Meituan (3690) Q1 2024 earnings summary

Executive summary

• Total revenue for Q1 2024 increased by 25% year-over-year to RMB 73.3 billion, with both core local commerce and new initiatives segments contributing to growth.

• Adjusted net profit rose 36.4% to RMB 7.5 billion, and adjusted EBITDA grew 28.9% to RMB 8.1 billion.

• Operating profit increased 45.3% year-over-year to RMB 5.2 billion, with profit for the period reaching RMB 5.4 billion.

• User and merchant bases accelerated for four consecutive quarters, both reaching new highs, and transaction frequency per user rose to over 50 times annually.

• Organizational restructuring in core local commerce aims to drive synergies between on-demand delivery, in-store, hotel, and travel businesses.

Financial highlights

• Gross profit increased to RMB 25.7 billion from RMB 19.8 billion year-over-year.

• Cost of revenue ratio decreased by 1.3 percentage points year-over-year to 64.9%, driven by improved gross margin in goods retail.

• Selling and marketing expenses ratio increased to 19%, while R&D expenses ratio decreased to 6.8%.

• Total segment operating profit rose from RMB 4.4 billion to RMB 6.9 billion, with operating margin up from 6.1% to 7.5%.

• Cash and equivalents plus short-term investments totaled RMB 138.6 billion as of March 31, 2024.

Outlook and guidance

• On-demand delivery order growth in Q2 is expected to normalize due to a higher base, but operating profit is projected to increase healthily for both Q2 and the full year.

• Meituan Instashopping's order volume growth for Q2 and the full year is expected to be much higher than food delivery, possibly more than double.

• In-store, hotel, and travel business is expected to maintain strong GTV growth in 2024 and beyond, with healthy operating profit growth.

• Meituan Select's operating loss is expected to continue narrowing significantly in the second half of the year.

• Management expects continued growth in local commerce, with a focus on operational efficiency and synergies across business units.