Annual loss of 23.4 billion! Meituan's triple dilemma | Financial report analysis

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Meituan is going through the deepest strategic pain period in its history.

On March 26, 2026, this food delivery giant released its Q4 2025 and full-year financial results. Although losses had long been expected, when the loss figure of 23.36 billion yuan finally came in, there was still a little surprise—especially since its first three quarters already showed a net loss of 8.211 billion yuan.

When the “cost of in-house competition” and the bet on “going overseas” are both put on the table at the same time, it seems that this path of Meituan’s has been particularly tough.

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Looking at the overall data, Meituan’s 2025 revenue was 364.9 billion yuan, up 8.1%. This number looks acceptable when placed against the macroeconomic environment and a large base effect. But when you dig deeper into what actually drives the growth, the “quality” seems rather average.

Compared with 2024, Meituan’s 2025 revenue increased by 27.3 billion yuan. Where did this incremental growth come from? The answer is the new business segment.

In 2025, Meituan’s new business segment revenue grew from 87.3 billion yuan to 104.0 billion yuan, an increase of 16.7 billion yuan, contributing more than 60% of the revenue growth increment.

On the other hand, the revenue of the core local commerce segment only rose from 250.2 billion yuan to 260.8 billion yuan, an increase of 10.6 billion yuan. This means the overall revenue growth of Meituan in 2025.

The core local commerce segment includes food delivery, on-site dining and lodging & travel, flash delivery, and other businesses—this is Meituan’s foundation.

From the revenue mix, Meituan’s delivery services revenue in 2025 fell from 98.1 billion yuan to 96.1 billion yuan, down 2.0% year over year. The explanation given in the annual report is:

Due to efforts to increase marketing and promotion to enhance brand influence and pricing competitiveness, thereby continuously improving user transaction activity and stickiness to cope with fierce competition, resulting in higher subsidies that are deducted from revenue.

So did the number of transactions increase? In Meituan’s subsequent earnings call, it mentioned that both the platform’s GTV and transaction volume in 2025 achieved double-digit growth. That is to say, users indeed placed more orders on the platform, but Meituan received less money per order on average.

This indicates that Meituan’s subsidy strategy has shifted from “acquiring customers” to “retaining customers”—not to attract new users, but to prevent old users from being poached by competitors.

Next, looking at commission revenue: in 2025, Meituan grew commission revenue from 95.3 billion yuan to 105.5 billion yuan, up 10.7%. This was mainly contributed by new businesses such as flash delivery, while food delivery commission growth was held back by the drag from a decline in AOV (average order value).

Online marketing services revenue grew from 49.2 billion yuan to 51.9 billion yuan, up 5.4%, and the growth rate was also clearly below historical levels and below the overall revenue growth rate.

For new businesses, Meituan’s year-over-year growth was 19.1%. This growth rate far exceeds that of the core business.

Among them, “other services and sales” (including food and grocery retail, overseas business, etc.) rose from 94.9 billion yuan to 111.4 billion yuan, which was the main driving force. In particular, Keeta’s overseas expansion contributed significantly.

In the second half of 2025, Keeta entered the Qatar, Kuwait, UAE, and Brazil markets one after another. The revenue growth in these new markets filled the gap left by the shutdown of Meituan Youxuan.

Commission revenue increased from 3.05 billion yuan to 6.24 billion yuan, more than doubling. This growth mainly came from commission revenue from overseas businesses, indicating that Keeta’s monetization capability in overseas markets is taking shape.

It is worth noting that Meituan’s Q4 data seems to start changing: total revenue was 92.1 billion yuan, down 3.1% quarter over quarter. Core local commerce revenue was 64.8 billion yuan, down 3.3% quarter over quarter; new business revenue was 27.3 billion yuan, down 2.8% quarter over quarter.

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The profit side is even more brutal.

In 2025, Meituan posted a net loss of 23.4 billion yuan, while in 2024 it was profitable with 35.8 billion yuan. The gap is as high as 59.2 billion yuan!

In 2025, Meituan’s gross margin fell from 38.4% to 30.4%. This 8 percentage-point drop is the root cause of Meituan’s 2025 losses.

What led to the sharp deterioration of gross margin?

According to the annual report, Meituan’s cost of sales increased from 207.8 billion yuan in the prior year to 253.8 billion yuan in 2025, a rise of 22.2%, far higher than the 8.1% revenue growth rate. The cost of sales as a percentage of revenue rose from 61.6% to 69.6%. That means that for every 100 yuan of revenue, costs increased by 8 yuan.

The annual report’s explanation is:

Due to an increase in the number of immediate delivery transactions, higher rider subsidies, and the expansion of the food-and-grocery retail business and overseas businesses.

It is worth noting that all three are structural factors: the economies of scale for immediate delivery were not fully reflected in a competitive environment, and rider costs show a rigid upward trend; new businesses naturally have lower gross margins, which means it is not easy for gross margin to recover.

The most striking part is that in 2025 Meituan’s selling and marketing expenses grew from 64.0 billion yuan to 102.9 billion yuan, up 60.9%. As a share of revenue, it surged from 19.0% to 28.2%.

The annual report’s explanation is:

Due to increasing marketing and promotion efforts to enhance brand influence and pricing competitiveness, while continuously improving user transaction activity and stickiness to cope with intense industry competition. In plain terms, it means increasing subsidy intensity.

In the earnings call, Wang Xing described this phenomenon as “irrational competition” and “involution.” But the issue is that Meituan itself is also a participant in this subsidy war.

In terms of results, this subsidy war did indeed bring growth in transaction volume—both platform GTV and transaction volume achieved double-digit growth. But the cost is that the marketing expense ratio rose from 19% to 28%, core local commerce operations had a loss of 6.9 billion yuan, whereas in 2024 it had operating profit of 52.4 billion yuan.

The Q4 data shows that Meituan has started to adjust its strategy: the marketing expense ratio fell from 35.6% in the third quarter to 34.4%, showing some decline quarter over quarter. But 34.4% is still a level above the historical average.

Also worth paying attention to is R&D expenses. Meituan increased R&D expenses from 21.1 billion yuan in 2024 to 26.0 billion yuan, up 23.5%, mainly due to increased investment in AI and higher employee compensation expenses.

In the earnings call, Wang Xing was even more direct, saying that Meituan may be “one of the Chinese companies that invests the most in AI, apart from those cloud companies.”

Putting it all together, Meituan’s loss of 23.4 billion yuan in 2025 is made up of three parts: a 59.3 billion yuan decline in core business profit, and an expansion of the new business loss by 2.8 billion yuan. That is to say, the root cause of the losses lies in the core business slipping, not in the expansion of new businesses.

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In subsequent earnings calls, Wang Xing spent a great deal of time outlining Meituan’s AI strategy. He sees AI as a “strategic opportunity,” with the goal of “upgrading the Meituan app into an AI-driven app.”

From a strategic perspective, the logic behind Meituan’s bet on AI is as follows: when human-computer interaction shifts from “search” to “conversation,” the one that can better understand user needs and execute tasks will become the new “super entry point.”

Meituan’s advantage is that it not only has massive local merchant data, but also has fulfillment capability—AI can recommend restaurants, but only Meituan can ensure deliveries arrive on time. This “digital + physical” combination cannot be replicated by pure AI companies.

But the risks of the AI strategy are equally obvious: huge investment, a long payback cycle, and uncertainty in the technical roadmap. In 2025, R&D expenses increased by 5.0 billion yuan, and this is only the beginning.

So in the leveraged game’s view, Meituan’s dilemma is clear right now: first, the core business faces the risk of continued losses; second, AI will require high ongoing investment in the long term; and third, the new overseas business is not profitable at the moment.

The so-called ideal is full and vivid; the reality is harsh.

The good news is that judging from the combined signals lately, the highly involuted subsidy war may be nearing its end. But in an external environment where competition is extremely fierce, how likely Meituan’s home base is to avoid being “stolen away by competitors” is still subject to significant uncertainty.

Meituan today can be said to be “bleeding for the future”—this is the ultimate test of efficiency, patience, and strategic resolve.

**All charts and tables whose sources are not marked in this article are sourced from corporate websites or announcements; this is stated and we also thank them  **

Ren Yaolong Lawyer Team

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