Business
Meituan : Annual Report (2025-04-28)
Meituan : Annual Report
About this update from Meituan Class B
Meituan (A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability) HKD Counter Stock Code: 3690 RMB Counter Stock Code: 83690 Corporate Information 2 Financial Summary Chairman's Statement 6 10 Management Discussion and Analysis 14 Directors and Senior Management 38 Report of Directors 44 Corporate Governance Report 89 Environmental, Social and Governance Report Independent Auditor's Report 123 197 Consolidated Income Statement 203 Consolidated Statement of Comprehensive Income 204 Consolidated Statement of Financial Position 205 Consolidated Statement of Changes in Equity 207 Consolidated Statement of Cash Flows 210 Notes to the Consolidated Financial Statements 212 Definitions 336 Glossary 344 CONTENTS 2 Meituan 2024 Annual Report CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Mr. Wang Xing ( 王興 ) (Chairman and Chief Executive Officer) Mr. Mu Rongjun ( 穆榮均 ) Independent Non-executive Directors Mr. Orr Gordon Robert Halyburton Mr. Leng Xuesong ( 冷雪松 ) Dr. Shum Heung Yeung Harry ( 沈向洋 ) Ms. Yang Marjorie Mun Tak ( 楊敏德 ) AUDIT COMMITTEE Mr. Orr Gordon Robert Halyburton (chairman) Mr. Leng Xuesong ( 冷雪松 ) Dr. Shum Heung Yeung Harry ( 沈向洋 ) Ms. Yang Marjorie Mun Tak ( 楊敏德 ) (appointed on March 22, 2024) REMUNERATION COMMITTEE Mr. Leng Xuesong ( 冷雪松 ) (chairman) Dr. Shum Heung Yeung Harry ( 沈向洋 ) Mr. Mu Rongjun ( 穆榮均 ) NOMINATION COMMITTEE Mr. Leng Xuesong ( 冷雪松 ) (chairman) Dr. Shum Heung Yeung Harry ( 沈向洋 ) CORPORATE GOVERNANCE COMMITTEE Mr. Leng Xuesong ( 冷雪松 ) (chairman) Dr. Shum Heung Yeung Harry ( 沈向洋 ) Mr. Orr Gordon Robert Halyburton JOINT COMPANY SECRETARIES Ms. Xu Sijia ( 徐思嘉 ) Ms. Lau Yee Wa ( 劉綺華 ) AUTHORIZED REPRESENTATIVES Mr. Wang Xing ( 王興 ) Mr. Mu Rongjun ( 穆榮均 ) AUDITOR PricewaterhouseCoopers Certified Public Accountants and Registered PIE Auditor 22/F, Prince's Building Central Hong Kong REGISTERED OFFICE PO Box 309, Ugland House Grand Cayman, KY1-1104 Cayman Islands HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN CHINA Block B&C, Hengjiweiye Building No. 4 Wang Jing East Road Chaoyang District Beijing 100102 China Meituan 2024 Annual Report 3 CORPORATE INFORMATION PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 1912, 19/F Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong LEGAL ADVISORS As to Hong Kong law: Davis Polk & Wardwell 10/F, The Hong Kong Club Building 3A Chater Road Central Hong Kong As to the PRC law: Han Kun Law Offices Beijing office 9/F, Office Tower C1 Oriental Plaza No. 1 East Chang An Ave Beijing 100738, the PRC As to Cayman Islands law: Maples and Calder (Hong Kong) LLP 26th Floor, Central Plaza 18 Harbour Road, Wanchai Hong Kong COMPLIANCE ADVISOR Guotai Junan Capital Limited 27/F, Low Block Grand Millennium Plaza 181 Queen's Road Central Hong Kong HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen's Road East Wanchai Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall Cricket Square Grand Cayman KY1-1102 Cayman Islands PRINCIPAL BANKER China Merchants Bank, Beijing Branch Shouti Sub-branch 1/F, Tengda Building No. 168 Xizhimenwai Street Haidian District Beijing China STOCK CODES 3690 (HKD counter) 83690 (RMB counter) STOCK SHORT NAMES 美团 -W (HKD counter) MEITUAN-W (HKD counter) 美团 -WR (RMB counter) MEITUAN-WR (RMB counter) COMPANY'S WEBSITE about.meituan.com 4 Meituan 2024 Annual Report CORPORATE INFORMATION WEIGHTED VOTING RIGHTS The Company is controlled through weighted voting rights. Each Class A Share has 10 votes per share and each Class B Share has one vote per share except with respect to resolutions regarding a limited number of Reserved Matters, where each Share has one vote. The Company's WVR Structure enables the WVR Beneficiaries to exercise voting control over the Company notwithstanding the WVR Beneficiaries do not hold a majority economic interest in the share capital of the Company. This allows the Company to benefit from the continuing vision and leadership of the WVR Beneficiaries who control the Company with a view to its long-term prospects and strategy. Shareholders and prospective investors are advised to be aware of the potential risks of investing in companies with WVR Structures, in particular that interests of the WVR Beneficiaries may not necessarily always be aligned with those of the Shareholders as a whole, and that the WVR Beneficiaries will be in a position to exert significant influence over the affairs of the Company and the outcome of Shareholders' resolutions, irrespective of how other Shareholders vote. Shareholders and prospective investors should make the decision to invest in the Company only after due and careful consideration. As at the date of this annual report (i.e. March 21, 2025), the WVR Beneficiaries are Wang Xing and Mu Rongjun. Wang Xing beneficially owned 515,869,783 Class A Shares, representing approximately 45.55% of the voting rights in the Company with respect to Shareholders' resolutions relating to matters other than the Reserved Matters. The Class A Shares beneficially owned by Wang Xing are held by (i) Crown Holdings, a company indirectly wholly owned by a trust established by Wang Xing (as settlor) for the benefit of Wang Xing and his family; and (ii) Shared Patience, a company directly wholly owned by Wang Xing. Mu Rongjun beneficially owned 63,569,388 Class A Shares, representing approximately 5.61% of the voting rights in the Company with respect to Shareholders' resolutions relating to matters other than the Reserved Matters. The Class A Shares beneficially owned by Mu Rongjun are held by Charmway Enterprises, a company indirectly wholly owned by a trust established by Mu Rongjun (as settlor) for the benefit of Mu Rongjun and his family. Class A Shares may be converted into Class B Shares on a one to one ratio. As at the date of this annual report, upon the conversion of all the issued and outstanding Class A Shares into Class B Shares, the Company will issue 579,439,171 Class B Shares, representing approximately 10.48% of the total number of issued Class B Shares as at the date of this annual report. Meituan 2024 Annual Report 5 CORPORATE INFORMATION The weighted voting rights attached to our Class A Shares will cease when none of the WVR Beneficiaries have beneficial ownership of any of our Class A Shares, in accordance with Listing Rule 8A.22. This may occur: upon the occurrence of any of the circumstances set out in Listing Rule 8A.17, in particular where a WVR Beneficiary is: (1) deceased; (2) no longer a member of the Board; (3) deemed by the Stock Exchange to be incapacitated for the purpose of performing his duties as a director; or (4) deemed by the Stock Exchange to no longer meet the requirements of a director set out in the Listing Rules; when the Class A Shareholders have transferred to another person the beneficial ownership of, or economic interest in, all of the Class A Shares or the control over the voting rights attached to them, other than in the circumstances permitted by Listing Rule 8A.18; where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule 8A.18(2); or when all of the Class A Shares have been converted to Class B Shares. 6 Meituan 2024 Annual Report FINANCIAL SUMMARY CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended December 31, 2020 2021 2022 2023 2024 (RMB in thousands) Revenues 114,794,510 179,127,997 219,954,948 276,744,954 337,591,576 Gross profit 34,050,142 42,474,128 61,752,979 97,191,161 129,784,594 Profit/(loss) before income tax 4,437,875 (23,566,477) (6,755,517) 14,021,868 37,985,429 Profit/(loss) for the year Profit/(loss) for the year attributable to equity holders of the Company 4,707,612 4,708,313 (23,536,198) (23,538,379) (6,685,323) (6,686,110) 13,857,331 13,855,828 35,808,322 35,807,179 Total comprehensive income/(loss) for the year 1,728,980 (25,036,620) (6,129,362) 14,224,686 37,668,130 Total comprehensive income/(loss) for the year attributable to equity holders of the Company 1,729,681 (25,038,801) (6,130,149) 14,223,183 37,666,987 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of December 31, 2020 2021 2022 2023 2024 (RMB in thousands) ASSETS Non-current assets 78,268,647 92,824,592 101,335,725 109,913,453 114,620,056 Current assets 88,306,155 147,828,677 143,145,467 183,116,179 209,734,861 Total assets 166,574,802 240,653,269 244,481,192 293,029,632 324,354,917 EQUITY Equity attributable to equity holders of the Company 97,693,027 125,613,442 128,761,610 152,013,207 172,662,960 Non-controlling interests (58,752) (56,680) (55,893) (56,840) (58,882) Total Equity 97,634,275 125,556,762 128,705,717 151,956,367 172,604,078 LIABILITIES Non-current liabilities 17,792,886 46,503,550 39,345,378 40,199,170 43,815,199 Current liabilities 51,147,641 68,592,957 76,430,097 100,874,095 107,935,640 Total liabilities 68,940,527 115,096,507 115,775,475 141,073,265 151,750,839 Total equity and liabilities 166,574,802 240,653,269 244,481,192 293,029,632 324,354,917 Meituan 2024 Annual Report 7 FINANCIAL SUMMARY FINANCIAL INFORMATION BY SEGMENT Unaudited Three Months Ended December 31, 2024 Core local commerce New initiatives Unallocated items 1 Total (RMB in thousands) Revenues: Delivery services 26,194,820 - - 26,194,820 Commission 24,066,077 902,420 - 24,968,497 Online marketing services 12,842,276 108,230 - 12,950,506 Other services and sales (including interest revenue) 2,463,659 21,909,814 - 24,373,473 Total revenues 65,566,832 22,920,464 - 88,487,296 Cost of revenues, operating expenses and unallocated items (52,666,505) (25,096,478) (4,030,814) (81,793,797) Operating profit/(loss) 12,900,327 (2,176,014) (4,030,814) 6,693,499 Unaudited Three Months Ended December 31, 2023 Core local commerce New initiatives Unallocated items Total (RMB in thousands) Revenues: Delivery services 21,927,023 - - 21,927,023 Commission 19,426,729 569,576 - 19,996,305 Online marketing services 10,907,096 76,905 - 10,984,001 Other services and sales (including interest revenue) 2,869,794 17,918,828 - 20,788,622 Total revenues 55,130,642 18,565,309 - 73,695,951 Cost of revenues, operating expenses and unallocated items (47,111,217) (23,398,001) (1,428,599) (71,937,817) Operating profit/(loss) 8,019,425 (4,832,692) (1,428,599) 1,758,134 1 Unallocated items mainly include (i) share-based compensation expenses, (ii) amortisation of intangible assets resulting from acquisitions, (iii) fair value changes of other financial investments at fair value through profit or loss, (iv) certain items in other gains/(losses), net, and (v) certain corporate administrative expenses and other items. They are not allocated to individual segments. 8 Meituan 2024 Annual Report FINANCIAL SUMMARY Year-over-year change (Percentages %) Revenues: Delivery services 19.5 NA NA 19.5 Commission 23.9 58.4 NA 24.9 Online marketing services 17.7 40.7 NA 17.9 Other services and sales (including interest revenue) (14.2) 22.3 NA 17.2 Total revenues 18.9 23.5 NA 20.1 Cost of revenues, operating expenses and unallocated items 11.8 7.3 182.2 13.7 Operating profit/(loss) 60.9 (55.0) 182.2 280.7 Core local commerce New initiatives Unallocated items Total Year Ended December 31, 2024 Core local commerce New initiatives Unallocated items Total (RMB in thousands) Revenues: Delivery services 98,065,260 - - 98,065,260 Commission 92,288,620 3,052,336 - 95,340,956 Online marketing services 48,836,066 404,326 - 49,240,392 Other services and sales (including interest revenue) 11,057,550 83,887,418 - 94,944,968 Total revenues 250,247,496 87,344,080 - 337,591,576 Cost of revenues, operating expenses and unallocated items (197,832,334) (94,617,394) (8,296,892) (300,746,620) Operating profit/(loss) 52,415,162 (7,273,314) (8,296,892) 36,844,956 Meituan 2024 Annual Report 9 FINANCIAL SUMMARY Core local New Unallocated commerce initiatives items Total Year Ended December 31, 2023 (RMB in thousands) Revenues: Delivery services 82,190,980 - - 82,190,980 Commission 74,630,737 2,057,806 - 76,688,543 Online marketing services 40,266,890 246,326 - 40,513,216 Other services and sales (including interest revenue) 9,818,325 67,533,890 - 77,352,215 Total revenues 206,906,932 69,838,022 - 276,744,954 Cost of revenues, operating expenses and unallocated items (168,208,085) (90,004,506) (5,116,976) (263,329,567) Operating profit/(loss) 38,698,847 (20,166,484) (5,116,976) 13,415,387 Year-over-year change Core local commerce New initiatives Unallocated items Total (Percentages %) Revenues: Delivery services 19.3 NA NA 19.3 Commission 23.7 48.3 NA 24.3 Online marketing services 21.3 64.1 NA 21.5 Other services and sales (including interest revenue) 12.6 24.2 NA 22.7 Total revenues 20.9 25.1 NA 22.0 Cost of revenues, operating expenses and unallocated items 17.6 5.1 62.1 14.2 Operating profit/(loss) 35.4 (63.9) 62.1 174.6 10 Meituan 2024 Annual Report CHAIRMAN'S STATEMENT To our Shareholders: 2024 was an important year for Meituan to adapt to the evolving consumption trends and facilitate industry transformation. As a leading platform in local services, we explored new growth opportunities through industry innovations, and brought changes to consumers' daily lives and merchants' business operation. As we maintained steady growth in all our core business areas, we also helped unleash consumer demand in the local service domain. Additionally, we actively expanded into the overseas markets, and continued to drive innovations and apply advanced technologies in the on-demand delivery space. In the long run, we believe technology will continue to transform the retail industry, and will help us better fulfill our mission that "we help people eat better, live better". COMPANY FINANCIAL HIGHLIGHTS For the full year of 2024, our revenues increased by 22.0% to RMB337.6 billion from RMB276.7 billion in 2023. Our total segment operating profit increased by 143.6% from RMB18.5 billion in 2023 to RMB45.1 billion in 2024, and the total segment operating margin increased from 6.7% to 13.4%, on a year-over-year basis. Our Core local commerce segment achieved an operating profit of RMB52.4 billion in 2024, which increased by 35.4% from RMB38.7 billion in 2023. Meanwhile, the operating loss for our New initiatives segment narrowed to RMB7.3 billion in 2024 from RMB20.2 billion in 2023. Our profit for the year was RMB35.8 billion in 2024, representing a 158.4% year-on-year growth. Our adjusted EBITDA and adjusted net profit increased to RMB49.1 billion and RMB43.8 billion in 2024, respectively. We also achieved an operating cash inflow of RMB57.1 billion in 2024. We held cash and cash equivalents of RMB70.8 billion and short-term treasury investments of RMB97.4 billion as of December 31, 2024. COMPANY BUSINESS HIGHLIGHTS Core local commerce For the full year of 2024, revenue for the Core local commerce segment increased by 20.9% year over year to RMB250.2 billion, thanks to further online penetration and strong consumer demand. Operating profit increased by 35.4% year over year to RMB52.4 billion, and operating margin improved to 20.9%, up from 18.7% in 2023, thanks to the high-quality growth and efficiency improvement across all businesses. For the fourth quarter of 2024, revenue for the Core local commerce segment increased by 18.9% year over year to RMB65.6 billion. Operating profit increased by 60.9% year over year to RMB12.9 billion, with operating margin improving year over year to 19.7%. Meituan 2024 Annual Report 11 CHAIRMAN'S STATEMENT In 2024, on-demand delivery business experienced steady growth. Nowadays, food delivery has become an important growth driver for the catering industry, and on-demand retail has become an indispensable component of the retail industry. We have adapted to the evolving consumption trends and fortified the "value-for-money" mindshare of our consumers, thereby cultivating a more efficient and inclusive ecosystem. We delved into supply chain innovations and refined our operations to address the diverse demand from consumers. Our new supply models brought new growth opportunities for merchants, enabling them to weather external challenges. Through Pin Hao Fan (" 拼好飯 "), a large number of restaurant merchants managed to boost their sales and attracted new customers. In the meantime, consumers were presented with more affordable food delivery options. We further expanded the supply, enhanced food safety control, and enhanced the user experience of Pin Hao Fan, which incentivized consumer demand under more scenarios and lifted consumer purchase frequency. The Branded Satellite Store (" 品牌衛星店 ") served as a cost-efficient expansion avenue for branded restaurants. By leveraging merchants' branding assets and adopting a more favorable cost structure, these Branded Satellite Stores offer consumers high-quality options at more affordable prices compared to in-store dining. We also enhanced our product assortment for Shen Qiang Shou (" 神搶手 "), better catering to consumer demand for quality products. Moreover, Meituan InstaMart (" 美团閃電倉 ") experienced remarkable growth throughout 2024, especially in lower-tier markets. It has emerged as an important new growth channel for a wide array of retailers. Many large traditional retailers actively embraced the Meituan InstaMart model. It complements traditional offline retail supply and enhances the convenience of on-demand retail, which further stimulates consumer demand. On-demand retail has now firmly established itself as a new lifestyle, characterized by a high level of certainty. We also continued to improve our services across different on-demand delivery categories. For example, consumers can enjoy one-stop services covering home testing, online diagnosis, medical insurance payment and on-demand delivery when purchasing medicines on our platform. As our on-demand delivery business grows, we remain steadfast in our commitment to cultivating a sustainable ecosystem. On the merchant front, we streamlined our promotional schemes, standardized marketing activities, enhanced food safety management and improved the governance over malicious negative reviews. We also launched a RMB1 billion merchant support program in the fourth quarter. By offering cash support and platform subsidies, we aim to help merchants improve their service quality, optimize efficiency, and explore innovations. Regarding couriers, enhancing their rights and benefits and improving their work experience are our top priorities. Under the guidance of government authorities, we have accumulatively provided RMB1.4 billion in occupational injury insurance for all the couriers in seven pilot provinces and cities since July 2022. Moreover, we implemented a series of courier-friendly measures. These include the introduction of anti-fatigue features in our system and providing special caring and accommodations for deaf and hearing-impaired couriers. Additionally, we have provided support to the family members of numerous couriers who are facing major illnesses or are in need of educational aid. Looking ahead, we will continue to invest in the ecosystem to drive the sustainable development of the industry. Specifically, through in-depth research and under the guidance of relevant authorities, we have come up with a pilot plan for couriers' social security. We expect to start rolling it out in some cities in the second quarter of 2025. 12 Meituan 2024 Annual Report CHAIRMAN'S STATEMENT In 2024, our in-store business posted stellar growth. The order volume soared by over 65%, and both annual Transacting Users and annual Active Merchants reached new highs. Following our organizational restructuring, we have integrated resources across different business lines. This integration has enabled us to provide merchants with an augmented business infrastructure and traffic support. By leveraging Special Deals (" 特價團購 "), live-streaming events, and theme-based campaigns, we were able to offer merchants more customized, diversified, and efficient marketing tools. In addition, we provided merchants with a suite of digital tools and services. These offerings are designed to enhance operations and help them accumulate digital assets. Moreover, our upgraded Shen Hui Yuan (" 神會員 ") membership program has effectively directed high-quality food delivery user traffic to in-store merchants. As a result, marketing efficiency of the participating merchants has been improved, and their transaction volumes have increased notably. Our strengthened supply-side advantages have consistently enhanced consumer mindshare. During 2024, we actively capitalized on consumer demand in leisure and entertainment services at more affordable prices. Leveraging our extensive offerings, strong brand awareness and high-quality services, we continuously expanded into new categories and effectively stimulated consumption. To capture the emerging trend of the county economy, we accelerated our penetration into lower-tier markets. We streamlined the merchant onboarding process for small and medium-sized merchants and facilitated their online operations through our easier-to-use operating toolkits. Furthermore, through our tailored Special Deals sessions, we enhanced our offerings in group-buy deals and packaged products. These strategies have driven notable growth for our in-store businesses in the lower-tier markets. In the hotel and travel business, during 2024, we witnessed strong consumer demand with evolving travel preferences. Thanks to our early establishment in lower-tier markets and low-star hotels, we further strengthened our collaborations with industry partners and enhanced our product diversity and price attractiveness. Additionally, leveraging our platform capabilities, we effectively realized cross-sells. We also integrated our resources with other categories to improve our Hotel+X packaged deals. These packaged deals were designed to more comprehensively address all aspects of consumers' travel-related needs, encompassing transportation, dining, and entertainment. In the low-star hotel domain, we leveraged Shen Hui Yuan (" 神會員 ") and other programs to accurately direct user traffic to the hotel merchants. We also provided merchants with comprehensive online tools and room renovation solutions. As for high-star hotels, we deepened our collaborations with hotel groups through joint membership and joint marketing programs. Notably, several leading hotel brands have actively engaged with us in Shen Hui Yuan. Meituan 2024 Annual Report 13 CHAIRMAN'S STATEMENT New initiatives In 2024, revenues from the New initiatives segment increased by 25.1% year over year to RMB87.3 billion. Operating loss narrowed to RMB7.3 billion, while operating margin improved to negative 8.3%, primarily attributable to improvement in operational efficiency across all businesses in this segment. For the fourth quarter of 2024, revenues from the New initiatives segment increased by 23.5% year over year to RMB22.9 billion. Operating loss for the segment narrowed by 55.0% year over year to RMB2.2 billion. Operating margin improved year over year to negative 9.5%. In 2024, we continued to refine our operations in grocery retail as well as software and hardware services, thereby achieving a substantial enhancement in operational efficiency. We solidified our market position across the majority of our new initiatives, such as B2B food distribution services, bike sharing, e-moped sharing, restaurant SaaS, and power bank services. These initiatives further strengthened our ecosystem, enhanced both consumer and merchant engagement, and are expected to unlock greater financial value in the future. In addition, we accelerated our exploration of overseas markets. After launching in Riyadh last October, we further expanded Keeta to all the major cities in Saudi Arabia, with user base and order volume growing rapidly. In the long run, we will continue to deliver high-quality products and services to consumers and merchants in more regions globally, and help more people eat better, live better. COMPANY OUTLOOK AND STRATEGY FOR 2025 Looking ahead, we remain committed to advancing the digital transformation of the industry, empowering merchant operations, and unleashing consumer demand. As we continue to execute the "Retail + Technology" corporate strategy, we will expand our investments in cutting-edge technologies and the relevant applications, such as AI, unmanned aerial delivery, and autonomous delivery vehicles. In the long run, we are convinced that technology will continue to transform the retail industry. As the industry leader, we are also dedicated to fulfilling our social responsibilities by creating employment opportunities, improving courier welfare, and promoting the sustainable development of the local service ecosystem. Our objective is not merely to drive industry growth and technological innovations but also to make contributions to society at large. Wang Xing Chairman Hong Kong, March 21, 2025 14 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS The Fourth Quarter of 2024 Compared to the Fourth Quarter of 2023 The following table sets forth the comparative figures for the fourth quarter of 2024 and 2023: Unaudited Three Months Ended December 31, 2024 December 31, 2023 (RMB in thousands) Revenues 88,487,296 73,695,951 Including: Interest revenue 394,119 438,293 Cost of revenues (55,043,149) (48,702,612) Gross profit 33,444,147 24,993,339 Selling and marketing expenses (17,301,322) (16,725,310) Research and development expenses (5,420,285) (5,425,285) General and administrative expenses (2,938,189) (2,700,281) Net provisions for impairment losses on financial and contract assets (170,390) (408,417) Fair value changes of other financial investments at fair value through profit or loss 12,835 (61,652) Other (losses)/gains, net (933,297) 2,085,740 Operating profit 6,693,499 1,758,134 Finance income 354,470 216,153 Finance costs (468,151) (366,725) Share of profits of investments accounted for using the equity method 316,482 705,484 Profit before income tax 6,896,300 2,313,046 Income tax expenses (674,249) (96,059) Profit for the period 6,222,051 2,216,987 Non-IFRS Accounting Standards measures: Adjusted EBITDA 11,522,592 3,744,406 Adjusted net profit 9,848,538 4,374,712 Meituan 2024 Annual Report 15 MANAGEMENT DISCUSSION AND ANALYSIS Revenues Our revenues increased by 20.1% to RMB88.5 billion for the fourth quarter of 2024 from RMB73.7 billion for the same period of 2023. We achieved revenue growth in both reportable segments. The following table sets forth our revenues by segment and type for the fourth quarter of 2024 and 2023: Unaudited Three Months Ended December 31, 2024 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 26,194,820 - 26,194,820 Commission 24,066,077 902,420 24,968,497 Online marketing services Other services and sales (including interest revenue) 12,842,276 2,463,659 108,230 21,909,814 12,950,506 24,373,473 Total 65,566,832 22,920,464 88,487,296 Unaudited Three Months Ended December 31, 2023 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 21,927,023 - 21,927,023 Commission 19,426,729 569,576 19,996,305 Online marketing services Other services and sales (including interest revenue) 10,907,096 2,869,794 76,905 17,918,828 10,984,001 20,788,622 Total 55,130,642 18,565,309 73,695,951 16 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Our revenues from the Core local commerce segment increased by 18.9% to RMB65.6 billion for the fourth quarter of 2024 from RMB55.1 billion for the same period of 2023. The revenue growth in delivery services was mainly due to the increased Number of On-demand Delivery transactions and the decreased incentives deducted from revenues. The revenue growth in commission was mainly driven by the increased GTV. The revenue growth in online marketing services was mainly attributable to the increased number of and the average revenue from online marketing Active Merchants. Our revenues from the New initiatives segment increased by 23.5% to RMB22.9 billion for the fourth quarter of 2024 from RMB18.6 billion for the same period of 2023, which was primarily attributable to the revenue growth in our grocery retail businesses and the development of our overseas businesses. Costs and Expenses The following table sets forth a breakdown of our costs and expenses by function for the periods indicated: Unaudited Three Months Ended December 31, 2024 December 31, 2023 As a As a Amount percentage of revenues Amount percentage of revenues (RMB in thousands, except for percentages) Costs and Expenses: Cost of revenues 55,043,149 62.2% 48,702,612 66.1% Selling and marketing expenses 17,301,322 19.6% 16,725,310 22.7% Research and development expenses 5,420,285 6.1% 5,425,285 7.4% General and administrative expenses 2,938,189 3.3% 2,700,281 3.7% Meituan 2024 Annual Report 17 MANAGEMENT DISCUSSION AND ANALYSIS Cost of Revenues Our cost of revenues increased by 13.0% to RMB55.0 billion for the fourth quarter of 2024 from RMB48.7 billion for the same period of 2023, and decreased by 3.9 percentage points to 62.2% from 66.1% as a percentage of revenues on a year-over-year basis. The increase in amount was primarily driven by the increase in cost of revenues of our on-demand delivery business and grocery retail businesses. The decrease in cost of revenues as a percentage of revenues on a year-over-year basis was mainly due to the improved gross margin of our grocery retail businesses and our efforts in improving operating leverage. Selling and Marketing Expenses Our selling and marketing expenses was RMB17.3 billion for the fourth quarter of 2024, remaining stable on a year-over-year basis. The percentage of revenues decreased by 3.1 percentage points to 19.6% for the fourth quarter of 2024 from 22.7% for the fourth quarter of 2023 on a year-over-year basis, mainly due to the improved marketing efficiency and the improved operating leverage. Research and Development Expenses Our research and development expenses was RMB5.4 billion for the fourth quarter of 2024, remaining stable on a year-over-year basis. The percentage of revenues decreased by 1.3 percentage points to 6.1% for the fourth quarter of 2024 from 7.4% for the fourth quarter of 2023 on a year-over-year basis, primarily due to the improved operating leverage. General and Administrative Expenses Our general and administrative expenses increased by 8.8% to RMB2.9 billion for the fourth quarter of 2024 from RMB2.7 billion for the same period of 2023, which was primarily driven by the increased tax surcharge expenses as a result of growth in business scale and the increased employee benefits expenses. The percentage of revenues was 3.3% for the fourth quarter of 2024, remaining stable on a year-over-year basis. 18 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Net Provisions for Impairment Losses on Financial and Contract Assets Our net provisions for impairment losses on financial and contract assets decreased to RMB170.4 million for the fourth quarter of 2024 from RMB408.4 million for the same period of 2023, which reflected the changes in expected credit losses for financial assets. Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss Our fair value changes of other financial investments at fair value through profit or loss changed to a gain of RMB12.8 million for the fourth quarter of 2024 from a loss of RMB61.7 million for the same period of 2023, which was driven by the fluctuation in the fair value of our investment portfolios. Other (Losses)/Gains, Net Our other (losses)/gains, net changed to a loss of RMB933.3 million for the fourth quarter of 2024 from a gain of RMB2.1 billion for the same period of 2023, which was primarily due to the fluctuation in unrealised foreign exchange gains/(losses) from intercompany balances, and the decreases in both tax preference and fair value changes and gains from treasury investments. Operating Profit As a result of the foregoing, our operating profit and operating margin for the fourth quarter of 2024 were RMB6.7 billion and 7.6% respectively, compared to operating profit of RMB1.8 billion and operating margin of 2.4% for the same period of 2023. Operating profit/(loss) and operating margin by segment are set forth in the table below: Unaudited Three Months Ended December 31, 2024 December 31, 2023 As a As a Amount percentage of revenues Amount percentage of revenues (RMB in thousands, except for percentages) Core local commerce 12,900,327 19.7% 8,019,425 14.5% New initiatives (2,176,014) (9.5%) (4,832,692) (26.0%) Unallocated items (4,030,814) NA (1,428,599) NA Including: Share-based compensation expenses (1,772,332) NA (1,857,422) NA Total operating profit 6,693,499 7.6% 1,758,134 2.4% Meituan 2024 Annual Report 19 MANAGEMENT DISCUSSION AND ANALYSIS Our operating profit from the Core local commerce segment increased to RMB12.9 billion for the fourth quarter of 2024 from RMB8.0 billion for the same period of 2023, and the operating margin increased by 5.2 percentage points to 19.7% from 14.5% on a year-over-year basis. The increase in operating profit was mainly attributable to revenue growth and improved operating margin. The increase in operating margin was mainly due to the improved gross profit margin, lower Transacting User incentives as a percentage of revenues, and the improved operating efficiency. Our operating loss from the New initiatives segment narrowed to RMB2.2 billion for the fourth quarter of 2024 from RMB4.8 billion for the same period of 2023, and the operating margin for this segment improved by 16.5 percentage points to negative 9.5% from negative 26.0% on a year-over-year basis. The improvements in both operating loss and operating margin were primarily attributable to our efforts in improving operating efficiency in our grocery retail businesses. Our operating loss from the unallocated items increased to RMB4.0 billion for the fourth quarter of 2024 from RMB1.4 billion for the same period of 2023, which was primarily due to the fluctuation in unrealised foreign exchange gains/(losses) from intercompany balances, and the decreases in both tax preference and fair value changes and gains from treasury investments. Share of Profits of Investments Accounted for Using the Equity Method Our share of profits of investments accounted for using the equity method decreased to RMB316.5 million for the fourth quarter of 2024 from RMB705.5 million for the same period of 2023, as a result of the fluctuation in financial results of our investees. Income Tax Expenses Our income tax expenses increased to RMB674.2 million for the fourth quarter of 2024 from RMB96.1 million for the same period of 2023, which was primarily attributable to both the profit growth and a higher provision for withholding taxes from some of our entities. Profit for the Period As a result of the foregoing, we recorded a profit of RMB6.2 billion for the fourth quarter of 2024, compared to a profit of RMB2.2 billion for the same period of 2023. 20 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS The Fourth Quarter of 2024 Compared to the Third Quarter of 2024 The following table sets forth the comparative figures for the fourth quarter of 2024 and the third quarter of 2024: Unaudited Three Months Ended December 31, 2024 September 30, 2024 (RMB in thousands) Revenues 88,487,296 93,577,319 Including: Interest revenue 394,119 475,106 Cost of revenues (55,043,149) (56,823,456) Gross profit 33,444,147 36,753,863 Selling and marketing expenses (17,301,322) (17,953,163) Research and development expenses (5,420,285) (5,293,483) General and administrative expenses (2,938,189) (2,797,760) Net provisions for impairment losses on financial and contract assets (170,390) (275,298) Fair value changes of other financial investments at fair value through profit or loss 12,835 765,239 Other (losses)/gains, net (933,297) 2,485,778 Operating profit 6,693,499 13,685,176 Finance income 354,470 313,088 Finance costs (468,151) (261,651) Share of profits of investments accounted for using the equity method 316,482 213,821 Profit before income tax 6,896,300 13,950,434 Income tax expenses (674,249) (1,085,480) Profit for the period 6,222,051 12,864,954 Non-IFRS Accounting Standards measures: Adjusted EBITDA 11,522,592 14,529,197 Adjusted net profit 9,848,538 12,829,261 Meituan 2024 Annual Report 21 MANAGEMENT DISCUSSION AND ANALYSIS Revenues Our revenues decreased by 5.4% to RMB88.5 billion for the fourth quarter of 2024 from RMB93.6 billion for the third quarter of 2024. The decrease was primarily due to seasonality. The following table sets forth our revenues by segment and type for the fourth quarter of 2024 and the third quarter of 2024: Unaudited Three Months Ended December 31, 2024 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 26,194,820 - 26,194,820 Commission 24,066,077 902,420 24,968,497 Online marketing services Other services and sales (including interest revenue) 12,842,276 2,463,659 108,230 21,909,814 12,950,506 24,373,473 Total 65,566,832 22,920,464 88,487,296 Unaudited Three Months Ended September 30, 2024 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 27,784,111 - 27,784,111 Commission 26,080,135 809,773 26,889,908 Online marketing services Other services and sales (including interest revenue) 13,423,641 2,085,212 115,499 23,278,948 13,539,140 25,364,160 Total 69,373,099 24,204,220 93,577,319 22 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Our revenues from the Core local commerce segment decreased by 5.5% to RMB65.6 billion for the fourth quarter of 2024 from RMB69.4 billion for the third quarter of 2024. The revenue decrease was primarily due to the decreased number of transactions and reduced marketing spending by merchants which resulted from seasonality. Our revenues from the New initiatives segment decreased by 5.3% to RMB22.9 billion for the fourth quarter of 2024 from RMB24.2 billion for the third quarter of 2024, mainly due to the seasonality of our certain new initiatives. Costs and Expenses The following table sets forth a breakdown of our costs and expenses by function for the periods indicated: Unaudited Three Months Ended December 31, 2024 September 30, 2024 As a As a Amount percentage of revenues Amount percentage of revenues (RMB in thousands, except for percentages) Costs and Expenses: Cost of revenues 55,043,149 62.2% 56,823,456 60.7% Selling and marketing expenses 17,301,322 19.6% 17,953,163 19.2% Research and development expenses 5,420,285 6.1% 5,293,483 5.7% General and administrative expenses 2,938,189 3.3% 2,797,760 3.0% Meituan 2024 Annual Report 23 MANAGEMENT DISCUSSION AND ANALYSIS Cost of Revenues Our cost of revenues decreased by 3.1% to RMB55.0 billion for the fourth quarter of 2024 from RMB56.8 billion for the third quarter of 2024, and increased by 1.5 percentage points to 62.2% from 60.7% as a percentage of revenues. The decrease in amount was primarily due to the decreased Number of On-demand Delivery transactions resulting from seasonality. The increase in cost of revenues as a percentage of revenues was mainly due to the increased seasonal couriers incentives, the increased costs related to overseas businesses and the seasonality of our certain new initiatives. Selling and Marketing Expenses Our selling and marketing expenses was RMB17.3 billion for the fourth quarter of 2024, and the percentage of revenues was 19.6%, both of which remained stable on a quarter-over-quarter basis. Research and Development Expenses Our research and development expenses was RMB5.4 billion for the fourth quarter of 2024, remaining stable on a quarter-over-quarter basis. The percentage of revenues increased by 0.4 percentage points to 6.1% for the fourth quarter of 2024 from 5.7% for the third quarter of 2024 on a quarter-over-quarter basis, which was primarily attributable to the increase in employee benefits expenses. General and Administrative Expenses Our general and administrative expenses increased by 5.0% to RMB2.9 billion for the fourth quarter of 2024 from RMB2.8 billion for the third quarter of 2024, which was primarily driven by the increases in employee benefits expenses, and tax surcharge expenses as a result of growth in business scale. The percentage of revenues was 3.3% for the fourth quarter of 2024, remaining stable on a quarter-over-quarter basis. 24 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Net Provisions for Impairment Losses on Financial and Contract Assets Our net provisions for impairment losses on financial and contract assets decreased to RMB170.4 million for the fourth quarter of 2024 from RMB275.3 million for the third quarter of 2024, which reflected the changes in expected credit losses for financial assets. Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss Our fair value changes of other financial investments at fair value through profit or loss decreased to a gain of RMB12.8 million for the fourth quarter of 2024 from a gain of RMB765.2 million for the third quarter of 2024, which was driven by the fluctuation in the fair value of our investment portfolios. Other (Losses)/Gains, Net Our other (losses)/gains, net changed to a loss of RMB933.3 million for the fourth quarter of 2024 from a gain of RMB2.5 billion for the third quarter of 2024, which was primarily due to the fluctuation in unrealised foreign exchange gains/(losses) from intercompany balances. Operating Profit As a result of the foregoing, our operating profit and operating margin for the fourth quarter of 2024 were RMB6.7 billion and 7.6% respectively, compared to operating profit of RMB13.7 billion and operating margin of 14.6% for the third quarter of 2024. Operating profit/(loss) and operating margin by segment are set forth in the table below: Unaudited Three Months Ended December 31, 2024 September 30, 2024 As a As a Amount percentage of revenues Amount percentage of revenues (RMB in thousands, except for percentages) Core local commerce 12,900,327 19.7% 14,582,403 21.0% New initiatives (2,176,014) (9.5%) (1,026,042) (4.2%) Unallocated items (4,030,814) NA 128,815 NA Including: Share-based compensation expenses (1,772,332) NA (1,890,022) NA Total operating profit 6,693,499 7.6% 13,685,176 14.6% Meituan 2024 Annual Report 25 MANAGEMENT DISCUSSION AND ANALYSIS Our operating profit from the Core local commerce segment decreased to RMB12.9 billion for the fourth quarter of 2024 from RMB14.6 billion for the third quarter of 2024, and the operating margin for this segment decreased by 1.3 percentage points to 19.7% from 21.0% on a quarter-over-quarter basis. The decrease in operating profit was mainly due to the decreased revenue resulting from seasonality. Moreover, the increased seasonal couriers incentives as a percentage of revenues, the higher Transacting User incentives as a percentage of revenues, and the adverse impact of operating leverage due to lower revenues resulted in a decline in operating margin. Our operating loss from the New initiatives segment increased to RMB2.2 billion for the fourth quarter of 2024 from RMB1.0 billion for the third quarter of 2024. The operating margin for this segment was negative 9.5% for the fourth quarter of 2024, representing a 5.3 percentage points decline from negative 4.2% for the third quarter of 2024. The widened operating loss and higher operating loss ratio were primarily due to the increased costs related to overseas businesses, the lower revenues resulting from the seasonality of our certain new initiatives and the adverse impact of operating leverage due to lower revenues. The operating loss from the unallocated items was RMB4.0 billion for the fourth quarter of 2024, compared to operating profit of RMB128.8 million for the third quarter of 2024. The change was primarily due to fluctuations in unrealised foreign exchange gains/(losses) from intercompany balances and in the fair value of our investment portfolios. Share of Profits of Investments Accounted for Using the Equity Method Our share of profits of investments accounted for using the equity method increased to RMB316.5 million for the fourth quarter of 2024 from RMB213.8 million for the third quarter of 2024, as a result of the fluctuation in financial results of our investees. Income Tax Expenses Our income tax expenses decreased to RMB674.2 million for the fourth quarter of 2024 from RMB1.1 billion for the third quarter of 2024, which was primarily attributable to the recognition of deferred tax assets based on the estimation of an increase in future taxable income from some of our entities. Profit for the Period As a result of the foregoing, we recorded a profit of RMB6.2 billion for the fourth quarter of 2024, compared to a profit of RMB12.9 billion for the third quarter of 2024. 26 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS The Year ended December 31, 2024 Compared to the Year ended December 31, 2023 The following table sets forth the comparative figures for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 December 31, 2023 (RMB in thousands) Revenues 337,591,576 276,744,954 Including: Interest revenue 1,964,341 1,449,743 Cost of revenues (207,806,982) (179,553,793) Gross profit 129,784,594 97,191,161 Selling and marketing expenses (63,975,235) (58,616,997) Research and development expenses (21,053,601) (21,201,005) General and administrative expenses (10,729,203) (9,372,067) Net provisions for impairment losses on financial and contract assets (897,505) (1,135,405) Fair value changes of other financial investments at fair value through profit or loss 140,921 234,227 Other gains, net 3,574,985 6,315,473 Operating profit 36,844,956 13,415,387 Finance income 1,291,807 818,986 Finance costs (1,337,038) (1,425,157) Share of profits of investments accounted for using the equity method 1,185,704 1,212,652 Profit before income tax 37,985,429 14,021,868 Income tax expenses (2,177,107) (164,537) Profit for the year 35,808,322 13,857,331 Non-IFRS Accounting Standards measures: Adjusted EBITDA 49,119,400 23,878,018 Adjusted net profit 43,772,449 23,253,418 Meituan 2024 Annual Report 27 MANAGEMENT DISCUSSION AND ANALYSIS Revenues Our revenues increased by 22.0% to RMB337.6 billion in 2024 from RMB276.7 billion in 2023. We achieved revenue growth in both reportable segments. The following table sets forth our revenues by segment and type in 2024 and 2023: Year Ended December 31, 2024 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 98,065,260 - 98,065,260 Commission 92,288,620 3,052,336 95,340,956 Online marketing services Other services and sales (including interest revenue) 48,836,066 11,057,550 404,326 83,887,418 49,240,392 94,944,968 Total 250,247,496 87,344,080 337,591,576 Year Ended December 31, 2023 Core local commerce New initiatives Total (RMB in thousands) Revenues Delivery services 82,190,980 - 82,190,980 Commission 74,630,737 2,057,806 76,688,543 Online marketing services Other services and sales (including interest revenue) 40,266,890 9,818,325 246,326 67,533,890 40,513,216 77,352,215 Total 206,906,932 69,838,022 276,744,954 28 Meituan 2024 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Our revenues from the Core local commerce segment increased by 20.9% to RMB250.2 billion in 2024 from RMB206.9 billion in 2023. The revenue growth in delivery services and commission was mainly due to the increased number of transactions. The revenue growth in online marketing services was mainly attributable to the increased number of and the average revenue from online marketing Active Merchants. Our revenues from the New initiatives segment increased by 25.1% to RMB87.3 billion in 2024 from RMB69.8 billion in 2023, mainly due to the revenue growth in our grocery retail businesses. Costs and Expenses The following table sets forth a breakdown of our costs and expenses by function for the years indicated: Year Ended December 31, 2024 December 31, 2023 As a As a Amount percentage of revenues Amount percentage of revenues (RMB in thousands, except for percentages) Costs and Expenses: Cost of revenues 207,806,982 61.6% 179,553,793 64.9% Selling and marketing expenses 63,975,235 19.0% 58,616,997 21.2% Research and development expenses 21,053,601 6.2% 21,201,005 7.7% General and administrative expenses 10,729,203 3.2% 9,372,067 3.4% Meituan 2024 Annual Report 29 MANAGEMENT DISCUSSION AND ANALYSIS Cost of Revenues Our cost of revenues increased by 15.7% to RMB207.8 billion in 2024 from RMB179.6 billion in 2023, and decreased by 3.3 percentage points to 61.6% from 64.9% as a percentage of revenues on a year-over-year basis. The increase in amount was primarily due to the increase in cost of revenues of our on-demand delivery business and grocery retail businesses. The decrease in cost of revenues as a percentage of revenues on a year-over-year basis was mainly attributable to the improved gross margin of our grocery retail businesses and our efforts in improving operating leverage. Selling and Marketing Expenses Our selling and marketing expenses increased by 9.1% to RMB64.0 billion in 2024 from RMB58.6 billion in 2023, which was mainly due to the increases in expenses related to promotion, advertising and user incentives and employee benefits expenses as business scale further increased. Meanwhile, the percentage of revenues decreased by 2.2 percentage points to 19.0% in 2024 from 21.2% in 2023 on a year-over-year basis, mainly due to the improved marketing efficiency and the improved operating leverage. Research and Development Expenses Our research and development expenses was RMB21.1 billion in 2024, remaining stable on a year-over-year basis. The percentage of revenues decreased by 1.5 percentage points to 6.2% in 2024 from 7.7% in 2023 on a year-over-year basis, primarily due to the improved operating leverage. General and Administrative Expenses Our general and administrative expenses increased by 14.5% to RMB10.7 billion in 2024 from RMB9.4 billion in 2023, which was primarily driven by the increases in employee benefits expenses, and tax surcharge expenses as a result of growth in business scale. The percentage of revenues was 3.2% in 2024, remaining stable on a year-over-year basis. Net Provisions for Impairment Losses on Financial and Contract Assets Our net provisions for impairment losses on financial and contract assets decreased to RMB897.5 million in 2024 from RMB1.1 billion in 2023, which reflected the changes in expected credit losses for financial assets.