---
title: "Meituan Q1 conference call: Will spare no effort to win the competition, unable to provide guidance for Q2 and full-year performance at this time"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/241869249.md"
description: "Regarding the impact of JD.com's 10 billion subsidy on Meituan's food delivery business, Meituan CEO Wang Xing responded that Meituan \"will spare no effort to win the competition.\" Due to \"uncertainty about how long the irrational competition from new entrants will last,\" he stated that \"it is impossible to provide accurate financial guidance for the second quarter and the remainder of this year, but Meituan will continue to defend its market share.\""
datetime: "2025-05-26T13:28:52.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/241869249.md)
  - [en](https://longbridge.com/en/news/241869249.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/241869249.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/241869249.md) | [繁體中文](https://longbridge.com/zh-HK/news/241869249.md)


# Meituan Q1 conference call: Will spare no effort to win the competition, unable to provide guidance for Q2 and full-year performance at this time

On May 26, Meituan held a conference call for its Q1 2025 earnings.

The Q1 2025 financial report released by Meituan earlier showed strong growth in both revenue and net profit. Total revenue reached 86.6 billion yuan, a year-on-year increase of 18.1%, and operating profit saw a significant year-on-year increase of 102.8%. The profit margin of core business has significantly improved, and losses from new businesses have narrowed considerably.

## Meituan: "We will spare no effort to win the competition"

Regarding the impact of JD.com's 10 billion yuan subsidy on Meituan's food delivery business, **Meituan CEO Wang Xing responded that Meituan "will spare no effort to win the competition."**

He stated that Meituan has also experienced several rounds of intense competition in the past and believes that Meituan can win this time as well. Meituan welcomes new players entering this market and recognizes the huge potential of the food delivery industry. At the same time, Meituan has noticed that some subsidies in the current industry competition are irrational, accompanied by low quality and low prices.

Wang Xing mentioned that he does not know how long the irrational competition from new entrants will last, **so he cannot provide accurate financial guidance for the second quarter and the remainder of this year, but Meituan will continue to defend its market share:**

> "We expect the year-on-year growth rate of core local business revenue in the second quarter to slow down from the level in the first quarter, and the operating profit of core local business will significantly decline year-on-year in the second quarter."

## The 618 event is about to start, with a focus on food delivery and flash purchase

Meituan executives also disclosed the latest progress of the flash purchase brand upgrade for the first time. Meituan CFO Chen Shaohui stated that since the launch of the new flash purchase brand, users born after 1995 have accounted for more than half.

In addition, Chen Shaohui previewed Meituan's 618 promotional arrangements for this year, stating:

> "To better meet consumers' shopping needs on instant retail platforms, Meituan's food delivery and flash purchase will jointly launch promotional activities with numerous catering and retail brands during the 618 event, offering consumers more favorable products and delivery services."

## Nearly 7 million riders have received 1.5 billion yuan in insurance premiums

Since Meituan piloted the "new occupational injury" program in July 2022, it has paid 1.5 billion yuan in insurance premiums for nearly 7 million riders in 7 provinces and cities, with plans to promote it nationwide by the end of next year. In early April this year, Meituan launched a pension insurance subsidy plan more suited to the characteristics of riders and began a pilot program. By early May, riders participating in the pilot had received cash subsidies provided by Meituan.

Wang Xing stated in the conference call that the specific plan is as follows: **For riders whose monthly income has reached the local social security payment base minimum threshold for three months in the past six months, Meituan will subsidize 50%.** This plan fully respects the flexibility of the new economy, allowing riders to freely decide their working hours and workload. By lowering the participation threshold, it can cover a wider range of riders, with no prerequisites, regardless of whether the riders are registered for social security, and there are no requirements regarding working hours or delivery volume, nor distinctions based on delivery types.

## Progress on Meituan's AI large model development: Business decision assistant to be launched in June

Wang Xing also revealed the progress of Meituan's AI large model development. He stated that Meituan plans to launch a business decision assistant in June, which will help merchants grasp AI trends and achieve digital transformation. He mentioned that in the last quarter, Meituan provided an automatic code generation tool for internal engineers, with 52% of the internal code already generated by AI. Furthermore, Wang Xing stated that Meituan's foundational large model capabilities are approaching the level of GPT-4O.

Wang Xing also mentioned that about 52% of the new code is generated by AI, with over 90% of the engineering team members widely using AI coding tools, and they will continue to increase investment in developing large language models. According to Wang Xing, Meituan is allocating resources to infrastructure and is also recruiting top AI talent to "ensure that we have the best team in this area in China."

## The following is the full transcript of the conference call:

> **Host:**
> 
> Welcome to our Q1 2025 earnings call. Joining us today are Mr. Wang Xing, Chairman and CEO of Meituan, and Mr. Chen Shaohui, Senior Vice President and Chief Financial Officer.
> 
> In today's conference call, the management will first review the performance of Q1 2025, followed by a Q&A session. Now, I will hand the meeting over to Mr. Wang Xing.
> 
> **Wang Xing:**
> 
> Hello everyone. In the first quarter, our business maintained stable growth, with revenue increasing by 18.1% year-on-year, reaching 86.6 billion RMB. The annual transaction users and annual active merchants have both reached new heights. We are pleased that more and more consumers and merchants are choosing Meituan as their preferred platform for local services.
> 
> In addition to our ongoing efforts to enhance products and services to improve their experience, we continue to expand our investments in ecosystem development, actively promoting the healthy development of the industry, and unlocking greater consumption potential for local services in China through improved supply and service innovation.
> 
> Since we launched our takeaway business over 11 years ago, we have continuously diversified our product offerings, broadened our price range, and optimized our 30-minute delivery network to provide better services and choices for hundreds of millions of consumers. Over the years, we have also supported millions of merchants, especially small and medium-sized merchants, helping them reach new customers, achieve business growth, and cope with industry cycles. To promote the industry's transition to a health-focused development phase, we aim to further facilitate industry transformation, improve the online business operating environment, and create greater value for the entire service industry through our innovative and refined supply models. We continue to help restaurants and merchants discover new growth opportunities. For example, we actively promote brand satellite stores, which allow chain restaurants to rapidly expand their geographical coverage at a much lower cost than traditional dining venues.
> 
> As of the end of the first quarter, over 480 brands have successfully launched more than 3,000 high-quality brand satellite stores on Meituan. Even more impressively, the average revenue per store is several times that of typical dining establishments. In addition to brand satellite stores, we have also designed other innovative offline business formats, providing customized growth strategies and operational solutions for chain restaurant merchants. Additionally, we launched our self-operated cloud kitchens specifically tailored for chain restaurant brands At the same time, we fully recognize that small and medium-sized merchants are the cornerstone of China's catering service industry. These businesses are also an important part of local employment and community economy. We remain firmly committed to providing more support for small and medium-sized merchants. Our goal is to ensure that those who work diligently on our platform gain recognition and trust from consumers and gradually become the preferred choice of consumers.
> 
> In the first quarter, we further implemented a series of comprehensive measures to support high-quality small and medium-sized merchants. These measures include providing financial assistance, traffic support, free digital tools, and online services. By doing so, we effectively help these merchants improve supply, enhance service quality, and offer a wider range of choices.
> 
> In addition, recognizing the importance of food safety and product quality, we launched the "Bright Kitchen" program and other food safety measures to enhance the quality of supply on our platform. We believe that higher transparency can make it easier for consumers to discover high-quality restaurants. To support micro-merchants, including family restaurants and community restaurants, we provide targeted subsidies to cover the hardware procurement and installation costs for joining our "Bright Kitchen" program. **Looking ahead, we plan to invest 100 billion RMB over the next three years to promote high-quality growth across the catering service industry.** These resources will be used to support various types of merchants.
> 
> **Over the past decade, we have consistently committed to improving measures to protect the rights and interests of riders and enhance their work experience.** Since July 2022, we have provided over 1.5 billion RMB in occupational injury insurance for all riders on the platform. Currently, this insurance has been implemented in seven pilot provinces, and we plan to expand it to more provinces this year, aiming for nationwide coverage by the end of next year. In April of this year, we also launched a pilot project for rider pensions, which will gradually be promoted nationwide in the future.
> 
> At the same time, we provide comprehensive talent development programs and career advancement paths for riders. Notably, 86% of management positions in our delivery network are filled by frontline riders. We also offer riders diverse job transfer opportunities within our platform and have sponsored hundreds of riders to pursue higher education at universities.
> 
> In addition to work support, we provide life and medical assistance for riders and their families. For example, through our "Kangaroo Baby Public Welfare Program," we have allocated over 100 million RMB in critical illness assistance to more than 6,000 riders and their families. We have also provided tens of millions of RMB in medical assistance funds and educational support for riders' children. We place great importance on supporting the career development of female riders. In 2024, the number of female riders earning income from our platform exceeded 700,000. In March of this year, we provided one year of free coverage for female riders under critical illness insurance.
> 
> Looking ahead, we will collect more feedback and suggestions from riders, continue to enhance their benefits, and ensure that their hard work is fully recognized and rewarded.
> 
> **In the first quarter, Meituan Flash Purchase continued to maintain strong growth, tapping into the immense potential of instant retail.** In April, we officially launched our own instant retail brand "Meituan Flash Purchase." Consumers can easily access the instant shopping page directly from the homepage of the Meituan app, browse and purchase various daily necessities, achieving 24-hour uninterrupted shopping. This next-generation shopping platform enables Meituan Flash Purchase to collaborate with millions of retailers, brands, and local small and medium-sized businesses to meet the daily shopping needs of over 300 million consumers nationwide, delivering high-quality products to consumers within 30 minutes and providing an unparalleled experience.
> 
> This public brand makes its debut to directly respond to the growing trend of instant retail. Our goal is to provide higher quality products while enhancing convenience and a more reliable shopping experience for every consumer. We also aim to leverage the opportunities brought by industry transformation and supply chain upgrades together with millions of merchants on the platform, providing important new sales channels for retailers and brand owners. Meituan Flash Purchase will continue to introduce more online tools to support merchants of all categories in expanding their business on Meituan.
> 
> Meituan Lightning Warehouse adapts to demand trends and the new macroeconomic environment, actively expanding product categories and services to meet diverse consumer preferences. For example, in response to the evolving consumption trends, we have launched initiatives such as "Anxin Xue" to provide consumers with more flexibility and restore their confidence in prepaid services. "Anxin Xue" has attracted over 20,000 educational institutions nationwide, covering a wide range of educational scenarios, with courses in sports, arts, and more. Consumers can seamlessly place orders, redeem services in installments on our platform, and apply for refunds with a single click when needed. Building on this success, we recently launched "Anxin Lian" and "Xin Lian," covering fitness training and extending this worry-free consumption model to a broader range of installation categories.
> 
> At the same time, by utilizing efficient, user-friendly online tools and extensive marketing programs, we also help merchants reach a larger customer base, improve conversion rates, enabling them to benefit from digital transformation and achieve business growth in various consumption scenarios. In the first quarter, the number of annual active in-store merchants increased by over 25% year-on-year.
> 
> In addition to offline merchants, our platform also hosts numerous independent artisans, such as photographers, hairdressers, and masseurs. As a platform connecting artisans, merchants, and consumers, we have introduced a set of services for artisans from the onboarding process, review management, content display, operational support to consulting services. These services enable over 1 million active artisans to develop their personal brands online. We have also streamlined the collaboration between merchants and artisans, while allowing consumers to easily access their preferred artisans, providing a wider selection, better cost-effectiveness, and a unique service experience.
> 
> Since integrating the medical beauty and health business into the medical health department, we have further strengthened cross-selling in the first quarter, deepening our penetration into the industry supply chain and providing consumers with comprehensive medical health solutions during the peak flu season. We work directly with pharmaceutical companies to ensure a sufficient supply of medicines while consolidating our leading position in the instant medicine delivery field. We have expanded our supply to meet the demand for chronic disease medications and medical devices, further increasing user purchase frequency At the same time, we have expanded our cooperation with medical beauty providers, dental clinics, traditional Chinese medicine clinics, and others. We are cross-selling more medical and health services to our existing user base. For example, in dental aesthetics, we focus on thoughtful consumption such as dental implants, enhancing the price comparison experience and decision-making process for consumers. We have also introduced a "Safe Implementation Functional Area" to provide guarantees that alleviate consumer concerns and risks. Looking ahead, we will continue to innovate our products and services to meet the evolving one-stop medical and health needs of consumers.

At the end of March, we launched the Meituan Membership Program, which covers all our business categories. It offers "New Selections" as a universal benefit, encompassing various aspects of consumers' daily lives. Our goal is to provide members with a broader range of benefits, enhanced experiences, and this membership framework. Users can accumulate growth points to elevate their membership level and unlock additional privileges. Currently, the privileges mainly include hotels, travel, and various other local service categories.

Looking ahead, we will continue to expand membership benefits to more categories. Additionally, we will introduce specific tiered privileges, such as priority delivery services for takeout, free comprehensive gifts, beverages, or installations, and continuously enhance the user experience for Meituan members. We expect to occupy consumers' mental share in Meituan by offering benefits that cover all categories and scenarios, becoming the preferred platform for discovering local stores and deals. By providing benefits that encompass all categories and scenarios, we aim to increase user stickiness, boost transaction frequency, and optimize cross-selling efficiency.

Now, let's turn to our new business segment. In the first quarter, we further refined our operations, achieving significant efficiency improvements in grocery retail software and hardware services, making notable progress compared to the same period last year.

Through our grocery retail business, such as "Little Elephant Supermarket" and Meituan Preferred, we have begun to provide comprehensive support for export enterprises, covering marketing, channel expansion, and branch cooperation, helping them distribute high-quality export products in the domestic market.

Our overseas business has also made significant breakthroughs in Saudi Arabia. Kitah effectively showcased our product capabilities and technological advantages by providing enhanced consumer experiences in transactions and deliveries. We have gained widespread recognition from local consumers and quickly become one of the most popular takeout applications in the region. Looking ahead to the remainder of 2025, we are committed to promoting the healthy development of our ecosystem.

In terms of merchants, we will introduce more support measures to improve the online operating environment and help merchants iterate and innovate their supply formats. For riders, we will provide broader measures to safeguard their rights, enhance their benefits, and promote social recognition of their contributions. For consumers, we are committed to providing more comprehensive services, products, and membership benefits, especially for those consumers who have supported us for a long time. By leveraging artificial intelligence technology, we will continuously improve user experience and enhance merchant operational efficiency. Furthermore, we will actively align with national strategies aimed at promoting consumption and expanding domestic demand. By focusing on emerging consumption trends and discovering new markets and opportunities, we will promote consumption growth and industry transformation, contributing to the broader economic landscape

> At this point, I will hand the meeting over to Chen Shaohui, who will update us on our financial results.
> 
> **Chen Shaohui:**
> 
> Next, I will introduce our financial performance for the first quarter. In this quarter, our business maintained a healthy growth trend, with total revenue increasing by 18.1% year-on-year, reaching RMB 86.6 billion. The cost of revenue decreased by 2 percentage points year-on-year, reaching 62.6%, mainly due to the improvement in the gross margin of our grocery retail business and enhanced operational leverage, although the increase in costs related to overseas operations partially offset this decline. Thanks to our improved marketing efficiency, selling and marketing expenses decreased by 1 percentage point year-on-year, reaching 18%. Research and development expenses and general and administrative expenses remained stable at 6.7% and 3%, respectively.
> 
> Our strategic focus on quality, growth, and operational efficiency continued to yield strong results this quarter. Total segment operating profit increased to RMB 11.2 billion, up from RMB 6.9 billion last year. Total segment operating profit margin improved from 9.5% to 13%. From a consolidated perspective, our adjusted net profit increased year-on-year, reaching RMB 10.9 billion this quarter. As of March 31, 2025, we maintained a strong net cash position, with cash and cash equivalents and short-term government bond investments totaling RMB 180.4 billion. Cash flow from operating activities increased year-on-year, reaching RMB 10.1 billion this quarter.
> 
> Now, let's review the performance of each segment, starting with our core local business. In this quarter, our takeaway business achieved a continuous recovery in year-on-year order volume growth, despite facing headwinds from reduced subsidies, with daily order growth in the first quarter still exceeding that of the fourth quarter. The engagement of mid-to-high frequency users continued to significantly improve. This is a direct result of our focus on execution, supply-side optimization, product iteration, and operational enhancements. Meanwhile, we continued to iterate our new supply formats this quarter. Notably, New Good Meal maintained a strong growth trajectory, with the retention rate of core consumers steadily increasing year-on-year.
> 
> In this quarter, Meituan Flash Purchase maintained strong growth momentum. Numerous consumption categories, including beverages, snacks, 3C, home appliances, beauty and personal care, and other non-food categories, performed outstandingly. The performance during Valentine's Day was particularly remarkable, with daily order volume nearly doubling year-on-year. In addition to floral gifts, we also observed a significant expansion in demand in non-gift categories, such as small appliances, jewelry, and beauty products, indicating that our platform is continuously evolving to serve more consumers, especially among the younger generation and across more categories.
> 
> Furthermore, Meituan East Market demonstrated our ongoing progress on the supply side. The number of Meituan East Markets and their order contributions continued to increase, especially in lower-tier markets. Our installation business effectively seized the opportunity of increased consumer spending during key holiday periods, with order volume growing by approximately 50% year-on-year. In this quarter, we enhanced our special offer program. It not only continued to gain traction in high-frequency categories such as light meals, fast food, and beverages but also stimulated increased demand in seasonal consumption categories during holidays
> 
> In the lower-tier markets, we continued to maintain strong growth momentum in the first quarter, with an ongoing increase in merchant coverage, user engagement, and transaction volume. Importantly, we further improved profitability in lower-tier cities. The optimized membership program has become another powerful growth accelerator this quarter, effectively aiding the installation of hotel and travel businesses. It not only attracted new users to re-engage but also increased the transaction frequency of inactive users. Our core local business segment continued to achieve strong year-on-year growth, reaching 17.8%, with revenue of RMB 64.3 billion. The operating profit and operating profit margin of the core local business segment improved year-on-year, reaching RMB 13.5 billion and 21%, respectively. We achieved higher efficiency in the operation of our core local business and realized greater operational leverage.
> 
> Next, let's take a look at the new business segment. In this quarter, the segment's revenue grew by 19.2% year-on-year, reaching RMB 22.2 billion, mainly due to the development of our grocery clearance business and overseas operations. Thanks to our efforts to improve operational and marketing efficiency in the grocery retail business, the operating loss and operating loss margin of this segment narrowed year-on-year, reaching RMB 2.3 billion and 10.2%, respectively. The quarter-on-quarter increase in operating loss was mainly due to increased investment in overseas operations.
> 
> Finally, I want to emphasize that over the years, our core local business has demonstrated resilient performance under complex and changing market conditions. Every challenge has made us stronger, sharpened our competitive advantages, driven operational excellence, and achieved continuous financial improvement.
> 
> Looking ahead, we remain confident in the tremendous growth potential of all businesses in the core local business segment. The continuously increasing synergies will further amplify our advantages. We are confident in our long-term ability to achieve healthy, high-quality growth. At this point, we open the floor for questions. Thank you.
> 
> **Question from a Goldman Sachs analyst:**
> 
> I would like to ask a question regarding the delivery aspect. JD.com has announced a 10 billion subsidy plan to enter the delivery field and has made some progress. Has this move already affected our order volume growth? How does management assess the changes in the competitive landscape? Meanwhile, given that Meituan has also announced a similar 10 billion subsidy plan, will we adjust our subsidy strategy accordingly to maintain competitiveness? What specific measures will we take to respond to this new competitive environment? How might these market changes affect Meituan's overall profit growth this year? Sorry for the long question. Thank you.
> 
> **Wang Xing:**
> 
> Okay, thank you. I think this is a very important question. **The short answer is that we will do whatever it takes to win this competition.** Now, the longer version is as follows. It sounds a bit ridiculous, 10 billion against 10 billion. It seems that every internet player wants to invest their 10 billion in this game. This means that the winner of this game will be very valuable, and we plan to be the winner
> 
> Currently, we are the largest participant in this business sector. We have been operating in this field for over 10 years and have withstood several rounds of intense competition in the past decade. Now, I believe we are in the best position to win again. I would like to elaborate on this.
> 
> **First, I want to emphasize that we welcome new entrants into the takeaway and instant retail market.** The actions of new entrants highlight the enormous growth potential that exists in the takeaway and broader instant retail sectors. We believe that competition will drive the development of the entire industry, especially for our Meituan Instant Purchase business, which has particularly significant upward potential.
> 
> However, I must say that **the current irrational subsidy competition characterized by low quality and low prices in the industry may be unsustainable in the long run.** Ultimately, competition should realign with business fundamentals. Only platforms that can effectively activate the three major pillars of consumers, merchants, and delivery networks can achieve sustainable growth.
> 
> We are confident in our scale advantages and the competitiveness of our demand-based network. We remain optimistic about the future growth potential of our takeaway business and the broader Meituan instant shopping business. Specifically regarding the takeaway business, the recent substantial subsidies in the industry have effectively stimulated more demand, particularly for elastic consumption categories like milk tea or coffee. Our platform also experienced very strong growth in the beverage category in April and May, while other food categories maintained stable growth. We have also observed that more medium-frequency users have increased their order frequency, becoming higher-frequency users. The retention rate of these core users remains at a very high level.
> 
> Due to intensified competition, consumers on other platforms may compromise on system failures and delayed deliveries, resulting in a very high refund rate. However, our platform has consistently provided a stable experience through our reliable delivery network and advanced systems. Having operated for over 11 years, we have built a fairly sophisticated service capability that meets consumers' daily needs across a wide range of price points and different consumption scenarios. Our platform hosts a large number of high-quality small and medium-sized merchants, who are not only the cornerstone of our takeaway supply but also the backbone of China's catering service industry. Through continuous product and service iterations, we help small and medium-sized merchants acquire customers and increase revenue.
> 
> At the same time, we assist brand restaurants in innovating supply models, including brand satellite stores, community restaurants, group meal services, and other innovative products. These not only meet consumers' demand for cost-effective options but also help merchants increase order volume and revenue. These collective efforts have diversified our supply and improved quality. Coupled with our industry-leading delivery network and ongoing operational enhancements, we are in a favorable position to provide consumers with more predictable services and enhance the consumption experience. We believe that once the irrational subsidy phase in the industry ends, consumers will choose the platform that offers the widest selection, best experience, and most reliable service.
> 
> Therefore, we are prepared to face competition. In the short term, we will make necessary investments to consolidate consumers' mind share, and we are confident in maintaining our long-term leadership position in the industry At the same time, we will prioritize the health and sustainable development of the entire industry and ecosystem.
> 
> We believe that China's food delivery industry should enter a new stage of development. Neither platforms nor merchants should revert to previous competitive models. An increasing number of merchants are now actively embracing new supply formats, seeking growth by improving product quality and service supply. They also face industry challenges such as excessive marketing, promotions, and food safety issues. We recognize that these industry-wide problems are profound and require immediate attention.
> 
> Therefore, in order to directly address competition, we will actively promote supply-side innovation this year and explore new growth opportunities. Yes, we will also take proactive measures to improve the quality of the entire industry and optimize the online business environment for merchants. We are also actively advocating against unnecessary excessive competition within the industry. We will continue to help merchants streamline their marketing efforts and reduce operational burdens. At the same time, we will focus on improving our marketing efficiency, increasing the purchase frequency and user stickiness of our core users. We remain committed to creating real value for all stakeholders, including merchants, delivery riders, and consumers, thereby guiding the industry towards a more rational, quality service-oriented growth trajectory.
> 
> **From a financial perspective, we expect fluctuations due to intensified competition.** Therefore, I believe no one will be surprised by the volatility of short-term financial results. Recently, high subsidy ratios have remained elsewhere. In these circumstances, we will continue to increase investments. We adhere to the principle of fair and orderly competition. Our overall investment philosophy is to promote the healthy development of the industry and defend our market position, and we will also increase investments in the ecosystem. Most of our investments will offset revenue. **We expect the year-on-year growth rate of core local business revenue in the second quarter to slow down from the level in the first quarter, and the operating profit of core local business will significantly decline year-on-year in the second quarter.**
> 
> **We do not know how long the irrational competition from new entrants will last, so we cannot provide accurate financial guidance for the second quarter and the remainder of this year, but we will continue to defend our market share.** We are very confident in our ability to consolidate our market leadership. We have played a key role in the development of China's food delivery industry over the past decade, and we are in the best position to continue creating value for all stakeholders. We hope all stakeholders can see through short-term fluctuations and focus on our long-term competitive advantages and sustainable growth potential.
> 
> In the long run, there is room for local businesses to unlock revenue and cost synergies across different operations. As our business further expands, economies of scale will become more apparent. We also expect that after this round of intense competition, the food delivery industry will return to a more rational or sustainable growth path, leading to a healthier ecosystem. Then, we are confident that the GTV profit margin of core local business will steadily increase to a reasonable level.
> 
> Furthermore, I believe regulators are also paying attention to this issue. However, since we have been operating in the Chinese internet sector for over 10 years, I believe the regulators' work is to prevent irrational and unhealthy subsidy competition, while our job is to win this battle within the allowed framework So, we are prepared to win this battle at all costs and consolidate our market leadership. Thank you.
> 
> **Question from Citigroup:**
> 
> Okay, thank you, management. We can see that instant retail has become a lifestyle for more and more young people. With our repositioning of Meituan Flash Purchase, what strategies do we have for expanding category choices? How is our progress with instant convenience stores? Additionally, what progress have we made in expanding into higher-priced product categories? For example, since we included electronics and home appliances in our business scope.
> 
> **Chen Shaohui:**
> 
> Thank you for your question. Yes, I am glad you asked about Meituan Flash Purchase. We launched this business in 2018, and since then, it has expanded into many categories, covering almost all aspects of daily life. Products like flowers, fruits, and fresh food are inherently suitable for the instant retail model. By integrating innovative product forms, we are able to stimulate new consumer demand and redefine the boundaries of the instant retail industry.
> 
> At the same time, it is more important that Flash Purchase has maintained strong growth momentum across all non-food categories, such as 3C electronics, beauty and personal care, maternal and infant care, pet care, daily necessities, and clothing. Although these categories are often considered low-frequency consumer goods due to their non-urgent nature, they have also achieved significant growth as we continue to expand product coverage and improve quality standards.
> 
> **In the first quarter, orders in non-food categories grew by over 60%.** Our wide variety of daily necessities and long-tail products effectively meet consumers' urgent needs. Categories such as beauty and personal care, toys and video games, pet care, and maternal and infant products also satisfy consumers' aspirations for quality living and emotional consumption. The growth of 3C products and home appliances is also significant, with portable small appliances, kitchen appliances, photography equipment, smart devices, and gaming equipment all achieving substantial growth on our platform. Notably, some consumers have even purchased large appliances like refrigerators and washing machines through our instant retail platform. Additionally, the volume of clothing orders from young consumers has far exceeded our initial expectations. These developments indicate that instant retail has become an important channel for meeting diverse consumer needs and a lifestyle choice trusted by the younger generation.
> 
> Meituan Flash Purchase currently has over 30,000 instant convenience stores, of which more than 10,000 are convenience stores. The remaining stores cover almost all the categories mentioned earlier. We are continuously strengthening the coverage density of convenience stores in categories such as fruits, pet care, and beauty products. Our network has reached a considerable scale and is rapidly developing. Meanwhile, categories like fashionable beverages and food have entered an accelerated growth phase after initial development. Furthermore, an increasing number of leading KA brands from supermarkets, convenience stores, small appliances, and daily necessities are accelerating their embrace of Meituan Flash Purchase. We remain committed to providing a range of support for merchants. **In the first quarter, the total number of transaction users for Meituan Flash Purchase has exceeded 500 million, with young consumers, specifically those born in the 1990s, accounting for two-thirds.** \*\*User's purchase frequency has also increased. We officially launched our own instant retail brand "Meituan Flash Purchase," and based on this solid foundation, we are working hard to deliver everything to your doorstep within 30 minutes.  
> In the early stages of the brand launch, our strategic marketing campaign drove the peak daily active user count of Meituan Flash Purchase to nearly 66.5 million, with users born in the 1990s and 1995s accounting for more than half of the total. In May, we launched the first service guarantee plan covering the entire instant retail process. Collaborating with hundreds of well-known brands and a wide range of local merchants, we upgraded our service experience, fulfillment, and after-sales service. Our goal is to make instant retail the most superior shopping experience in terms of service and guarantees. For example, we partnered with home appliance brands to provide half-day delivery and installation services for home appliances, exclusive delivery and customer service for high-value items, and a product exchange plan delivered within 30 minutes from hundreds of thousands of local stores. We also offer a 7-day return guarantee service for millions of inventory items and launched a compensation guarantee service for damaged or improperly preserved fruits and fresh products, as well as beverages that do not meet promised freshness.  
> We firmly believe that Meituan Flash Purchase will become a leading consumption platform for more consumers, especially the younger generation. We expect that with the brand name update and the launch of the service guarantee plan, we will capture an increasingly larger share in high-ticket categories and collaborate more closely with more brands. For example, in the first quarter, we successfully introduced five famous brands, such as Super Mario and Philips, to establish estimates on our platform. This collaboration not only provides consumers with high-quality electronic products but also creates substantial incremental revenue for brand owners, effectively promoting a win-win ecosystem. Additionally, to better meet consumers' strong demand for instant retail, our takeaway business and Meituan Flash Purchase will launch the 618 marketing campaign on May 28. We will collaborate with dining and retail brands to offer consumers more cost-effective products and services. In summary, we are confident in the long-term tremendous potential of Meituan Flash Purchase. Thank you.  
> **Questioner from UBS:**  
> Hello, management, good evening. Thank you for taking my question. Could the management elaborate on the recently announced 100 billion yuan subsidy promotion plan for the next three years? At the same time, Meituan has also launched a pilot project for rider pension insurance. Could you also share the latest progress in this area as well as the subsequent promotion plans and rhythm? Thank you.  
> **Wang Xing:**  
> Thank you for your attention to our announcement. Yes, we have indeed announced a 100 billion yuan investment plan to drive industry development over the next three years. Our goal is to help the industry discover new growth opportunities, improve supply quality, and create a more favorable business environment for dining merchants.  
> Through continuous investment, the plan mainly focuses on the following four key areas:  
> **First, empowering merchants.** Last year, we launched the first 1 billion yuan merchant support fund. As of April this year, the project has covered 180,000 merchants, including small and medium-sized merchants, community stores, brand flagship stores, high-quality brands entering new supply formats, and low-tier markets, as well as well-known chain brands Merchants are using our support funds for online operation improvements, product innovation, and equipment upgrades.
> 
> **Second, improve supply quality.** Brand satellite stores have helped over 480 brands open 3,000 high-quality satellite stores in the past year, utilizing AI-driven services such as site selection, product planning, and targeted traffic placement. The average revenue of these brand satellite stores is two to three times that of traditional stores. In addition to expanding brand satellite stores, we are also allocating resources to well-performing merchants, including popular merchants, while providing various special subsidies to other quality merchants.
> 
> **Third, we will continue to promote the "Bright Kitchen, Bright Stove" program.** This initiative aims to encourage more high-quality urban takeout merchants to establish high-standard kitchens, thereby strengthening the food safety infrastructure of the industry. With increased hardware subsidies and traffic support, we expect the number of participating merchants to exceed 100,000 by the end of this year. We will invite more takeout merchants to join our "Bright Kitchen, Bright Stove" program, as it allows consumers to observe the food preparation process in real-time. This transparency is key to enhancing public confidence in food safety.
> 
> **Fourth, stimulate consumption.** We will utilize Meituan membership, special coupons, and other diversified products to incentivize users. Our goal is to revitalize takeout consumption, enabling merchants to increase order volume and expand their business.
> 
> Regarding the pension issue for riders, on April 3rd, we launched a new pension insurance pilot project in Nantong and Quanzhou, covering all riders in these two cities. For many years, we have maintained regular communication with relevant authorities, deepening our understanding of social security policy guidance for flexible employment and gaining more insights into the needs of riders. This has enabled us to actively explore effective solutions to enhance the rights and interests of flexible employees.
> 
> Previously, we implemented a work injury insurance pilot project, providing RMB 1.5 billion in insurance coverage for approximately 7 million riders in seven pilot provinces. The newly launched pension insurance pilot project is designed according to the national policy on social security for flexible employment, providing riders with specially customized subsidies.
> 
> **The specific plan is as follows:** For riders whose monthly income has reached the local social security contribution base minimum threshold for three months in the past six months, Meituan will subsidize 50%. The plan fully respects the flexibility of the new economy, allowing riders to freely decide their working hours and workload. By lowering the participation threshold, it can cover a broader range of riders, with no prerequisites, regardless of whether the rider is registered for social security, and without any requirements regarding working hours or delivery volume, nor distinctions based on delivery type.
> 
> At the beginning of May, the first batch of riders who joined our pension insurance pilot project has already received our cash subsidies. We are pleased to see that the plan has received a positive response from the Human Resources and Social Security Bureau of the pilot cities. Looking ahead, we will continue to address riders' inquiries about the pension insurance plan, strengthen policy promotion, and encourage riders to participate in the program.
> 
> We plan to expand the pilot project to more cities this year and continuously improve it during the implementation process. At the same time, we are confident that the increased efficiency and order density in our network will provide cost-saving benefits to offset the additional costs brought by this insurance Thank you.
> 
> **Questioner from Morgan Stanley:**
> 
> Hello. Thank you to the management for providing this opportunity. Could the management share the latest progress of Keeta in Hong Kong and Saudi Arabia? What are the company's core competitive advantages in these regions? The company previously mentioned focusing on the Middle East in the short term, but recently announced its entry into the food delivery market in Brazil.
> 
> Why is the company preparing to enter regions outside the Middle East? Aside from the timing, what are the key criteria for regional expansion plans and selecting new markets? Given that overseas markets are not as large as the Chinese market, could the management share the company's overall plan and long-term goals for these overseas businesses?
> 
> **Wang Xing:**
> 
> Thank you. Keeta has made good progress in both Hong Kong and Saudi Arabia. Last week, we celebrated the second anniversary of Keeta in Hong Kong. It officially launched two years ago on May 20. Over the past two years, we have become the largest food delivery platform in Hong Kong. Moreover, we have continued to grow in terms of order volume, average order value, market share, and the number of restaurants and riders. That’s the situation in Hong Kong.
> 
> In Saudi Arabia, we launched in September last year, so we have only been operating for a little over six months. But now, TikTok is operating in all nine cities. This covers all cities in Saudi Arabia with a population of over one million. This is our current market, and we plan to expand it to more cities in Saudi Arabia. And, as you mentioned, we announced our plan to enter Brazil and committed to investing $1 billion over the next five years. Yes, I will explain why and how we plan to win this competition.
> 
> We entered the food delivery business at the end of 2016. Over the past decade, we have invested heavily to build a leading global food delivery business. Currently, we handle over 20 million orders every day.
> 
> In building the food delivery business, we developed a world-leading system that requires a lot of software engineering skills to construct. It requires extensive machine learning to optimize the order scheduling system. Building the original online food delivery application is easy. However, as it scales up, when you need to meet the demands of an increasing number of users, restaurants, and riders, you must use machine learning to optimize the system. Otherwise, you will not be able to cope with the growing demand. Through Meituan, we have built such a system. We believe we have one of the best systems. We plan to apply all our knowledge and operational experience to Keeta and bring all these capabilities to other markets.
> 
> We believe that by leveraging our competitive products, services, and operational experience, we can provide consumers, restaurants, and riders in other markets with very fast delivery speeds and an excellent user experience. Moreover, I think in this process, we will also help create a large number of job opportunities in these markets.
> 
> Therefore, **I believe that in a few years, Keeta will become the preferred food delivery platform in more and more overseas markets.** Regarding the progress of our plans, I think, as we have said in the past, in the long run, Meituan is destined to become a global company, but we are not in a hurry. Therefore, we will carefully evaluate every opportunity The decision to enter new markets is made through comprehensive analysis, which considers many factors, including the current and potential size of the market, growth potential, and market structure, which is very important. Because when you enter a market, you need to ensure that you can become the first or second player. Otherwise, it doesn't make much sense. Therefore, market size and market structure are crucial, as we need to collaborate with many local partners. Thus, we pay close attention to the regulatory framework and overall business environment of each market.

Regarding Brazil, I think it is very important that we see a lasting strategic partnership between the two countries. I believe this indicates the strength of the strategic partnership between the two nations. Moreover, we believe that investments from Chinese companies in Brazil will be welcomed by Brazilian consumers and local merchants.

Earlier this year, I visited Brazil, and I saw a vibrant economy with a very large population. Therefore, I believe Brazil is a country with immense potential. In terms of territory, it is one of the largest countries, ranking fifth. In terms of total population, Brazil ranks seventh. In terms of GDP, Brazil may rank around ninth. However, in terms of food delivery, Brazil actually ranks in the top five. This indicates the current size and potential of Brazil's food delivery market. Furthermore, I think it is not entirely fair to say that other markets are not as large as China. Yes, of course, the two largest markets in the world are China and the United States. This is not surprising. However, if you combine many other countries, they would be larger than either China or the United States. But because there are many countries, each country will be different. Therefore, we need to assess opportunities more based on individual countries.

So, our current plan is to work in Saudi Arabia while preparing to launch our business Keeta in Brazil. We are very excited about this. Keeta has performed well in Hong Kong and Saudi Arabia, and Brazil represents a very good opportunity in the long run. Moreover, I am confident about the growth potential of global food delivery and even broader on-demand delivery. So, in many markets now, food delivery is just an occasional convenience for certain demographics. But I believe that over time, penetration and frequency will become higher.

We have witnessed this in China. I believe this will happen in many different countries. Given our expertise and our world-leading software systems, I think we should be able to bring this to these markets and create value for all stakeholders. That is our plan. I believe it will have some impact on our short-term profitability. But I think in the long run, global expansion represents a very good and promising growth opportunity for us. I think that is the plan. Thank you.

**Question from Jefferies:**

Good evening. Thank you to the management for answering my question. Could the management introduce the progress of the company's AI large language model, as well as the R&D expenses and timeline related to its applications? Thank you.

**Wang Xing:**

Yes, of course, a financial call without AI questions would be incomplete. This quarter, we continue to strengthen our capabilities on all three levels. When we talk about AI, I think there are three levels: AI infrastructure, AI in products, and AI in operations This is how we view AI.

> In this quarter, we iterated on our foundational large language model. We launched new AI applications and services for external users. At the same time, we enhanced a set of employee productivity tools to improve our own efficiency and work experience.
> 
> It can be said that we have made good progress in these three areas.
> 
> First, in terms of AI infrastructure. We continue to increase our investment in large language models, allocating resources not only to infrastructure capital expenditures but also to recruiting top AI talent to ensure our foundational language model is among the best teams in China.
> 
> In this quarter, we continued to upgrade our LongCat large language model. The enhanced model can now seamlessly switch between reasoning and non-reasoning modes, achieving performance levels comparable to leading models in China in both modes. We also updated our end-to-end voice interaction model LongCat. This updated model demonstrates advanced capabilities in understanding nuanced information, including emotions or contextual environments, and can engage in natural voice conversations. Its performance is close to GPT-4.0.
> 
> In terms of AI in products, the value of AI is not limited to efficiency improvements; it can also become a powerful tool to empower our platform merchants. By leveraging AI, we can better assist merchants in accelerating their digital transformation and optimizing costs.
> 
> On May 18, Meituan's Restaurant Advisory Committee held a seminar on the evolution of AI in the restaurant industry in Shanghai. Based on the feedback from the committee's discussions, **we plan to launch a new large model next month, in June. It will be an AI-driven business decision assistant for the restaurant industry.** It will serve as an intelligent operational assistant for restaurant merchants and industry professionals, covering four key scenarios: dish selection, new store location, menu development, and store operations. This innovation marks a shift in industry decision-making from experience-driven to AI + data. It is a new process that will effectively reduce operational risks for merchants while promoting business growth.
> 
> I believe the third point is actually the most exciting aspect of last quarter. We believe in developing internal AI tools, that is, AI at work, and we hope to leverage AI to enhance employee productivity and work experience. This remains a key priority in our AI program.
> 
> Last quarter, we continued to improve engineers' AI coding capabilities and actively promoted the adoption of internal AI coding. Currently, about 52% of the new code in our company is generated by AI. In some R&D teams, over 90% of team members extensively use AI coding tools. Our goal is to gradually achieve a 100% adoption rate among all engineers.
> 
> We have our own no-code platform, which is available to all employees and has been widely adopted internally. The no-code platform allows users to quickly generate applications through natural language conversations without prior coding experience.
> 
> Now, all professional positions in our company are using the no-code platform, including product managers, user experience designers, business analysts, human resources, and finance personnel. They utilize the no-code platform to create product prototypes, interactive pages, and efficiency tools, with 62% of product managers and 28% of business analysts using the no-code platform internally
> 
> Last week, we launched a no-code platform for public users for free. Users can turn various ideas into reality without any coding skills. We believe this application will support the digital transformation of small and medium-sized businesses in the AI era. Currently, users have created 9,410 applications, of which more than 16 have been published and are in active use.
> 
> In the long run, we believe Meituan's unique advantage lies in our diverse consumption scenarios. We have a rich array of offline service products and possess very strong fulfillment capabilities. Therefore, we will continue to build our AI capabilities in foundational research and applications, using AI to help people eat better and live better in the physical world. Thank you.
> 
> **Question from a Citigroup analyst:**
> 
> Good evening, management. Thank you for answering my question. Congratulations on achieving such robust performance. My question is related to investment and capital allocation. Given the significant funds the company has invested in overseas expansion and the competition in the domestic food delivery market, will the company adjust the business strategy and investment scale of Meituan Youxuan to balance overall profitability and cash flow? What are the company's capital allocation priorities and strategies? Will increased overseas investment lead to a pause in the stock repurchase plan?
> 
> **Wang Xing:**
> 
> Thank you. Yes, we have been comprehensively reviewing our capital allocation strategy and always strive to balance the cash flow of our core local business, the priorities and resource needs of new businesses, and shareholder returns to formulate the best capital deployment strategy each year. Speaking of competition, we have faced competition from the very beginning and have become stronger through it. We believe that healthy competition is a catalyst for driving larger-scale development and promoting long-term growth in the entire industry. Although competition may lead to fluctuations in short-term profits, we are confident that our core local business segment will continue to generate strong cash flow, providing a solid financial foundation for our overseas expansion and fresh retail business.
> 
> Our new businesses are in a rapid growth phase. We have tailored different key performance indicators (KPIs) for each business unit and will carefully assess the performance of each business and dynamically adjust our strategies. As for Meituan Youxuan, it is part of our overall fresh strategy.
> 
> We have been firmly committed to seizing the opportunities in China's fresh market. We believe that the digitalization potential of this industry is enormous, capable of providing better user experiences and better infrastructure to improve the efficiency of the entire industry.
> 
> At the same time, we also recognize that China is vast, and the fresh industry market is very fragmented. We need to provide different solutions for different markets. For example, in high-tier cities, we operate small elephant fresh supermarkets, utilizing a front warehouse model, which has performed very well. We also have the Meituan Flash Purchase platform model, which connects local retailers and local consumers. These two businesses play a key role in establishing our brand image in fresh retail. For lower-tier markets and more everyday consumption, we believe different models should be adopted to serve, as this is a highly challenging and fragmented market. Meituan Youxuan is our tool for testing the potential of this market and validating the business models in these markets Although it is more challenging than we expected, we still believe that enhancing supply chain capabilities and providing a better experience for the demand in these lower-tier cities has potential. We will continue to focus on testing the Meituan Preferred model and verifying its economic viability, rather than scaling it up.
> 
> Therefore, the total loss of Meituan Preferred is manageable. Nevertheless, we have also seen continuous improvement in its business operations since the fourth quarter of last year. Specifically, we have improved the efficiency and service quality of self-pickup points, upgraded product quality, and enhanced delivery timeliness.
> 
> This year, we will continue to consolidate our core competitiveness and improve our operational efficiency. Regarding shareholder returns, we will continue to assess our cash reserves and potential cash flow, making flexible arrangements. We will maintain the stock repurchase plan as the main channel for shareholder returns, with our fundamental goal being to offset the dilution of shares caused by our Employee Stock Ownership Plan (ESOP) each year. In addition, we will look for suitable market opportunities to further reduce the number of shares outstanding when we feel the timing is right. Thank you

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