Business
Meituan : Interim Report
Meituan : Interim
About this update from Meituan Class B
CONTENTS CORPORATE INFORMATION 2 KEY HIGHLIGHTS 4 CHAIRMAN'S STATEMENT 8 MANAGEMENT DISCUSSION AND ANALYSIS 11 OTHER INFORMATION 30 REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION 55 INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT 56 INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 57 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 58 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 60 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 62 NOTES TO THE INTERIM FINANCIAL INFORMATION 64 DEFINITIONS 111 GLOSSARY 118 CORPORATE INFORMATION BOARD OF DIRECTORS JOINT COMPANY SECRETARIES Executive Directors Ms. Xu Sijia ( 徐思嘉 ) Ms. Lau Yee Wa ( 劉綺華 ) Mr. Wang Xing ( 王興 ) (Chairman and Chief Executive Officer) AUTHORIZED REPRESENTATIVES Mr. Mu Rongjun ( 穆榮均 ) Mr. Wang Xing ( 王興 ) Independent Non-executive Directors Mr. Mu Rongjun ( 穆榮均 ) Mr. Orr Gordon Robert Halyburton AUDITOR Mr. Leng Xuesong ( 冷雪松 ) Dr. Shum Heung Yeung Harry ( 沈向洋 ) PricewaterhouseCoopers Ms. Yang Marjorie Mun Tak ( 楊敏德 ) Certified Public Accountants and Registered PIE Auditor AUDIT COMMITTEE 22/F, Prince's Building Central Mr. Orr Gordon Robert Halyburton (Chairman) Hong Kong Mr. Leng Xuesong ( 冷雪松 ) Dr. Shum Heung Yeung Harry ( 沈向洋 ) REGISTERED OFFICE Ms. Yang Marjorie Mun Tak ( 楊敏德 ) (appointed on March 22, 2024) PO Box 309, Ugland House Grand Cayman, KY1-1104 REMUNERATION COMMITTEE Cayman Islands Mr. Leng Xuesong ( 冷雪松 ) (Chairman) HEAD OFFICE AND PRINCIPAL PLACE OF Dr. Shum Heung Yeung Harry ( 沈向洋 ) BUSINESS IN CHINA Mr. Mu Rongjun ( 穆榮均 ) Block B&C, Hengjiweiye Building NOMINATION COMMITTEE No. 4 Wang Jing East Road Chaoyang District Mr. Leng Xuesong ( 冷雪松 ) (Chairman) Beijing 100102 Dr. Shum Heung Yeung Harry ( 沈向洋 ) China CORPORATE GOVERNANCE COMMITTEE PRINCIPAL PLACE OF BUSINESS IN HONG KONG Mr. Leng Xuesong ( 冷雪松 ) (Chairman) Dr. Shum Heung Yeung Harry ( 沈向洋 ) 5/F, Manulife Place Mr. Orr Gordon Robert Halyburton 348 Kwun Tong Road Kowloon Hong Kong 2 CORPORATE INFORMATION 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 美團 -W (HKD counter) MEITUAN-W (HKD counter) 美團 -WR (RMB counter) MEITUAN-WR (RMB counter) COMPANY'S WEBSITE about.meituan.com This Interim Report has been posted in both the English and Chinese languages on the Company's website at about.meituan.com and the website of Hong Kong Stock Exchange at www.hkexnews.hk . A printed version of this Interim Report is available on request from the Company and the Company's Hong Kong Share Registrar free of charge. MEITUAN | 2024 INTERIM REPORT 3 KEY HIGHLIGHTS FINANCIAL SUMMARY AND OPERATING METRICS Unaudited Three Months Ended June 30, 2024 June 30, 2023 As a As a percentage percentage Year-over- Amount of revenues Amount of revenues year change (RMB in thousands, except for percentages) Revenues 82,251,077 100.0% 67,964,624 100.0% 21.0% Operating profit 11,256,889 13.7% 4,712,999 6.9% 138.8% Profit for the period 11,352,338 13.8% 4,688,619 6.9% 142.1% Non-IFRS Accounting Standards measures 1 : Adjusted EBITDA 14,997,268 18.2% 7,682,351 11.3% 95.2% Adjusted net profit 13,606,256 16.5% 7,659,868 11.3% 77.6% Unaudited Six Months Ended June 30, 2024 June 30, 2023 As a As a percentage percentage Year-over- Amount of revenues Amount of revenues year change (RMB in thousands, except for percentages) Revenues 155,526,961 100.0% 126,582,096 100.0% 22.9% Operating profit 16,466,281 10.6% 8,298,720 6.6% 98.4% Profit for the period 16,721,317 10.8% 8,047,110 6.4% 107.8% Non-IFRS Accounting Standards measures: Adjusted EBITDA 23,067,611 14.8% 13,944,411 11.0% 65.4% Adjusted net profit 21,094,650 13.6% 13,151,309 10.4% 60.4% Three Months Ended Year-over- June 30, 2024 June 30, 2023 year change (in millions, except for percentages) Number of On-demand Delivery transactions 6,167.1 5,400.4 14.2% 1 See the section entitled "Reconciliation of Non-IFRS Accounting Standards Measures to the Nearest IFRS Accounting Standards Measures" for more information about the non-IFRS Accounting Standards measures. 4 KEY HIGHLIGHTS FINANCIAL INFORMATION BY SEGMENT Unaudited Three Months Ended June 30, 2024 Core local New Unallocated commerce initiatives items 2 Total (RMB in thousands) Revenues: Delivery services 23,021,272 - - 23,021,272 Commission 22,108,369 716,909 - 22,825,278 Online marketing services 12,262,733 97,115 - 12,359,848 Other services and sales (including interest revenue) 3,289,484 20,755,195 - 24,044,679 Total revenues 60,681,858 21,569,219 - 82,251,077 Cost of revenues, operating expenses and unallocated items (45,448,273) (22,883,578) (2,662,337) (70,994,188) Operating profit/(loss) 15,233,585 (1,314,359) (2,662,337) 11,256,889 Unaudited Three Months Ended June 30, 2023 Core local New Unallocated commerce initiatives items Total (RMB in thousands) Revenues: Delivery services 20,374,970 - - 20,374,970 Commission 18,402,189 510,284 - 18,912,473 Online marketing services 10,243,600 63,577 - 10,307,177 Other services and sales (including interest revenue) 2,179,187 16,190,817 - 18,370,004 Total revenues 51,199,946 16,764,678 - 67,964,624 Cost of revenues, operating expenses and unallocated items (40,061,425) (21,957,600) (1,232,600) (63,251,625) Operating profit/(loss) 11,138,521 (5,192,922) (1,232,600) 4,712,999 2 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) other gains, net, and (v) certain corporate administrative expenses and other items. They are not allocated to individual segments. MEITUAN | 2024 INTERIM REPORT 5 KEY HIGHLIGHTS Year-over-year change Core local New Unallocated commerce initiatives items Total (Percentages %) Revenues: Delivery services 13.0 NA NA 13.0 Commission 20.1 40.5 NA 20.7 Online marketing services 19.7 52.8 NA 19.9 Other services and sales (including interest revenue) 51.0 28.2 NA 30.9 Total revenues 18.5 28.7 NA 21.0 Cost of revenues, operating expenses and unallocated items 13.4 4.2 116.0 12.2 Operating profit/(loss) 36.8 (74.7) 116.0 138.8 Unaudited Six Months Ended June 30, 2024 Core local New Unallocated commerce initiatives items Total (RMB in thousands) Revenues: Delivery services 44,086,329 - - 44,086,329 Commission 42,142,408 1,340,143 - 43,482,551 Online marketing services 22,570,149 180,597 - 22,750,746 Other services and sales (including interest revenue) 6,508,679 38,698,656 - 45,207,335 Total revenues 115,307,565 40,219,396 - 155,526,961 Cost of revenues, operating expenses and unallocated items (90,375,133) (44,290,654) (4,394,893) (139,060,680) Operating profit/(loss) 24,932,432 (4,071,258) (4,394,893) 16,466,281 6 KEY HIGHLIGHTS Unaudited Six Months Ended June 30, 2023 Core local New Unallocated commerce initiatives items Total (RMB in thousands) Revenues: Delivery services 37,280,261 - - 37,280,261 Commission 34,217,481 938,049 - 35,155,530 Online marketing services 17,990,214 99,780 - 18,089,994 Other services and sales (including interest revenue) 4,597,326 31,458,985 - 36,056,311 Total revenues 94,085,282 32,496,814 - 126,582,096 Cost of revenues, operating expenses and unallocated items (73,501,691) (42,718,630) (2,063,055) (118,283,376) Operating profit/(loss) 20,583,591 (10,221,816) (2,063,055) 8,298,720 Year-over-year change Core local New Unallocated commerce initiatives items Total (Percentages %) Revenues: Delivery services 18.3 NA NA 18.3 Commission 23.2 42.9 NA 23.7 Online marketing services 25.5 81.0 NA 25.8 Other services and sales (including interest revenue) 41.6 23.0 NA 25.4 Total revenues 22.6 23.8 NA 22.9 Cost of revenues, operating expenses and unallocated items 23.0 3.7 113.0 17.6 Operating profit/(loss) 21.1 (60.2) 113.0 98.4 MEITUAN | 2024 INTERIM REPORT 7 CHAIRMAN'S STATEMENT To our shareholders: The local commerce industry in China holds significant growth potential driven by digital transformation. As a leading one-stop local commerce platform, we continue to provide consumers with more diverse product offerings and on-demand delivery services, and provide local merchants with more comprehensive online solutions across consumption scenarios. Looking ahead, we are confident in navigating market cycles and facilitating industry digital transformation to unlock long-term value. We will adapt to changing consumption trends, penetrate deeper into the supply chain, and offer diverse products and services. Through our ongoing efforts, we aim to enhance value for all the stakeholders in our ecosystem, driving high-quality development in China's local commerce industry and fulfilling our mission that "We help people eat better, live better". Company Business Highlights Core Local Commerce For the second quarter of 2024, segment revenue increased by 18.5% year over year to RMB60.7 billion. Operating profit increased by 36.8% year over year to RMB15.2 billion, and operating margin improved by 3.3 percentage points year over year to 25.1% in the second quarter. Our on-demand delivery business maintained steady growth in the second quarter and further improved its operation efficiency. For food delivery, we have cultivated strong consumer mindshare in "speed" and "variety" over the past years. We further focused on operational improvements in our shelf-based model and enhanced our "value-for-money" offerings. Our refined operations and strategies further enhanced user stickiness, user scale, and purchase frequency. On the supply side, we actively explored new product formats to capture different consumer demand, particularly in the low-price domain. Pin Hao Fan (" 拼好飯 ") delivered strong performance during the second quarter, breaking a peak daily order volume of 8 million. Our continuous enhancement in supply has made it easier for consumers to use Pin Hao Fan, resulting in significant improvements in user retention and order frequency. We collaborated with branded restaurants to offer high-quality and value-for-money products for consumers. Pin Hao Fan has become a new growth driver for many small and medium-sized merchants and helps chain restaurants improve efficiency and attract younger consumers. For branded restaurants, we continued to expand Branded Satellite Stores (" 品牌衛星店 ") with more restaurant partners, bringing quality selections at lower prices. Moving forward, we will keep innovating our supply formats, deepening our supply chain penetration, and consistently providing more value-for-money products. Meituan Instashopping posted robust growth in the second quarter. Annual Transacting Users of Meituan Instashopping increased steadily and order frequency grew even faster. We continued to improve our operations and marketing strategies, catering to more diverse needs from consumers. During the quarter, we deepened collaborations with leading brands across different categories and onboarded numerous branded stores. We implemented various merchant support measures to boost transaction conversion rates and drive incremental sales for merchants. We also expanded Meituan InstaMart (" 美团閃電倉 ") to broader regions. Meituan InstaMart provides online operational support to merchants, including user traffic, product selection recommendations, pricing strategies, and more. For certain categories, we penetrated deeper into the supply chain and implemented in-house procurement. For example, our self-operated brand in the liquor and beverage category, "Wai Ma Song Jiu" (" 歪馬送酒 "), continued to expand in scale. In the medicine category, we reinforced consumer mindshare, enhanced our capacity to meet seasonal demand, and expanded offerings in health supplements. Additionally, we introduced the online medical insurance payment option for OTC products in selected cities. The adoption of on-demand retail by traditional brands and the accelerated expansion of new supply formats have strengthened Meituan Instashopping's competitive edge, improving user experience and setting a strong foundation for resilient growth amid external challenges. 8 CHAIRMAN'S STATEMENT The long-term sustainable development of our on-demand delivery business depends on the continuous optimization of our delivery network and the hard work of our couriers. Thus, we launched courier-friendly communities and courier-friendly merchants in over 20 cities nationwide. To facilitate easy access for couriers in residential areas, we introduced a digital solution in collaboration with various major property management companies. We also partnered with over 10,000 stores of restaurant brands and healthcare service brands to provide rest stations, beverages, and discounted meals for our couriers. Looking forward, under the supervision of relevant local authorities, we will continue to collaborate with the broader society, including local communities, property management companies, chain brands, and caring merchants, to accelerate the promotion of courier- friendly community access solutions, introduce more resting scenarios, and provide more discounted services for our couriers. In-store, hotel and travel business maintained strong growth, with order volume growing by over 60% year over year in the second quarter. Annual Transacting Users and Annual Active Merchants both reached new highs. In the current macro environment, demand for local services remains strong despite the changes in consumption preferences. As we launched a new brand Meituan Group Buy (" 美团團購 "), we continued to leverage our shelf- based model to satisfy consumer demand in value-for-money products. We also continued to promote mega-hit products, by leveraging Special Deals (" 特價團購 ") and many other operational tactics. These measures effectively captured consumer demand for deep-discounted deals and boosted our transacting user base and order volume. In the second quarter, we expanded the "Shen Hui Yuan" (" 神會員 ") membership program to more categories in the in-store, hotel and travel domain in pilot cities, and further rolled it out nationwide in July. With the new integrated membership program, we can deepen collaborations with a broader network of merchants, and our members can gain access to a more diverse selection of value-for-money products and services. According to the initial assessment in the pilot cities, Shen Hui Yuan not only strengthened consumer mindshare in our value-for- money offerings, but also attracted broad merchant participation. Moreover, we continued to invest in the lower- tier markets to provide greater convenience and more diverse offerings for the local consumers. GTV in lower- tier markets achieved a significant growth as a result. We recently promoted the "Pickup Now" (" 秒提 ") service in our in-store business. It allows consumers to buy and validate coupons online simultaneously, to avoid waste time queuing and validate the coupons offline, providing more convenience and better the user experience for the consumers. "Pickup Now" is complementary to our food delivery and in-store dining services. In addition, we launched the 2024 "Must-Eat List" (" 必吃榜 "), featuring nearly 2,800 restaurants across over 100 cities, representing an increase from last year. We provided these merchants with online traffic support and operational guidance to enhance exposure and efficiency. For other in-store services, consumers increasingly focus on diversity and affordability. We capitalized on our strengths in supply, brand recognition, and service quality. As a result, GTV and order volume surged by over 60% year over year in the leisure and entertainment category, and GTV increased by over 50% year over year for beauty and medical aesthetics. Hotel and travel experienced a steady growth in both domestic room nights and GTV during the second quarter. We expanded branding promotions and refined marketing strategies. Leveraging our platform advantages, our expanded "Hotel + X" packaged deals not only offered consumers value-for-money products, but also helped merchants cross-sell other services. In response to the increased demand, we further enhanced our supply capabilities in the low-star domain, catering to differentiated consumer preferences and expanding value-for-money options. We also offered comprehensive online solutions to low-star hotel merchants, from traffic acquisition to business growth and room renovations, helping them seize growth opportunities. For high-star hotels, we launched the 2024 "Must-Stay List" (" 必住榜 ") with expanded coverage. We further strengthened joint membership programs with high-star hotel groups, adding exclusive discounts and privileges, and launched joint marketing events to enhance product exposure and attract new users. MEITUAN | 2024 INTERIM REPORT 9