Meituan Dianping Announces Financial Results for the Year Ended December 31, 2019
HONG KONG, March 30, 2020 /PRNewswire/ -- Meituan Dianping (HKG: 3690) (the "Company" or "Meituan"), China's leading e-commerce platform for services, today announced the audited consolidated results of the Company for the year ended December 31, 2019.
Company Financial Highlights
In the year ended December 31, 2019, we achieved strong revenues growth and profitability improvement across all major business segments. Moreover, we achieved an important milestone of turning both operating profit and operating cash flow positive first time in our history. Total revenues increased by 49.5% year-over-year to RMB97.5 billion from RMB65.2 billion in 2018. Total gross profit increased by 114.0% year-over-year to RMB32.3 billion from RMB15.1 billion in 2018, and operating profit turned to positive RMB2.7 billion from negative RMB11.1 billion in 2018. Adjusted EBITDA and adjusted net profit were RMB7.3 billion and RMB4.7 billion in 2019, respectively. Our operating cash flow turned to positive RMB5.6 billion in 2019 from negative RMB9.2 billion in 2018. We had cash and cash equivalents of RMB13.4 billion and short-term investments of RMB49.4 billion as of December 31, 2019, compared to the balance of RMB17.0 billion and RMB41.8 billion, respectively, as of December 31, 2018.
"2019 was a year in which we experienced solid growth in our core business," said Xing Wang, Chairman and CEO of Meituan. "Our 2019 performance demonstrated our strategy of building China's leading e-commerce platform for services. We strengthened our clear leadership in food-related local services, and continued to penetrate both the demand and supply sides of broader local services."
"Since the beginning of 2020, the coronavirus outbreak has resulted in tremendous near-term shocks to many industries in China. As an industry leader mindful of the social responsibility that comes with our position, we have proactively provided supply assistance and helped to secure people's livelihoods in pandemic-stricken areas. We have also continued to provide our services to people nationwide to ensure that their lives are not adversely affected during the crisis," Wang said.
"Despite the short-term setback, we have strong confidence in our long-term growth. The pandemic has made society more aware of the urgency and importance of digitizing the service industry on both the demand and supply sides, and it has also strengthened our determination to continue upgrading many of the core elements of our business model," he added.
Company Business Highlights
As the world's leading food delivery service provider, we further strengthened our market-leading position in terms of consumer base, merchant base and delivery network during 2019. As we grow our business, we have also improved the unit economics of our food delivery business on a year-over-year basis consecutively over the past four quarters due to increasing economies of scale. In 2019, GTV of our food delivery business increased by 38.9% to RMB392.7 billion. The daily average number of food delivery transactions increased by 36.4% to 23.9 million. The average value per order of our food delivery business increased by 1.8% year-over-year. Monetization Rate[i] of our food delivery business increased to 14.0% from 13.5% in 2018. As a result, revenues increased by 43.8% year-over-year to RMB54.8 billion in 2019. Gross profit from our food delivery business increased by 94.2% to RMB10.2 billion in 2019, while gross margin expanded to 18.7% from 13.8% year-over-year. In the fourth quarter of 2019, total GTV of our food delivery business increased by 39.9% year-over-year to RMB112.1 billion and the daily average number of food delivery transactions increased by 36.7% year-over-year to 27.2 million. The average value per order of our food delivery business increased by 2.3% year-over-year to RMB44.8, and Monetization Rate of our food delivery business increased to 14.0%. As a result, revenues from food delivery increased by 42.8% year-over-year to RMB15.7 billion in the fourth quarter of 2019. Gross profit from our food delivery business increased by 89.4% year-over-year to RMB2.8 billion for the fourth quarter of 2019, while gross margin expanded to 17.7% from 13.4% year-over-year.
On the consumer front, owing to our early, forceful expansion into lower-tier cities, we currently enjoy a significant first-mover advantage and stand to benefit from the ongoing trend that demand in lower-tier cities continues to grow alongside the rising levels of consumption. Our food delivery business in lower-tier cities made a larger contribution and exhibited higher growth in terms of GTV in full year 2019 as well as the fourth quarter of 2019. Moreover, lower-tier cities continued to be the main driver of our user growth in 2019. Attributable to our improvements to operational teams, delivery network and marketing capabilities as well as positive word-of-mouth, we continued to acquire new users, the majority of which came from third-tier cities and below.
Meanwhile, as we continued to expand the quality food supply, delivery categories, available hours and delivery distance to better satisfy consumer demand, purchase frequency of our repeat consumers continued to improve. The successful rollout of our Food Delivery Membership Program in 2019 further enabled us to improve the order frequency and loyalty of these repeat consumers. Moreover, our Food Delivery Membership Program effectively boosted consumer impulse consumptions during off-peak hours. Consumer demand during off-peak hours, including breakfast, afternoon tea and late night snacks, continued to grow rapidly in the fourth quarter of 2019, with increasing needs for more personalized and high-quality online food supplies. In particular, delivery volume of healthy light meals, salad, desserts and beverages all achieved strong growth in the fourth quarter of 2019.
On the merchant front, as the leading platform with sufficient user traffic, we helped millions of restaurants maximize their exposure to online channels and increase online sales in 2019. In addition to cost-effective on-demand delivery infrastructure, we continued to optimize our comprehensive set of solutions to empower local merchants in 2019. These include solutions for online marketing, production and operation digitalization, integrated payment, food distribution and financing services. For example, we introduced dish-based recommendation feeds for restaurants in August 2019 and continued to optimize this marketing solution for merchants in the fourth quarter of 2019. This dish-based recommendation feeds provide more opportunities to merchants to showcase their popular local dishes and attract new consumers while increasing their conversion ratios. More notably, because of our continuous efforts in developing innovative online marketing products to help food delivery merchants enhance their exposure to potential consumers and further boost their marketing efficiency, increasingly more food delivery merchants have adopted our online marketing services in 2019. Online marketing revenues of food delivery business grew robustly, increasing by 118.6% year-over-year. Moreover, we continued to improve our marketplace products to provide restaurants with more useful tools for enhancing their operating efficiency. For example, we introduced an intelligent diagnosis tool for restaurant merchants on their product quality and guidance on product mix optimization. Furthermore, in the fourth quarter of 2019, we released four targeted solutions, including digital business solution, specialized production solution, diversified marketing solution, and intelligent service solution. Through these solutions, our goal is to help millions of merchants build next generation stores, identify and resolve online operation pain points, achieve seamless integration between online and offline operations, and enhance service and product quality.
On the delivery front, we further solidified our advantages in delivery efficiency attributable to higher order density, refinement of our proprietary dispatching system algorithms, and optimization of our operational capabilities in 2019. In addition, we began to fine-tune our delivery service segmentation and our delivery network mobilization capacity, especially during off-peak hours, extreme weather conditions and holidays in the second half of 2019, which enabled us to further lower our delivery cost per order while ensuring a consistent level of user experience over the past two quarters. At the same time, to maintain the consistency in our delivery service quality, we require our delivery partners to set and continuously refine strict delivery riders recruitment standards and closely monitor their adherence to our service standards. In addition, we helped our partners establish legally compliant management systems to ensure fire safety and driving safety, and required them to provide regular training to delivery riders to promote their awareness of safety compliance. We continued to exert efforts on improving delivery riders' corporate affinity and attaining increasing social respect through the "717 Delivery Riders' Day" celebration, "Delivery Riders Guardian Program," and offering free counseling to delivery riders, among others.
In-store, hotel & travel
Our in-store, hotel & travel businesses continued to solidify its market leadership and further demonstrated strong monetization capability in 2019. GTV of our in-store, hotel & travel businesses grew by 25.6% year-over-year to RMB222.1 billion in 2019. Revenues from our in-store, hotel & travel businesses increased by 40.6% year-over-year to RMB22.3 billion in 2019. Gross profit of our in-store, hotel & travel businesses increased by 40.1% year-over-year to RMB19.7 billion in 2019, while gross margin remained relatively flat year-over-year. GTV growth of our in-store, hotel & travel businesses continued to accelerate for the fourth quarter of 2019, growing by 35.3% year-over-year to RMB60.4 billion. Revenues from our in-store, hotel & travel businesses increased by 38.4% year-over-year to RMB6.4 billion for the fourth quarter of 2019. Gross profit from our in-store, hotel & travel businesses increased to RMB5.6 billion for the fourth quarter of 2019, while gross margin increased to 88.8% from 86.8% year-over-year.
For our in-store business, the year-over-year growth rate of commission revenues from transaction-based products re-accelerated in the beginning of the second half of 2019 and continued to accelerate during the fourth quarter of 2019. Online marketing revenues also maintained strong growth momentum throughout the year, with around 55% increase year-over-year in 2019. The impressive results achieved in 2019 were mainly due to the refinement in our business operations, our strengthened content creation capabilities, expansion in the range of product and service offerings and enhanced location-based algorithms.
First, we reorganized our sales team and expanded our coverage for high-quality restaurant merchants in 2019. By dividing restaurant merchants into different categories, our sales team has gained a better understanding of each merchant category and is increasingly capable of providing more personalized product solutions. Second, our continuous enhancement of location-based algorithms was key in helping local service merchants maximize the impact of their online marketing and further refine their marketing precision via user-generated local search queries. We were also able to further leverage the user profiles generated from our database to gauge user demand on our platform across different service categories and promote additional cross-selling opportunities. Third, we continued to diversify our affordable marketing products and tools for merchants. Merchant base penetration rate of our cost-per-click advertising products and subscription-based services increased steadily throughout 2019. Our interest-based feeds, which were rolled out in late 2018 and have barely been monetized at the current stage, also enabled merchants to tailor and promote their content within the editorial feed, display their content to a larger audience, and achieve a higher click-through-rate. Fourth, we continued to advance our operational capabilities through the execution of numerous promotional activities and campaigns in 2019. These promotional activities and campaigns included, to name a few, "Super Brand Food Festival," "2019 Parent-Child Fantasy Day," "Chinese Valentine's Day Special Campaign," "Double 11 Carnival," and "Double 12 Carnival." All of these theme-based promotional campaigns were exceptionally well received by the market. Lastly, we continued to make good progress in the development of our content ecosystem in 2019, which has also helped improve the marketing efficiency of merchants on our platform. As of December 31, 2019, we had accumulated over 7.7 billion user-generated reviews on our platform for millions of merchants in China. Moreover, our refinement of interest-based feeds within the Dianping app has resulted in a more visually appealing user interface, an increasingly personalized content delivery system, and the rapid growth of both DAUs and user time spent on the application for the full year of 2019. Meanwhile, our enhanced Black Pearl Restaurant Guide, Must List Series, and other initiatives have risen in popularity among consumers. Importantly, these features enable consumers to not only discover and explore a broad range of local service categories, but also allow our recommended merchants to generate higher sales, augment their brand influence, streamline their operations, and bolster their product offerings through consumer reviews that are both authentic and dynamic.
With respect to our hotel booking business, we further strengthened our leading position in 2019. The number of domestic room nights consumed on our platform in 2019 increased by 38.2% year-over-year to 392.4 million. Average daily rate per room night also experienced a steady year-over-year growth. More notably, the growth of domestic room nights in the fourth quarter of 2019 further accelerated and increased by 47.9% year-over-year, reaching 110 million quarterly room nights for two consecutive quarters. In 2019, we further solidified our leading position in lower-tier cities and low-star hotel segment because of our increased efforts on exploring offline traffic conversion and new traffic channels. Meanwhile, our high-star hotel booking business maintained healthy growth in 2019. Our "Hotel + X" strategy has enabled us to develop deeper relationships with an increasing number of high-star hotel groups by helping them increase their non-lodging revenues streams. Revenues contribution from high-end hotels further increased year-over-year for the fourth quarter of 2019.
New initiatives and others
Revenues from the new initiatives and others segment increased by 81.5% year-over-year to RMB20.4 billion in 2019. Gross profit of the new initiatives and others segment increased to positive RMB2.3 billion in 2019 from negative RMB4.3 billion in 2018, while gross margin improved to positive 11.5% in 2019 from negative 37.9% in 2018. In the fourth quarter of 2019, revenues in this segment increased by 44.8% year-over-year to RMB6.1 billion in 2019. Gross profit increased to positive RMB1.3 billion in 2019 from negative RMB1.0 billion in 2018, while gross margin further expanded to positive 21.2% in 2019 from negative 23.3% in 2018.
For our bike-sharing and car-hailing services, we successfully reduced our losses during 2019 while improving operation efficiencies and developing synergies with other businesses on our platform. With respect to our bike-sharing services, most of our older bikes reached the end of their useful lives in the third quarter of 2019. As such, we have gradually replaced the remaining older bikes with new Meituan Bikes, which are painted in Meituan yellow, have a longer life span, are modified for a better user experience and may only be unlocked through the Meituan app. We believe that the new Meituan Bikes would have better unit economics and could create more synergies with our platform as compared to the old Mobike model. With respect to our car-hailing services, we have improved our control of operating losses after rolling out the "aggregated" model in 2019. We operated our car-hailing services in 54 cities as of the end of 2019.
In 2019, we continued to drive supply side digitization by investing in our restaurant management system and B2B food distribution services. With respect to our restaurant management system services, emphasis on merchant quality has become a priority in 2019, and both the number and percentage of high-quality merchants have increased. Continuous investment in R&D, product upgrade, as well as a higher standard of post-sale service quality further strengthened our position in this space. For the B2B food distribution services, we prioritized merchant development, product selection, and core capabilities in 2019. We focused on the development and maintenance of high-quality merchants as well as the growth of average revenue per user through an increase in their wallet share, purchase frequency, and ticket size. In addition, we adjusted our product structure according to the geographic distribution and purchase frequency of merchants. Notably, fresh produce and meat products accounted for a higher proportion of our product selection in 2019. We have also bolstered our quality control and pricing management capabilities for fresh products.
With respect to our grocery retail services, we continued to explore both our self-operated model and marketplace model while improving the operational efficiencies of both. With respect to our self-operated Meituan Grocery model, we have increased our warehouse density by setting up 96 warehouses in Beijing, Shanghai, and Shenzhen, as well as by establishing more than 30 locations for self-pickup in Wuhan as of the end of 2019. With respect to our marketplace model, Meituan Instashopping is positioned to be an online marketplace with tens of thousands of SKUs. These SKUs range from items that meet the daily needs of consumers to specialty items from selected vertical service categories, such as medical products and flowers. Notably, GTV growth of both medical products and flowers on our platform achieved robust growth in 2019.
Company Outlook for 2020 and Potential Adverse Impact of the Recent Coronavirus Outbreak
Since the beginning of 2020, the coronavirus outbreak has resulted in tremendous near-term shocks to many industries in China. Local services, which are the focus of our e-commerce platform, have been impacted by this pandemic in many ways. Especially, the pandemic has already caused severe disruptions to the daily operations of our merchants, including restaurants, local services merchants and hotels, which in turn resulted in downward pressure on our own operations for the first quarter of 2020. Business segments such as food delivery and in-store, hotel and travel are all facing significant challenges on the demand side and supply side. As a result of the pandemic, we estimate that we would experience negative year-over-year revenues growth and operating loss for the first quarter of 2020. Due to the high uncertainty of the evolving situation, we are unable to fully ascertain the expected impact on full year 2020 at this stage; however, if it takes longer for user demand and merchant operations to recover to normal levels as the pandemic continues, the results of our operations for the following quarters could also be adversely impacted.
In face of such a severe pandemic, the first thing that comes across our mind is our position as an industry leader and the social responsibilities attached to our position. Therefore, we have been proactively providing supply assistance and helping to secure people's livelihood in pandemic-stricken areas. Additionally, we have continued to provide our services to people nationwide to ensure that their normal lives are not adversely affected during the pandemic.
At the very early stage of the pandemic, we established a special support fund of RMB200 million for medical staff across the country, with a focus on supporting medical staff in key areas of pandemic prevention and control, such as Wuhan, as well as medical teams who have come to Wuhan from other parts of the country to support local medical staff. We were the first to introduce "contact-free" delivery services in Wuhan, which has now been rolled out nationwide. Our Meituan Instashopping business continues to cooperate with supermarkets, pharmacies, convenience stores, fruit and vegetable stores in Wuhan and other regions to provide consumers with on-demand delivery of food, medicines, daily consumer goods and other products. Our grocery shopping business also continues to increase its number of high-quality suppliers, strengthen its food safety management, increase its procurement capabilities, and ensure the supply of groceries during the pandemic. During the pandemic, we extended the emergency service guarantee policy for travel orders to speed up the refund process for hotels, travel as well as train and air tickets. Our B2B food distribution services have also opened green channels for medical institutions in 34 cities while overcoming inventory and capacity challenges to ensure adequate supply of food during the pandemic. We have also suspended fee collection for the use of our bikes in Hubei during the pandemic, while donating more than 2.15 million free ride passes to medical professionals fighting against the coronavirus across the country. Our car-hailing services have rolled out the first real-name public transport system in China to assist the government to track pandemic information. We are also providing job matching services for millions of local service providers and tens of millions of participants. To date, we have released 200,000 delivery riders job openings and thousands of other job openings across campuses and throughout the country.
At the same time, we have launched a series of assistance programs to help small and medium-sized merchants in the local service industry overcome the severe difficulties that they are facing during the pandemic. For example, we established a special fund to support the resumption of operations for merchants across the country. Further, we are working with our bank partners to provide RMB20 billion of loans with preferential interest rates to various merchants while providing free online courses to merchants on the best practices in pandemic response, food safety, storefront operations and other topics. With respect to our food delivery business, we have waived commissions for all food delivery restaurant merchants in Wuhan until after the city lockdown is over. Also, we have returned a portion of commissions to high-quality food delivery restaurant merchants nationwide to be used for online promotion and marketing in the future while providing free traffic support and subsidies to these merchants. With respect to our in-store business, we have waived commissions for the months of February and March for in-store dining restaurant merchants and local service merchants in Hubei as well as February commissions for in-store dining restaurant merchants and local service merchants across the country. In addition, we have extended the validity period of subscription-based services for two additional months for recently on-boarded in-store dining restaurant merchants and local service merchants as well as for those who have renewed their contracts with us within a specified period. With respect to our hotel and travel businesses, we provide subsidies to hotels, guesthouses and tourist attractions nationwide that worth a total of RMB1 billion, primarily to be used for online promotion and marketing. We also provide free insurance products to restaurant merchants in Wuhan and their employees, restaurant management systems to eligible restaurant merchants in Hubei, and anti-pandemic supplies and hotel management systems to hotels and guesthouses in Hubei.
We also launched a series of campaigns to further promote the gradual recovery of consumption. By establishing "Safe-dining Restaurants," "Safe-stay Hotels," and other services, we utilized our online capabilities to guide merchants in the process of streamlining, standardizing, and digitizing their pandemic and safety measures to help merchants attract customers. In addition, we launched "Safe Consumption Month" to provide consumers with subsidies and other benefits as well as our "Safe Reservation" services in cooperation with more than 50,000 in-store dining restaurants and tens of thousands of hotels and attractions across the country.
Meanwhile, we are providing additional support to our delivery riders who remain committed to providing delivery services during the pandemic. For example, we are implementing strict health management systems for our delivery riders, distributing pandemic prevention and control knowledge, upgrade anti-septic and pandemic prevention measures at delivery stations across the country, and provide insurance to our delivery riders. We will continue to implement and refine these measures to support every player in our ecosystem.
Although many businesses would be adversely impacted by the pandemic in 2020, we believe that many industries will re-accelerate towards a better direction in the long run. The pandemic has also made the society more aware of the urgency and importance of digitizing the service industry on both the demand and supply sides. As the leading e-commerce platform for services, we will be an important promoter, leader and long-term beneficiary of this long-term trend. In 2020, we will continue to execute our "Food + Platform" strategy and fulfill our mission of "We help people eat better, live better." We will live up to the challenges throughout this pandemic, create more value for consumers and merchants, enhance consumer stickiness and deepen merchant relationship. Meanwhile, we will continue to actively invest in the areas in our ecosystem that we believe will drive the growth of our business, including merchants, consumers, delivery network, and technology.
For the full announcement of Meituan 2019 annual results, please visit:
About Meituan Dianping
Meituan Dianping (HKG: 3690) (the "Company" or "Meituan") is China's leading e-commerce platform for services. With the mission of "We help people eat better, live better," the Company's platform uses technology to connect consumers and merchants. Service offerings on the platform address people's daily needs for food, and extend further to broad lifestyle and travel services. Meituan is the world's leading on-demand food delivery service provider and China's leading e-commerce platform for in-store dining services. Meituan helps consumers discover merchant information, make informed decisions, complete online and offline transactions and enjoy on-demand delivery. The Company currently owns several household brands in China, including Meituan, China's leading online marketplace for services, Dianping, China' s leading online destination for discovering local services, Meituan Waimai for on-demand delivery services, and Meituan Bikes for bike-sharing services. Meituan has 450.5 million Annual Transacting Users and 6.2 million Annual Active Merchants as of December 31, 2019. The Company operates in over 2,800 cities and counties in China.
This press release contains forward-looking statements relating to the business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.
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Tel: +86 138-1079-1408
[i] Monetization rate equals the revenues for the year/period divided by the Gross Transaction Volume for the year/period.
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