Special Coverage: MEITUAN's Q2 Earnings Released, Net Profit Falls 89%, Food Delivery Competition Drives Marketing Expenses Up by 7.7 Billion Yuan, Stock Price Tumbles

The intensity of the "food delivery war" remains very high.

MEITUAN's latest earnings report shows that due to fierce competition in the food delivery industry, the company's Q2 revenue grew 11.7% year-over-year but fell short of expectations, with adjusted net profit plummeting 89% year-over-year. Affected by this, on the evening of August 27, MEITUAN ADR plunged over 14% after U.S. markets opened.

MEITUAN CEO Wang Xing stated during the earnings call that the company expects its core commercial business to report significant losses in Q3 due to strategic investments. However, Wang emphasized that management believes competition will eventually return to rationality.

MEITUAN Plunges

On the evening of August 27 Beijing time, after U.S. markets opened, MEITUAN ADR dropped sharply, falling over 14% intraday before narrowing losses to 10.83% as of press time.

On the news front, MEITUAN's Q2 earnings report released on August 27 showed that in Q2 2025, the company's revenue reached 91.84 billion yuan (RMB), up 11.7% year-over-year; adjusted net profit was 1.49 billion yuan, down significantly by 89% year-over-year. For the first half of 2025, MEITUAN achieved revenue of 178.398 billion yuan, up 14.7% year-over-year, and adjusted net profit of 12.442 billion yuan, down 41% year-over-year.

Regarding the dramatic performance fluctuations, MEITUAN stated that due to intense competition in the food delivery industry, the operating profit of the company's core local commercial segment declined significantly; meanwhile, overseas expansion impacted the new initiatives segment, causing operating losses to widen.

By business segment, in Q2 2025, MEITUAN's "cash cow" core local commercial segment contributed revenue of 65.347 billion yuan, up 7.7% year-over-year, compared to an estimated 67.55 billion yuan. The operating profit margin plummeted from 25.1% in the same period last year to 5.7%, which management attributed to "irrational competition" that began in Q2.

The new initiatives segment contributed revenue of 26.493 billion yuan in Q2, up 22.8% year-over-year, but operating losses expanded 43.1% to 1.881 billion yuan.

MEITUAN's surge in sales and marketing expenses in Q2 reflects the cash-burning intensity of the food delivery war. The company spent 7.7 billion yuan more on sales and marketing in Q2 compared to the same period last year, representing a 51.5% year-over-year increase. The earnings report stated that this expense growth was primarily to address fierce competition in food delivery and instant retail businesses.

On another note, MEITUAN's Q2 cost of sales increased 27% year-over-year to 61.4 billion yuan, with cost of sales as a percentage of revenue rising from 58.8% to 66.9%.

The earnings report showed that in Q2, MEITUAN App's monthly active users exceeded 500 million, with annual transaction frequency per user reaching a new historical high. In July, MEITUAN's instant retail daily order volume peaked at over 150 million orders, setting a new record. The average delivery time for all delivery orders was 34 minutes, with core user group stickiness further enhanced.

From a positive perspective, MEITUAN's Q2 operating cash flow reached 4.8 billion yuan, with cash and cash equivalents plus short-term financial investments totaling 171.1 billion yuan, maintaining a solid financial position. This provides sufficient "ammunition" for MEITUAN to address current competitive challenges.

Wang Xing's Latest Comments

During MEITUAN's earnings call, CEO Wang Xing stated that the company expects its core commercial business to report significant losses in Q3 due to strategic investments, which will mainly be used to provide high incentives to ensure price competitiveness and industry-leading delivery services, as well as for marketing to strengthen brand recognition.

Regarding current competition in the food delivery market, Wang Xing said MEITUAN opposes involution, and as food delivery market competition continues to intensify, the company will continue to defend its market position. "MEITUAN grew up in competition, and we achieved today's leading position through continuous competition."

Wang emphasized that the company maintains its unchanged long-term profitability assumptions of "1 yuan per order and approximately 3% profit margin." Although Q3 will see increased strategic investments that may put short-term pressure on some financial metrics, management believes competition will eventually return to rationality.

Regarding competition in the instant retail field, Wang stated that MEITUAN's growth momentum in lower-tier markets is very obvious, with year-over-year growth reaching 50%. In the future, MEITUAN will further strengthen differentiated supply, expand categories, and deepen supply chain innovation. From a long-term perspective, investments by other participants will help improve the entire industry's penetration rate.

Wang pointed out: "In the long term, competition will return to normal. The instant retail market is much larger than most people initially envisioned. Short-term subsidy-driven low-price demand may be very aggressive, but it can only replace existing offline or traditional e-commerce in the short term. This is not the best way to create long-term real value. True incremental demand depends not only on subsidies but also on supply-side optimization and the cultivation of consumer mindset and habits. We will remain patient."

Over the past few quarters, MEITUAN Flash has achieved quarterly profitability for several consecutive quarters. However, Wang stated that MEITUAN will prioritize growth over profitability to maintain its leading position. He further indicated that subsidies will not decline significantly in the current quarter, but subsidies will decrease over time in the long term.

MEITUAN CFO Chen Shaohui emphasized that the company always adheres to the concept of multi-party win-win and opposes industry involution. He pointed out that MEITUAN's core local commercial business has demonstrated strong resilience across multiple economic cycles, new businesses continue to achieve breakthroughs, and the company remains confident in its long-term growth potential.