Meituan’s Earnings Call: Growth Amidst Challenges

Meituan Dianping ((HK:3690)) has held its Q1 earnings call. Read on for the main highlights of the call.

The latest earnings call from Meituan Dianping reflects a balanced sentiment, highlighting both positive developments and challenges. The company reported strong revenue growth and successful expansion in overseas markets, alongside advancements in AI technology. However, it also faces intensified competition in the food delivery sector and ongoing challenges in grocery retail. Despite these hurdles, Meituan is taking strategic steps to maintain its competitive edge and is committed to long-term growth.

Strong Revenue Growth

Meituan reported an impressive 18.1% year-over-year increase in revenue for the first quarter of 2025, reaching RMB86.6 billion. This growth is a testament to the company’s robust business model and its ability to attract and retain a growing number of transacting users and active merchants.

Expansion of Meituan Instashopping

Meituan Instashopping experienced significant growth, with over 500 million transacting users. The service expanded into new product categories, achieving over 60% order growth in non-food categories, showcasing Meituan’s ability to diversify its offerings and capture new market segments.

Successful Expansion in Overseas Markets

Meituan’s international ventures have been fruitful, with Keeta becoming the largest food delivery player in Hong Kong and expanding operations to all major cities in Saudi Arabia. The company also announced plans to invest $1 billion in the Brazilian market over the next five years, signaling its commitment to global growth.

Commitment to Courier Welfare

In a move to support its workforce, Meituan announced a pilot pension program and occupational injury insurance for couriers, covering over 7 million couriers and providing RMB1.5 billion in insurance coverage. This initiative underscores Meituan’s dedication to improving the welfare of its couriers.

AI and Technology Advancements

Meituan has made significant strides in AI, with 52% of new code generated by AI. The company plans to launch AI-powered business decision assistants for the food service industry, aiming to enhance operational efficiency and user experience.

Intensified Competition in Food Delivery

Meituan is facing increased competition from new entrants like JD.com and Ele.me, each announcing RMB10 billion subsidy programs. This competition is impacting Meituan’s market share and could potentially affect its profitability.

Potential Profitability Impact

Due to the intensified competition, Meituan expects volatility in short-term financial results and a significant decrease in operating profit for Core Local Commerce in Q2. The company is preparing to navigate these challenges while maintaining its market position.

Challenges in Grocery Retail with Meituan Select

Meituan Select is facing challenges in lower-tier markets, prompting the company to focus on testing and validating its unit economics rather than expanding its scale. This strategic focus aims to ensure sustainable growth in the grocery retail sector.

Forward-Looking Guidance

During the earnings call, Meituan’s management provided forward-looking guidance, emphasizing their plans to invest RMB100 billion over the next three years to drive high-quality growth in the food service industry. The company aims to empower merchants, elevate supply quality, and stimulate consumption. Despite the competitive landscape, Meituan remains confident in maintaining market leadership and leveraging AI technology to refine user experience and operational efficiency.

In summary, Meituan’s earnings call highlighted a mix of positive growth and strategic challenges. The company is making significant investments in technology and global expansion while addressing competition and market dynamics. Meituan’s commitment to long-term growth and innovation positions it well for future success, despite the hurdles it faces in the competitive food delivery and grocery retail markets.