue of 88.5 billion yuan, a year-on-year increase of 20.1%, and operating profit of 6.69 billion yuan, a year-on-year increase of 280.7%.
Seventy percent of Meituan's revenue comes from its core local business. In the fourth quarter, this business achieved revenue of 65.6 billion yuan, a year-on-year increase of 18.9%, which is 7.9 percentage points lower than the same period last year. However, the operating profit of Meituan's core local business segment was 12.9 billion yuan, a year-on-year increase of 60.9%; the operating profit margin increased by 5.2 percentage points year-on-year to 19.7%.
The reason for this, as stated in the financial report, is that the increase in operating profit is mainly due to revenue growth and an increase in operating profit margin. The increase in operating profit margin is mainly due to the rise in gross profit margin, a decrease in the percentage of transaction user incentives to revenue, and improvements in operational efficiency. According to insider information from Wall Street, Meituan's annual transaction user count has surpassed 770 million, and the number of active merchants has increased to 14.5 million, both reaching new highs.
Meituan's revenue mainly comes from delivery services and commissions. In the fourth quarter, Meituan's delivery services achieved revenue of 26.2 billion yuan, a year-on-year increase of 19.5%, which is an increase of 8.4 percentage points compared to the same period last year. Considering the off-peak consumption season, this growth performance is commendable
In terms of the takeaway business, Meituan is deeply promoting supply chain innovation, attracting users through its low-priced &#34;Pin Hao Fan&#34; service, which has helped restaurant merchants increase their sales. At the same time, Meituan is improving new service models such as &#34;brand satellite stores&#34; to meet diverse takeaway consumption needs.
&#34;Satellite stores&#34; are small shops that orbit around the main store like satellites around the Earth, similar to front warehouses, allowing for greater user coverage around the main store. At the restaurant conference in September last year, Xue Bing, general manager of Meituan's takeaway division, revealed that brand satellite stores have become a new type of store for takeaway growth, rapidly lighting up more cities at a rate of 100 new stores per week.
Meituan is also continuously increasing its investment in instant retail. In October last year, Xiao Kun, vice president of Meituan and head of the flash purchase division, stated that the number of Meituan's flash warehouses has exceeded 30,000, and by 2027, it is expected to exceed 100,000, with the market size projected to reach 200 billion yuan. By the end of 2024, Meituan's flash purchase has partnered with over 5,600 large chain retailers, 410,000 local small merchants, and more than 570 brand merchants.
However, Meituan's growth rate in commissions and online marketing services is far less than the same period last year. To a large extent, this indicates that the overall consumption environment in the restaurant industry remains relatively sluggish in the fourth quarter, and merchants' willingness to invest in advertising is still low.
Meituan's operational efficiency has significantly improved. In the fourth quarter, the proportion of sales cost, sales and marketing expenses, research and development, and general and administrative expenses relative to revenue generally decreased, especially sales costs, which fell by 3.9 percentage points to 62.2%.
An important driving factor behind Meituan's profit increase is the reduction of losses in new businesses. In the fourth quarter, Meituan's operating loss from new businesses was 2.2 billion yuan, a year-on-year narrowing of 55.0%. In 2024, Meituan's operating loss narrowed to 7.3 billion yuan, with the operating loss rate improving to 8.3%.
In terms of overseas expansion, since launching in Riyadh last October, Meituan has continued to expand its business to other cities. Currently, Keeta has begun operations in more than six major cities in Saudi Arabia. However, Keeta is still in the investment phase of its business.
Morgan Stanley expects that the incremental revenue Meituan gains from the takeaway business in Gulf Cooperation Council (GCC) countries will reach 1.15 billion yuan (approximately 150 million USD) by 2028. &#34;Although new businesses will face losses during the 2025-2027 period, it is expected to break even by 2028.&#34;
<h2>Betting</h2>
Wang Xing has been regarded by investors as one of the few thinkers with a clear understanding of the wild growth of the Chinese internet landscape. Standing at the critical juncture of AI and globalization, he has pointed out the direction for Meituan's new phase of development.
Looking towards the next decade, Wang Xing clearly stated that in addition to the core local life business, food retail, globalization, and technology will become the three key focuses. Food retail will primarily cover self-operated fresh food retail and platform retail businesses; globalization refers to the overseas expansion of takeaway services, including Keeta and drone delivery. At the same time, Meituan hopes to seize the opportunities presented by AI development.
In the main battlefield of local life business, Meituan's current core strategies focus on two aspects: continuously attracting young new users and continuously innovating on the supply side. The takeaway market has innovations like &#34;Pin Hao Fan,&#34; while in retail, it empowers merchants through online operations, thereby enhancing supply capabilities
During the conference call, Wang Xing stated that although the growth rate of the takeaway business has slowed in recent years after reaching a high base, the management team remains confident in the overall potential of the on-demand delivery business.
Regarding the globalization investment strategy, Wang Xing mentioned that Meituan's overseas business focuses on takeaway delivery and will gradually expand into other businesses based on on-demand takeaway services. &#34;Various businesses, including Xiaoxiang Supermarket, have good long-term potential. However, in the short term, we will focus on market research and some pilot projects, without making overly aggressive investments.&#34;
Wang Xing indicated that currently, Keeta will focus on growth. Due to the average order value in markets like the Middle East being much higher than in China, users are more willing to pay for services, and the profit margins for takeaway businesses are also higher than in the Chinese market, the company is confident in its long-term prospects and profitability.
Meituan disclosed its investment in AI for the first time. Wang Xing stated that Meituan's strategy for AI is offensive rather than defensive. In the era of AI, Meituan will continue to play the role of a connector between the online and offline worlds, which is the company's strength.
Meituan's AI strategy is built on three levels. First, in the work scenario, Meituan will use its self-developed large language model &#34;Luoong&#34; in parallel with external models, launching tools for employees such as AI programming, smart meetings, document assistants, short video generation, and AI sales assistants. For example, about 27% of the new code generated internally by the company comes from AI programming tools.
In terms of product applications, Meituan is advancing in two directions simultaneously: one is to optimize existing products using AI, and the other is to develop entirely new AI-native products. For the former, Meituan will use AI to upgrade existing products and services, including businesses aimed at B-end (merchants) and C-end (consumers).
According to internal sources from Wall Street, Meituan is about to launch a more advanced AI assistant that will cover all of Meituan's services, allowing everyone to have a free personal assistant. This also means that following ByteDance's Doubao, Tencent's Yuanbao, and Alibaba's New Quark, Meituan is also starting to bet on AI-native applications.
Meituan has also built its self-developed large model &#34;Luoong.&#34; It has been reported that &#34;Luoong&#34; has achieved quite good evaluation results, comparable to top domestic models, and its API call volume has increased from 10% at the beginning of last year to the current 68%.
The importance of AI to Meituan is increasing. Wang Xing stated, &#34;Even though we have allocated a large amount of resources for shareholder returns and new plans, we are still continuously investing billions of dollars in GPU resources. This year's capital expenditure scale is very considerable, and we plan to further expand our investment in this key area.&#34;
Analyst Jin Rong from Huatai Global Technology Team suggested paying attention to the comprehensive empowerment of AI on business under Meituan's long-term strategy of &#34;retail + technology,&#34; and maintained a &#34;buy&#34; rating. From the perspective of overseas companies, AI has improved advertising conversion rates and efficiency through real-time feedback optimization, intelligent recommendation engines, and automated ad creative generation, benefiting advertising efficiency and revenue for Meta, Applovin, Pinterest, Snapchat, and others.
As a local life giant, Meituan is no longer content with a defensive position, showing an unprecedented offensive posture. This representative enterprise of the mobile internet era has finally begun to stride towards the AI era
<h2>Hidden Concerns</h2>
For the past decade, the local lifestyle market has been a battleground, which has forced Meituan to remain vigilant against competitors' moves.
In the early stages, the &#34;Battle of the Hundred Groups&#34; was a life-and-death elimination match among numerous startups. Subsequently, the industry entered a fierce competition for the takeaway market dominated by Meituan, Ele.me, and Baidu Waimai. In these two brutal survival battles, Meituan emerged victorious and has maintained its position as the king of local lifestyle for many years.
In recent years, Meituan has faced even stronger competitors. In 2022, Douyin began to lay out its strategy in the local lifestyle market and successfully entered businesses such as in-store services, posing a threat to Meituan. Earlier this year, JD.com also announced its formal entry into the takeaway business. With the increase in competitors, the pressure on Meituan in the local lifestyle market will undoubtedly intensify.
More importantly, Meituan's business model relies on a large team of delivery riders, and paying social security for them in the short term may lead to rising costs.
The social security for Meituan riders mainly consists of two aspects: occupational injury insurance and social insurance. Since July 2022, Meituan has taken the lead in paying new occupational injury insurance premiums for new employment groups, having invested 1.4 billion yuan to provide occupational injury protection for riders in seven pilot provinces and cities, with plans to further cover all riders in all provinces and cities in the future.
On February 19, Meituan announced that it would pay social insurance for full-time and stable part-time riders nationwide, which is an important measure for improving social security for new employment groups in recent years, expected to be implemented in the second quarter of 2025.
The number of takeaway riders in China has exceeded 10 million, with most riders coming from Meituan. Last Mid-Autumn Festival, Wang Xing stated in a letter to employees that about 7.45 million riders earned income on the Meituan platform in the previous year, with total compensation exceeding 80 billion yuan.
However, among these 7.45 million Meituan riders, nearly half had fewer than 30 days of order-taking, showing strong characteristics of transitional employment. According to sources from Wall Street, only 11% of the aforementioned riders took orders for more than 260 days a year, approximately 820,000 riders.
In other words, the scale of riders eligible for Meituan's social insurance is about 820,000. Sources from capital circles indicate that Meituan's expenditure on rider social security in 2025 will be around 2 billion yuan.
In response, Wang Xing stated that although these measures may increase overall costs, in the long run, the entire ecosystem (including Meituan's platform) will benefit from it, and the improvement in efficiency will offset these incremental costs.
Fifteen years ago, Meituan was officially established, becoming a representative enterprise of the mobile internet era with its takeaway model. Fifteen years later, the global maritime era combined with AI technological changes will bring unprecedented commercial upheaval. This is both an opportunity and a challenge.
Like two sides of a coin, for Meituan, globalization, AI, and rider social security all require substantial financial investment, but this is also an essential path for Meituan's self-evolution. This will be a thorny adventure, and Wang Xing and Meituan must go all out

Meituan will announce its first quarter 2025 results after the Hong Kong stock market closes on May 26. According to analysts' expectations, Meituan's revenue in Q1 2025 is expected to increase by 17% year-on-year to 85.44 billion yuan; adjusted net profit is expected to increase by 30% year-on-year to 9.73 billion yuan; net earnings per share are expected to be 1.39 yuan, a year-on-year increase of 61%.

Recently, a total of 40 analysts have rated Meituan-W, of which 38 analysts have given a "buy" rating or above, with an average target price of HK$199.15.

Meituan will announce its first quarter 2025 results after the Hong Kong stock market closes on May 26. According to analysts' expectations, Meituan's revenue in Q1 2025 is expected to increase by 17% year-on-year to 85.44 billion yuan; adjusted net profit is expected to increase by 30% year-on-year to 9.73 billion yuan; net earnings per share are expected to be 1.39 yuan, a year-on-year increase of 61%. Recently, a total of 40 analysts have rated Meituan-W, of which 38 analysts have given a "buy" rating or above, with an average target price of HK$199.15.

Meituan earnings , understand it at a glance!

Alibaba  earnings 

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The investment scale reaches several billion dollars

- Meituan has shifted from a passive response to actively controlling its strategy in the face of competition from Douyin, as reflected in its latest financial report showing significant profit growth.  
- In 2024, Meituan's revenue reached 337.6 billion yuan, a 22% increase, with a notable rise in operating profit driven by structural adjustments and innovative strategies in its delivery and retail sectors.  
- However, increased competition and the need to provide social security for its delivery riders may raise operational costs, posing challenges as Meituan navigates its expansion and investment in AI and globalization.

Meituan fully bets on AI