Meituan, China’s leading e-commerce platform for services, saw its revenues increase by 16.4% to 50.9 billion yuan ($7.42 billion) in the second quarter of the year, according to its financial report released on August 26.
Starting from this quarter, Meituan has started to review information under a new reporting structure, and its segment reporting has been updated to conform to this change.
The first segment is core local commerce, which includes the former food delivery and in-store, hotel & travel segments, as well as Meituan Instashopping, alternative accommodations and transportation ticketing. The second segment involves new initiatives, including Meituan Select, Meituan Grocery, B2B food distribution, ride sharing, bike sharing, e-moped sharing, power banks, RMS and others.
Meituan‘s core local commerce segment achieved an operating profit of 8.3 billion yuan for the second quarter of 2022, up from 5.9 billion yuan for the same period of 2021, while the operating loss for the new initiatives segment narrowed on both year-over-year and quarter-over-quarter basis to 6.8 billion yuan for the second quarter of 2022.
Adjusted EBITDA and adjusted net profit were 3.8 billion yuan and 2.1 billion yuan for this quarter, turning from loss positions to profit positions on both year-over-year and quarter-over-quarter basis. Meituan held cash and cash equivalents of 25.5 billion yuan and short-term treasury investments of 82.0 billion yuan as of June 30, 2022.
Core local commerce segment
During the quarter, the total orders of Meituan‘s food delivery and Meituan Instashopping businesses increased by 7.6% year over year. Its food delivery business, however, was negatively impacted by the pandemic and the necessary control measures, especially in some tier-1 cities, places that usually contribute higher percentages of total food delivery order volume. Order volume was heavily affected in April and May but swiftly recovered in June as the pandemic was brought under control.
The in-store, hotel & travel business was heavily impacted by the COVID resurgence, with revenues decreasing meaningfully in the second quarter of 2022. For in-store dining, as offline operations were largely impacted in Shanghai, Beijing and many other cities, Meituan offered discounted online marketing services to temporarily closed restaurants, introduced food delivery options and self-pickup services to merchants.
For hotel & travel, the spread of Omicron and strict control measures in April and May caused a sharp decline in travel activities, and Meituan‘s domestic room nights experienced notable decreases before a gradual recovery in June. For alternative accommodations, Meituan onboarded more supplies from Airbnb after their announcement to exit the domestic Chinese market, and it guided the hosts through a smooth transition on its platform.
In the second quarter of 2022, revenues from the new initiatives segment increased 40.7% year-over-year to 14.2 billion yuan, mainly driven by growths in the retail goods businesses. Operating losses narrowed on a sequential basis to 6.8 billion yuan, while operating margin improved to negative 48.0%, primarily attributable to an improvement in operating efficiency from the retail goods businesses.
Meituan‘s research and development spending rose to 5.2 billion yuan in the second quarter, up 33% year on year. Meituan said that in the second quarter, it further increased the construction of retail infrastructure, including cold chain logistics and warehousing, and continued to increase the funding of scientific and technological R&D.