---
title: "Meituan: As AI Draws Fire Elsewhere, Can It Finally Stop the Bleeding?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/41342254.md"
description: "After the Hong Kong close on Jun 1, the last name in the 'Food Delivery Index' — $MEITUAN(03690.HK) — released its Q1 2026 results. Absolute performance remained weak, with revenue roughly flat and the group still in the red.However, vs. market expectations the print was decent. The key highlight was that the actual loss in Core Local Commerce came in far below prior guidance, implying faster-than-expected loss reduction in the on-demand retail biz.Specifically: 1) reporting scope tweak. Before dissecting the quarter, note Meituan made a slight adjustment to how it discloses sub-segment revenue; we flag this upfront."
datetime: "2026-06-01T15:25:08.000Z"
locales:
  - [en](https://longbridge.com/en/topics/41342254.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/41342254.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/41342254.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# Meituan: As AI Draws Fire Elsewhere, Can It Finally Stop the Bleeding?

After the Jun 1 HK close, the last name in the 'Food Delivery Index' — $MEITUAN(03690.HK) — reported Q1 FY26. In absolute terms, results were still weak, with revenue nearly flat and the company remaining loss-making. **But vs. street expectations, the print was decent, led by a much smaller-than-guided loss in Core Local Commerce, implying faster-than-expected loss reduction in on-demand retail. Details below:**

**1) Another reporting tweak:** Before digging into the quarter, note Meituan made minor changes to its revenue disclosures, along with certain historical restatements.

Among them, **delivery-related revenue is unchanged vs. the old schema**. **Two main changes: commissions and ads are combined into 'merchant services', and self-operated retail is carved out from 'other revenue' and disclosed separately.**

We think the main effects are: a) it is now harder to parse the performance of to-home vs. in-store businesses from the FS. b) the self-operated retail breakout helps track XiaoXiang Supermarket and, going forward, the to-be-consolidated Dingdong Maicai.

**2) Core Local Commerce growth underwhelmed:** Core Local Commerce revenue was approx. RMB 64.1bn, +0.2% YoY, roughly in line with the street and not inspiring.

**Delivery-related revenue fell 6.4% YoY,** narrowing from -10% last quarter, **but only modestly.** This suggests **loss reduction in to-home this quarter did not mainly come from cutting rider fee subsidies.**

**Merchant services revenue was RMB 35.6bn, +0.2% YoY**. **Versus last quarter,** the combined 'ads+commissions' growth **only marginally improved and was essentially flat,** implying **in-store growth likely slowed** given some improvement in to-home. This is not surprising, as market expectations for in-store were already muted due to Douyin competition.

**3) New initiatives accelerated:** In contrast, **New Initiatives revenue reached RMB 27.0bn,** **+21% YoY, up from +19% last quarter,** slightly above consensus. Growth was still **driven by self-operated businesses such as XiaoXiang Supermarket** and **overseas expansion of Meituan Keeta.**

Within that, **merchant services revenue** (primarily reflecting Keeta) **rose ~96% YoY,** with a slight deceleration vs. last quarter. The newly broken-out **self-operated retail revenue grew nearly 41% this quarter,** a strong pace that does not yet include the impact of consolidating Dingdong Maicai.

**4) Biggest highlight: losses narrowed more than expected:** Despite muted growth, **Meituan beat on losses,** with operating loss of RMB 6.5bn, well below the street’s ~RMB 9.0bn. Ex non-operating items, **actual losses were ~RMB 2.0bn better than expected.**

Specifically, **Core Local Commerce posted an actual loss of ~RMB 2.0bn vs. \>RMB 4.0bn expected,** the key driver of the beat. In our view at Dolphin Research, **this mainly reflects smaller-than-expected losses in to-home, rather than higher-than-expected profit in in-store.**

Our math suggests **Meituan food delivery + flash retail unit loss likely fell to RMB 1.0–1.1 per order, better than the RMB 1.4 the street expected. This widens the UE (unit economics) gap vs. Alibaba Flash Retail from ~RMB 1.6 last quarter to ~RMB 2.0,** a key positive signal.

Separately, **New Initiatives’ loss narrowed to ~RMB 2.1bn, better than the street’s ~RMB 2.6bn and a sharp improvement vs. last quarter,** driven by **efficiency gains at XiaoXiang and overseas**, and **seasonally lower investment in Q1.**

**5) Lower consumer subsidies are the core driver:** **GPM was weak, down nearly 900bps YoY and below Bloomberg consensus.** Taken with revenue dynamics, **rider and merchant reliefs (booked as contra-revenue) did not decline meaningfully.**

**Instead, sharply lower consumer coupon subsidies — captured as lower opex — drove the loss beat. Marketing expense was ~RMB 23.0bn, well below the street’s \>RMB 25.0bn, matching the ~RMB 2.0bn profit delta.**

**On other opex, R&D rose 22% YoY on continued AI-related development, while G&A rose just 10% YoY.**

**Dolphin Research view:**

From an expectations lens, Meituan’s quarter was decent. Key takeaways include:

a) To-home loss reduction beat, and the UE gap between Taobao Flash Retail and Meituan, which had narrowed for two quarters, expanded again. This implies a widening efficiency gap in Meituan’s favor, a meaningful trend signal.

b) In-store revenue growth likely continued to slow, validating market concern that Douyin is exerting greater pressure on Meituan within local in-store.

c) New Initiatives delivered solid growth and better-than-expected QoQ loss reduction. However, part of that reflects seasonal low investment in Q1, so it is not a given that losses will keep narrowing in Q2.

**2) Outlook and trends:**

**1) On-demand retail competition:** All three players in the delivery war continued to narrow losses in Q1 as consensus expected. Looking ahead, **Meituan and Alibaba are likely to push on-demand retail toward breakeven** (or at least try), which the market broadly agrees on.

**The key question is where UE settles in steady state,** while **the near-term pace of loss reduction matters less.**

The reason: on-demand retail remains a moving battlefield, where **order-level UE shifts with changes in rivals’ subsidy intensity.** As seen this quarter, when Meituan cut consumer coupons, UE improved quickly, but if competition for share heats up again in 3Q’s peak season, UE could deteriorate.

We think **share trajectory remains the metric to watch. If Meituan keeps gaining share in on-demand retail, that would signal an inflection in steady-state UE and the investment case. If shares remain tightly contested, UE will likely stay volatile, and Meituan’s moat in this vertical will not be fully rebuilt.**

**2) Is in-store becoming the bigger issue?** While the endgame in on-demand retail is unclear, competition intensity there is cooling. **Market focus has shifted to Meituan vs. Douyin in in-store.**

Management guided that in Q1, in-store hotel & travel GTV growth would slow to below 15%. **But top brokers now generally expect high single-digit growth, with further deceleration ahead.**

Meanwhile, **Douyin’s in-store hotel & travel GTV growth** varies by source, **but is still near the high-teens to double-digits** (roughly 20%–40% on pre-redemption GTV). Under current expectations, **Douyin’s in-store hotel & travel GTV could rise from slightly over 70% of Meituan’s in 2025 to nearly 100% in 2026.**

This suggests **the in-store battle may pressure share and positioning even more than the delivery war, though profit impact should be less severe.**

Renewed focus on Douyin’s threat also follows a fresh org revamp in its local services biz. The key change is **segmenting merchants by monthly GMV above or below RMB 50,000,** with larger merchants continuing on the main placement rails, **and smaller merchants shifted to offline sales coverage and growth.**

Douyin noted **SMBs lack the capital and capabilities to bid for sufficient traffic on-platform,** making offline more suitable. It can leverage **a standalone in-store app — DouShengSheng — with LBS to drive more traffic** (for nearby stores, less dependent on video-based promotion).

If executed well, **Douyin could shore up its weaker SMB coverage and LBS shelf-style in-store entry, beyond its strength with large merchants.** QuestMobile data also show Douyin’s in-store merchant MAUs have surpassed Meituan’s and the gap is widening, and the new DouShengSheng app has reached nearly 10mn DAUs within two months. This represents tangible competitive pressure for Meituan.

4) From a valuation angle, while near-term loss cuts do not strongly dictate steady-state UE, in the near to mid term, the beat on losses and the prospect that Meituan’s delivery UE could turn positive in the usual Q2 seasonal profit peak support a more neutral-to-constructive setup.

Also, reports suggest Alibaba and Douyin may materially lift AI-related capex. If so, as Meituan’s main rivals in to-home and in-store, they could dial back spending in these areas, prioritize loss reduction or monetization, and reserve more capital for AI.

Near to mid term, that could skew Meituan’s stock and valuation toward a more optimistic scenario. Assuming to-home order volume rises ~15% from current levels in steady state, with per-order UE returning to RMB 1 as guided, and in-store revenue up 10% YoY in 2026 with a 25% OPM (optimistic, and actual could be lower), total operating profit would be ~RMB 51.5bn. At 15x PE, post-tax implies HKD 124 per share.

That said, management also acknowledged that Q3/Q4 to-home UE will depend on competitive intensity, and steady-state remains uncertain. With tougher comps in 2H, to-home orders and revenue could decline YoY, and in-store visibility is even lower. The above valuation is unlikely to be fully realized and should be viewed as a take-profit zone if approached.

**Detailed earnings review follows:**

**I. Local commerce growth remains lukewarm**

Under the updated schema, **new sub-revenues comprise: a) delivery-related revenue** (the only item unchanged), **b) merchant services**, combining the former commissions and ads but not fully comparable historically, **c) self-operated retail,** accounted on a GMV basis for both revenue and cost to showcase XiaoXiang and, later, Dingdong Maicai, and **d) other.**

Post-change, it is harder to infer to-home vs. in-store within Core Local. We will rely more on management commentary from the call and share a separate short note.

Specifically, this quarter **Core Local Commerce revenue was ~RMB 64.1bn, +0.2% YoY, only in line with the street and unimpressive.**

By line item, **delivery-related revenue, a proxy for to-home, fell 6.4% YoY,** an improvement from -10% last quarter, **but not by much.** This implies **loss reduction in to-home was driven more by lower consumer couponing than by cuts to rider fee subsidies.**

With ads and commissions now combined, we can no longer triangulate in-store via growth spreads. **Merchant services came in at RMB 35.6bn, +0.2% YoY,** **and growth was broadly flat vs. last quarter’s combined 'ads+commissions'.** Given better momentum in to-home revenue, **this implies in-store revenue growth slowed QoQ** (unsurprising and in line with expectations).

**II. New initiatives continue to accelerate; Keeta and XiaoXiang performed well**

**New Initiatives revenue reached RMB 27.0bn,** **+21% YoY vs. +19% last quarter,** slightly ahead of the street. Per company disclosures, growth was **driven by self-operated businesses (XiaoXiang)** and **overseas Keeta.**

By subline, **merchant services rose ~96% YoY,** largely reflecting overseas Keeta, **with a modest decel vs. last quarter.** The separately disclosed **self-operated retail grew nearly 41% this quarter,** led by XiaoXiang (and KuaiLv), and does not yet include Dingdong Maicai consolidation.

Overall, New Initiatives growth was solid.

**III. Food delivery loss reduction beat — the biggest highlight**

Despite tepid growth, **Meituan’s loss reduction beat across the board,** with operating loss of ~RMB 6.5bn vs. ~RMB 9.0bn expected. Ex non-operating items, adjusted net loss was ~RMB 5.0bn, also better than the street’s ~RMB 6.0–7.0bn, meaning **profit was ~RMB 2.0bn above expectations.**

By segment, the beat **came from Core Local Commerce,** with **actual loss of ~RMB 2.0bn vs. \>RMB 4.0bn expected,** fully explaining the overall upside.

Given softer recent reads on in-store growth, we think **it was mainly lower-than-expected losses in to-home, rather than stronger in-store profit.**

Assuming in-store OP was just over RMB 4.0bn, **that implies delivery + flash retail loss slightly above RMB 6.0bn, a sharp improvement vs. ~RMB 14.0bn last quarter.**

Per our estimates, **Meituan delivery + flash retail unit loss fell to ~RMB 1.0–1.1 per order, beating the street’s RMB 1.4.** This means the UE gap vs. Alibaba Flash Retail widened from ~RMB 1.6 last quarter to ~RMB 2.0, a constructive sign.

At the same time, **New Initiatives loss narrowed to ~RMB 2.1bn, vs. ~RMB 2.6bn expected and ~RMB 4.65bn last quarter.** Per management, **domestic XiaoXiang and overseas efficiency improved,** and **Q1 is a low-investment, high-margin season,** so we should not simply extrapolate further loss narrowing in Q2.

**Unallocated loss was ~RMB 2.3bn, ~RMB 0.4bn above expectations and up from ~RMB 1.4bn last quarter,** partly **due to a ~RMB 0.75bn SAMR fine.**

**IV. Lower couponing is the core driver behind profit release**

**From a COGS/opex perspective:** with revenue growth uninspiring, **GPM fell nearly 900bps YoY and missed Bloomberg consensus.** Based on revenue and GP trends, **rider and merchant reliefs (contra-revenue) did not decline materially and were not the main driver.**

**Lower-than-expected opex was the key. Marketing expense was ~RMB 23.0bn, vs. \>RMB 25.0bn expected, roughly a RMB 2.0bn delta.** The run-rate also fell sharply from \>RMB 30.0bn in each of the prior two quarters. As management noted, **the Core Local profit beat mainly reflects a significant pullback in consumer coupon subsidies.**

**Elsewhere, R&D rose 22% YoY on AI feature development, while G&A rose 10% YoY. With competition still intense, cost control remains essential.** In short, the fundamental driver of the beat was a clear reduction in user couponing intensity.

<End of text\>

**Dolphin Research past work on \[Meituan\]**

**Earnings reviews:**

Nov 28, 2025 Takeaways: [**Meituan (Trans): Q3 losses likely peaked, but Q4 to remain loss-making**](https://longbridge.com/zh-CN/topics/36794593)

Nov 28, 2025 Review: [Meituan: Nearly RMB 20bn loss — did Alibaba really pull off a sneak attack?](https://longbridge.com/zh-CN/topics/36794593)

Aug 27, 2025 Review: **[**Warm-up already ate RMB 10bn of profit — is Meituan’s 'wolf' finally here?**](https://longportapp.cn/zh-CN/topics/33388315)**

Aug 27, 2025 Takeaways: [**Meituan (Trans): Guard against a sneak attack — big loss next quarter**](https://longportapp.cn/zh-CN/topics/33392554)

May 26, 2025 Review: **[**Meituan: Sunshine before the storm? Delivery war clouds are gathering**](https://longportapp.cn/zh-CN/topics/30043158)**

May 26, 2025 Takeaways: **[**Meituan (Trans): Winning at any cost — Q2 profit to drop sharply YoY**](https://longportapp.cn/zh-CN/topics/30043677)**

Mar 21, 2025 Review: **[**Meituan: The last war just ended, now chasing a 'second curve'?**](https://longportapp.cn/zh-CN/topics/28274324)**

Mar 21, 2025 Takeaways: [**Meituan (Trans): Overseas plans beyond Saudi still undecided**](https://longportapp.cn/zh-CN/topics/28275559)

**Deep dives:**

**Jun 2, 2023: [**Facing Douyin, Meituan cannot repeat Alibaba’s mistakes**](https://longportapp.cn/zh-CN/topics/6816316)**

**Dec 16, 2022: [**With reopening finally here, can Meituan reclaim the crown?**](https://longportapp.com/en/topics/3762428)**

**Sep 22, 2022: [Alibaba, Meituan, JD, PDD all concede? Still betting on big luck](https://longbridgeapp.com/topics/3457950?channel=t3457950&invite-code=276530)**

Risk disclosure and disclaimer: [Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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