Original title: Meituan made overall profit in Q2 for the first time, but growth is still the focus of the future | Source of financial report: Gao Mengyang
However, Meituan will continue to focus on growth rather than profitability. Meituan CFO Chen Shaohui emphasized to analysts at the earnings conference that "our focus is on growth rather than profitability."
After ten years, 2019 In the second quarter, Meituan Dianping finally achieved overall profitability.
On August 23, Meituan Dianping (stock code: 3690.HK) released its 2019 second quarter results, the company's adjusted EBITDA reached 2.3 billion yuan ( Unit: RMB, the same below), the adjusted net profit was 1.5 billion yuan, and the overall profit was achieved for the first time.
At the same time, in the second quarter, Meituan achieved rapid growth in revenue, transaction volume and other data, and the two main businesses of catering takeaway, in-store and wine travel Operational efficiency has also been improved.
In addition, due to the reduction in investment in bicycles, the new business, which has been called a "loss black hole" by the outside world, has also turned from negative to positive, and its revenue has increased from 2018 to 2018. The 2.5 billion yuan in the same period increased to 4.6 billion yuan, and the overall gross profit achieved 420 million yuan.
This quarter, Meituan's operating income increased by 50.6% year-on-year to 22.7 billion yuan, and its total transaction value increased by 28.7% year-on-year to 159.2 billion yuan. For the 12 months ended June 30, 2019, the number of active merchants and transaction users reached 5.9 million and 423 million, respectively. Among them, the average number of transactions per transaction user per year increased to 25.5.
Actually, Meituan in 2019 In 2018, there were not only profit pressures, but also strong competitive pressures from Ali's local life business. However, relying on the reduction of losses from new business and other income and the continuous development of the food delivery business, Meituan turned losses into profits in a single quarter.
In response, Meituan CEO Wang Xing said that this quarter, Meituan continued to maintain strong growth and achieved overall profitability for the first time, thanks to its supply side and demand The brand penetration rate on the side continues to increase, which ultimately drives the continuous growth of the business scale of multiple service categories.
"Meituan will continue to focus on the 'Food+Platform' strategy, and through continuous investment in strategic areas and technological innovation, will provide users with richer consumption scenarios and help Merchant's business growth and operating efficiency have improved."
However, Meituan will continue to focus on growth rather than profitability, said senior vice president of Meituan Dianping. President and CFO Chen Shaohui emphasized to analysts at the earnings conference, "Our focus is on growth rather than profitability."
The peak season of food delivery, gross profit In terms of performance, Meituan's overall profitability is closely related to the performance of its food delivery business.
In the second quarter of 2019, Meituan’sThe food delivery business achieved positive adjusted operating profit for the first time. It is mentioned in this financial report that the second quarter is usually the most profitable due to the abundant capacity and the most favorable weather conditions in the country, which help to minimize the amount of seasonal incentives paid to takeaway riders. catering takeaway season.
As for the food delivery business, in the second quarter of this year, the transaction value of Meituan Dianping's food delivery business increased by 36.5% to 93.1 billion yuan from 68.2 billion yuan in the same period last year. Yuan Renminbi.
The number of food delivery orders increased by 34.6% from 1.5 billion in the same period of 2019 to 2.1 billion in the second quarter of this year. The average value of each order for food delivery business increased by 1.4% year-on-year. The realization rate of food delivery business increased from 13.1% to 13.8% year-on-year.
Therefore, the revenue of food delivery business is determined by The RMB 8.9 billion in the same period in 2018 increased by 44.2% year-on-year to RMB 12.8 billion. The gross profit of the food delivery business increased by 102.8% to 2.9 billion yuan from 1.4 billion yuan in the same period last year, while the gross profit margin increased from 15.8% to 22.3%.
For the growth of food delivery business, Chen Shaohui stated in the subsequent earnings conference call that seasonal factors have a great impact on the delivery business. "The second quarter is the best quarter, because the weather is not too hot or too cold, which is an important factor for us to achieve profitability. So we hope that investors can pay more attention to the year-on-year change rather than the month-on-month change. Only in this way can we see The progress of the food delivery business."
In addition, from the financial report, the economies of scale of the food delivery business are also emerging. In the second quarter of this year, Meituan continued to expand its scale and the average daily order volume exceeded 22.9 million. The financial report believes that as the number of Meituan transactions increases, its order density also increases accordingly, so the probability of collecting more orders in one ride improves, which enables Meituan to further reduce the average delivery cost per order.
On the user side, Meituan Waimai launched a membership system in the second half of 2018 to provide exclusive discounts. As of the second quarter, the average purchase frequency of monthly active members was More than three times the average monthly active users; on the merchant side, Meituan continues to launch innovative online marketing products, driving the merchants to continue to develop and generate income, establish a close relationship of cooperation and win-win, and also help improve the monetization rate of the catering takeaway business.
Obviously, the Meituan toB strategy is gradually It worked. Judging from the financial report, Meituan's efforts on the supply side have helped to gradually optimize the revenue structure of takeaway.
According to the financial report, compared with the same period last year, Meituan’s commission ratio has dropped from 73.5% to 68%; correspondingly, for the B-side The revenue share of merchants' marketing services and product services (catering supply chain, micro-loans) has increased. Among them, the source of online marketing services increased from 13.9% to 16%; online marketing services and sales increased from 12.6% to 16%.
From the cost distribution point of view, the cost of sales of takeaways in the total cost of sales is very close to the proportion of takeaways in the total revenue. Among them, the cost of food delivery riders is still the largest cost of Meituan Dianping. This quarter, the cost of sales of Meituan’s food delivery business was about 10 billion yuan, of which the cost of riders accounted for about 9.273 billion yuan.
The in-store service business maintains high growth, and the sinking market is still the key target for penetration
In addition to the growth of food delivery business, Meituan's hotel and travel business still firmly occupies the leading position in the industry.
The financial report shows that for the three months ended June 30, 2019, the transaction amount of Meituan Dianping’s in-store, hotel and travel business increased from 425 in the same period of 2018. RMB 100 million increased by 20.7% to RMB 51.3 billion, while the realization rate increased from 8.6% to 10.2%. Hotel room nights increased by 28.9% year-on-year to 94 million room nights.
In terms of revenue, it increased by 42.8% to RMB 5.2 billion from RMB 3.7 billion in the same period of 2018. Gross profit of in-store, hotel and travel business increased from RMB 3.3 billion in the same period of 2018 to RMB 4.7 billion, while gross profit margin decreased slightly from 90.8% to 88.8%.
In this regard, Meituan explained in the financial report that the depreciation of property, plant and equipment, the increase in bandwidth and server hosting fees, and the increase in network traffic costs were mainly due to the database improvement project. to support online marketing revenue growth.
Meituan Dianping continues to see strong revenue growth in this segment, mainly attributable to growth in online marketing services revenue. For the three months ended June 30, 2019, the number of active marketing merchants in this segment increased by more than 50% year-on-year, and the average revenue per active marketing merchant continued to increase steadily.
At the same time, Meituan Dianping continued to enrich and improve its marketing products, and launched promotional activities for in-store, hotel and travel businesses to promote Meituan Dianping's transaction-based marketing. Services grow. For example, Meituan Dianping launched the 618 Promotion Festival in the second quarter to enable local lifestyle service merchants to increase brand exposure and gain online traffic. During the six-day 618 promotion festival, medical and cosmetic transaction users contributed about 670 million yuan in transaction amount to the platform.
"I think we have created a very special online platform for offline merchants. Our business model has a relatively high threshold, including hotel room reservation services", Wang Xing said in In the earnings conference call, it was revealed that Meituan’s in-store service currently only covers less than 2 million MAU (monthly active users) merchants. expand. "We will continue to improve sales efficiency and seize opportunities to penetrate local merchants in the sinking market."
In addition, he also said that from the service business sectors such as beauty and entertainment The revenue of the company has achieved year-on-year growth, and newly developed business sectors, such as medical care, parent-child, education, home improvement, etc., will become the main source of growth for in-store services in the future.
Bike sharing, online car-hailing and other new businesses performed well, and gross profit turned positive for the first time
Previously, Meituan’s non-Meituan traditional businesses such as shared bicycles, online car-hailing, ToB, and new retail have been controversial due to losses and other reasons. But in the second quarter of this year, Meituan achieved good results in new business.
According to the financial report, the second quarter revenue of Meituan's new business and other segments increased by 85.1% to 4.6 billion yuan from 2.5 billion yuan in the same period of 2018, and the overall gross profit achieved 420 million, from negative to positive. For the three months ended June 30, 2019, gross profit margin was 9.1%, an improvement from the negative 76.4% for the same period in 2018.
In the bicycle-sharing business, compared with the previous quarter, the operating loss in the second quarter narrowed significantly. This was mainly due to the fact that the useful life of some bicycles in the second quarter has expired and no depreciation expenses will be incurred, and the depreciation has decreased significantly due to the lack of a large number of new replacement bicycles. In addition, Meituan will continue to optimize its pricing strategy and begin to appropriately increase the per-ride fee and monthly subscription fee in certain cities.
As for the online car-hailing business, as Meituan launched the aggregation model in the second quarter, the Meituan car-hailing business has made new breakthroughs and has expanded to include Beijing, 42 cities including Shanghai, Shenzhen, Guangzhou, Hangzhou, Nanjing and Chengdu. In addition, adding the car-hailing service to the Meituan app will also help Meituan to further increase the number of transactions and stickiness of users.
In addition, Meituan's new food and beverage management system goes one step further. According to the financial report, Meituan focuses on optimizing products and increasing the coverage of high-quality merchants to lay a better foundation for future commercialization. For the three months ended June 30, 2019, the number of high-quality merchants continued to grow year-on-year.
Previously, Meituan had invested in Baby Elephant Fresh in the fresh food retail business, but after making business adjustments in 2019, it decided to rapidly shrink Baby Elephant Fresh. , but chose to launch the Meituan grocery shopping business to make progress in Beijing and Shanghai, andThe business was recently expanded to Wuhan.
"Grocery retail business, this market is very large, but the penetration rate is relatively low." In the follow-up earnings conference call, Wang Xing said that online grocery retailing also In the early stage of development, many companies in the industry are exploring various business models, but no one knows which one is really effective. In a hurry to expand the scale, we will continue to test and verify our business model.”
It is worth noting that Meituan has also made a brand marketing strategy for the new business. Optimization adjustment.
Financial information shows that the sales and marketing expenses of this segment as a percentage of total revenue increased from 25.7% for the same period in 2018, and for the three years ended March 31, 2019 19.3% in the month, down to 18.3%. Meituan attributed this to the company's further strengthening of operating leverage across all business segments and optimization of brand and marketing spending.
"The focus is on growth not profitability"
Overall, the second half of this year Meituan achieved overall profitability in the quarter, mainly because Meituan achieved “open source and reduce expenditure”. For Meituan, balancing the relationship between growth and profitability is still a test, and how to deal with changes in the market environment and competition is also a question that Meituan has been thinking about.
When talking about industry headwinds, Wang Xing said that China has an urban population of about 860 million, and each person eats three meals a day, which is 25 Billionton, Meituan only accounts for less than 2% of the market. "We will continue to grow in the future as China's per capita disposable income continues to rise and people tend to cook away from home for convenience and choice."
Wang Xing believes that China's food delivery business has been accelerating recently, and Meituan believes this trend will continue.
In addition, Wang Xing also pointed out that the main growth driver of the food delivery industry is the increase in the number of users ordering meals rather than the increase in the number of new users.
Wang Xing emphasized that there is still a lot of room for growth in the number of Meituan users ordering meals. In the new stage, Meituan will present users with food that is more in line with their tastes. Food will also work with merchants to improve the supply structure and user experience, give users better personalized recommendations, and present more food suppliers to keep them growing.
At the same time, Meituan will continue to invest in the delivery business to improve efficiency and meet growing user needs. "I think the food delivery business will maintain steady growth as the number of food delivery transactions in Meituan continues to increase. We are very confident in the potential of the food delivery market and believe that it will continue to drive long-term industry growth. The word 'long-term' is the key."
In addition, Meituan still needs to face the competition from Ali's local life, especially Ele.me in the sinking market, but Wang Xing's point of view is that the food delivery industry is still in the In the early stages of development, participating companies can benefit from the huge potential of this industry. "I think takeaway is a huge market that can accommodate a lot of businesses."
"We will continue to improve service quality and operational efficiency, and continue to generate higher ROI (return on investment) areas to invest in and drive growth”. Wang Xing believes that through the above measures, the market share will naturally increase. In addition, he also revealed that he will continue to advance in the field of takeaway business, such as supply-side operations, to improve distribution efficiency. "I think unit economics and market share will grow naturally if you just stick to doing the right things."
Talking about sinking markets and competing with competitors On the issue of competition in the sinking market, Chen Shaohui, senior vice president and CFO of Meituan Dianping, said that the growth rate of food delivery transactions in the sinking market in the second quarter of Meituan Dianping was higher than that of first- and second-tier cities, and the sinking market contributed most of the orders.
“Our market share in sinking markets remained stable, although during the same period ourOur competitors have implemented a very aggressive penetration strategy.” Chen Shaohui believes that Meituan has advantages in the number of users, number of merchants, delivery services and comprehensive services, and has established a very high brand awareness. Quality and operational efficiency are critical to maintaining market leadership. "
"We have also seen great development in the past few years, and now the industry growth rate is slowing down, but the takeaway business will occupy a large part of the overall catering consumption in the future. In Chen Shaohui's view, while the industry continues to develop, Meituan can do a lot to promote industry growth and meet demand. "I want to reiterate that our focus is on growth rather than profitability. "(This article was first published by Titanium Media, author / Gao Mengyang)