INSTANT RETAIL WAR CAUSES CARNAGE IN MEITUAN’S QUARTERLY RESULTS

After JD and Alibaba, the third party in the instant retail/food delivery battle has released its Q3 results. As those who have followed the trend in China will know, Alibaba and Meituan went head to head in July and August, handing out tens of billions of yuan in consumer subsidies to win over or retain food delivery customers.

I shared the impact on JD here: linkedin.com/posts/edsa…

Non-GAAP income from operations went from RMB 13 billion to RMB 211 million YoY.

And here’s how it affected Alibaba: linkedin.com/posts/edsa…

YoY increase in marketing expenses was RMB 34 billion. Adjusted EBITA -78% YoY.

Everybody expected Meituan’s results to be the most shocking.

▶️ The group’s revenue increased from RMB 93.6 billion in Q3 2024 to RMB 95.5 billion.

▶️ The group’s cost of revenue and operating expenses increased from RMB 79.9 billion in Q3 2024 to RMB 115.2 billion.

▶️ Specifically, the group’s selling and marketing expenses almost doubled from RMB 18 billion to RMB 34.3 billion.

▶️ The group’s operating result went from RMB 13.7 billion in Q3 2024 to RMB -19.8 billion.

▶️ The revenue of Core Local Commerce (which includes food delivery) decreased from RMB 69.3 billion in Q3 2024 to RMB 67.4 billion.

▶️ The cost of revenue and operating expenses of Core Local Commerce ballooned from RMB 54.8 billion in Q3 2024 to RMB 81.5 billion.

▶️ The Core Local Commerce operating result went from RMB 14.6 billion in Q3 2024 to RMB -14.1 billion

▶️In the New Initiatives division, which includes Xiaoxiang Supermarket (a front-end warehouse instant retail format, and overseas business Keeta), commission revenues doubled to RMB 1.6 billion. However, costs of revenue grew from RMB 24,2 billion in Q3 2024 to RMB 29,3 billion. As a result, the segment's operating loss increased from RMB 1 billion to RMB 1.3 billion. 

-Ed