Meituan released its second-quarter and half-year financial results for fiscal 2026. During the second quarter, the company generated revenue of 104.6 billion yuan, representing a 14.4% increase year-on-year. Following the earnings release, Meituan's Chairman and CEO Wang Xing, along with Senior Vice President and CFO Chen Shaohui, participated in an analyst conference call to discuss the financial performance. The following is a transcript of the Q&A session from the call.

Jefferies analyst Thomas Chong: How does management view the current competitive landscape in the food delivery and instant retail sectors? Specifically, in the mid-to-high ticket order segment, what trends has Meituan's market share shown? Looking ahead to the third quarter, as industry subsidies gradually normalize, how do you expect the unit economics of the food delivery business to change sequentially compared to the second quarter?

Wang Xing: First, I would like to share some of our perspectives on the future direction of the food delivery industry. To start, we observe that the entire sector is progressively shifting toward a greater emphasis on marketing and operational efficiency. We believe that as regulators strengthen their guidance on relevant business practices, industry competition will gradually return to the factors that truly matter: quality, service, and innovation. This will foster healthier industry development and create a fairer competitive environment for companies with genuine core competencies. Over the past few months, we have seen this trend gradually emerge. Meituan's advantages in user structure, order mix, and operational efficiency have continued to strengthen, and our order volume and gross transaction value (GTV) continue to expand our industry-leading position on a sequential basis. In particular, in the mid-to-high ticket order segment, we have been continuously enhancing membership benefits, expanding high-quality supply, and improving service quality, and these initiatives are steadily yielding results. We are seeing deeper engagement from high-value users on the Meituan platform, and user awareness and mindshare of the Meituan brand are further strengthening. For Meituan's instant retail business, we also maintain our industry leadership position. Instant retail has fundamentally changed consumer expectations around convenience and reliability, and this has become an irreversible lifestyle shift. Considering that penetration rates across different consumer segments are still at a relatively early stage, we believe there remains significant long-term growth potential. While we recognize the pressures from a higher base last year and the overall challenging macroeconomic environment, we are more focused on continuously strengthening our operational capabilities to build a solid foundation for high-quality, sustainable growth over the long term. Over the years, we have established a diversified instant retail supply network covering a wide range of offline retail formats. This provides a strong foundation for us to meet evolving consumer demands and to continue driving the broader adoption of instant consumption. Looking forward, we will continue to invest in enhancing product competitiveness, strengthening supply chain integration, and enriching our supply structure, thereby further improving consumer brand Recognition and mindshare across various categories.

Regarding the outlook for the third quarter, we expect the platform's food delivery unit economics (UE) to improve significantly year-on-year. However, on a sequential basis, UE will still be affected by seasonal factors. Nevertheless, as we continue to optimize operational efficiency, we expect unit economics to remain positive in the third quarter. Specifically, current industry subsidy levels remain significantly higher than those seen in 2024, and it will take several quarters for subsidy intensity to return to normal levels. At the same time, seasonal factors will also have a notable impact on our unit economics. As we mentioned previously, the third quarter is the peak season for on-demand delivery, primarily driven by various promotional activities. Additionally, to seize the window of strongest demand throughout the year, we will increase marketing investment on a sequential basis. Furthermore, to ensure delivery service quality during the peak season and in extremely hot weather conditions, we will also provide additional subsidies to our riders. Therefore, we expect the average delivery cost per order in the third quarter to be higher than in the second quarter. In addition to this, the occupational injury insurance has been rolled out nationwide starting July 1st, which will further increase our costs. However, I want to emphasize that the recent fluctuations in unit economics are primarily driven by seasonal factors and our proactive strategic decisions. We need to maintain a balance between scale, profitability, and the ecosystem. We are confident in maintaining our market-leading position and in maintaining a significant lead in unit economics in both the food delivery and non-food segments. This confidence comes from our continuously improving user structure and our ever-increasing operational efficiency. Meanwhile, our ongoing investments in the ecosystem are further strengthening our operating model. In fact, in the current market environment, we are well-positioned to focus more on the strategic priorities that matter most for long-term development. In summary, we have clear visibility into the recovery path of the platform's unit economics. Over the medium to long term, we believe the platform's unit economics will gradually return to reasonable levels.