---
title: "MEITUAN conference call: Future goal is to significantly reduce losses"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/200476505.md"
description: "Meituan stated that it plans to increase the markup on goods in the future and reduce subsidies, focusing more on the long-term growth of natural user retention rates"
datetime: "2024-03-22T13:53:38.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/200476505.md)
  - [en](https://longbridge.com/en/news/200476505.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/200476505.md)
---

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# MEITUAN conference call: Future goal is to significantly reduce losses

On March 22, MEITUAN released its fourth-quarter financial report, with revenue slightly exceeding expectations, net profit turning around year-on-year, and narrowing losses in new businesses.

According to the financial report, MEITUAN achieved a revenue of 73.70 billion yuan in the quarter, compared to 62.62 billion yuan in the same period last year, a year-on-year increase of 22.6%, surpassing market expectations of 72.7 billion yuan. Net profit was 2.2 billion yuan, compared to a loss of 1.1 billion yuan in the same period last year. Last year, MEITUAN's instant delivery orders grew by 24% to 21.9 billion, while flash purchase orders continued to grow, with an annual order growth rate of over 40%.

The core local business maintained stability, with a 2.1% decrease in profit margin year-on-year. At the same time, losses in new businesses narrowed, but MEITUAN's preferred growth rate slowed down. Sales and marketing costs increased, while research and development expenses remained stable.

During the subsequent earnings conference call, MEITUAN's management stated that the company is focusing on price-sensitive user groups and investing more in high-value orders. Last year, MEITUAN's instant shopping order volume grew by over 40% year-on-year, demonstrating significant growth potential.

Furthermore, MEITUAN stated that the company will continue to consolidate its competitive model, providing greater value to consumers and merchants. They are confident in the online penetration potential of service retail and are committed to promoting the digital transformation of local services, with significant online penetration potential in lower-tier cities and various new categories.

The following is a transcript of the Q&A session:

**Question 1: The company recently announced changes in its organizational structure. Could the management share more information about this change? Specifically, how will the various business segments achieve more synergy?**

Answer: The company has made organizational adjustments to improve operational efficiency and user experience. After the adjustment, on one hand, business teams can collaborate more closely to provide better services to merchants and enhance operational efficiency. On the other hand, the integration of business teams helps better identify consumer needs, strengthen product and pricing competitiveness, and improve consumer experience. In addition, the organizational changes aim to enhance operational efficiency through platform integration and R&D consolidation to realize cost synergy.

(In February this year, MEITUAN announced a new organizational structure adjustment in an internal memo, integrating the on-demand business group, on-site business group, MEITUAN platform, basic R&D, etc., in the core local business. In March, MEITUAN announced a new round of business leader rotation appointment plan through an internal memo.)

**Question 2: How did the performance of on-site, hotel, and travel businesses fare last year? Since expanding to lower-tier cities in the fourth quarter, there has been a noticeable decrease in operating profit margins. How does the company evaluate the ROI of this investment? What are the growth, profit prospects, and competitive landscape for the hotel and travel business in 2024 and the medium to long term?** Answer: The company is excited about the growth of its offline business, especially the rapid increase in online penetration rate. We have not only deepened our merchant partnerships and shared base model, but also rapidly developed live streaming capabilities to meet the growing demand. In addition, we have launched a special discount section to create a market of price competition.

Last year, we replaced the agent operation model in lower-tier cities with a nationwide operation model. This strategic move has allowed us to effectively understand the merchants and consumer groups in these areas and seize the opportunity of digital transformation. These investments may impact our short-term profitability, but the overall investment return will greatly benefit our long-term business.

The growth rate of the company's GTV in 2023 will exceed expectations, and revenue growth is also as expected. During the Spring Festival, the hotel and tourism business continued to reach new highs, with a daily average year-on-year growth of 36% during the holiday period, exceeding 150% compared to 2019.

We believe that the GTV of the tourism business will maintain high growth in 2024, and the industry's medium to long-term growth will continue to benefit from the increase in online penetration rate and changing consumption trends. Short-term profit fluctuations only reflect the results of our long-term strategic investments, and we remain confident in the long-term revenue growth potential and profitability of our offline, hotel, and tourism businesses.

Question 3: Can the management share some information about the new initiatives in 2024 and how to improve profitability or reduce losses? For MEITUAN Selected, how much will the reduction in losses be?

Answer: Despite macro headwinds and consumers reconsidering returning to offline channels, we have worked very hard but still incurred significant losses. The growth of MEITUAN Selected is slower than expected, making it difficult to significantly reduce operating costs. The second reason is competition, which makes it challenging to raise prices and reduce subsidies.

We will make strategic adjustments to improve the business model with the goal of significantly reducing operating losses. Instead of focusing on expanding scale and market share, we will prioritize building core competitiveness and improving user experience. In the future, we plan to increase product markups and reduce subsidies, focusing more on the long-term growth of natural user retention rates.

Question 4: What should we expect in terms of future development plans for global expansion and technology?

Answer: The company started late in globalization but has launched food delivery services in Hong Kong and introduced the KeeTa brand. It has been less than a year since its establishment, and the business is doing well, with growth on track. The results are considered quite positive, and the company is evaluating opportunities in other markets. The company believes that the expertise accumulated in technology and operations will help with global expansion.

At the same time, the company is investing in drones and autonomous vehicles, believing that these technologies will become part of future urban infrastructure, although this requires years of continuous investment and experimentation. I believe autonomous delivery is very important, and in order to increase the penetration rate of online groceries in the future, we must find a better new way, hopefully with the help of technology.

Question 5: We saw MEITUAN start repurchasing shares in January, are there plans to further expand the buyback this quarter? Answer: The company is committed to enhancing long-term total shareholder returns through a combination of different capital allocation options. The company initiated a stock repurchase in January, spending nearly HKD 400 million. The company plans to continue executing the existing stock repurchase program and may adjust the repurchase plan as needed. We believe there are still many potential investment areas in our core business, and we consider the current stock price to be severely undervalued.

Internally, we prioritize capital allocation in areas that meet high-quality ROI requirements, followed by strengthening areas that enhance our competitive strength. We focus on generating substantial free cash flow growth through these investments.

Externally, we cautiously evaluate investment opportunities that bring meaningful strategic value to our core business, helping us capture new growth opportunities in the ecosystem. If we believe there are no good short-term investment opportunities and we have sufficient liquidity to fund the business, we will regularly assess returning capital to shareholders, with stock repurchases being our preferred method to increase shareholder returns

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