Meituan Dianping Ord Cl B

Thank you for standing by and welcome to the Meituan Second Quarter 2025 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 Hsu, VP and Head of Capital Markets. Please go ahead.

Thank you, operator. Good evening and good morning, everyone. Welcome to our second quarter of 2025 earnings conference call. Joining us today are Mr. Xin Wang, Chairman and CEO, and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan. For today's call, management will first provide a review of our second quarter of 2025 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 differ from actual results in the future. This presentation also contains an audited non-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 in a non-IFIS accounting standard measure, please refer to disclosure documents in the IR section of our website. Now I will turn call over to Mr. Xin Wang. Please go ahead, Xin.

Thank you, Scarlett. Hello, everyone. In the second quarter, the competitive dynamics of both food delivery and more generally the on-demand retail evolved rapidly. Our business maintained a steady growth with revenue increasing by 11.7% year-over-year to RMB 91.8 billion. The total MAU exceeded 600 million, while the MAU of our Meituan app alone surpassed 500 million. An annual transacting frequency hit a new record, with the average user transaction volume transacted at least once a week. So this underscores Meituan's position as a preferred platform for local services among a growing number of consumers. Leveraging our extensive categories and merchant coverage, and coupled with our industry-leading efficiency, efficient, reliable on-demand delivery network we deliver comprehensive, high-quality, and convenient services to our consumers. And looking ahead, we will further enhance our products and services to better address consumer needs by applying technology and rolling out more innovative supplies. We will continue to empower the local service industry and further unlock the industry's long-term potential. In the second quarter, the on-demand delivery industry entered a new phase and another round of intense competition. And drawing on the operational capability and the unparalleled efficiency we have built over a decade, we further solidified our market leadership, hitting an important milestone in July as our high steady on-demand delivery order finally surpassed 150 million orders per day. That day, not per day. That being said, what truly matters more than these figures is our steadfast commitment to service quality and consumer experience. And more importantly, the intensified competitive landscape will not change our commitment in building a healthy ecosystem. We understand deeply that only by fostering a sustainable ecosystem can we ensure long-term development and deliver sustainable win-win outcomes for all participants. In the second quarter, our food delivery business successfully attracted a larger base of new users while solidifying the loyalty of our core users. This achievement stems from our comprehensive offerings of value-for-money products across all price bands and the reliable service experience that we offer. In using Meituan membership and diversified marketing initiatives, we effectively enhanced user stickiness and transaction frequency among our core users. while deepening penetration into high-value scenarios, such as family meals and premium meal options. As a result, we maintained an unrivaled market leadership in the food categories. Meanwhile, we remained focused on building a sustainable ecosystem for the whole industry. Through collaborative efforts with merchants to drive supply-side innovations, we continue to lead the industry-wide advancement in quality standards and user experience. In July, we had partnered with over 800 restaurant chains to launch more than 5,500 branded satellite stores, while helping them optimize their online operational efficiency and lower costs with our AI-driven solutions. Our target is to expand this network to over 10,000 branded satellite stores by the end of this year. And our centralized kitchen initiative, Huanxiong Shitan, the Raccoon Cloud Kitchen, continues its expansion, setting new benchmarks for food safety across the industry. It delivers end-to-end infrastructure support to restaurants of all types, encompassing supply chain management, bright kitchen program, and digital operations, all under a unified food safety management framework. Over the next three years, we plan to invest in building 1,200 raccoon cloud kitchens nationwide, enabling tens of thousands of restaurants to upgrade quality, creating a fully traceable and trustworthy regulatory model for consumers. In addition, we continue to iterate the supply diversity and service quality of our Pinghao Fund and Shen Qiangshou, making sure they meet consumer demand for valuable money across different price ranges. Notably, Pinghao Fund has emerged as the fastest-growing innovative product in the industry over the past five years, serving as a reliable revenue stream for small and medium-sized merchants, as well as restaurant brands. Recently, we launched the Wan Jiaping Mai Ji Huang, a 10,000-brand initiative for Ping Hao Ban, which provided tailored support for 10,000 branded restaurants nationwide. Throughout the second quarter, we continued to promote the Mingzhu Lianzao Application Program, directing more traffic to participating quality merchants and providing hardware subsidies to small and medium-sized merchants. We also simplified our marketing schemes to alleviate operational burden on merchants, redirecting industry focus toward quality enhancement Moreover, we are committed to developing a robust welfare scheme for coolies, ensuring competitive compensation, flexible hours, and safety protection. Starting July 1st, we have expanded the coverage of occupational injury insurance to all coolies in 17 provinces and cities. Following successful pilot in Chenzhou and Nantong, our pension insurance subsidy program will be expanded nationwide by the end of this year. We expect it to cover more, over one million couriers. And we have also upgraded additional supportive measures for couriers. For example, we set up an RMB 1.6 billion Summer Subsidy Fund, our critical illness fund has been expanded to cover more disease and now include the children who are part-time and crowdsourcing couriers. In collaboration with ecosystem partners, we have built a Xizhou Zijia courier's homes in multiple provinces and cities, offering free services such as emergency assistance rest areas, price, battery replacement, and charging facilities to all queries, or even including queries from other platforms. In the second quarter, Meta InstaShopping solidified its leading position with a rapid growth of on-demand retail industry and evolving consumer needs. GTV achieved a much stronger growth than order volume. User growth also accelerated. Not only did more food delivery users converted to made-time instant shopping users, but also around 20 million new users have tried our 30-minute delivery service for the first time this quarter. Transaction frequency of core users increased notably. with consumption scenarios expanding beyond grocery to encompass 3C electronics, cosmetics, mother and child products, and more. And this quarter marked our first June 18th shopping festival for on-demand retail, during which we helped nearly 1 million offline stores serve over 100 million users. It was a June 18th event dedicated to offline merchants, enabling brick-and-mortar retailers to enjoy the benefit of online shopping festivals and drive sales growth through on-demand retail channels. During this June 18th shopping festival, QGV for over 60 product categories on our platform doubled, While overall, QTV of Meituan Instamart nearly doubled. High AOV items such as mobile phones or Chinese liquor Baijiu and milk powders and home appliances experienced 200% QTV growth. In the liquid category, we enhanced the shopping experience for chilled beer and strengthened consumer mindset of purchasing Chinese liquor on Meituan. Through the introduction of national subsidy and a series of shopping protection measures, we significantly elevated the shopping experience for 3C electronics And we also added more snack discount stores to enrich the supply of leisure food on our platform. On the service branch, we launched a service insurance plan, Anxin Shanggou, upgrading services across three dimensions, the service experience and fulfillment, and post sales support. Notably, we partnered with numerous home appliances brands to offer value-added services, such as half-day delivery and installation service through offline stores. As the on-demand retail industry grows, we continue to lead supply-side transformation. By the end of the second quarter, we have collaborated with retailers and brands to set up over 50,000 in-store through InstaMath, we facilitated the digital transformation of numerous local mom and pop stores, expanding the service radius and enhancing operational efficiency. This quarter, our in-store business maintained its strong growth momentum. with order volume surging over 40% year over year. And annual transacting users increased by more than 20%. And annual active merchants hit a new high. And QGV of hotel and travel during the Labor Day and Golden Week also reached a new high. On the merchant side, we have actively seized the emerging opportunities in the service retail industry. such as the new categories, innovative supply models, and the growth potential of lower-tier cities, and continue to promote merchants' digital upgrade and standardization by providing integrated services, including chain store management, business decision-making, marketing, customer acquisition, and organizational management. We help merchants improve their efficiency and their business skill. We remain committed to empowering merchants to build their online presence and strengthen their online branded images. For example, we help merchants refine store pages displays with more sophisticated, more accurate, and diversified information. help them simplify store management through more efficient systems, and leverage digital assets such as user reviews, photos, and videos, and various featured rankings list to enhance their brand influence. In addition, we've helped over 1 million independent artisans digitize their profile, matching them with consumer demand, while providing them with more convenient online management tools. And our goal is to turn good craftsmanship into good business. And recently, we launched a series of AI business assistants in a merchant interface, which have started to be rolled out to more services, retail merchants. And on the consumer side, we have further solidified the consumer mindset of finding stores and deals on Meituan. Particularly, we leveraged the Meituan membership to provide consumers with richer benefits and better service experiences. This quarter, we launched more in-store benefits for members of different tiers, such as member-exclusive free offers and member-exclusive discounts covering various categories, including restaurant dining, beverage, leisure and entertainment, as well as housekeeping and laundry services. These efforts have continuously improved user loyalty, transaction frequency, and the efficiency of cross-selling across different businesses. We also leverage meta-membership to direct high-quality users to the hotel and travel business, upgrading the membership benefits in hotel and travel to deliver greater value. Notably, we have witnessed a growing trend among high-tier members to expand their engagement with our travel-related products and explore more categories on our platform. For example, The proportion of the high-tier members purchasing hotels and travel offerings rose markedly during the Labor Day holiday. This quarter, we deepened our strategic partnership with Mario International with the official launch of our joint membership program. On the first day of the partnership, the number of bookings of Mario Hotels on our platform surged by 88% year over year, with bookings from young users under the age of 13 surging over 148%, a clear indicator of our expanding growth potential in the high star hotel segment. And next, let's turn to our new initiatives. In the second quarter, we refined our grocery retail strategy while accelerating the overseas expansion of our food delivery brand, Kita. In June, we launched a strategic transformation for Meta Select. We accessed underperforming regions with sustained losses while continuing to explore this next-day delivery process self-pickup model, and new community retail formats in core regions. And currently, we are accelerating the expansion of our supermarket, and that's our self-operated on-demand grocery business. With a clear roadmap to gradually extend this model to all first and second tier cities nationwide, During this quarter, Shazhan Supermarket maintained a very high growth, significantly outpacing the industry average. We now operate nearly 1,000 front distribution centers in 20 cities. In Beijing, Shanghai, Guangzhou, Shenzhen, all Shazhan Supermarket locations have extended operating hours to 2 a.m. enhancing coverage of consumers' nighttime shopping needs. We are also continuously elevating product qualities and diversities, with both the number of our private brand products and their contribution to our total sales growing steadily. On the international front, Kita delivered a very robust growth strategy in both order volumes and GDP this quarter. In Hong Kong, our first market, we further strengthened our leading position while driving continuous improvements in efficiency. In Saudi Arabia, Kitkat footprint have expanded to 20 cities by the end of July. Additionally, We officially launched Kita in Qatar last week. Looking ahead, we will continue to leverage our strengths in product technology and operations know-how to bring superior experiences to consumers around the world. Over the years, we have stayed committed to pursuing what's challenging, yet right in the long term. Guided by our retail plus technology strategy, we have deepened our roots in the retail sector while driving industry growth through relentless innovation. We believe that industry progress does not come from temporary scale expansion driven by massive short-term subsidies. Instead, it lies in empowering merchants to reduce operational costs enhance operational efficiency, and improve quality through digital transformation. And this is exactly why we are firmly against the involution nation. We aim to remain our focus toward improving user experience and enhancing supply and bringing competition back to the track of value creation. As a platform that connects hundreds of millions of users, tens of millions of merchants, and millions of couriers, we adhere to the principle of achieving win-win outcomes for all stakeholders. Whether through technology breakthrough or business model innovations, we will always prioritize sustainable industry growth, foster a healthy ecosystem, and unlock greater consumption potential. With that, I will turn the call over to Xiaofei for an update on our latest financial results.