Meituan conference call: Losses have peaked, necessary investments will be made to maintain leadership position, but will not participate in price wars

Meituan reports its first quarterly loss in three years, with an adjusted net loss of 16 billion yuan in the third quarter, and expects the loss trend to continue into the fourth quarter, reflecting that the food delivery battle has entered a heated stage. The company's core local business has turned from profit to loss, recording an operating loss of 14.1 billion yuan in the third quarter, compared to a profit of 14.6 billion yuan in the same period last year.

On Thursday evening, Meituan's management pointed out in the earnings call that "the food delivery price war is essentially a low-quality, low-level vicious competition," and expressed strong opposition to it.

Management also stated that although they believe losses have peaked, the food delivery business will still face pressure in the fourth quarter. The company will make necessary investments to maintain its leadership position but will not participate in the price war, instead dynamically adjusting resources based on the competitive landscape. Management expects that losses in the flash purchase business will slightly widen in the fourth quarter, but they are confident in achieving a reasonable and sustainable profit level in the medium to long term.

The company's Chief Financial Officer stated that the level of industry subsidies from October to November has decreased compared to the summer peak, and recently Meituan's market share and order volume have shown a rebound. The GTV of orders above 15 yuan accounts for more than two-thirds, while orders above 30 yuan account for about 70%, with the average net order value significantly higher than other platforms.

Q&A session of the conference call (translated with AI assistance):

Q1:

Can management comment on the latest changes in the competitive landscape of the food delivery industry, especially after entering the fourth quarter? Have you observed a contraction in industry subsidies? We noticed that competitors have increased investment in membership programs like 88VIP. How is Meituan's core user retention and engagement trend? Finally, from a financial perspective, what is management's expectation for the food delivery business in the fourth quarter? Has there been any change in the outlook for long-term growth and profitability?

A:

Before answering specifically, please allow me to reiterate our clear core position over the past two quarters: First, the food delivery price war is essentially a low-quality, low-level vicious competition, and we strongly oppose it. The past six months have proven that this competition cannot create real value for the industry and is unsustainable. Second, we continue to strengthen the protection of rider rights and support for small and medium-sized merchants, which is the only way to maintain the healthy development of the industry. Third, we will focus on doing the right things for consumers, merchants, and riders, and we are confident in defending our leadership position in the instant delivery field.

The level of industry subsidies from October to November has decreased compared to the summer peak, especially after the Double Eleven promotion period. We are still closely monitoring market dynamics and adjusting strategies accordingly. Recently, our market share and order volume have shown a rebound, maintaining a leading position in the mid-to-high order value segment—orders above 15 yuan account for more than two-thirds of GTV, and orders above 30 yuan account for about 70%. Our average net order value continues to be significantly higher than other platforms.

Core users maintain a high retention rate, with consumption frequency and stickiness steadily increasing, reflecting our strong user mindset and service advantages built in the food delivery scenario. Although users typically install multiple local service applications, Meituan remains the preferred platform for hundreds of millions of consumers. Core users' consumption frequency is several times the average level, demonstrating strong brand recognition and loyalty even in fierce competition—high-frequency, high-value users place more importance on delivery experience, supply quality, and service certainty rather than just low prices

We continuously enhance the core user experience through faster and more reliable delivery (especially during extreme weather and holidays), a diversified supply covering all price ranges, and exclusive benefits provided by the Meituan membership system. We believe that investment in the high-end user group will expand the reachable market, and we will further increase our influence among quality users by leveraging our service quality advantages.

Regarding financial performance: Although we believe that losses have peaked, the takeout business will still face pressure in the fourth quarter. We will make necessary investments to maintain our leadership position but will not engage in a price war; instead, we will dynamically adjust resources based on the competitive landscape, continuously strengthening our service experience and operational efficiency advantages.

In the medium to long term, industry competition will continue to evolve dynamically. The evolution of business models typically follows a clear path from capital-driven to efficiency-driven, and finally to innovation-driven. The Chinese takeout industry has entered a stage of service upgrades and technological innovation, and relying solely on subsidies for scale expansion is unsustainable. We believe that the current irrational competition will eventually transition to a rational and mature stage, where companies with industry insights, excellent operations, and high-quality growth capabilities will become industry leaders.

As mentioned in the last earnings call, Meituan will focus on doing the right things: expanding quality supply, ensuring fast and reliable delivery, and maintaining price affinity. While defending our market position, we aim to create greater value for the entire industry. Takeout is becoming a high-certainty lifestyle for more and more consumers, with clear long-term growth prospects. Our goal of achieving an average of 100 million high-quality orders per day remains unchanged. With our proven operational efficiency advantages, we are confident in maintaining industry-leading unit economics, and in the long run, takeout profits will return to reasonable levels in a dynamic market.

Q2:

Regarding the flash purchase business: In the face of other e-commerce platforms continuously ramping up instant retail and introducing traditional e-commerce brands, how does management view our competitive advantages? After the Double Eleven event, can you share the next steps for Meituan Flash Purchase? Will there be increased investment in the fourth quarter? Thank you.

Answer:

First, it is important to emphasize that we have significant competitive advantages in the native instant retail supply chain, with barriers even higher than those in our already leading takeout business. In our view, instant retail fundamentally differs from traditional e-commerce and same-day/next-day delivery models. Instant retail means "no waiting, what you see is what you get, instant satisfaction." The platform needs to accurately identify real consumer needs and allocate the corresponding supply chain.

Relying on years of understanding market demand and urgent pain points, we digitalize offline supply and use data insights to more accurately meet instant retail needs. Simply migrating traditional e-commerce inventory to instant retail channels does not create incremental value for merchants or consumers. To better serve the lifestyle shaped by instant retail, we are promoting upgrades in infrastructure and service experiences across the industry: for example, expanding the network of 24-hour convenience stores and pharmacies, launching cold delivery services for alcoholic beverages, and introducing quality assurance systems like "open kitchen" and "bad must be compensated" for categories like fruit cuts.

More importantly, our takeout business has cultivated a user base that highly relies on "30-minute certainty." This platform brings the highest conversion rates and incremental sales to merchants, making it the best scenario for developing instant retail Therefore, even with intensified competition, we have still solidified our market share among core user groups and maintained our leading position across all categories.

In the new competitive environment, we are deepening our collaboration with brand owners: going beyond physical stores and platform official flagship stores, we have launched the "Brand Official Flagship Lightning Warehouse," providing 24-hour operational instant delivery services for branded products. Through native instant retail channels, we offer brands a quadruple infrastructure covering warehousing, delivery, and digital systems. During the Double Eleven period, hundreds of brands have already settled in, with some brands achieving a threefold increase in sales on the first day of the event at the official lightning warehouse. We aim to help brands break through the traditional e-commerce competition and explore new growth points in instant retail.

The brand official flagship store model helps brands achieve lower operating costs, faster product launches, stronger brand recognition, and more sustainable repurchase rates. We are also upgrading our brand service tools to provide intelligent product selection and AI decision-making support for fast-moving consumer goods partners. We will continue to strive to become the preferred platform for brand owners to layout instant retail.

Regarding fourth-quarter investments: we will continue to invest in supply-side operations to ensure the best user experience and strengthen user education for events like Double Eleven. It is expected that the losses from the flash purchase business in the fourth quarter may slightly widen compared to the third quarter. However, with our competitive advantages in supply chain, user base, and fulfillment, we can maintain our leadership position with higher investment efficiency. We are confident in achieving a reasonable and sustainable level of profitability in the medium to long term.

Q3:

Good evening, management. Recently, Amap launched the "Street Scanning" feature, and Taobao also introduced "Group Buying." What impact do these measures have on the competitive landscape of in-store business? What specific measures does the company plan to take to respond to challenges in the new competitive environment?

Answer:

Our in-store business differs from competitors in terms of category structure, merchant scale types, and marketing models. Through long-term accumulation of real, precise, and easily accessible POI data, we have established consumer perception—Meituan is the preferred platform for local life services. The vast majority of local transactions are completed on our platform.

On the other hand, Amap has a clear navigation tool attribute, making it difficult to cultivate users' proactive search mindset for local services. Based on ten years of operation, we have accumulated over 25 billion real user reviews, which is a key reason why consumers trust and choose Meituan as their preferred platform for local services. We also have the widest coverage and selection of local service categories, providing users with a one-stop service that includes reservations, diverse group buying vouchers, in-store ordering, payment, and membership benefits.

We maintain industry-leading merchant coverage and, leveraging the experience of our offline promotion team and deep industry insights, provide top-notch services to merchants. These are core competitive advantages that we believe other platforms find difficult to replicate quickly.

To respond to dynamic competition, we continuously iterate our products and operational capabilities to provide diversified and personalized services for more quality merchants and consumers:

First, by expanding quality lists such as "Must-Eat List," "Must-Visit List," and "Black Pearl," and introducing more vertical demand lists, we have built an ecosystem favorable to quality merchants, bringing them precise traffic, efficient promotion, and higher conversion

Second, we optimize the evaluation system to guide merchants to focus on product and service quality rather than merely pursuing the quantity of evaluations. By using big data intelligence to deduplicate and automatically filter out abnormal evaluations, we significantly enhance the experience for both merchants and users. We believe that as AI technology is deeply integrated, this system will be further improved.

Third, we have launched innovative products such as "in-store appointment" and "smart ordering," enhancing the consumer experience and merchant operational efficiency through digital solutions.

The above are just a few examples. In the future, we will focus on three key directions: continuously optimizing service innovation and operational upgrades, providing consumers with a seamless experience across the entire chain, empowering merchants throughout the entire cycle from customer acquisition to conversion and retention, and promoting sustainable development in the industry through digital transformation.

Competition may temporarily affect the profit margins of in-store businesses, but we believe that the long-term competitive landscape will remain unchanged. We are fully confident in maintaining our market leadership and continuously leading the evolution of the industry ecosystem.

Q4:

Please elaborate on our future plans and investment strategies in the field of artificial intelligence.

Answer:

In this quarter, we continue to strengthen our capabilities in three core dimensions: first, self-developed large language models; second, AI productization; and third, AI infrastructure.

We have launched multiple open-source versions of the "Lung Mao" large model series. These self-trained large language models have received positive feedback in the developer community, reflecting the value of open-source models. Currently, the large models have been deeply integrated into our specific application scenarios, driving innovation based on real business needs and supporting our long-term strategic growth in the integration of online and offline.

We have upgraded several local service AI tools to provide merchants with more precise intelligent services. For example:

• "Shangqitong" can assist catering merchants in product planning and site selection decisions.

• "Smart Store Manager" has added multiple functional modules, including AI reception, operational analysis, and evaluation responses, helping merchants achieve intelligent store operations.

We have launched the intelligent life assistant "Xiao Mei" for users, which is currently in large-scale testing. At the same time, we have introduced the AI assistant "Wen Xiao Tuan" within the Meituan App. We are adopting a dual-path testing strategy: developing independent AI assistant applications while also deeply integrating AI assistant functions into the main app.

Currently, these assistants cover all local service scenarios, including dining, accommodation, transportation, and flash purchase, capable of completing the entire process from demand search and price comparison to order generation, providing users with smarter and more personalized services.

We will also continue to develop tools such as AI programming to enhance employee work efficiency through low-code applications.

Looking ahead, we will continue to focus on three directions:

1. Enhance the competitiveness of self-developed foundational models.

2. Expand the application of AI agents in local service scenarios.

3. Iterate AI assistant strategies based on operational insights and user feedback, promoting the deep integration of AI technology across the entire ecosystem.

Q5:

Regarding overseas business: How are the new cities and country markets we have entered performing currently? Considering the strong competitors in markets like the Middle East, including local players, what differentiated strategies will we adopt to gain market share? Additionally, what are our plans for the synergy between service expansion and the overall capital allocation strategy of the company? How do we control losses in new businesses?

Answer:

Thank you for your attention to emerging businesses. Regarding the Hong Kong market, there is an important development: KeeTa achieved its first monthly profit in October this year, which is a significant milestone for us. We entered the Hong Kong market in May 2023 and achieved profitability by October 2025, taking 29 months, which is ahead of the original three-year plan. This confirms that a customer-centric approach, combined with deep operational experience and strong technical capabilities, can achieve a better unit economic model. We will continue to improve on this basis and expect to see more significant month-on-month improvements in the future. We also look forward to replicating a similar path in other markets, such as Saudi Arabia and other Gulf Cooperation Council markets.

Regarding business in the Gulf region: Based on the Saudi market, we have recently entered other GCC markets, such as Qatar in August and the UAE in September. We are still in the early stages, so it is too early to share specific details. However, given the common market structure and user behavior in the Gulf region, we have reason to believe that it remains one of the most attractive markets for the delivery industry. Compared to Saudi Arabia, some GCC countries not only have a more mature delivery penetration rate but also offer a richer and more diverse restaurant supply, indicating that this market still holds significant untapped potential.

Regarding the latest market, Brazil: As stated in the financial report, Brazil is one of the top five delivery markets globally, with an annual growth rate still exceeding 20%. Our market research found that transactions completed through traditional channels such as WhatsApp and phone calls still account for a significant proportion, even exceeding existing online platforms. This indicates that there is enormous potential for online penetration in the coming years, providing an entry opportunity for KeeTa, despite the presence of local competitors.

In our operations in the mainland China market, we have established the world's most efficient instant delivery platform and technical system, which can support orderly and rapid delivery of over 150 million orders per day. Additionally, KeeTa's early successes in Hong Kong and Saudi Arabia over the past two years have validated our localized operational capabilities for different markets.

We are confident in bringing a better experience and service to these new markets because industry competition will ultimately return to its essence: consumers in any market seek richer choices, affordable prices, and reliable and fast delivery—this is a common demand across markets. Merchants hope to receive more orders, reasonable commission rates, and convenient tool experiences. At the same time, regulators and society are also concerned about job creation and talent development. We will fully implement these values in all operating markets.

Regarding capital allocation: As part of the new business segment, KeeTa is strategically aligned with long-term strategies such as grocery retail. We have scaled back the Meituan grocery business by the end of the second quarter while focusing on the well-performing Xiaoxiang supermarket and plan to pilot new offline retail formats such as "Happy Home" in 2026 to further enhance the quality of the grocery supply chain KeeTa and grocery retail represent long-term opportunities that we are highly confident in, due to their verifiable business models and transferable capabilities from the Chinese market. In the short term, the expansion into the GCC market and investments in Brazil will lead to increased related investments in the fourth quarter. However, based on the early success in the Hong Kong market, we are confident in seeing a positive development trajectory in GCC markets such as Saudi Arabia, where unit economics have shown a rapid improvement trend, and the market capacity is sufficient to accommodate multiple participants.

Overall, we expect that the GCC countries and the Brazilian market will follow a similar path of unit economic improvement as Hong Kong. We anticipate that the losses in the new business segment next year will not significantly exceed those of this year