Meituan Dianping Ord Cl B

Thank you for standing by and welcome to the Meituan first quarter 2024 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 Xu, VP and Head of Capital Markets. Please go ahead.

Thank you, operator. Good evening and good morning, everyone. Welcome to our first quarter of 2024 earnings conference call. Joining us today are Mr. Hsing Wang, Chairman and CEO, and Mr. Xiao Hui Chen, Senior Vice President and CFO of Mayclam. For today's call, management will first provide a review of our first quarter of 2024 results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements, which include a number of risks and uncertainties, and may defer some actual results in the future. This presentation also contains an audited non-IFIS accounting standard 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-ISIS accounting standard measures, please refer to the disclosure documents in the IR section of our website. Now I will turn the call over to Mr. Xin Wang. Please go ahead, Xin.

Thank you. Hello, everyone. Since the beginning of 2024, China's local commerce industry continues to grow steadily along with the consumption improvement during spring festival. We effectively captured the industry we found and invigorated local consumptions, leading to our robust performance in the first quarter. During the first quarter, our total revenue increased by 25% year-over-year to RMB $73.3 billion. Adjusted net profit increased by 36.4% year-over-year to RMB 7.5 billion. Growth over user base and merchant base accelerated for four consecutive quarters and both reached new highs. Annual transaction frequency for annual transaction users also increased steadily to over 50 times The development of local commerce has brought changes to the livelihood and consumption habits of Chinese people. As an industry leader, Meituan continually led the digital transformation process and innovation of the industry. Thanks to years of refined operations and strong execution, we continue to cultivate the everything-now lifestyle through non-on-demand retail and satisfy diverse consumption needs across consumption categories and scenarios through our in-store business. In addition, we streamlined and optimized our organizational structure for the core local commerce segment at the beginning of this year. This will drive further synergies between on-demand delivery and in-store hotel and and improve the overall efficiency of our platform. We will continue to work closely with all the participants in our ecosystem, create more job opportunities, realize more social value, and fulfill our mission to help people eat better, live better. Let me walk you through each business in more details. our own demand delivery business posted another healthy growth in the first quarter. As we face new macro environments and shifting consumer habits, we see both opportunities and challenges in 2024. For food delivery, amid the changing consumer preference, many merchants face challenges in balancing consumer demand with cost-cutting. We worked closely with millions of merchants and brands, penetrated deeper into the industry value chain, and actively explored innovative business models. We launched Branded Satellite Store in Paiwei, Xinjiang, a new model that focuses on efficiency for well-known chain restaurants. In Branded Satellite Stores, merchants do not offer in-store dining, but rather rather they only provide high quality and value for money food delivery services. Through this model, merchants can not only leverage existing brand value, but also benefit from better cost structure of food delivery. Thanks to the cost advantage, merchants can offer significantly lower price than in-store dining while ensuring meal quality. and bring consumer high-quality options at affordable prices. We also provided the traffic support and AI-empowered services for the participating merchants and helped the merchants quickly run up their business after new store openings. For Ping Hao Dan, we extended coverage to broader cities during the quarter. In addition, we elevated consumer experience in Ping Hao Fan with an ROI-oriented approach and continued to improve our order dispatch system and operational capability. As a result, peak daily order volume from Ping Hao Fan reached a new high in the first quarter. For the Shen Qiangshou program, we improved our supply quality and variety and introduced more popular SKUs from chain restaurants. We further refined our subsidy strategy to encourage consumers to order premium quality meals from Shen Qiang Shou. Moreover, we enhanced our marketing solutions to satisfy the growing needs from restaurant merchants and help them acquire customers with higher efficiency. Subsequently, the number of annual advertising merchants posted robust growth, increasing by more than 20% year-over-year. On the consumer side, we launched various marketing campaigns with high-quality restaurants to stimulate demand during holidays, such as the Spring Festival, New Year's Day, and in special consumption scenarios, including weekends, cross-city travel, and late-night snacks. We also offer the wide selection of coupon packages and discounts for mega-hit products. These initiatives help us further strengthen consumer mindshare in our low-price offerings, while incentivizing demand for premium quality and discretionary consumption. Annual active users of food delivery also continue to grow to almost 500 million, and transaction frequency increased notably as well. Nowadays, more and more high-quality users from food delivery have converted into Meitang instant shopping users. In the first quarter of 2024, annual active users of Meitang instant shopping posted a high-teen year-over-year growth and transaction frequency increased even more notably. We precisely captured the increasing needs from consumers for diversity and quality, and refined our operational strategy to satisfy consumers' searching demand for holiday gifting and traveling. During Spring Festival, an increasing number of consumers ordered holiday products and gifts by our on-demand retail channel. BGB from categories such as liquor and beverage, holiday gifts, and daily necessities experience remarkable growth, earning higher revenue to offline retailers, especially for many K-A merchants. We worked with high-quality brands and merchants during our Women's Day marketing campaign Growth from flowers, beauty products, and mom and child products were particularly high. We also collaborated with many top-tier brands in electronics and apparels and jointly launched Super Brand Day promotion . The participating merchants have had a significant GDP growth from the on-demand retail channel and they have become more willing to advertise on our platform. In addition, we continue to expand the coverage of our new supply format. By the end of the first quarter, we had around 7,000 Meituan Instamask, Meituan Shandiancang, and its order contribution further increased. Meituan Instamask accelerated online penetration in lower-tier markets. bringing diversity and competitive pricing to our platform, and effectively elevating the consumer shopping experience in all-demand retail. Additionally, categories offered by Meitan Instamask continue to expand. Besides convenience store, Meitan Instamask also specializes in categories such as beauty products and FMCG. These categories posted rapid growth during the first quarter. Over the past years, our continuous iteration on the supply side have brought a visible improvement in user experience and purchase frequency. We firmly believe that there are substantial growth opportunities across product categories in the on-demand retail market, which we will explore collectively with our business partners. And thanks to holiday consumption peak, such as New Year's Day and Spring Festival, our in-store hotel and travel business experienced a strong year-over-year growth. In the first quarter, GTV grew by over 60% year-over-year. Annual transaction users grew by over 37% year-over-year. and annual active merchants reached a record high. As consumers increasingly favored value for money, we further integrated our products, improved our marketing ability to promote mega-hit products, and enhanced our pricing competitiveness. For live streaming, we leveraged major holiday marketing windows such as New Year's Day, Spring Festival, Women's Day, and launched dedicated live streaming campaigns. We extended our Meituan platform live streaming, Meituan Guanfang Zhibu, to broader regions and continued to increase its proficiency. During the first quarter, more than 400,000 merchants from over 200 cities participated in the Meishan platform live streaming. For merchant live streaming, we step up our merchant support measures and launch the online-offline joint promotion to help them attract user traffic for live streaming. As a result, the number of participating merchants increased rapidly. We offered a special boost to Datan Go. which is extended from our traditional shelf-based model aiming to promote mega-hit products. After continuous iterations for the past year, we have accumulated strong know-hows in deep discount offerings. On the one hand, special deals help deepen consumer mindset in our value-for-money offerings. On the other hand, Merchants' willingness to offer deep discounts on our platform was increased. For special use, we iterated our product selection criteria, enhanced the product control standards, and improved our algorithm to capture consumer-certified consumption demand. These measures both allowed us to offer merchants tailored operational recommendations on product selections and pricing, thereby helping the participating merchants significantly boost sales. In the first quarter, we continued to refine our operational strategies to capitalize on major consumption scenarios, such as holiday outings, family reunions, and group gatherings. Subsequently, business volume during holidays and weekends grew rapidly. During Spring Festival, we collaborated with over 10,000 restaurants from tourist attraction areas, thousands of restaurants from our Master Eat List discipline, and nearly 6,000 high-quality merchants in the lower-tier markets. By utilizing such views, that are ongoing. Lab streaming and themed promotions will offer the consumers wide selections of combo deals. In addition, we launched a variety of marketing programs to promote the high-growth in-store categories, such as spa and massage, ATV, pet care, and escape the room, and et cetera. Additionally, after implementing our direct operation model nationwide, we were able to better seize the opportunities from both online penetration and strong consumption potential in the vast lower-tier markets. In those lower-tier markets, we accelerated the merchant onboarding process and provided a broad selection of products and deals. which satisfied both daily needs from local residents and the diverse demand from tourists and homecoming people during holiday seasons. In the first quarter, people's willingness to travel remained high. Despite a strong base in the same period of last year, we achieved robust year-over-year growth in both the massive hotel room rise and GTV, far exceeding the pre-pandemic level. We continued to enhance our platform supply, pricing, product capabilities, and marketing strategies, and solidified our competitive advantages. Recently, consumer preference for travel destinations has gradually evolved, with niche destinations such as some smaller towns and lower-tier cities becoming increasingly popular. We swiftly adapted to this consumption change thanks to our first-mover advantage in penetrating into lower-tier cities and their continuous operational iterations. Our growth in those niche travel destinations is notably higher than the industry average. On the product side, we leveraged our unique patch to satisfy one-stop consumption needs for travel and local services, including where to stay , where to visit , and provided recommendations on local food, drinks, and entertainment . On the marketing side, we stepped up branding promotion around the New Year's Day, Spring Festival, and Qingming Festival to strengthen the consumer mindset. In addition, we leveraged popular IPs and launched dedicated live streaming sessions. During these sessions, the number of user visits, BGP from HotelPlus executes, and mix from new users all hit new heights. In the first quarter, we continued to experience fast growth in high-star hotels, while further solidifying our market share in the lower-star domain. For low-star hotels, we focused on merchant services, enhancing their customer acquisition ability, and offering them diversified room renovation solutions to help them improve overall operational efficiency. Moving on to our new initiative segment now. For MedlineSelect, we defined our business strategy and focused more on operational enhancement and high quality growth in the first quarter. Q1 is usually the peak season for MedlineSelect because of the Spring Festival. We stepped up our price markup ratio and improved our fulfillment experience for consumers. We also optimized our warehouse operations in selected properties, leading to further improvement in the average procurement cost per item. In addition, we enhanced the resource allocation and achieved a higher marketing efficiency. Thanks to all these measures, operating loss narrowed significantly on both quarter-over-quarter and year-over-year basis. For the rest of the year, we are determined to further improve efficiency for MetaSelect by building our core competence in product selections and procurement. Besides MetaSelect, most of our other new initiatives have made healthy progress during the first quarter, including Kuai Yu, RMS and bike sharing, power bank, and etc. We have not only achieved a market leadership in terms of business scale, but also enhanced the operational efficiency. These new initiatives embed strategy value and synergies with the core local commerce segment. and we will be able to gradually unlock more financial value in the reputation. Amid the current macro environment, we have been proactively adapting to the latest trends and consumption habits to strengthen our competitive modes. We will continue to refine our portal offerings and operational strategies. and provide merchants with diverse marketing tools and effective online operational solutions. Currently, we will continue to enrich consumer experience by offering wider selections of valuable money, products, and services. With our organizational restructuring, we will further iterate our growth model strengthen collaborations among different business units, and integrate our operation in a core local commerce segment more cohesively. These measures will enable us to provide a better experience for both our merchants and consumers, and fulfill our company's mission to help people eat better, live better. With that, I will turn the call over to Xiaohui for an update on financials.