Meituan Dianping Ord Cl B

Thank you for standing by and welcome to the May 1, third quarter 2023 earnings conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, please press star then 1 on your telephone keypad. I would now like to hand the conference over to Scarlett Chu, VP and Head of Capital Markets. Please go ahead.

Thank you, operator. Good evening and good morning, everyone. Welcome to our third quarter 2023 earnings conference call. Joining us today are Mr. Hsing Wang, Chairman and CEO, and Mr. Shao Hui Chen, Senior Vice President and CFO of Meiquan. For today's call, management will first provide a review of our third quarter 2023 results and then conduct a Q&A session. Before we start, we would like to remind you that Our plantation contains four locking statements, which include a number of risks and uncertainties, and may differ from actual results in the future. This plantation also contains an audited RFI's financial measures that should be considered in addition to and not as a substitute for measures of the company's financial performance prepared in accordance with RFIs. For a detailed discussion of risk factors and non-IFI measures, please refer to disclosure documents in the IR section of our website. Now, I will turn the call over to Hsin. Please go ahead.

Thank you. Good evening, everyone. In the first quarter, our total revenue increased by 22.1% year-over-year to 65.5 billion RMB. And our adjusted net profit increased to 5.7 billion RMB, representing 62.4% year-over-year growth. Meanwhile, our annual transaction users and annual active merchants both experienced accelerated growth and achieved record highs. Furthermore, user purchase frequency also reached a new break peak, to continue to innovate by introducing the everything-now lifestyle to consumers and further facilitate industrial digital transformation. We have expanded the service scope that the consumer can enjoy on our platform and further diversified our product formats. Through years of business operations, we have reached a point where we are helping over 10 million merchants generate more income while also creating job opportunities for millions of careers. Going forward, we will continue to implement our retail plus technology strategy and provide more diverse local services to Chinese consumers, fulfilling our mission that we help people eat better, live better. During the quarter, Our food delivery business maintained its robust growth momentum, especially its peak daily order volume reached a new record high of $78 million in the summer, doubled at that level over three years ago. To capture more opportunities from the consumption recovery and further unlock consumption potential, we further enhanced our understanding of consumer needs across different income levels and different consumption scenarios, empowering merchants to digitize their operations. The scale of our medium and high-frequency user base, along with their purchase frequency, continued to grow rapidly, and user stickiness also improved. We iterated our membership program offering coupon packages of different sizes, which effectively boosted user transaction frequency. In addition, we continue to enhance consumer mindshare for a high-growth consumption scenario. For instance, during this year's multi-marketing campaign, on the first day of autumn, Over 21 million newbie orders were made in a single day, showing a large potential of the afternoon tea category. Order growth for late-night snacks was also particularly strong in the summer, thanks to our effective marketing and subsidy strategy. During the National Day holiday, we also witnessed strong growth from travel scenarios like at hotels, airports, and train stations. In addition, the value of Ding Hao Fan has become increasingly evident as more and more high-quality selections at affordable prices emerge. Ding Hao Fan allowed us to effectively cater to the food delivery needs at a low price band. Moreover, campaigns and events that promotes net heat products such as Shen Qiangshou help cultivate consumer behavior in viewing live streaming and shopping on Meituan and further enhance their transaction frequency. At the same time, they also help merchants accumulate customers, improve operation efficiencies, and enhance brand image. In September, Shen Qiangshou launched a special live streaming session for time-honored brands as Lao Chi Hao to celebrate a mid-autumn festival in Beijing, Shanghai, Shenzhen, and Xi'an. The session was intended to facilitate digital transformation for time-honored brands and find new growth opportunities in food delivery for them. We also offered merchants new tools for customer management, which will help them grow their customer base and revenue. Through these efforts, we further expanded the diversity and improved the quality of our platform's supply. Right now, InstaShopping, once again, grows strongly in the third quarter with all the volume, merchant base, and user base all increasing notably. We further promoted the integration of online and offline retail and facilitated the rapid growth of on-demand retail. To better adapt to the evolving consumption trends, the retail industry is actively embracing the new on-demand model, which meets the needs of live now, business now, and service now. In fact, The everything-now shopping style has emerged as a new norm among younger generations. Even against the backdrop of last year's high base, NetOnline's shopping order volume continues to achieve long growth, reaching a peak of over 13 million daily orders on Chinese Valentine's Day in August. We further expanded our user base across the city tiers, The consumers from lower tier cities were at a faster rate than average. Users' transaction frequency had further accelerated, particularly among users aged 18 to 25. Young people have emerged as the primary consumer force of Meta InstaShopping. Moreover, people have started to use Meta InstaShopping in a wider variety of timeframes and consumption scenarios. For example, order mix from late night snacks has further increased. Notably, during the third quarter, our annual active merchants grew by 30% year over year. We have not only empowered the digital transformation of small retail model retailers, but have also established the partnerships with nearly 400 brands. In addition, the number of our Meituan Instamart, Meituan Shandiancang, now exceeded 5,000, complementing traditional offline supply. Revolving consumer demands are also driving changes from the supply side. We see retailers and brands constantly diversifying their SKU offerings align with the on-demand retail channel. During the third quarter, 140 categories such as electronics, home appliances, and beauty products remained as key growth drivers. Categories such as freshly cut food and iced beer have also emerged, catering to consumers' diverse demands for quality products. We believe that on-demand retail will continue to drive consumption expansion and transform the offline retail in the future. And we are very confident that Meituan Instant Shopping will remain its robust growth as a leading on-demand retail platform. And our in-store hotel and travel business maintained its strong growth momentum since the beginning of this year. with the GDP increasing by over 90% year-over-year in the third quarter. Quarterly active merchants grew by over 50% compared to the same period of last year. And quarterly transacting users also increased substantially. Throughout this period, we further solidified our competitive advantages in a shelf-based model and leveraged short-form videos and live streaming to promote the mega-hit products. Our efforts have effectively revitalized the growth for our offline merchants, facilitated transactions on our platform, and provided consumers with better quality, more cost-effective products and services. Our in-store business grew robustly during this summer, achieving a new record in monthly GDP in August. Throughout the third quarter, we continued to iterate and refine our live streaming and special deals. Then we introduced the Master Eat Festival this year for the first time, offering consumers hot interactive products and engaging content. By leveraging our in-depth understanding of consumer behavior, and LBS features. Coupled with the improvement in our product capabilities, our live streaming session can effectively bring in nearby consumers with specific consumption needs. We also seized opportunities during the Mid-Autumn Festival and National Day holiday peak seasons. Optimizing our made-time platform live streaming has been possible to showcase special events such as the duty expert, Mei Bo Hui, and the wedding expert, Hung Bo Hui, and more. With the Meituan platform live streaming now covering more than 200 cities, the number of live streaming sessions has increased 10 times exponentially, and their GDP contribution has grown substantially. We also enhanced our service offerings and boosted our AI capabilities to reduce the entry barrier for merchants to engage in live streaming on May 10. Furthermore, we refined our operations and optimized the user traffic allocation for special bills at AdvanGo, reinforcing consumer mindset as the sole-two platform for value-for-money purchases. These initiatives also motivated more merchants to offer high-quality cost-effective products, resulting in increased transaction volumes on our platform. During the summer holidays and the National Day Golden Week, we proactively launched a number of marketing events and theme-based promotions to drive growth. For example, we jointly launched the first online beauty expert in collaboration with over 30 brands We introduced over 150 megahertz products covering a broad range of services, including facial treatment, hair salons, manicures, dental cares, and medical aesthetics. And these initiatives sparked significant consumer interest in energy consumption. During the quarter, we collaborated with 20,000 merchants when launching the first-ever must-eat festival, Di Shi Jie. During the festival, we encouraged merchants to offer consumers must-eat set meals, Di Shi Tao Chan, at affordable prices. In addition, we introduced the must-eat festival market, Di Shi Jie Shi Ji, an offline event that allows consumers to sample dishes from various restaurants featured on our on our must-eat list. This initiative helped boost in-store dining consumption at nearby shopping centers. Our hotels and travel business continue its strong growth trajectory in the third quarter, with both GDB and room nights growing robustly compared to both the third quarter of 2022 and 2019. We successfully captured the summer peak season closely tracked the evolving consumption trends, and further diversified our products offering. For example, we introduced a greater number of deep discounted deals and increased the frequency of live streaming sessions on our platform. We also expanded quality supply and optimized the price competitiveness to meet the increasingly diverse needs from consumers. After launching the Stay for More Grants to the one last quarter, we further enriched our HotelPlusX active use and enhanced our consumer mindset through promotions, marketing campaigns, and live streaming events. In August, we unveiled the last must-stay list for 2023, earning a selection of over 900 hotels. We expanded our promotional efforts through live streaming and joint marketing collaborations with high-star hotels. For small and medium-sized hotel merchants, we made our best effort to understand their different operational needs and pain points. We helped them improve traffic acquisition, provide room renovation solutions, and broadened promotional channels, all aimed at boosting their earnings. Room nights for alternative accommodation also continued to grow rapidly during the third quarter. We enhanced our platform's self-service capabilities, helped consumers make more efficient and better informed choices, and enhance the host's operational efficiency. And now turning to our new initiative segment. First, Maitan Select maintained its market position in the third quarter with enhanced operating efficiency. We reinforced our product pricing capabilities to provide more value for money selections. We also continually refined our logistic network and increased the density of high-quality pickup stations. Elevating the overall fulfillment experience for consumers, we continued to expand Meituan Select's user base and have accumulated 490 million transacting users by the end of September. Meanwhile, we have been helping farmers increase income facilitating the circulation of agricultural products and boosting the earnings for small business owners. Meitang Grocery, that's Meitang Mai Cai, delivered a further strong growth, with the GDP growing rapidly in the third quarter. And we are pleased to see that Meitang Grocery has increasingly become the preferred choice for consumers, with its user base, purchase frequency, and average order value for increasing quality. During the quarter, we've identified our pricing advantages, optimized our logistics network, and improved operational efficiency across the entire supply chain. In addition, we enhanced the breadth and depth of our product offerings and leveraged the holiday promotions to satisfy consumers' diverse needs and strengthen consumer mindset. For example, scales of mooncakes and seafood experienced high growth during the holiday season. Moreover, our continuous improvement of private label products ensure that our consumers can access a wider range of high-quality items with a guaranteed supply. Since the beginning of the year, a number of macro policies aimed to promote economic growth and consumption have been unveiled, and we believe consumer demand will gradually recover next year. And we will adapt to the evolving consumption trends and iterate our products and operational strategies and provide consumers with more cost-effective goods and services. We intend to play an active role in enhancing the industry ecosystem and create more job opportunities and help stimulate consumption. Looking ahead, we will continue to focus on our retail plus technology strategy to help people eat better, live better. With that, I will turn the call over to Shaohui for an update on our latest financial results.