As industry competition becomes more rational, Meituan has entered a critical validation period for high-quality development. During the earnings call, Chairman and CEO Wang Xing reiterated the company's firm commitment to its long-term "Retail + Technology" strategy. R&D expenditure this quarter reached RMB 70 billion, a 22% year-on-year increase, accounting for 7.7% of revenue, with a focus on driving the practical application of AI in real-world scenarios. In the instant delivery sector, new users continued to grow, with user activity and loyalty consistently improving.
Wang Xing emphasized that Meituan will "increase AI investment both online and offline" to drive retail upgrades through technology. Specific implementations include: online, leveraging large language models to optimize search, recommendations, and intelligent customer service; offline, empowering physical nodes such as rider devices, autonomous delivery vehicles, and smart pick-up lockers with AI to build a comprehensive data feedback loop.
Regarding order volume trends, Wang Xing stated that due to the high base from the same period last year, order volume may see negative year-on-year growth in the second half of the year. However, this is not due to weak demand but a normal fluctuation from the high base effect. Concurrently, order structure continues to improve, with consumers increasingly willing to pay a premium for quality supply. Therefore, Gross Transaction Value growth is expected to be more resilient than order volume growth. Management believes that, in the medium to long term, increases in user frequency and retention rates are more critical growth drivers.
Financial results show that Meituan's revenue for the quarter was RMB 910 billion, a 5.6% year-on-year increase. Operating loss narrowed from RMB 161 billion last quarter to RMB 65 billion. Specifically, the core local commerce operating loss was RMB 20 billion, a significant improvement from the RMB 100 billion loss last quarter; the new initiatives operating loss was RMB 21 billion, showing a marked reduction from the RMB 46 billion loss last quarter.
CFO Chen Shaohui noted that while maintaining resilient growth, the company's financial position has seen substantial improvement, with Meituan becoming the preferred platform for both consumers and merchants in the local services sector. Within the new initiatives segment, operating losses for Meituan Instashopping and overseas businesses narrowed significantly quarter-on-quarter, with operational efficiency in Hong Kong and Saudi Arabia showing meaningful improvement.
In the new initiatives segment, the company will focus on Meituan Instashopping and overseas expansion, prioritizing return on investment. Simultaneously, Meituan will continue to increase AI investment to drive retail upgrades through technology, creating long-term sustainable value for all stakeholders.
**Food Delivery: Competition Rationalizes, User Quality Improves**
Wang Xing stated that irrational competition in the industry moderated in the first quarter compared to the previous quarter. However, Meituan's food delivery business still attracted a large number of new users, demonstrating consumer recognition of the platform's comprehensive service capabilities and reliability, rather than reliance on price incentives alone.
Regarding user structure, activity among high-frequency and medium-to-high-frequency users increased noticeably, with many low-frequency users upgrading to high-frequency users. The "Gen Z" demographic has become a key growth driver. These high-quality users have more diverse consumption demands, higher requirements for service quality and supply, and exhibit higher order frequency.
In delivery services, Meituan continues to expand the coverage of high-quality delivery services like one-to-one express delivery. It has also promoted time-sensitive delivery for holiday shopping scenarios, covering categories sensitive to timeliness such as maternal and infant products, daily necessities, electronics, and liquor.
On the supply side, brand satellite stores continue to expand rapidly. With comprehensive operational support from Meituan, their conversion and repurchase rates are higher than traditional restaurants. The company also collaborates deeply with merchants to optimize menus based on insights into local consumption preferences and comprehensively upgrades supply chain services for key events, improving merchant procurement efficiency and consumer experience. Squirrel Convenience and brand flagship flash warehouses continue steady expansion, further enriching the platform's product supply.
Regarding food safety, Meituan announced ten improvement measures in April, strengthening governance across three core areas: merchant access, transparent operations, and multi-party supervision.
**AI Deployment Accelerates, "Xiao Tuan" Assistant Integrated into Core Entry Point**
Regarding its AI strategy, Meituan has positioned its AI assistant "Xiao Tuan" in the central spot of the bottom navigation bar within the app, making it a core traffic entry point.
Wang Xing explained that Xiao Tuan can already handle complex, cross-scenario instructions, such as "recommend a restaurant between two locations for a guest who doesn't eat spicy food," and can dynamically update recommendations based on user-adjusted criteria in real-time. During the recent May Day holiday, Xiao Tuan's conversation volume increased significantly compared to the Spring Festival. Users are not only using it to claim coupons but also increasingly to explore new services and destinations.
Management also revealed that Meituan will soon collaborate with Tencent's AI assistant "Yuanbao." When users make local service-related requests within Yuanbao, it will trigger an agent-to-agent communication, seamlessly redirecting to Meituan's services like ordering and delivery, enabling a one-stop local service transaction experience.
On the merchant side, the AI tool "Smart Shopkeeper" has served over 700,000 merchants cumulatively, with coverage expanding from single stores to chain stores this quarter. The "Digital Employee" has served over 300,000 service retail merchants. Management stated that future AI tools will evolve from single-point applications to human-machine collaboration, gradually providing decision support for merchants' complex business scenarios and end-to-end automation of routine tasks.
**In-store and Hotel & Travel Businesses Show Steady Growth, Competitive Pressure Manageable**
For the in-store and hotel & travel businesses, Meituan achieved stable growth in the first quarter and continued to solidify its leading position in the low-star hotel segment. Management noted that sub-categories like leisure entertainment, fitness, and pet services maintained rapid growth, while emerging service retail sectors like medical aesthetics, elderly care services, and home renovation also showed good growth momentum.
Addressing market concerns about competitive pressure from Douyin, Chen Shaohui emphasized that the core barrier for local in-store services is not traffic, but real-world fulfillment capabilities and consumer trust. The merchant-verified information, billions of authentic user reviews, online booking and queuing systems, and consumer protection mechanisms for pre-paid services that Meituan has accumulated collectively form an ecosystem moat difficult for a pure traffic model to replicate. She expects the in-store business margin to remain stable in the near term, with room for recovery in the long run.
Regarding the hotel & travel business, management stated that recent increases in aviation fuel surcharges may cause short-term disruptions for long-distance travel and high-star hotels. However, short-distance leisure travel, local accommodation, and low-star hotels continue to show strong resilience, aligning well with Meituan's core strengths.
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