MEITUAN-W's second quarter earnings reveal an 89% plunge in net profit, with food delivery competition driving a 7.7 billion yuan surge in sales expenses, sending shares tumbling.

"We will spare no cost to win the competition."

This was the bold declaration made by MEITUAN-W CEO Wang Xing at the shareholders' meeting in June this year.

At that time, the food delivery market storm was just beginning. JD.com had aggressively entered the food delivery sector with its "10 billion yuan subsidy," immediately dragging MEITUAN-W and Ele.me into a fierce price war.

Looking back at Wang Xing's declaration now, it reads both like a heavy strike on war drums and a prophetic footnote written in advance.

On August 27, MEITUAN-W's Q2 2025 earnings arrived as scheduled: revenue of 91.8 billion yuan, up 11.7% year-over-year; adjusted net profit of 1.49 billion yuan, plummeting 89% year-over-year, earning 12.1 billion yuan less than the same period last year.

The four words "spare no cost" were translated into real losses in the financial report. Investors witnessed evaporated profits, while consumers remembered the abundant red packets and discount vouchers flying everywhere.

Wang Xing once said that competition would eventually return to rationality.

But at least for this quarter, MEITUAN-W indeed proved with real money how much it was willing to spare no cost, and also proved that sometimes irrationality is the truth of the market.

**Cliff-like Profit Decline**

The cold numbers in the financial report laid bare the money MEITUAN-W burned in front of the market.

The core local commerce segment is MEITUAN-W's most profitable foundation and the main battlefield of this subsidy war.

Over the past few years, it contributed over 70% of MEITUAN-W's revenue and the vast majority of profits, regarded as the "cash cow."

Although this segment achieved revenue of 65.3 billion yuan in Q2 2025, up 7.7% year-over-year, operating profit plummeted 76% year-over-year to 3.7 billion yuan, a full 11.5 billion yuan less than last year's 15.2 billion yuan.

Meanwhile, the operating profit margin crashed from 25.1% to 5.7%, representing an almost "cliff-like decline."

In other words, MEITUAN-W worked harder than last year but earned less money.

The reason is not difficult to understand: the subsidies were too aggressive.

To retain users, MEITUAN-W's promotional subsidies reached unprecedented levels.

In Q2, sales and marketing expenses hit 22.5 billion yuan, surging 51.8% year-over-year, spending an additional 7.7 billion yuan compared to before.

This means that while red packets attracted orders, profits were also "inversely drained."

The secondary market reaction was more direct. MEITUAN ADR plunged as much as 14% intraday on the earnings release day, with market capitalization evaporating by hundreds of billions of Hong Kong dollars.

The capital market's reaction was ruthlessly cold, but this wasn't investors' emotional response—it was concern about future profitability prospects, as the originally high-margin local lifestyle business was forcibly dragged back to the starting point of "subsidy competition."

**Food Delivery "Three Kingdoms War" - Who Won?**

MEITUAN-W attributed the profit decline in its earnings report to "irrational competition that began this quarter." This wasn't passing the buck but a true reflection of the current food delivery market.

In April this year, JD.com's food delivery launched "10 billion yuan subsidies," aggressively entering the market with commission-free services, firing the first shot of the price war.

Subsequently, Alibaba integrated Ele.me resources to launch "Taobao Flash Purchase." The market, once dominated by MEITUAN-W alone, instantly became a "Three Kingdoms battle."

JD.com's earnings showed Q2 revenue of 356.7 billion yuan, up 22.4% year-over-year, but net profit plummeted 50.8%, halving to 6.2 billion yuan.

New businesses with significant food delivery exposure posted losses of 14.8 billion yuan, over 20 times higher than last year's 695 million yuan loss.

To promote food delivery, JD.com spent 27 billion yuan on marketing in Q2, surging 127.6% year-over-year.

Although Alibaba hasn't officially released Q2 earnings, Morgan Stanley estimates that Alibaba invested approximately 10 billion yuan in food delivery and flash purchase in the first fiscal quarter ending in June, with second-quarter investment expected to double to 20 billion yuan.

Since all three giants burned money, what were the results?

UBS reports show MEITUAN-W's market share dropped from 74% to 65%, still industry leader but at a heavy cost.

Ele.me rose from 13% to 28%, with Taobao Flash Purchase repeatedly breaking daily order records in July, reaching 200 million daily active users.

JD.com only maintained 7% market share, far below the 20% during initial volume surge.

Under the influence of the "Three Kingdoms war," user behavior changed.

Previously, ordering food delivery almost defaulted to MEITUAN-W. Now many consumers habitually check subsidy levels on JD.com or Ele.me before placing orders.

"Use whoever is cheaper" became the new consensus.

Merchant attitudes similarly wavered. Previously, many brands only listed on MEITUAN-W, considered "exclusive territory." But under subsidy offensives, leading bubble tea brands like Heytea have simultaneously launched on Ele.me.

For users, having more choices is good; but for MEITUAN-W, this means the "exclusive merchant advantage" moat is being breached.

Subsidies brought short-term prosperity—user growth and order volume increased—but everyone understands: no company can survive long-term by burning money.

This food delivery "Three Kingdoms war" is essentially a "see who can outlast" endurance battle.

**Hidden War Behind Anti-Involution**

Interestingly, all three giants almost simultaneously stated opposition to disorderly competition.

JD.com CEO Xu Ran frankly said such excessive competition "disrupted the pricing system, troubled merchants, and is unsustainable."

MEITUAN-W's Core Local Commerce CEO Wang Puzhong also stated, "Excessive competition is meaningless; everyone should focus on long-term value." Alibaba emphasized healthy competition.

But immediately after these statements, MEITUAN-W launched Free Order Day in July, with single-day orders breaking through 150 million, setting a new record. JD.com Flash Purchase shouted "Low Prices Every Day," doubling down on instant retail. Ele.me's order volume in first and second-tier cities also doubled year-over-year.

Surface-level anti-involution while secretly doubling down—this is the true nature of the hidden war.

Subsidies are just surface-level warfare; the real competition is shifting toward offline and ecosystem battles.

MEITUAN-W launched "Raccoon Canteen," planning to build 1,200 central kitchens within three years, attempting to directly control restaurant supply through standardized kitchens.

JD.com isn't backing down, launching "7Fresh Kitchen," targeting 10,000 stores in three years, making instant retail and dining new growth engines.

Alibaba tightly integrates food delivery, flash purchase, and Taobao systems, striving to create an "e-commerce + local lifestyle" closed loop.

Meanwhile, MEITUAN-W began attempting to repair relationships.

Recently, MEITUAN-W announced it would completely eliminate overtime penalties for crowdsourced delivery riders by the end of 2025 and distribute support funds to 100,000 small restaurants, hoping to rebuild merchant trust beyond the subsidy war.

Because once merchants turn to competitors, MEITUAN-W's strong user-side moat would be shaken.

In summary, subsidies are open warfare; ecosystem is hidden warfare. Whoever can retain users after subsidies recede will determine the real winner.

**A War with No Winners**

Q2's food delivery war created a "consumer feast," with users enjoying unprecedented discounts.

Short-term winners are consumers; losers are the three platforms.

But from a market cycle perspective, this smokeless war is destined to have no real winners.

Because burning money can buy short-term data but not necessarily long-term loyalty.

Future battlefields won't just be food delivery itself, but comprehensive competition in instant retail, dine-in services, community group buying, and overseas markets.

Q3 may see MEITUAN-W continue facing significant losses. Whether Wang Xing's insisted assumption of "1 yuan per order, 3% profit margin" can survive until industry rationality returns will determine MEITUAN-W's fate.

After the war, market structure may stabilize, with competitive focus shifting from "who can subsidize more" to "who can serve better."

Then, fulfillment efficiency, merchant relationships, user experience, and even sustainable ecosystems will become new determining factors.

For Wang Xing, the cost of "sparing no cost" has been most intuitively annotated in the financial report.

But the next question is: in an endurance war with no real winners, how much longer can losses continue?