Meituan saw a profit of RMB2.2 billion for the second quarter of 2020 with an increase of 152.4% YoY, compared to a profit of RMB875.8 million for the same period of 2019.
Food Delivery
For Q2 2020, GTV of its food delivery business increased by 16.9% year-over-year to RMB108.8 billion. The daily average number of food delivery transactions increased by 6.9% year-over-year to 24.5 million.
The average value per order of its food delivery business increased by 9.4% year-over-year. Monetization Rate of its food delivery business decreased to 13.4% for Q2 2020 from 13.8% for the same period of 2019.
As a result, revenues of food delivery business increased by 13.2% year-over-year to RMB14.5 billion for Q2 2020. Operating profit from its food delivery business turned to positive RMB1.3 billion for Q2 2020, compared to operating loss of RMB70.9 million for the first quarter of 2020, while operating margin turned to positive 8.6% from negative 0.7%.
Operating profit from the food delivery business increased by 65.7% year-over-year while operating margin improved by 2.7 percentage points year-over-year.
To ensure the safety of its delivery riders and consumers, among other measures, Meituan organized nucleic acid testing for all of its delivery riders in Beijing, expanded the use of “intelligent lockers” in the city, and further upgraded its contactless delivery process.
For merchants, Meituan rolled out targeted support and commission rebate programs to help them better survive the COVID-19 new cases that occurred in Beijing. Meituan also created a portal for merchants to upload their green COVID-19 testing results so as to provide consumers with extra food safety assurance.
The order volume of its food delivery business experienced positive year-over-year growth in Q2 2020 with the daily average number of food delivery transactions increasing by 6.9% year-over-year to 24.5 million.
Meituan’s online marketing services revenues experienced rapid growth in the second quarter of 2020, increased by 62.2% year-over-year.
In-store, hotel & travel
Revenues from its in-store, hotel & travel businesses decreased by 13.4% year-over-year to RMB4.5 billion in Q2 2020.
Operating profit of its in-store, hotel & travel businesses decreased by 11.9% year-over-year, but increased by 178.1% quarter-over-quarter to RMB1.9 billion in Q2 2020 while operating margin increased by 0.7 percentage points year-over-year and by 19.6 percentage points quarter-over-quarter to 41.6%.
During Q2 2020, the in-store segment continued to recover at a slower pace than the food delivery business as consumers needed more time to rebuild confidence in certain discretionary in-store consumptions.
In order to stimulate local services consumption and restore local economies, Meituan cooperated with local governments to launch the “Safe Consumption Festival” in more than 60 cities and issued e-Vouchers during this quarter.
These e-Vouchers were mainly for in-store dining initially, but Meituan has since expanded them to cover hotels, shopping, and other local services. Meituan also launched a series of promotional campaigns in Q2 2020, including Labits Day promotions, Dragon Boat Festival promotions, and June 18 Marketing Festival promotions.
Meituan kept increasing its partnership with more hotels via its “Safe Stay” program to provide travelers with accommodation options that are more conducive to their desires and the quarantine environment.
Meantime, in light of the increasing demand for intra-city and short-distance local travel, Meituan also launched the “Safe Travel” program to help expedite the recovery of the industry.
More notably, the pace of development for its high-star hotel partnerships also picked up, and Meituan established a significant increase in relationships with these types of hotels in Q2 2020 by increasing their non-lodging revenues through its “hotel + x” program. As a result, the contribution from high-end hotels further increased year-over-year.
New initiatives and others
Revenues from the new initiatives and other segments increased by 22.1% year-over-year to RMB5.6 billion in Q2 2020.
On a sequential basis, operating loss from the new initiatives and others segment expanded by 7.0% to RMB1.5 billion for the second quarter of 2020 from RMB1.4 billion for the first quarter of 2020, while operating margin improved by 6.8 percentage points to negative 25.9% for Q2 2020 from negative 32.7% for the first quarter of 2020.
Operating loss from the new initiatives and others segment narrowed by 11.3% on a year-over-year basis while operating margin improved by 9.8 percentage points year-over-year.
During Q2 2020, Meituan maintained the rapid expansion of its key businesses, especially grocery retail business. its marketplace model “Meituan Instashopping” achieved stellar revenue growth during the second quarter of 2020 on a year-over-year basis as Meituan expanded its product variety and SKU categories to significantly grow its merchant base.
“Caidaquan,” its relatively nascent fresh produce-focused brand under “Meituan Instashopping,” enabled more than 300 traditional Meituant markets to sell online and operate digitally.
Its self-operated model, “Meituan Grocery,” not only significantly expanded its coverage in key cities, such as Beijing and Shenzhen, but also began operations in new cities, such as Guangzhou, in July 2020.
During Q2 2020, Meituan also established a new business division for community group purchase services, rolling out the “Meituan Selected” service brand accordingly in Jinan, Shandong in July 2020, which offers carefully selected fresh produce and daily necessities at attractive prices for local consumers living in different communities.
Group leaders are appointed by us in each community to promote its discounted grocery products via MeituanChat groups. Group members can place orders through its Meituan WeChat Mini Program and pick up their products the next day at self-pickup points located in nearby convenience stores.
For bike-sharing services, Meituan replaced around 1.5 million old bikes with new “Meituan Bikes” during Q2 2020. The average turnover rate per bike improved incrementally and the unit economics also improved.
Additionally, Meituan launched more than 290,000 electric bikes. During this period, the average turnover rate per electric bike achieved better unit economics as compared to traditional bikes and demonstrated a clear path to independent profitability.
Financial Results
Meituan’s total revenues for Q2 2020 increased by 8.9% year-over-year to RMB24.7 billion from RMB22.7 billion for the same period of 2019.
Its operating profit improved to RMB2.2 billion in Q2 2020, with an increase by 95.5% year-over-year, while operating margin increased from 4.9% to 8.8%.
Both adjusted EBITDA and adjusted net profit experienced positive year-over-year growth and improved to RMB2.6 billion and RMB2.7 billion, respectively. Its operating cash flow also turned to positive RMB5.6 billion for Q2 2020 from negative RMB5.0 billion for the first quarter of 2020.
Meituan had cash and cash equivalents of RMB13.9 billion and short-term investments of RMB44.5 billion as of June 30, 2020, compared to the balances of RMB14.1 billion and RMB42.4 billion, respectively, as of March 31, 2020.
