On March 30, 2020, Meituan Dianping released its 2019 financial report. Its total revenue was 97.5 billion yuan, a year-on-year increase of 49.5%; total gross profit was 32.3 billion yuan, a year-on-year increase of 114.0%; the adjusted EBITDA and adjusted net profit were 7.3 billion yuan and 4.7 billion yuan, a loss of 8.517 billion yuan in the same period of 2018.

Operating cash flow has changed from a negative value of 9.2 billion yuan in 2018 to a positive value of 5.6 billion yuan in 2019. As of 2019, cash and cash equivalents were 13.4 billion yuan and short-term investments were 49.4 billion yuan, compared with 17 billion yuan and 41.8 billion yuan in the same period in 2018, respectively.

In 2019, Meituan's food delivery business continued to focus on the sinking market, with annual revenue of 54.8 billion yuan, a year-on-year increase of 43.8%. Revenue from in-store, hotel and tourism businesses was 22.3 billion yuan, a year-on-year increase of 40.6%. In 2019, the revenue from new business represented by sharing bicycles, online car rental, and grocery shopping was 20.4 billion yuan, a year-on-year increase of 81.5%, which is close to the revenue of the hotel and store business.

In 2020, the epidemic will also make the global economy full of uncertainty. Meituan said that the epidemic will exert downward pressure on the company in the first quarter of 2020, and predicts the first quarter of this year's performance may loss, and its operating results in the next few quarters will also be adversely affected.

March 4 this year marks the 10th anniversary of Meituan Group's establishment. Wang Xing, the founder of the Meituan Group, issued an internal letter stating that "In the past decade, China's urbanization rate has been more than half, the service industry accounted for more than half of GDP, and mobile Internet users exceeded the half of the total population. This is the era that China's life service industry develops rapidly. It also gives us a huge opportunity in the field of digitalization of the life service industry."

Regarding the development in the next ten years, Wang Xing said that Meituan will increase its investment in scientific and technological research and development, so that science and technology can better benefit the development of the industry. And it will further improve its organizational construction and talent development.

The Beijing News reporter noted that in January of this year, the Meituan Group launched the "Leadership Training Program". It aims to promote the company's talent inventory, rotation training, succession planning and other tasks in an orderly manner, and to provide organization and institutional guarantees for the next decade of talent training. Wang Huiwen, co-founder and senior vice president of Meituan, will also exit the company's specific management affairs in December 2020.

Meituan's food delivery business continues to focus on the sinking market

In the whole year of 2019, Meituan's catering and food delivery business grew steadily, with a transaction amount of 392.7 billion yuan, a year-on-year increase of 38.9%. The average daily number of food delivery transactions was 23.9 million, a year-on-year increase of 36.4%. The average value of each food delivery order increased 1.8% year on year. The cash ratio of the food delivery business increased from 13.5% in 2018 to 14.0% in 2019. The average number of transactions per year for trading users further increased to 27.4 yuan. Therefore, the annual revenue was 54.8 billion yuan, a year-on-year increase of 43.8%. The gross profit of the food delivery business was 10.2 billion yuan, a year-on-year increase of 94.2%; the gross profit margin rose from 13.8% to 18.7% year on year.

The fourth quarter of 2019 performed well. The total transaction amount of the food delivery business was 112.1 billion yuan, an increase of 39.9% year on year. The average daily transaction of food delivery business was 27.2 million, an increase of 36.7% year on year. The average value of each food delivery order was 44.8 yuan, a year-on-year increase of 2.3%; the cash rate of the food delivery business rose to 14.0%. The revenue was 15.7 billion yuan, a year-on-year increase of 42.8%. The gross profit of the food delivery business was 2.8 billion yuan, a year-on-year increase of 89.4%; the gross profit margin increased from 13.4% to 17.7% year on year.

In the fourth quarter, the transaction volume of Meituan's food delivery business in low-tier cities increased by 45%. Meituan believes that for the whole year of 2019 and the fourth quarter, Meituan's food delivery business in low-tier cities has become more and more important, and the transaction value has also grown faster and faster. Low-tier cities in 2019 will still be the main driver of user growth. 

The financial report shows that in 2019, Meituan launched a catering takeout membership system to further increase the frequency and loyalty of old customers, effectively promoting consumers' instant consumption during off-peak hours. In the fourth quarter of 2019, consumers' consumption during off-peak hours, including breakfast, dunch and supper, continued to grow rapidly, and the volume of food delivery orders for light food, salads, desserts and beverages all achieved strong growth.

The cost of food delivery increased by 35.7% from 32.9 billion yuan in 2018 to 44.6 billion yuan in 2019, mainly due to the increase of orders and the cost of riders in food delivery. Meituan data shows that in 2019, there are 3.99 million riders from Meituan.

Meituan's revenue may be overtaken by its new business

The cashability of in-store, hotel and tourism business has been enhanced. In 2019, the transaction amount of in-store, hotel and tourism business reached 22.21 billion yuan, a year-on-year increase of 25.6%. Its business income reached 22.3 billion yuan, a year-on-year increase of 40.6%. And the business gross profit reached 19.7 billion yuan, a year-on-year increase of 40.1%, which remained relatively stable.

The business growth accelerated in the fourth quarter of 2019. The transaction amount of in-store, hotel and tourism business was 60.4 billion yuan, a year-on-year increase of 35.3%. Its business income was 6.4 billion yuan, a year-on-year increase of 38.4%; business gross profit was 5.6 billion yuan, a year-on-year increase of 88.8%.

The year-on-year growth rate of commission income of store-to-shop business transaction products accelerated again in the second half of 2019, and continued to accelerate in the fourth quarter. Online marketing revenue also maintained strong growth throughout the year, with a year-on-year growth of approximately 55% in 2019.

In terms of hotel booking business, in 2019, the hotel room consumption in China on the platform was 392 million, an increase of 38.2% year on year. The average daily night price also increased steadily year on year. In the fourth quarter, the growth accelerated further, with a year-on-year growth of 47.9%, and the number of hotel nights for two consecutive quarters reached 110 million.

Meituan believes that it will further consolidate the leading position of low-tier cities and low-star hotel parts by vigorously exploring offline traffic conversion and new traffic channels. At the same time, high-star hotel booking business maintained steady growth. In the fourth quarter, the revenue contribution from high-star hotels further increased year on year.

New business may jump into the second largest business

The low-key Meituan has spared no effort in new business development. In 2019, Meituan started its grocery shopping business and also adjusted several Xiaoxiang Fresh stores. At the same time, Meituan launched a new distribution platform, and Meituan Dache also launched the "aggregation model". In addition, some new businesses were also tested.

After the first anniversary of the acquisition of Mobike, Meituan also started account integration. Since then, Meituan announced that the brand has changed its color from the previous blue to yellow. In addition to the online app being changed to yellow, Meituan's offline contacts and interactive portals will also become yellow in the future, including sharing bicycles, power banks, payment codes, POS machines, and cash boxes.

In 2019, the revenue from new businesses and other segments represented by sharing bikes, online car rentals, and grocery shopping was 20.4 billion yuan, a year-on-year increase of 81.5%. Gross profit increased from a negative value of 4.3 billion yuan in 2018 to a positive value of 2.3 billion yuan in 2019. The gross profit margin improved from a negative value of 37.9% in 2018 to a positive value of 11.5% in 2019.

In the fourth quarter of 2019, the segment's revenue was 6.1 billion yuan, a year-on-year increase of 44.8%. Gross profit increased from a negative value of 1 billion yuan in 2018 to a positive value of 1.3 billion yuan in 2019. The gross profit margin improved from a negative value of 23.3% in 2018 to a positive value of 21.2% in 2019.

In 2019, sharing bikes and Internet-linked cars narrowed losses. In terms of sharing bicycle services, the use period of most bicycles has expired in the third quarter of 2019, so it is gradually replaced with yellow Meituan. In terms of ride-hailing services, operating losses have improved since the launch of the "aggregation" model in 2019. As of the end of 2019, it has operated online car rental services in 54 cities. The cost of online taxi drivers was 3.119 billion yuan, compared with 4.463 billion yuan in the same period of 2018.

Grocery retail services continue to explore the self-employed model and platform model. In terms of self-employed Meituan shopping, as of the end of 2019, the density of warehouses has been increased by setting up 96 warehouses in Beijing, Shanghai, and Shenzhen and more than 30 self-collection points in Wuhan. In terms of the platform model, Meituan Flash Sale is positioned as an online trading platform with tens of thousands of SKUs. The transaction value of medicines and flowers on the platform will increase in 2019.

In 2019, the sale cost of new business and other businesses was 18.1 billion yuan, an increase of 16.6% year on year, mainly due to the increase of the sales cost such as B2B catering supply chain services and retail business of food and sundry, the distribution cost of Meituan Flash, the payment and processing fee of aggregate payment services. And some costs was partly offset by the depreciation expense of sharing single vehicle services and the decrease in costs related to ride-hailing drivers.

In 2019, the revenue from new business and other businesses has approached Meituan's second-largest business-to-shop and hotel business. With the optimization and acceleration of operating efficiency such as the new business, this business may become Meituan's second-largest business.

In 2018, Meituan and Didi faced a commercial war in the field of ride-hailing and food delivery. In 2019, the battle between Meituan and Didi was not extinguished, and the industry started a aggregation mode. In 2020, under the influence of the epidemic, Didi has already entered the field of distribution, and it will have some competition with Meituan.

This is an article from 199IT, translated by Chris Yuan.