Net profit surged 490%. Has Meituan returned to profitability?
$MEITUAN-W(03690)$ 2026 Q2 Financial Results Release
Meituan reported revenue of approximately RMB 104.643 billion for the second quarter of 2026, representing a year-on-year increase of 14.4% and exceeding the Bloomberg consensus estimate of RMB 101.079 billion by approximately 3.53%. Profit for the period amounted to approximately RMB 2.155 billion, up 490% year-on-year. Adjusted net profit amounted to approximately RMB 2.524 billion, up 69% year-on-year, significantly exceeding the Bloomberg consensus estimate of RMB 340 million.
The substantial divergence in year-on-year growth rates between profit for the period and adjusted net profit was primarily attributable to a significant increase in other net gains during the quarter, the specific sources of which were not disclosed.
Previously, Meituan had been caught up in intense three-way competition with Alibaba and JD.com in the on-demand delivery space. Since early 2025, the three companies had invested billions of yuan in subsidies to capture market share, which severely squeezed platform profitability. With regulatory intervention and remediation, such spending has gradually cooled. In June, Wang Xing indicated that industry subsidies had "become more rational" and that user numbers continued to grow. In response to domestic competition, Meituan has been expanding overseas through Keeta, having achieved profitability in Hong Kong and entering markets in the Middle East and Brazil. Wang Xing stated that overseas expansion would focus on existing markets and projected that new business losses would further narrow this year.
On a segment-by-segment basis, core local commerce revenue for Q2 2026 reached RMB 71.5 billion, up 10.1% year-on-year, with operating profit of RMB 5.7 billion and an operating margin of 7.9%, exceeding the Bloomberg consensus estimate of 4.81% by approximately 29.37%. Delivery service revenue increased 13.1% to RMB 26.8 billion, returning to positive year-on-year growth. The company's non-dining innovation businesses, such as Flash Delivery and Waima Songjiu, have evolved from concept to scale expansion, effectively raising the ceiling on delivery frequency. Revenue from sales of self-operated categories, including pharmaceuticals and alcoholic beverages, increased to RMB 3.6 billion, up 78.9% year-on-year.
In the new business segment, Q2 revenue grew 25.0% year-on-year to RMB 33.1 billion, with merchandise sales contributing particularly strongly (+45.1% year-on-year). Operating losses narrowed to RMB 1.7 billion, with an operating margin of -5.3%, better than the market consensus estimate of -7.5%. Growth was primarily driven by the accelerated expansion of grocery retail businesses and overseas operations (Keeta), while the better-than-expected improvement on the profit side stemmed from scale effects realized through enhanced operational efficiency.
Overall, the quality of core operations is indeed improving, with both core business margins and new business loss reduction exceeding expectations—confirming a fundamental recovery trend. However, the current period's profit growth was boosted by one-time investment gains, resulting in a notable divergence from the adjusted profit figure. For assessing the true earnings baseline, greater reliance should be placed on the latter metric.
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