By
Mayowa Adebajo
July 20th, 2023
In the face of changing dynamics for China’s tech giants, Meituan has demonstrated a commitment to strategic expansion into adjacent sectors.
Chinese tech giant Meituan (HKG: 3690) released its second-quarter (Q2) 2023 financial results earlier today, stunning investors and industry experts alike with performance far exceeding expectations.
Meituan Results Unveiled in Net Profit
One of the most remarkable highlights of Meituan’s Q2 report is its impressive net profit of 4.69 billion Yuan (approximately $644.4 million). This marks a significant leap from the net loss of 1.12 billion Yuan reported during the same period last year. The results surpassed even the most optimistic projections, which were pegged at 3.35 billion Yuan based on a poll of analysts conducted by FactSet.
In addition to the remarkable net profit results, Meituan recorded significant sales growth in the second quarter. The company’s revenue increased by 33% over the same period last year, reaching a staggering 67.96 billion Yuan.
The company’s revenue performance exceeded even the most optimistic predictions. The FactSet poll projected sales to be around 66.82 billion Yuan, making Meituan’s stated figure a strong reflection of its remarkable market performance and strategy execution.
One of the cornerstones of Meituan’s revenue growth during the second quarter was its delivery services. Revenue from delivery services surged by a commendable 28%, reaching 20.37 billion Yuan. This increase was fueled by a remarkable 32% rise in on-demand delivery transactions, totaling 5.40 billion Yuan.
Meituan’s food-delivery services, in particular, stood out as a key contributor to this growth. As consumption patterns continued to rebound from the impact of the pandemic, the company’s food delivery segment experienced robust growth.
The second-quarter report also revealed interesting trends in Meituan’s expense management. Notably, the company reported a 15% reduction in general and administrative expenses compared to the same period the previous year. This decline, amounting to 2.14 billion Yuan, can be attributed in part to decreased employee benefits expenses.
While Meituan’s revenue growth has been impressive, the report also highlights a notable increase in marketing expenses, which surged by a significant 62% compared to the previous year. This rise can be attributed to heightened investments in user incentives, promotion, and advertising efforts.
Meituan’s Path Forward amid Changing Landscape
In the face of changing dynamics for China’s tech giants, Meituan has demonstrated a commitment to strategic expansion into adjacent sectors. Its diversification efforts, ranging from grocery retailing to group buying, showcase its agility in identifying new growth opportunities beyond its core services.
To remain competitive in a fast-changing landscape, Meituan said it is heavily investing in live-streaming services, a strategic reaction to rivals such as ByteDance Ltd’s Douyin. This dedication to innovation demonstrates Meituan’s resolve to not only maintain its market position but also to seek new growth opportunities.
Meituan’s venture into international markets, with its launch in Hong Kong, also marks a significant step towards global expansion. Also, the introduction of cash-heavy incentive schemes for its “KeeTa” meal delivery app demonstrates the company’s adaptability to local market dynamics.
