Key Takeaways:
Meituan swung to a 2.155 billion yuan net profit in Q2, snapping a three-quarter loss streak as food-delivery price competition eased.
"As the food-delivery industry gradually shifted back to operational efficiency, both our order mix and user mix continued to improve," Meituan said.
Revenue jumped 14% from a year earlier to 104.64 billion yuan, accelerating from 5.6% growth in the previous quarter. Both figures beat market expectations — analysts had estimated a net loss of 1.43 billion yuan on revenue of 101.56 billion yuan, according to a FactSet-compiled consensus.
The Beijing-based company, which competes with Alibaba Group and JD.com for dominance in China's one-hour delivery market, recorded a net loss of 6.82 billion yuan in the first quarter and a net profit of about 365 million yuan in the year-ago period.
Revenue from the core local commerce segment rose 10%, helping the company turn an operating profit for the second quarter. The new initiatives division, which includes overseas businesses, narrowed operating losses as revenue climbed 25% on progress in the company's expansion abroad.
Meituan said its Keeta platform maintained strong growth momentum. In Hong Kong, the business achieved stable profitability, while the Middle East market continued to see sequential efficiency improvements.
China Galaxy International said unit economics at Meituan's food-delivery unit likely turned profitable in the second quarter as it cut back subsidies. DBS analysts raised their 2026 and 2027 earnings forecasts for the company by 4% and 6%, respectively, citing an improved food-delivery business. Meituan stands to gain from a recovery in margins as key competitors reduce subsidies and redirect resources away from food delivery, they said in a note.
The results follow a year of bruising, subsidy-fuelled competition in China's one-hour delivery market, where Meituan, Alibaba's Ele.me, and JD.com have fought for market share through aggressive discounting and rider incentives. The easing of that price war has allowed Meituan to shift focus back to operational efficiency and margin recovery, a trend analysts expect to continue as rivals prioritize profitability over market share.
Meituan's Hong Kong-listed shares were unchanged ahead of the results, leaving year-to-date losses at about 25%.
The profit swing points to improving margin conditions across China's food-delivery sector as subsidy wars subside. Investors will watch whether Meituan can sustain profitability through the second half as it continues expanding Keeta in the Middle East, where the company faces competition from local players and international entrants.
This article is for informational purposes only and does not constitute investment advice.
