Meituan has released its first quarterly report for 2026.

The company's revenue for the first quarter reached 91 billion yuan, marking a year-on-year increase of 5.6%.

Operating losses were 6.5 billion yuan, a significant improvement of 9.6 billion yuan from the previous quarter's loss of 16.1 billion yuan, while the adjusted net loss was 4.968 billion yuan, both figures surpassing market expectations.

However, the company had recorded an operating profit of 10.6 billion yuan in the same period last year.

Beyond the reduction in losses, the market is more focused on what will drive Meituan's renewed growth once subsidies are scaled back.

CEO Wang Xing stated during the earnings call that "order growth driven solely by subsidies is not sustainable."

The signals from this financial report suggest that the most intense phase of subsidy competition for Meituan may be over, but the journey to rebuild profitability is far from complete.

Concurrently, a new growth narrative distinct from food delivery is beginning to emerge.

Progress on the Path to Profitability

From a financial perspective, the first quarter showed a clear improvement in losses.

The operating loss narrowed to 6.5 billion yuan from 16.1 billion yuan in the previous quarter, and the adjusted net loss of 4.968 billion yuan both exceeded market forecasts.

However, a longer-term view reveals this performance was not easily achieved.

Comparing the 6.5 billion yuan operating loss this quarter to the 10.6 billion yuan operating profit from a year ago reveals a profit swing exceeding 170 billion yuan.

Furthermore, revenue from the core local commerce segment grew a mere 0.1% year-on-year to 64.1 billion yuan, nearly stalling.

Wang Xing offered a cautious outlook for the second half of the year, noting the high base from the same period last year.

He stated that order volume growth may slow or even potentially decline year-on-year.

Nevertheless, he emphasized that the platform is observing a healthier order mix.

He indicated that consumers are increasingly willing to pay a premium for higher-quality goods and services, suggesting that growth in net transaction value will be more resilient than growth in order volume.

This signifies Meituan's shift from pursuing sheer order volume growth to focusing on improving transaction quality.

An industry consultant noted that as subsidy competition becomes more rational, rivalry is returning to factors like operational efficiency and user experience.

For Meituan, narrowing losses is more akin to stopping the bleeding rather than reaching the final destination.

Sustained improvement in unit economics still depends on multiple variables, including the competitive landscape, delivery costs, and industry regulations.

Retail Takes the Baton

More noteworthy than the loss reduction is the shift in revenue structure.

In the first quarter, Meituan updated its revenue reporting, separating merchandise sales from its new initiatives segment.

The report shows that merchandise sales revenue within core local commerce surged 96% year-on-year to 2.983 billion yuan, while delivery service revenue fell by 6.5%.

This change indicates Meituan is expanding from a pure platform model to a hybrid model combining platform services with self-operated retail.

Its Xiaoxiang Supermarket has become a key growth driver.

By the end of the first quarter, it covered 55 cities with over 2,000 fulfillment centers, approximately 60% of which were profitable.

Merchandise sales revenue grew 40.7% year-on-year to 18 billion yuan, making it one of the fastest-growing revenue streams within the group.

Concurrently, following the shutdown of Meituan Select, revenue from new initiatives grew 21.3% year-on-year to 27 billion yuan.

Operating losses for this segment narrowed from 4.6 billion yuan to 2.1 billion yuan, with the operating margin improving to -7.8%.

Compared to the previous expansion logic reliant on subsidies for scale, new initiatives are entering a phase that prioritizes operational efficiency.

However, Meituan remains measured in its profit expectations for the retail business.

Wang Xing has previously stated that he does not expect the grocery business to become a highly profitable venture.

This implies the value of Xiaoxiang Supermarket lies not in replicating the high margins of the food delivery business, but in helping Meituan build deeper supply chain capabilities and more diversified revenue sources.

Strategic shifts are also evident in overseas markets.

The financial report indicates that Keeta continues to improve operational efficiency in Hong Kong and Saudi Arabia, while maintaining growth in other Middle Eastern regions and Brazil.

However, the expansion has not been without challenges.

Recent market information suggests Keeta delayed its entry into Rio de Janeiro and downsized some local teams.

In Brazil, exclusive partnership agreements between many restaurants and competitors have also increased the difficulty for new entrants.

Addressing expectations for overseas markets, Wang Xing clearly stated that the priority this year is operational optimization rather than entering new markets.

Compared to previous rapid expansion, Meituan's overseas operations have pivoted towards efficiency.

Sustained Investment in AI

Beyond retail and overseas markets, Meituan continues to invest heavily in AI.

First-quarter R&D expenditure reached 7 billion yuan, a 22% year-on-year increase.

Meituan has now positioned its AI assistant "Xiaotuan" at a core entry point within its app.

Wang Xing explained that Xiaotuan can handle complex cross-scenario user requests, such as dynamically recommending restaurants and services based on user criteria.

Furthermore, the collaboration between Meituan's AI assistant "Xiaomei" and Tencent's Yuanbao is set to launch soon, allowing users to directly access local services like food delivery within Yuanbao.

On the model front, Meituan opened testing for LongCat-2.0-Preview in April, a model whose total parameter scale exceeds one trillion.

However, at this stage, AI's direct contribution to revenue and profit remains limited.

For Meituan, AI is more akin to a long-term infrastructure investment rather than a short-term profit driver.

The information from the first-quarter report suggests the most perilous period for Meituan may have passed.

Yet, what will determine the growth potential for the next phase extends beyond the food delivery business alone.

The future growth narrative for Meituan in the coming years will be shaped by whether its retail business can continue to scale, whether overseas markets can control losses, and whether its AI investments can ultimately translate into operational efficiency.