Meituan's 2023 financial report: net profit of 13.9 billion, the highlight is not takeaway
Author/Zeng Xiantian
Editor/Lin Jiongjia
After the Hong Kong stock market on March 22, Meituan announced its 2023 Q4 and annual financial reports.
In 2023, Meituan's revenue will be 276.7 billion yuan, a year-on-year increase of 25.8%. The operating profit of the core local commercial segment was $38.7 billion, up 31.2% year-on-year, and the operating loss of new business distribution narrowed from $28.4 billion in 2022 to $20.2 billion in 2023. Other core financial indicators of Meituan's financial report were higher than market expectations across the board.
To put it simply, Meituan's traditional core businesses such as food delivery and hospitality have maintained steady growth, while the losses of new businesses such as community group buying have narrowed to a certain extent. Under the comprehensive effect, Meituan not only reversed the dilemma of a huge loss of 6.7 billion yuan in 2022, but also made a net profit of 13.9 billion yuan in 2023.
From the perspective of business lines, in addition to traditional basic markets such as takeaway and group buying, Meituan Wine Travel and Flash Delivery are the two highlights worth paying attention to in this financial report.
1. The recovery of the wine and tourism market is a catalyst
The wine and tourism market in 2023 will be lively from the beginning of the year to the end of the year. Zibo barbecue, Guizhou village super, Chengdu World Games, Harbin in winter...... The relay of major cities has exploded, driving the rapid growth of the domestic cultural tourism market.
According to data released by the Ministry of Culture and Tourism, the number of domestic trips will reach 4.891 billion in 2023, an increase of 2.361 billion over the same period of the previous year and a year-on-year increase of 93.3%. In 2023, the total travel expenditure of domestic tourists will be 4.91 trillion yuan, an increase of 2.87 trillion yuan over the previous year and a year-on-year increase of 140.3%.
Meituan has focused on taking root in China for many years, and its business has not yet expanded overseas. The first recovery of the domestic tourism market in 2023 has brought more benefits to Meituan.
According to Meituan's financial report, the rebound of offline consumption has made the transaction value of the platform's in-store, hotel and tourism business in 2023 increase by more than 100% year-on-year, the annual transaction users will increase by more than 30% year-on-year, and the annual active merchants will increase by more than 60% year-on-year.
In fact, this kind of growth data was reflected in some of the tourism booms last year. In April 2023, Meituan announced a series of growth data for its Shandong market. In the first quarter of the Zibo barbecue explosion, the overall travel orders of Shandong Province on the Meituan platform increased by 45% year-on-year, of which the number of accommodation orders including hotels and homestays increased by 25.5% year-on-year, and the number of vacation ticket orders increased by 74.6%.
In addition to tourism and local consumption, the skyrocketing price of merchants is also a part that needs to be paid attention to. For example, during the "Zibo Barbecue" fire, the number of Zibo barbecue merchants on the Meituan platform increased by 2.3 times month-on-month within a month, and these new merchants were distributed all over the country.
The growth of the merchant side also led to a sharp increase in order volume and transaction volume, when the order volume of Zibo barbecue was more than 4 times that of the same period of the previous year, and the transaction volume increased by more than 6 times year-on-year. An explosive cultural and tourism hotspot event has benefited Meituan's entire trading pool, and this driving effect is also true in subsequent events such as Guizhou Village Super and Harbin in winter.
Meituan pointed out in its financial report that in 2023, it will strengthen its merchant resources in the field of hospitality and tourism, and enhance its supply and fulfillment capabilities. On the marketing side, it combines live broadcast and shelf models to create as many user touchpoints and popular cases as possible. In addition, through the combination of high-frequency catering and in-store services, combined with low-frequency tourism, and the formation of various package products to expand sales, the business data of domestic hotel transaction value increased by more than 100% year-on-year.
Relying on the recovery of the macro tourism market, the hospitality business has played a role in Meituan's financial report. Meituan's rider delivery system is still the cornerstone of financial growth. Meituan's financial report shows that the number of instant delivery orders will reach 21.9 billion in 2023, a year-on-year increase of 24%. However, Meituan only said that the annual active merchants of food delivery reached a new high, and the annual transaction users of food delivery continued to grow, but did not disclose the specific digital scale.
Overall, in 2023, Meituan's core local business segment will have revenue growth of 29% to RMB206.9 billion, and operating profit of RMB38.7 billion, up 31% year-on-year. From the perspective of horizontal market comparison, Meituan has been able to maintain its current growth rate on the basis of its huge scale, indicating that the diversion effect of its competitor Douyin is not obvious.
However, it is worth noting that at present, Douyin's focus is mainly concentrated in the field of local life, that is, the in-store group buying market, and it has not yet been deeply rooted in business lines such as tourism, hotels, and takeaways. The moment of Meituan's competitive barriers has not really arrived, and there are naturally no traces of influence on the financial report data.
2. Flash sales, grabbing e-commerce business
In its earnings report, Meituan highlighted the development of the flash sale business. The so-called flash sale can be understood as Meituan's copying of the service capabilities of the takeaway delivery system from the catering field to other commodity markets. This is another line of business that differentiates itself from food delivery. To put it simply, users can place a single mobile phone at Meituan, and the flash sale will be delivered to them in about half an hour, which eliminates the waiting time for e-commerce logistics in "days".
In 2023, flash sales orders increased by 40% year-on-year, and annual active merchants increased by nearly 30% year-on-year. Meituan has partnered with about 400 brands to offer new online distribution channels. The "Meituan Lightning Warehouse" serving flash sales has covered more than 200 cities. Meituan is also strengthening its one-stop service system through flash sales, such as providing users with one-stop services such as online diagnosis, drug prescribing, and flash sale delivery.
Meituan also cited the example of 11.11 in 2023. During the Double 11 period, Meituan Flash Sale united 800,000 offline physical stores to create various marketing activities. The number of participating products increased by 123% year-on-year, covering digital home appliances, beauty and personal care, department stores and apparel, and other categories, with sales hitting a new high. Obviously, Meituan's flash sale diverts the order flow of traditional e-commerce, and uses Meituan's unique takeaway logistics system to greatly shorten the logistics delivery time when the goods and categories are the same, so as to attract users who originally placed orders on e-commerce platforms to the Meituan platform.
In its financial report, Meituan believes that the development strategy of the flash sale business has worked. Compared with general food delivery users, Meituan Flash Sale has a higher stickiness and purchasing power, and most of them are young users. Meituan said that through continuous observation, it found that the purchase frequency and consumption amount of flash sale users are in a growing trend.
When elaborating on its 2024 strategy, Meituan also emphasized that it will continue to cultivate in the instant delivery industry. Because Meituan firmly believes that 30 minutes of everything at home will become the next trend of the times. In other words, it will also be a moat that Meituan can dig deepest.
In terms of new business, Meituan is still losing money, but it has abandoned its aggressive attitude of "not hesitating to burn money to change the market" in the early days, and instead acknowledged the difficulties of market competition, and has continuously made strategic adjustments and transformations. Meituan pointed out in its financial report that Meituan's community e-commerce business "Meituan Preferred" is still part of the online "grocery" strategy, but Meituan also admitted that it is more difficult to take root in this market than expected. The core of the strategic adjustment in 2024 is to improve the business model and significantly reduce the operating loss.
Meituan's front-end community group buying business, Meituan Grocery has been upgraded to Xiaoxiang Supermarket, no longer focusing on the price war in the field of fresh grocery shopping, but using a larger product system to improve user stickiness and sales, as well as optimizing the supply chain, reducing fulfillment costs, and improving operational efficiency. It is not difficult to find that the adjustments are aimed at reducing losses.
The numbers speak for themselves. In 2023, Meituan's new business segment revenue increased by 18.0% year-on-year to RMB69.8 billion. The operating loss narrowed to RMB20.2 billion, and the operating loss ratio improved to 28.9%. Meituan emphasized that the main reason for the optimization of financial report data was the improvement in the operational efficiency of all businesses in the new business segment.
In terms of capital chain and cash reserves, Meituan has always maintained an abundant capital pool. According to the financial report, as of December 31, 2023, Meituan held cash and cash equivalents of 33.3 billion yuan, and short-term wealth management investment was 111.8 billion yuan.