Related news: Meituan’s fourth-quarter revenue of 49.5 billion yuan and an adjusted net loss of 3.936 billion yuan
Sina Technology News, March 25 evening news, Meituan released its fourth quarter and full-year financial report for 2021 today. The financial report shows that the company’s fourth quarter revenue was 49.5 billion yuan, with an estimated 49.32 billion yuan, a year-on-year increase of 30.6%. ; The net loss in the fourth quarter was 5.339 billion yuan, and the adjusted net loss in the same period last year was 2.244 billion yuan, and the loss increased by 137.9% year-on-year; the adjusted net loss in the fourth quarter was 3.936 billion yuan, and the adjusted net loss in the same period last year was 1.437 billion yuan. The loss expanded by 174.0% year-on-year. For the full year of 2021, Meituan’s revenue was 179.13 billion yuan, a year-on-year increase of 56%; the annual net loss was 23.5 billion yuan, and the profit for the same period last year was 4.71 billion yuan; the adjusted net loss for the whole year of 2021 was 15.6 billion yuan, The income in the same period last year was 3.12 billion yuan; the annual operating loss in 2021 was 23.1 billion yuan, and the income in the same period last year was 4.33 billion yuan.
After the financial report was released,Meituan CEO Wang Xing and CFO Chen ShaohuiParticipated in the analyst conference call, interpreted the financial report, and answered analysts’ questions.
The following is a transcript of the Q&A session of the conference call:
Goldman SachsAnalyst Ronald Keung:A question about the company’s food delivery business. For the first time, the company disclosed the revenue of the food delivery business excluding commissions and delivery services. However, if these parts of the revenue are added together, I find that it cannot cover the food delivery business. cost, will the company further reduce the commission rate considering the recent guidance from the NDRC? What specific measures does the company take? What impact will it have on the business?
Wang Xing:I know that everyone is paying attention to this matter recently. In fact, we released a new charging standard in May last year, splitting the platform service fee into two parts: technical service fee and distribution service fee, which makes our charging structure More transparency is also in response to the government’s call to support small and medium-sized businesses. The technical service fee we charge, also known as the commission, adopts a fixed rate, mainly the service fee for merchants to use our platform to display their information; merchants who use the Meituan delivery service will also charge delivery fees. , which is mainly calculated based on the average order price, delivery distance, and delivery time to cover the cost of delivery services, the operating costs of delivery stations, and the cost of dispatching orders. The new charging standard we have announced is very clear and transparent. Merchants can choose which one to use or not to use according to their needs. The new standard reduces the delivery fee for orders within three kilometers, benefiting most small and medium-sized businesses.
This quarter, in order to reflect this new fee structure and make it known to all merchants, we adjusted the way we disclose food delivery revenue and divided this part of revenue into the following categories: First, our self-operated The catering take-out service fee charged by the business to the merchants and consumers; the second is the commission, that is, the technical service fee charged to the merchants and third parties who use our platform; the third is the online marketing service revenue contributed by the merchant, this part of the revenue Most of them are performance ads.
To be clear, unlike most other platforms, we not only provide merchants with online platform services including transactions and marketing, but also provide instant delivery, which increases the cost. In addition to paying the courier delivery fee, we also have to bear the costs of dispatching orders, delivery service management, etc. In addition, we also need to continuously invest in research and development to optimize our algorithms.
In fact, the current distribution service revenue contributed by merchants and consumers still cannot cover the cost of distribution fees we pay to couriers. Taking the fourth quarter of last year as an example, our commission income, that is, the amount we pay to merchants and third parties The technical service rates charged by the three parties are relatively stable and reasonable. We expect this rate to remain stable and continue to optimize our charging structure to support small businesses and short-distance orders. Most of the company’s catering takeaway business revenue comes from delivery service fees. Our self-operated catering takeaway business accounts for 57% of the total catering takeaway transaction volume. Although we charge merchants and consumers for delivery service fees, we also need to pay The cost of delivery and the provision of discount coupons to consumers stimulate their desire to spend.
In the fourth quarter, the company’s distribution service revenue was 14.3 billion yuan, far lower than the related cost of 18.3 billion yuan, equivalent to a loss of 1 yuan per order. We use commission income to offset this part of the loss, mainly to pay food delivery staff. Although the distribution service business is still not profitable, the company will continue to strengthen the capabilities of the distribution network, because we believe that better distribution services can create value for merchants, especially in the case of a bad macro environment, the merchants we currently serve, In particular, small and medium-sized businesses do not have the ability to deliver meals themselves. If they ignore this part of the business because they are not profitable, then these businesses that do not have the ability to deliver meals will not be able to expand the scope of their meal delivery services and increase their income.
In addition, by providing food delivery services, our platform also provides more options, bringing more value to consumers, and providing more jobs for delivery boys and increasing their income levels.The catering industry contributes to economic growthChangheMeituan’s own food delivery service business is of great significance, so even though the current unfavorable external environment poses many challenges to the catering industry, especially small and medium-sized restaurants, we are still committed to providing a full range of services for merchants , we will continue to fulfill our responsibilities and make more contributions to assisting merchants to resolve the current difficulties. We have been actively engaging in constructive dialogue with regulators, and in accordance with the government’s guidance, we launched business support measures on March 1, targeting small and medium-sized businesses located in medium and high-risk areas of the epidemic, most affected and experiencing operational difficulties. Merchants, launched a commission halving offer until the end of December 2022, and provided them with free digital services and tools.
In addition, the new charging standard we announced last year has been rolled out in all cities where direct-sale business is launched, benefiting most small and medium-sized merchants, and this year we will work with merchants in all lower-tier cities to ensure that this charging structure is available nationwide by the end of this year Landed inside. We will also hold 100 forums this year to maintain communication with merchants, understand their pain points, listen to their suggestions, and help them operate better. Overall, we believe that as the macro environment improves, the catering industry will gradually recover, and we will continue to provide merchants with diversified services and tools, including our takeaway butler service, to help them achieve better online operations, Increasing revenue and resolving macro-environmental challenges, in turn, will help the Meituan platform to provide more diverse and higher-quality catering and takeaway services, better meet consumer demand and prosper the market.
Jeffrey analyst Thomas Chong:The growth of the company’s main business slowed down this quarter, why? You mentioned the reasons for the epidemic and the macro environment. Can you brief us on the recent situation? Has the company considered reducing investment in new business due to the difficulties encountered in its main business?
Wang Xing:The main reason is the strict epidemic prevention measures. In addition, the current macro environment has also had a certain adverse impact on the business. In fact, compared with other consumption-related businesses, our main business has shown strong resilience. The reason is that Our in-store business offers a variety of services, and our order sizes are relatively small. For the food delivery business, many cities in China, including Xi’an, Dalian, Chongqing, etc., saw a lot of new coronary pneumonia cases in the fourth quarter. The epidemic prevention and control measures were also very strict, restricting people’s travel, and our business was also affected. , but we see that the order volume of mid- and high-frequency users is still growing.
In addition, the number of Meituan members and transaction frequency also increased, driving the growth of the main business in the fourth quarter. The average annual growth rate of orders in the two years was close to 25%, and the average daily order volume also increased to 53 million last year. Orders for tea and soft drinks both increased by more than 100%, and orders for cakes and desserts also increased by more than 50% year-on-year. The epidemic situation and the macro environment have had a great impact on the hotel and tourism business. In particular, the consumer demand for long-distance travel and business travel has been greatly suppressed. The resilience of the in-store business is still very good, with transaction volume and revenue exceeding 30%. The growth of in-store business, the order volume, transaction volume and annual active users of the in-store business have all reached new highs. The company currently has about 20 service categories on the platform, with prices covering all levels and providing a lot of preferential packages.
Under the current consumption situation, since tourism is not advocated, users spend more money on local services, so the unit price per customer is not very high, and our in-store service is therefore less affected by the macro environment. However, the strict anti-epidemic policies adopted by local service providers in mid- and high-tier cities have seriously affected the company’s in-store service business. However, we also expect that with the relaxation of control measures, the growth of these services will resume quickly. The company’s main business The year-on-year growth rate in January and February was similar to that in the fourth quarter of last year. The in-store service business has a very large demand, especially in February, and the growth of the catering take-out business has also recovered. Many users have used our take-out service before and after the Spring Festival. Orders for leisure and entertainment services during the Spring Festival holiday also saw good growth.
However, since March, a number of first- and second-tier cities, including Shenzhen and Shanghai, have experienced the outbreak of the Omega virus. The epidemic prevention and control measures have been tightened. Many residential quarters and office buildings have been closed, shops have been suspended, and traffic has stopped. , Meituan’s main business has been greatly affected, because these cities have a great contribution to the transaction volume of this business, so we expect the performance of the company’s main business will be greatly affected in the first quarter. Overall, given the current short-term headwinds, our work is currently focused on high-quality growth and operational efficiency improvements.
With the normalization of epidemic prevention and control, coupled with the adjustment of fiscal policy, economic growth and consumption will be boosted. We also expect that the growth of main business will return to normal and achieve stable growth throughout the year. In addition, our investment in new businesses will be more cautious. On the one hand, we will evaluate new market opportunities from a long-term perspective and invest based on our new strategy of retail plus technology and long-term business value; on the other hand, we will be more We will also be more flexible in adjusting the pace of new business investments in order to carefully balance resources such as cash reserves and core business cash flow. In general, we will pay more attention to the high-quality growth of new businesses, improve unit economic efficiency, and operational efficiency. It is expected that the operating loss of new businesses this year will narrow year-on-year.
CITIC SecuritiesAnalyst Jiang Ya:I have a question for a food delivery business. How does management see unit economics and order volume growth for the business this year? Will external factors affect the long-term order growth and profitability of the business?
Chen Shaohui:We are very satisfied with the performance of last year’s catering takeaway business despite the challenging external environment, and we are confident in the unit economic benefits and order volume growth of this business this year. In view of the unfavorable factors such as the epidemic and the macro environment, we will focus our work on medium and high-frequency users, and improve their consumption frequency and unit price by better meeting their needs. The high-quality service provided has enabled our food delivery business to withstand the challenges of various adverse factors and achieve growth.
Although the current epidemic prevention and control measures have suppressed the growth of order volume, we expect that once the prevention and control measures are relaxed, the order volume growth will gradually recover immediately, as we have seen in the past two years, the recovery of this growth rate will be Powerful and fast. In the long run, we still believe that food delivery is a major consumption trend, the market penetration rate will continue to increase, and there is also a lot of room for growth. We still adhere to the goal of 100 million daily orders, and are moving towards this goal. .
As mentioned just now, the company’s daily order volume in the fourth quarter exceeded 50 million orders, so the goal of 100 million orders and half of the realization, we pay more attention to the value that the company can provide for the society, businesses and consumers. It is believed that the service category and quality of the platform will continue to be improved to meet the growing catering needs of consumers and the increasing consumption frequency. We will also continue to explore business models including group purchases and expand our business scale. On the issue of unit economics, we have been focusing on high-quality growth in a digital environment, and we expect steady growth in advertising revenue.
The merchant support measures we recently announced will have some negative impact on the company’s ability to monetize, but will have a long-term positive impact on our ecosystem. In addition, we firmly support the implementation of the policy on social security for delivery workers. We believe that only by taking good care of the delivery boy can the company’s business be guaranteed to operate effectively for a long time. We expect that the details of the guidelines for accident insurance may be published in a few days. A few months later, it will be piloted in many provinces and cities in China. We also expect the company to achieve the profit target shared with the market before, which is also beneficial to the development of the entire industry.
Bank of America Merrill Lynch analyst Eddie Leung:A question about the company’s in-store and hotel reservation business, management talked about the short-term outlook, can you also share the long-term outlook for this business? In addition, how does the management view the competition from short video platforms with traffic advantages?
Chen Shaohui:I know a lot of investors are very concerned about this issue. Based on observations over the past few quarters to several years, users have gradually recognized the value and growth potential of the Meituan-to-Store business, which has shown great growth resilience, and we have unique capabilities in this area, including our services The number of merchants, more than 1 billion user reviews, and more than 200 in-store service categories, these are the sources of assurance and confidence that we can serve both the supply side and the demand side.
Compared with traffic platforms including short video platforms, we have deeper insights into user behavior, which makes our products richer, service quality higher, and with the freshest and detailed information of millions of local merchants we display. Information, becoming the most convenient consumption platform for consumers, these are very high barriers to entry. We are also continuously improving our competitiveness and launching more online marketing tools that can improve the return on investment of merchants. The company will also continue to enter more low-tier cities to better meet the needs of local users.
Morgan StanleyAnalyst Gary Yu:Questions about the company’s community group buying business. The growth rate of this business in the fourth quarter seems to have slowed down rapidly compared to the previous quarters. Is the user retention rate of this business lower than management’s expectations? How is the market competition? What are the long-term unit economics? What is the operation plan of Meituan Select this year?
Wang Xing:Last year was a year of rapid development of the community group buying business. The company has been continuously optimizing distribution and product categories, strictly following regulatory guidance, and maintaining healthy and stable business growth. Meituan Select also provides us with opportunities to enter the physical e-commerce business and consumer retail industry. We have confidence in the long-term development of the community group buying market, and the current market competition has gradually returned to rationality due to the intervention of supervision, allowing various platforms in the market. Shift to building long-term development capacity.
Although the overall growth rate is not as good as expected, we expect that under the regulatory guidance, Meituan Select will maintain a stable and healthy growth pace and continue to grow its ability for long-term development. With the tightening of the epidemic in the first quarter, the value of Meituan’s community group purchases and other retail businesses became more obvious. People reduced going out and worked from home. Many people bought groceries and daily necessities online. Our services allow users to conveniently and affordable We are also constantly adjusting the category, and the price of a single item has also increased, so the unit economic benefit has also improved.
UBSAnalyst Jerry Liu:A question about the company’s flash sale business. Can you talk about the business development plan for this year? What are the priorities and investment priorities?
Chen Shaohui:We believe that this is a big shopping trend, and we hope that Meituan can become a brand that provides immediate delivery services. Last year, the business grew very rapidly. We expect this trend to continue this year, and the same is true for the long-term forecast. Our flash sale business The medium-term goal is to reach 10 million orders per day.
Through the cooperation with local supermarkets to develop new categories, sales during the Spring Festival this year increased by 80% year-on-year, and the unit price of customers also increased. We believe that the potential size of the flash sale market is 1 trillion, and the number of active users of Meituan flash sale is 230 million. Last year, the sales of Meituan flash sale was equivalent to 12% of the transaction volume of food delivery. We expect flash sale business this year. The growth rate will exceed the growth rate of the food delivery business. This year, Meituan will continue to strengthen cooperation with merchants and brands to convert more high-quality food delivery consumers into Meituan flash sale users. (Tianheng)