Meituan today released its financial results for the first quarter of 2024: Revenue was 73.3 billion yuan, an increase of 25.0% year-on-year. Net profit was 5.4 billion yuan, while it was 3.4 billion yuan in the same period of 2023; adjusted net profit was 7.488 billion yuan, while it was 5.491 billion yuan in the same period of 2023.
After the release of the financial report, Meituan's CEO Wang Xing and CFO Chen Shaohui participated in the analyst conference call to interpret the financial report.
Ronald Keung from Goldman Sachs: Regarding the company's recent organizational restructuring, will this change affect the operations of on-demand delivery, in-store, hotel and tourism and other sectors? What are the changes in the operation of this business? If so, when can we see the impact of the restructuring? What is the synergy pursued by the restructuring, and how does it affect the revenue and profit margins of the core local business sector? How to quantify the related synergy?
Wang Xing: We are still in the process of organizational adjustment and are still in this process, in order to better support and integrate our core local business sector. As this restructuring continues to move forward, we will gradually realize more changes in the operation. Just as I mentioned last quarter, we hope to cover all categories and scenarios of local services, provide a closed-loop solution from demand discovery to service completion, and we have to ensure high-quality and comprehensive experience for each service. So our organizational restructuring is not only to achieve the integration of the supply side of online in-store, hotel and travel businesses, but more importantly, we hope to achieve better synergy between the Meituan platform and the Meituan infrastructure platform and our core business through this change, that is, to combine our demand side and supply side.
In the future, we will comprehensively review the overall performance, operation strategy, product development and resource allocation of the core local business. We hope to provide effective traffic support for various businesses through the Meituan platform and the dynamic Meituan application, and promote deeper cooperation and synergy between different business units. We hope to better match the consumer demand with our platform supply and reshape our brand positioning in the local service industry.
For example, we are exploring comprehensive and comprehensive marketing and operation solutions for merchants to broaden their marketing and customer acquisition channels. Help merchants achieve higher operational efficiency and transaction conversion rates through the Meituan platform. In addition, we are also exploring structured promotion methods to better capture user demands in different consumption scenarios. Since mid-May, we have upgraded the Meituan God Member membership system in several pilot cities, expanding the membership rights from on-demand delivery to covering in-store, hotel and travel services. We plan to gradually promote this rich membership plan to more areas.
In the past few years, through the on-demand delivery membership plan of Meituan, we have accumulated more than 100 million members. The expansion of the membership scale not only increases the transaction frequency of on-demand delivery users, but also brings substantial growth to catering merchants and helps them improve marketing efficiency. As we continue to integrate the marketing measures and membership plans of different businesses, we expect to strengthen cooperation with the continuously expanding merchant network. Through these cooperations, our members can obtain more cost-effective products and diversified services in all consumption categories of the local business field.
In conclusion, all business departments of the core local business along with our Meituan platform will work together to explore innovative ways to create greater synergy. The continuous iteration of products and services will bring comprehensive high-quality experiences to merchants and consumers. This synergy can also help us improve the revenue growth rate and profit ability in the future. It is estimated that it will take several quarters to release the potential of this change, and quantification is too early.
Thomas Chong from Jefferies: I have a question about the on-demand delivery business. Can the management share some updated progress on the food delivery and Meituan in-store shopping business? Given the current macro environment and consumer sentiment, how should we track the growth and financial performance of these two businesses in the second quarter and throughout 2024?
Chen Shaohui: Regarding the on-demand delivery problem you mentioned. As mentioned earlier, although the macro environment has an impact on the demand side, in the recent months, the on-demand delivery business has maintained a healthy growth momentum. However, as we enter the second quarter, the advantage of the low order base last year disappears, and the year-on-year order growth rate in the second quarter will be affected accordingly and tend to decrease to the normal level, which also reflects the current consumption environment. For food delivery, we will continuously improve our own operation to deal with different consumption scenarios, and it is expected to promote the stable growth of the number and purchase frequency of mid-to-high-frequency users. In the first quarter, the order growth rate of mid-to-high-frequency users continued to be higher than the average level of the platform.
In addition, the iteration of the Pinhao Fan model will help meet the needs of price-sensitive users more efficiently. The scale of Pinhao Fan has steadily expanded in the past few quarters. Both the user base and purchase frequency have increased rapidly, and the unit economic benefit has also continued to improve. We will continue to optimize the supply, innovate the business model and improve the operation to capture the demand in all scenarios.
For the Meituan flash purchase business, the expected order growth rate in the second quarter and throughout the year is much higher than that of food delivery, maybe more than twice. We believe that the growth of on-demand retail business will continue to benefit from the digital transformation. On the supply side, we will cooperate with more high-quality brands and offline retailers to achieve quality optimization and diverse choices in various product categories. In some scenarios, such as emergency needs and travel, better meet the needs of consumers. In addition, we will also continue to broaden the commodity choices in the long-tail category. On the consumer side, we will convert more high-frequency food delivery users into Meituan flash purchase users and increase their usage frequencies during promotional activities to enhance the platform supply.
The macro situation will continue to put pressure on the average order value of Meituan's on-demand delivery business. However, we believe that the year-on-year change of the average order value should gradually normalize in the second half of this year. We also have confidence to balance the growth and profit of this business. It is expected that there will be healthy growth in operating profit in the second quarter and throughout the year. We see that restaurants, offline retailers and brand customers have a stronger interest in advertising, so there is further growth potential in advertising and commercial realization. In addition, we will continue to optimize the subsidy strategy. As the business scale expands, we also see more operating leverage.