Meituan's Q2 Profit Plummets 87% Amid Intense Competition with Alibaba.

Meituan reported a significant decline in profits, with a 87% YoY drop in non-IFRS operating profit to RMB 1.84bn. Revenue increased 12% to RMB 91.84bn, but still missed estimates. The company predicts substantial losses in its core local commerce segment for Q3, citing intense competition with Alibaba. Meituan's unit economics turned negative, recording -0.12 yuan, compared to positive figures in previous periods.

Chinese technology giant Meituan released its Q2 2025 earnings report, revealing mixed results with a significant decline in profits despite revenue growth. The company reported a revenue of 91.84 billion yuan, up 11.7% year-over-year (YoY), driven by its Core Local Commerce segment and instant retail expansion [1]. However, the operating profit fell to 2.26 billion yuan, a 48.0% decrease compared to the previous year, while the period profit dropped to 3.65 billion yuan, down by 96.8% YoY.

The revenue growth was primarily attributed to the Core Local Commerce segment and the expansion of Meituan Flash Purchase, which attracted over 100 million customers during the recent 618 shopping festival [1]. However, the company's operating profit margin for food delivery services declined to 10.8%, down from 17.8% in Q1 2025, due to aggressive subsidies from rivals such as JD.com and Alibaba. These subsidies have put significant pressure on Meituan's profitability, leading to a substantial drop in profit per food delivery order, which fell by 60% to 0.74 yuan [2].

Meituan's management has indicated its willingness to defend its market leadership in the food delivery business, which remains the strategic core of the company. The company has been investing heavily in AI-driven logistics and expanding its global operations, particularly in the Middle East and Brazil, to offset the margin losses and leverage network effects [2].

The stock market has reacted to the earnings report, with the implied volatility of Meituan's options market indicating a potential single-day price fluctuation of 4.56% [1]. This reflects the uncertainty surrounding Meituan's ability to maintain its market share and profitability in the face of intense competition.

Investors are closely watching Meituan's strategic resilience and its ability to navigate the competitive landscape in the food delivery and instant retail markets. The company's performance in the second quarter will be a crucial test of its strategic resilience and its ability to adapt to the changing market dynamics.

References:
[1] https://news.futunn.com/en/post/61065774/a-preview-in-one-chart-meituan-s-q2-earnings-report
[2] https://www.ainvest.com/news/meituan-earnings-volatility-strategic-survival-china-food-delivery-price-war-2508/