This article first appeared on GuruFocus .
-
Total Revenue:RMB104.6 billion in Q2 2026, up 14.4% year-over-year.
-
Cost of Revenue Ratio:Edged down to 66.5%.
-
Selling and Marketing Expenses Ratio:Decreased to 23.6% due to more disciplined marketing spending.
-
R&D Expense Ratio:Increased to 7.3% due to higher investment in AI.
-
G&A Expenses Ratio:Remained stable at 3.1%.
-
Segment Operating Profit:Turned profitable at RMB3.9 billion.
-
Adjusted Net Profit:RMB2.5 billion.
-
Cash and Cash Equivalents:RMB168.3 billion as of end of June.
-
Investment Portfolio:Nearly RMB77.3 billion as of June 30.
-
Core Local Commerce Revenue:RMB71.5 billion, up 10.1% year-over-year.
-
Core Local Commerce Product Sales:Grew 78.9% year-over-year.
-
Core Local Commerce Operating Profit:RMB5.7 billion.
-
New Initiatives Revenue:RMB33.1 billion, up 25% year-over-year.
-
New Initiatives Operating Loss:Narrowed sequentially to RMB1.7 billion.
Release Date: August 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Meituan ( MPNGF ) reported a 14.4% year-over-year revenue growth to RMB104.6 billion, with net profit turning positive in Q2 2026.
-
Food delivery returned to positive revenue growth, with improved order mix, higher AOV, and stronger core user stickiness, leading to a leadership position in both order volume and GTV.
-
Keeta achieved sustained profitability in Hong Kong and turned profitable in Saudi Arabia in July 2026, just 22 months after entry, demonstrating scalable operational efficiency.
-
The company's AI strategy, including the open-sourced LongCat 2.0 model, is driving internal productivity gains and enhancing user and merchant experiences, with a focus on ROI-driven investment.
-
Meituan ( MPNGF ) holds a strong cash position of RMB168.3 billion and is open to monetizing its investment portfolio (worth over RMB70 billion) to fund growth and shareholder returns.
Negative Points
-
Industry subsidy levels in food delivery remain significantly higher than 2024 levels, and normalization is expected to take several quarters, pressuring near-term unit economics.
-
Q3 2026 food delivery unit economics are expected to face seasonal headwinds, including higher delivery costs and increased marketing spending, which may weigh on profitability.
-
The in-store, hotel, and travel business faces intensified competition, with competitors subsidizing heavily, leading to a potential decline in operating margin in Q3 and Q4 due to increased investment.
-
Losses from the grocery retail business (Xiaoxiang Supermarket and Happy Monkey) increased quarter-over-quarter due to rapid expansion, though efficiency is improving.
-
Macroeconomic headwinds are affecting consumer spending, leading to lower AOV in certain categories, and the company expects continued pressure on in-store business growth.
Q & A Highlights
Q: How does management view the competitive landscape in food delivery and quick commerce, and what are the expectations for unit economics in Q3 as subsidies normalize? A: Shaohui Chen (CFO) stated that the industry is shifting toward marketing and operational efficiency, with competition expected to return to quality, service, and innovation as regulators guide subsidy practices. Meituan has strengthened its lead in order volume and GTV, particularly in the mid-to-high AOV segment. For Q3, food delivery unit economics are expected to improve meaningfully year-over-year but face sequential seasonality headwinds, including higher delivery costs and the nationwide rollout of occupational injury insurance. Despite this, UE is expected to remain positive, with a clear path to recovery in the medium to long term.
Q: What is the role of LongCat 2.0 in Meituan's AI strategy, and is there a path to commercializing the LLM? A: Xing Wang (CEO) explained that LongCat 2.0 is a foundational element of Meituan's AI strategy, focused on bridging digital and physical worlds to deepen its moat in local services. The strategy rests on three pillars: building the LLM, AI at work, and AI in products. LongCat 2.0, a trillion-parameter model trained on Chinese infrastructure, has been open-sourced and is driving productivity gains internally, particularly in coding and customer service. Meituan is not competing to be a "token factory" but is embedding AI into real workflows to improve user and merchant experiences, with a disciplined, ROI-oriented approach to capital allocation.
Q: Can you update us on the competitive landscape for the in-store business and the path to margin recovery? A: Shaohui Chen (CFO) noted that the in-store market has expanded with more players differentiating across user groups and scenarios. Meituan is focused on high-quality growth, avoiding subsidy-driven low-quality orders, and has seen no meaningful impact on core users or merchants. The company serves over 8 million merchants across 200+ categories, with new demand emerging in categories like sports and wellness. While operating margins may decline in Q3 and Q4 due to increased investment, Meituan expects gradual margin improvement over the medium to long term as competition normalizes and ROI-driven resource allocation takes effect.
Q: What is the latest on Xiaoxiang Supermarket and Happy Monkey, and how does the omni-channel strategy fit into Meituan's grocery retail plans? A: Xing Wang (CEO) emphasized that grocery retail is a key strategic priority aligned with Meituan's mission. Xiaoxiang Supermarket now operates in 68 cities with strong GTV growth and improving efficiencies. The company is expanding offline flagship stores, with five now open, to build trust and brand recognition through sensory experiences. Happy Monkey, a neighborhood grocery format with a high private-label mix, has 40 stores in operation. Meituan believes the true moat lies in organizational and supply chain capabilities, which will unlock a large addressable market as online penetration in grocery remains low.
Q: Could you provide an update on Keeta's expansion, particularly in Brazil, and the investment budget for overseas markets? A: Xing Wang (CEO) highlighted Keeta's success: Hong Kong reached profitability in 29 months, and Saudi Arabia achieved profitability in just 22 months, demonstrating the scalability of Meituan's operational approach. In Brazil, a top-five global food delivery market, Meituan is focusing on Sao Paulo, which represents 25% of the market, to build a differentiated edge before broader expansion. For the second half, the focus is on operational optimization and efficiency gains, with new initiative segment losses in 2026 expected not to exceed 2025 levels.
Q: How should we think about capital allocation priorities, including investments, AI CapEx, and shareholder returns? A: Xing Wang (CEO) reiterated Meituan's ROI-driven approach, prioritizing core business growth and market leadership. Investments in overseas expansion and grocery retail are being paced based on ROI, while AI investments are focused on embedding technology into real business scenarios. Share buybacks remain the primary method of returning capital, and Meituan is open to monetizing its investment portfolio, which is valued at over RMB70 billion, to free up capital for reinvestment and shareholder returns when market conditions are favorable.
Q: What drove the significant improvement in on-demand delivery unit economics in Q2, and how sustainable is this trend? A: Shaohui Chen (CFO) attributed the sequential improvement in UE to seasonal tailwinds and meaningful subsidy reductions. The company's strategic focus on higher AOV orders, core user base, and operational efficiency has led to a healthier order mix and improved marketing efficiency. While industry subsidies remain above 2024 levels and will take time to normalize, Meituan's UE recovery has clear visibility, and the company expects to stay far ahead of the industry in both food and non-food categories.
Q: How is Meituan leveraging AI to enhance both consumer experience and merchant operations? A: Xing Wang (CEO) discussed the rollout of Xiaochuan, an AI assistant built into the Meituan app, which is driving meaningful lifts in user engagement for complex local services decisions. On the merchant side, Meituan is deploying specialized AI agents on its Catapult platform across restaurants, services retail, medicines, and hotels, helping merchants improve daily operations and achieve tangible efficiency gains. The goal is to evolve from being a merchant's online channel to becoming their AI-powered business partner, or "digital copilot."
Q: What are the key drivers behind the revenue growth in the core local commerce segment, and how is the in-store business performing? A: Shaohui Chen (CFO) reported that core local commerce revenue grew 10.1% year-over-year to RMB71.5 billion, with delivery service revenue and merchant service revenue accelerating. Food delivery returned to positive revenue growth, driven by a focus on higher AOV orders and core users. Meituan Instant Shopping grew faster in revenue than order volume, supported by the rapid expansion of the 1P business and strong advertising traction. The in-store, hotel, and travel business also grew steadily, with operating profit margins improving sequentially despite intensified competition.
Q: How is Meituan addressing social responsibilities, such as courier welfare and food safety, and what impact does this have on costs? A: Xing Wang (CEO) highlighted the nationwide rollout of occupational injury insurance covering every order and courier, along
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
