Meituan reported a net loss of CNY23.4 billion (approximately USD3.4 billion) for the past year, primarily due to increased subsidies and promotional campaigns aimed at staying competitive in the crowded Chinese on-demand services market. The company’s CEO emphasized that maintaining an assertive approach is crucial amid the artificial intelligence revolution.
The Beijing-based firm’s annual financial statement revealed that its net loss, for the year ending December 31, compared to a CNY35.8 billion profit in the previous year. Despite the loss, revenue grew by 8.1%, reaching CNY364.9 billion (around USD52.8 billion).
Marketing and sales expenses soared by 61% to CNY102.9 billion, driven by intensified marketing efforts to bolster brand visibility and price competitiveness. Research and development costs increased by 24%, totaling CNY26 billion, mainly due to heightened corporate investments in artificial intelligence.
In its core local commerce segment, the firm experienced an operating loss of CNY6.9 billion (USD998.5 million), contrasting with an operating profit of CNY52.4 billion in the previous year. The segment’s operating margin dropped from positive 20.9% to negative 2.6%, largely due to higher spending on user incentives, promotions, and advertising.
The company’s leadership noted that despite fierce competition and aggressive subsidies, it remains the preferred choice for high-value customers ordering food, citing better overall service. They also expect improvements in first-quarter losses per order by reallocating resources from low-value orders to those with higher transaction values.
Regarding competition, the CFO acknowledged that increased investments by rivals could negatively affect short-term profitability.
Shares traded up 1.6% at HKD88.10 (about USD11.25) in Hong Kong as of mid-morning today.
The CEO highlighted that AI is set to transform all aspects of their business. He explained that adopting an aggressive stance is necessary in this new era but clarified that the company doesn’t aim to become a “token factory.” Instead, AI will be used to enhance and revolutionize local service offerings.
Looking ahead to 2025, the company plans to promote AI-driven transformations in the physical world by integrating AI innovations into its established service advantages. They are leveraging their proprietary multi-modal LongCat series large language models, open-source models, and proprietary digital assets such as extensive merchant data, diverse product offerings, real-time consumer behavior, and user reviews.
The CEO added that capturing the “super gateway” is fundamentally about understanding users’ needs accurately and executing tasks efficiently—more complex than creating an intelligent chatbot.
Last year, they launched Xiaotuan, an AI assistant embedded within the app, which aims to shift consumer interactions from simple searches to command-based requests. The company has implemented AI across all categories of local services on their platform.
He also noted that their AI investment ranks among the largest among Chinese companies, ongoing for over three years, and that their deep expertise in food delivery, retail, and supply chain management will give them a significant edge in linking AI to the physical world.
In overseas markets, their food delivery platform Keeta expanded into Qatar, Kuwait, the UAE, and Brazil in the second half of last year. It became profitable in Hong Kong in October, 29 months after launch, and the company expects it to turn a profit in Saudi Arabia much sooner, before year’s end, with several cities already profitable.
In Brazil, focus remains on refining the model in São Paulo ahead of a broader rollout. While overall losses in the new markets are expected to remain considerable this year, the company is committed to ensuring that losses in its New Initiatives segment do not surpass last year’s figures.