Meituan Dianping Ord Cl B

Thank you for standing by and welcome to the Meituan fourth quarter and full year 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 you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Scarlett Zhu, VP and Head of Capital Markets. Please go ahead.

Thank you, Operator. Good evening and good morning, everyone. Welcome to our fourth quarter and fiscal year 2023 earnings conference call. Joining us today are Mr. Hsing-Wang, Chairman and CEO, and Mr. Xiao Hui-Ting, Senior Vice President and CFO of MedPlan. For today's call, management will first provide a review of our fourth quarter and fiscal year 2023 results and then conduct a Q&A session. Before we start, We would like to remind you that our presentation contains four looking statements which include a number of risks and uncertainties and may differ from actual results in the future. This presentation also contains an audited IFIS accounting standards 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 IFIS accounting standards. For a detailed discussion of risk factors and non-IFIS accounting standards measures, please refer to the disclosure document in the IR section of our website. Now I will turn the call over to Mr. Xin Wang. Please go ahead, Xin.

Thank you, Scarlett. Hello, everyone. During 2023, China's local commerce industry experienced a faster growth than other retail sectors. and as an industry leader, Medline achieved healthy and high-quality growth in core businesses. Total revenue increased by 25.8% year-over-year to RMB $276.7 billion. The judges' net profit increased substantially to RMB $73.3 billion from RMB $2.8 billion in previous years. In the fourth quarter, user base and merchant base both accelerated growth, setting new records. Daily active users also grew by over 30% year-over-year to record high. These results laid a solid foundation for our long-term business expansion in the future. In 2023, daily order volumes of on-demand delivery increased by 33.9% year-over-year to 60 million. Picket daily order volume of food delivery exceeded 78 million on the beginning of autumn. Picket daily order volume of instant shopping surpassed 13 million on Chinese Valentine's Day. We continue to cultivate consumer behavior in adapting to the everything-now lifestyle. We also fostered a sustainable development ecosystem for our consumers, merchants, couriers, and business partners, and facilitated the high-quality growth of on-demand retail in China. Moreover, our in-store hotel and travel businesses achieved explosive growth of GTV, merchant base, and user base. With TAM expanding and online penetration accelerating, in a new consumption environment. We effectively satisfied diverse needs from consumers and invigorated local consumption by offering more valuable money selections through more product formats across broader categories. In future, we will continue to devote ourselves in better serving the needs of our consumers delivering greater value to merchants and creating more job opportunities and generating more social value. Now, let me walk you through each business in more details. 2023 marks the 10-year anniversary of our full-degree business. The past decade shows our continuous innovation and growth in a competitive environment. In 2023, we further solidified our market leadership and core competence, annual transaction users of food delivery continues to grow. Next to high-frequency users and their consumption frequency increase steadily. We are delighted to see that food delivery now caters to a much larger consumer base and satisfies more diverse needs from consumers. Having food and meals delivered in 30 minutes has become a new lifestyle. Throughout the year, we proactively generated our business strategies and refined our operations in products, marketing, and supply to cope with the evolving consumption trends. For Ping Hao Fan, we focused on scale expansion and operation enhancement. It allows us to meet the consumption demand for value for money selection through group purchase and having them delivered to their doorstep with higher efficiency. It helped us reach broader audience, enhance user stickiness, and improve purchase frequency of price-sensitive users. We also put more efforts in high-order value domain by innovating and refining products such as Shen Qiangshou or Yiren Shi, Milk One, and Master Order List, Yi Dian Ba. During the process, we strengthened two key competencies. The first one is progress display. We enhanced our content production capabilities across various formats, including graphics, tags, videos, and live streaming to nurture a vibrant content ecosystem. The other one is promotional schemes. We upgraded and simplified our membership program to make it easier to use consumers and merchants alike. Our continuous improvement in a shelf-based model, combined with our improved marketing ability with our mega-heat products, allows us to stimulate consumer demand more effectively. After five years of rapid growth, Meituan Instant Shopping has now become a pivotal role in the on-demand retail domain. It connects millions of local retailers and brands with hundreds of millions of consumers. We have successfully cultivated a consumer habit in having everything delivered to their doorsteps in 30 minutes. In 2023, order volume of Meituan Instant Shopping increased by over 40% year-over-year, showcasing its large growth potential. The user base of Meisan Instant Shopping not only has a higher stickiness, but also demonstrates a stronger purchasing power compared to the average food delivery users, with a significant portion in young users. While we continue to improve supply, we notice that consumers now use Meisan Instant Shopping more frequently because of a wider range of scenarios and time periods. Notably, in the fourth quarter, purchase frequency from core users grew by over 20% year-over-year. We believe that purchase frequency and approval from these core users still have substantial room to grow. In 2023, our annual active merchants also grew by almost 30% year-over-year. As more offline retailers are tapping into the on-demand channel, the quality and diversity of our supply has enhanced significantly. We partnered with around 400 brands, onboarded more key account merchants, and supported their transition to online operation. We also expanded our new supply formats to broader regions that made on Instamart, now covering over 200 cities. Our continuous efforts on the supply side have progressively yielded an elevated user experience and sustained user growth. All the volume grew robustly across all categories, regions, and scenarios. Moreover, we continued we continually innovated and optimized our platform solutions to better cope with the evolving demand. For example, we expanded our coverage for 24-hour pharmacies, elaborated with the chain pharmacies in offering medical insurance payment options, and provided on-demand quick home testing service, Qijia Qaijin, during the flu season. We were the first in the industry to launch a close-end solution for home testing, online diagnosis, and medicine delivery, and offer the consumer one-stop online health service. Thanks to our past efforts, the value embedded in the on-demand retail and on-demand logistics has been recognized We believe that having everything delivered to the consumer's doorstep will be the next era. Historically, driven by growing consumer demand, we continuously moved the offline price to the online platform and provided reliable procurement services. In the next stage, we will transform and penetrate deeper into the industry value chain across all major categories for both food delivery and non-food delivery. We are absolutely confident in the long-term development of food delivery and instant shopping. Our in-store hotel and travel business actively captured the rebound of offline consumption with products and operations further iterated. For the full year of 2023, GTV increased by over 100% annual transaction users increased by over 30%, and annual active merchants grew by over 60%, all reaching new highs. In 2013, we navigated through the industry involvement and satisfied the diversified preferences from consumers to merchants by business iterations. As a leading online platform, we have the responsibility to drive the industry transformation During the year, we proactively enhanced our ability to promote mega-heat products and enrich video content offerings. We worked with high-quality merchants and offered consumers diverse selection of high-quality discounted views through our special view session, Sejia Cangou. Consumer mindset in our low-price offering was further elevated Meanwhile, we launched our live streaming programs with a combination of platform live streaming, merchant live streamings, and sales team live streaming. And this allows us to recommend value for money products in a more vivid way to satisfy consumer needs in stockpiling views. Transaction skills from live streaming increased rapidly in 2023, with daily live streaming sessions exceeding 10,000 in December. We are glad to see that consumers are increasingly willing to watch live streaming and place orders on our platform. Both special deal sessions and live streaming events help us further solidify our consumer mindshare of everyday low price. Amidst the changing industry environment, we continue to optimize our shell-based search module to solidify our competitive edge. By offering merchants incentives and joint marketing programs, we have strengthened our partnership with many high-quality merchants and provided consumers with more valuable money deals. We also lowered the threshold for subscription-based services, thus accelerating merchant onboarding and significantly expanding our merchant base. In the fourth quarter, we further implemented our direct operations model nationwide to substitute the formal agency model in order to accelerate the online penetration and see future growth opportunities in the lower tier cities. We are committed to making our platform as a topic for merchants to operate online. Through our continued efforts, we help merchants accumulate valuable digital assets like user reviews and transaction data and provided consumers with a reliable source for making consumption decisions. Additionally, we optimized our theme-based marketing events and organized diversified online and offline promotions for our trusted eSpa must-eat list, and this year, a must-eat festival, and Pay the New Bandhan, a black hole list, helping us enhance brand awareness and improve transaction conversions. The hotel and travel industry experienced the highest rebound in 2023. Thanks to our accumulated know-how in leisure travel and our unparalleled leadership in the domestic market, we swiftly captured the industry growth. We also deepened our understanding in consumer preferences and improved our supply capabilities to better cope with the evolving demand. In 2023, our domestic hotel GDP increased by over 100% year-over-year. To provide consumers with elevated content experience and cost-effective recommendations, we enhanced our live streaming capabilities. Last year, we further leveraged our unique positioning in the in-store dining domain and offered bundle deals of hotel room size In addition, we followed the latest popular trends and launched the various marketing campaigns during holidays. Subsequently, room night reservations during holiday seasons broke record highs in 2023. We also maintained a strong presence and made further progress in the high-star domain, as GTV from domestic high-star hotels exceeded 30% in 2023. For alternative augmentations, after achieving absolute leadership in the domestic market, we further expand the supply, improve the service quality, and enhance user experience while continuing to drive industry development in future. Looking ahead, we will continue to solidify our competitive mode, bring larger value to both consumers and merchants, and capture more growth opportunity for our in-store hotel and travel businesses. We have full confidence in the online penetration potential of our services retail, and we are committed to facilitating the digital transformation process of local services.