Meituan: Under Three Mountains, Will "Old Deng" in Delivery Remain Kneeling?

Meituan (美团) reported its FY25 Q4 results after the Hong Kong close on March 26, and the headline is blunt: the prior profit warning was largely accurate, but the company’s attempts to cut delivery losses have been more than offset by widening losses in new businesses. The core local commerce unit still showed heavy red ink, while overseas push and AI-related spending ate most of the hard-won improvements. Can Meituan afford to keep investing aggressively while its domestic cash cow is only marginally improving?

Earnings snapshot

Meituan’s core local commerce posted an operating loss of about RMB 10 billion, roughly in line with its warning; on the surface in‑store operating profit was RMB 4.2 billion, implying that at‑home (delivery) losses exceeded RMB 14 billion. Per‑order subsidies have fallen — Meituan’s per‑order loss reportedly narrowed from about RMB 2.5 to RMB 2 — but rival Alibaba (阿里巴巴) has been cutting losses faster, narrowing the gap. New‑business losses jumped to roughly RMB 4.6 billion, materially above market expectations of RMB 3.5 billion and largely negating the core business’ improvement. Non‑operating gains of just over RMB 2.2 billion helped the group headline, but core operating loss after gross margin and expenses remained near RMB 18.3 billion.

Competitive and regulatory pressures

Competition is intensifying on multiple fronts. It has been reported that Douyin (抖音) has rapidly re‑accelerated in local services with GTV growth said to exceed 60%, pressuring Meituan’s in‑store monetization and growth rates. Meanwhile, Alibaba’s strategy appears to prioritize scale and market share even at the cost of slower de‑leveraging, while it has been reported that Chinese regulators have increased public warnings about “cutthroat” subsidy wars. Will regulators step in decisively? Probably not to outlaw voluntary platform subsidies — more likely they will nudge faster normalization of subsidy practices rather than impose an outright ban.

Outlook: expansion vs. restraint

Meituan’s innovation and overseas arm — Keeta — helped lift new‑business revenue growth to about 19% year‑on‑year, but the company is spending to grow: total expenses climbed to roughly RMB 42.4 billion, with marketing alone at RMB 31.7 billion while R&D and admin rose sharply on AI and overseas investment. The picture is clear: Meituan is fighting a two‑front war — trimming delivery losses at home while betting on international and AI‑driven growth — and currently choosing aggression over restraint. That may signal courage to some investors, but for many it reads as a precarious posture: improvement is real, yet fragile.