MEITU

Meitu 2H25 First Take: Overall results came in below expectations, and an accidental early leak of the report may trigger a sharp market reaction. Revenue missed, GP missed materially, but disciplined opex delivery beat, leaving OP roughly in line. The user ecosystem underpinning subscriptions is under clear pressure, so Dolphin Research’s overall take is negative.

1) Overall MAUs fell by 4 mn vs. 1H. YoY growth slowed to 3.83%, missing Bloomberg consensus of 4.3%.

By use case, consumer-life scenarios lost 5 mn users vs. 1H. Dolphin Research attributes this to both measurement effects and a lack of year-end breakout features to drive acquisition.AI foundation models may also have siphoned off some C-end users. The productivity scenario was broadly in line.

Ex-China, YoY growth dropped sharply to 6.9% from 15.7% in 1H, missing the 8.7% consensus. The overseas MAU shortfall likely caps overall ARPPU and subscription penetration upside. On conversion, both subscriber count and penetration saw small misses and were basically in line.

In terms of growth volume, net new subscribers rose by 2.8 mn in 1H but slowed to just 1.5 mn in 2H. With total MAUs declining, the in-line penetration rate is partly a passive uplift from a smaller denominator, implying lower-quality conversion.

2) Core subscription revenue grew 38.8% YoY, still a strong pace. It reached RMB 1.603 bn, 1.3% above expectations.

3) Cost discipline

GP growth slowed to 20.8% YoY, with GPM flat vs. 1H. The GP miss mainly reflects two factors: a lower mix of high-margin advertising and the strategy of bundling compute costs into subscription plans to attract users, which drove a sharp increase in compute and API-related expenses.

Despite the GP miss, core OP was RMB 466 mn (+82.6% YoY), basically in line. The key driver was tight control across selling, G&A and R&D, delivering an across-the-board beat.

- On selling expenses, Dolphin Research had assumed intl expansion would require higher spend. In 2H, sales expense as a % of subscription revenue stayed at 16%.

- On R&D, the Model Container strategy curtailed base-model training spend. Full-year R&D grew just 3.8%.

Dolphin Research believes that, given the weak user ecosystem and especially the miss in overseas expansion, the company may still need to step up promotion to acquire users. Also note that R&D savings are coming at the expense of GP.For more, including management’s view on AI cannibalizing software and the outlook for B-end and overseas businesses, see the earnings call. Dolphin Research will share further views on Meitu; stay tuned.$MEITU(01357.HK)

Didi 3Q25 Quick Interpretation: In early November, Didi updated the market with guidance on its 3Q performance, mainly mentioning two issues:

1. The investment in the food delivery business in Brazil (to gain a first-mover advantage over Meitu Keeta) will lead to a significant expansion of losses in overseas business; 2. The guidance also indicated that domestic subsidies and other investments would be concentrated in the second half of the year, resulting in a decline in the domestic business's adj. EBITA profit margin compared to the high point in the first half.

As this unfavorable guidance was digested by the market, Didi's stock price subsequently retreated by nearly 20%. The actual performance this quarter was largely in line with the previous guidance, with Bloomberg's consensus expectations being somewhat high due to untimely updates, while major banks have made corresponding adjustments. Therefore, overall, Didi's performance this season was expectedly poor.

Specifically:

1) In terms of core growth indicators, the domestic travel segment's GTV grew by approximately 10% year-on-year, slightly slowing down by about 2 percentage points quarter-on-quarter.

The domestic business growth remains generally stable and largely in line with expectations. Meanwhile, the GTV growth rate of overseas business significantly increased to 31%, reflecting that the overseas investment indeed accelerated business growth, and it was notably higher than Bloomberg's consensus expectations.

2) In terms of profit, the domestic business adj. EBITA profit was 2.98 billion, slightly higher than the November guidance of 2.7-2.8 billion. However, the trend shows that this quarter's profit margin fell significantly from over 4% in the first two quarters of this year (based on GTV) to 3.5% this quarter, indicating a considerable decline.

Dolphin Research preliminarily judges that this is more due to the drag of weakening overall domestic ride-hailing demand (macro factors), while Didi's competitive landscape remains stable or further improved.

3) The overseas business's loss this quarter expanded significantly to nearly 1.8 billion, with the loss rate doubling quarter-on-quarter to 5.6%, which is generally in line with the updated expectations of major banks. As mentioned earlier, this is mainly due to the impact of investment in Brazil's food delivery. $DiDi(DIDIY.US)

$KUAISHOU-W(01024.HK) This should be released by Goldman Sachs. Keling's monthly revenue declined, and the AI concept $MEITU(01357.HK) also retreated.