Thank you, operator. Good evening and good morning, everyone.

Welcome to our first quarter of 2026 earnings conference call. Joining us today are Mr.

Xing Wang, Chairman and CEO, and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan.

For today's call, management will first provide a review of our first quarter of 2026 results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements, which include a number of risks and uncertainties and may differ from actual results in the future.

This presentation also contains unaudited non-IFRS accounting standards financial measures that should be considered in addition to, and not as a substitute for, measures of the company's financial performance prepared in accordance with IFRS accounting standards. For detailed discussion of risk factors and non-IFRS accounting standards measures, please refer to disclosure documents in the IR section of our website.

Now, I will turn the call over to Mr. Xing Wang.

Please go ahead, Xing.

Hello, everyone. In the first quarter of 2026, we stayed focused on our long-term retail plus technology strategy, driving high-quality growth for both our company and the whole industry.

As the preferred local service platform for consumers and merchants, Meituan's ecosystem showed strong resilience. Despite a complex market environment, we kept innovating products and services.

We increased investment in our ecosystem and technology, and remained committed to creating long-term value for both consumers and merchants. We also expanded grocery retail and overseas business with improving operating efficiency.

Meanwhile, we accelerated the application of AI in real business use cases. Thanks to these efforts, both our core local commerce and new initiatives segments delivered solid results in the first quarter.

Their operating losses narrowed significantly compared with the prior quarter. Now let me walk you through each segment in details.

In the first quarter, in on-demand delivery industry, the irrational subsidy moderated compared with last quarter. Even so, our food delivery business continued to attract a large number of new users.

This shows that consumers choose Meituan for our comprehensive and reliable services, rather than price incentive alone. In addition, our stable and reliable delivery services during holidays and extreme weathers, together with our growing high-quality supply, have further strengthened our users' stickiness.

Notably, high and mid-frequency users became more active. Their ARPU increased, and user loyalty strengthened.

A large number of mid-frequency users upgraded to high-frequency users. These high-quality users have more diverse consumption needs and value services and supply quality more.

Meanwhile, core users of Meituan Instashopping also demonstrated higher order frequency. Notably, the post-2000s generation has emerged as a key growth driver.

Our user structure advantage support our industry-leading operational efficiency. In the first quarter, the operating loss of our on-demand delivery business narrowed sharply on a quarter-on-quarter basis.

To better meet user demand, especially that of our core users, we continued to improve our delivery services, merchant supply, and the whole ecosystem. First, we expanded the coverage of our high-quality delivery service.

More food delivery users now choose to use 1-to-1 express delivery, [yiduiyi jisong?] , and they are willing to pay a premium for faster delivery.

During the holiday shopping season, we further promoted this delivery service for Meituan Instashopping. This service addresses users' time-sensitive shopping needs for categories such as mother and baby products or daily necessities and their needs for high-end gift purchase, including electronics and baijiu.

Second, we further enhanced our supply chain capabilities. For food delivery, our branded satellite stores, [pinpai weixing dian?]

, expanded rapidly. With our comprehensive operational support, these stores achieved higher conversion rates and repeat purchase rates than traditional restaurant.

For [Pinhaofan?] , we worked closely with merchants to optimize their menus based on our in-depth insights into local consumer preferences.

For Meituan Instashopping, we upgraded our supply chain services for all Meituan InstaMarts. We helped merchant improve product assortments, enhance procurement efficiencies, and elevate the consumer experience.

Kuaima Songjiu, Songshu Bianli, and branded flagship InstaMart, [pinpai guanjia dianshang?] , all continued their steady expansion, further enriching the product supply available on our platform.

Beyond the supply upgrade, we expanded support for small and medium-sized merchants and further improved food safety governance to build a healthier platform ecosystem. In the first quarter, we provided targeted operational support for more high-quality local restaurant merchants.

We launched practical tools and policies to improve merchant experience, including malicious review management, order damage protection, and AI-powered operational solutions, among others. On food safety, we launched 10 improvement initiatives in April.

We strengthened food safety governance in three core areas. The first is merchant onboarding, and the second is transparent operations, and the third is cross-party supervision.

Our goal is to build a safer and more trustworthy food delivery environment for all users. For our in-store, hotel, and travel business, we continued to optimize our supply system and focused on ROI-led investment.

These efforts further solidified our leading position in local services. Our core categories achieved steady growth in the first quarter, attributable to our sustained efforts to reinforce consumers' perception of Meituan as a one-stop local service platform.

First, on the supply side, we built a full-scope, value-for-money supply system spanning all categories and price tiers, with a particular emphasis on high-quality supply. We expanded the reach and influence of our authoritative recommendation lists, including the Black Pearl list, [Heizhenzhu?]

, Must-Eat List, [Bichibang?] , Must-Visit List, and Must-Stay List.

These recommendation lists helped direct targeted traffic to high-quality merchants, while providing consumers with clear, reliable guidance to inform their decision-making. In addition, we supported nearly 1.3 million skilled artisans on our platform.

We helped them upgrade professional skills and build personal brands through digital profiles and training programs. We continued to serve as a key link connecting merchants, artisans, and consumers.

Second, on the product side, we launched a new point system that integrates platform points with loyalty programs of chained merchants. This helped merchant refine operations based on member data and insights.

It also supports merchants in transitioning from one-time customer acquisition to long-term user retention and customer relation management. Moreover, we actively upgraded industry-wide service standards and consumer protection mechanism.

We expanded assurance programs for prepaid services across fitness, hair salon, and massage categories. We also introduced equipment and medicine verification processes for dental care, medical aesthetics, and other healthcare services.

Our goal is to reduce information asymmetry in local services and build a standardized trust system. We believe this will help lower barriers to transaction conversion, particularly for non-standard local service categories, thereby supporting the long-term sustainable growth of both our platform and merchants.

Now let's turn to our new initiative segment. In the first quarter, we focused on the high-quality development of grocery retail and Keeta.

For grocery retail, Xiaoxiang Supermarket increased its coverage to 55 cities in the first quarter through accelerated expansion. While sustaining robust GTV growth, it further strengthened its supply chain capabilities, offering consumers a broader selection of high-quality and very competitively priced products.

For example, in the first quarter, private label products accounted for a higher share of its GTV. For Keeta, driven by economy of scale and refined operations, we achieved meaningful efficiency gains in both Hong Kong and Saudi Arabia in the first quarter.

Keeta also posted solid growth in other Middle Eastern markets and Brazil following their respective market launches. Leveraging our accumulated operational experience, Keeta has achieved efficiency gains in certain new markets at a faster paces than we realized in our mature markets at comparable stages of development.

Going forward, we will continue to leverage our strength in product, technology, and operations to deliver better consumption and delivery experiences to Keeta users. This quarter, we continued to make progress in AI development.

We upgraded our AI assistant, Xiaotuan. It brings users improved AI search experience.

We recently added a dedicated Xiaotuan entry point within the Meituan app, making it easier for users to access and engage with the AI assistant. It also helped users make quicker and smarter decisions on local services.

On the merchant side, our AI tools are designed to address real pain points in their online operations. In the in-store dining domain, our smart manager, [Zhineng Zhanggui?]

, has served over 700,000 merchants in total. This quarter, we expanded its coverage from individual stores to chain stores.

Our digital staff, [Shuzi Yuangong?] , continued to support small and medium-sized merchants in services retail.

It now served over 300,000 merchants across a wide range of services categories. Moving forward, we will continue to evolve our AI tools from single-point AI empowerment towards human-machine collaborations.

AI will support decision-making in merchants' complex business scenarios. It will also enable end-to-end automation for routine and repetitive merchant tasks.

Looking back at the first quarter, I would say we delivered solid results amid ongoing industry changes. All our businesses showed strong resilience amid a competitive market environment.

For the full year of 2026, we aim to further deepen our competitive moat for core local commerce while further improving overall operational efficiency. We will continue optimizing our products, advancing technological innovations, and deepening investment in our ecosystem.

We will further improve user experience, help merchants improve operational efficiency and revenues, and protect the rights and interests of couriers. For new initiative, we will focus on grocery retail and overseas expansion with a focus on achieving higher ROI.

In addition, we will continue to invest in AI across both the physical and digital worlds, leveraging technology to drive retail upgrades and create long-term sustainable value for all stakeholders. With that, I will turn the call over to Shaohui for an update on our latest financial results.

Thank you, Xing. Hello, everyone.

In this quarter, we have achieved substantial financial improvement while maintaining resilient growth. We are the go-to platform for local service merchants to run their business and for consumers to discover and transact.

This strong mindshare, together with our ongoing investment in user experience, supply, and fulfillment, allow us to navigate this dynamic environment effectively. Now let's look at our financial results in details.

All comparisons are on a year-over-year basis unless otherwise noted. Total revenue was RMB 91 billion, up 5.6%.

Cost of revenue ratio increased by 8.7 percentage points to 71.5%. This was primarily driven by two factors: more consumer incentive deducted from revenue; higher rider incentive to maintain leading service quality amid intensified competition.

Selling and marketing expenses ratio rose by 7.6 percentage points to 25.2%, largely due to our increased investments in promotion, advertising, and user incentive to enhance our brand awareness and core user engagement to address the competition. R&D expenses ratio increased to 7.7%, reflecting our increased investment in AI, while the G&A expense ratio remaining stable at 3.2%.

Our bottom line showed strong improvement this quarter. Sequentially, we achieved more than RMB 10 billion loss reduction, with total segment operating loss and adjusted net loss narrowing to RMB 4.1 billion and RMB 5 billion, respectively.

This meaningful improvement reflected a moderation of competition, our effective execution on high-quality growth, and operational efficiency improvement. As of end of March, we held cash and cash equivalents and short-term treasury investments totaling RMB 180 billion.

Beyond our own AI initiatives, we are also actively investing into some of China's leading AI and other technology companies to support their growth. As of March 31st, our investment portfolio was nearly RMB 53 billion.

Separately, fair value changes in certain of our investments, including Zhipu AI, result in an RMB 7.6 billion gain recognized in other comprehensive income rather than the P&L this quarter. Now let's look at the segment results, starting with the core local commerce segment.

Segment revenue was RMB 64 billion in Q1, returning to positive year-over-year growth. Segment operating loss narrowed meaningfully from last quarter to RMB 2 billion.

On-demand delivery industry-wide subsidy started to go down in Q1. We further improved our subsidy efficiency and stayed focused on high-AOV order segment and our core user base.

Both the order volume and GTV of our on-demand business maintained resilient year-over-year growth during this quarter. We further solidify our leadership in both food and non-food sectors.

Our on-demand delivery's unit economics improved significantly quarter-on-quarter. This was mainly driven by two factors.

First, our superior order mix and user structure supports a faster recovery in AOV. Second, our overall better operational capability allow us to adapt more quickly to market shifts and drive further efficiency.

However, both the AOV and subsidy for our on-demand business still need more time to go back to reasonable level, they continue to weight on the revenue growth and operating profit of on-demand delivery business during this quarter. For in-store, we continued to focus on high-quality growth.

We held our position in core in-store categories and effectively capture increased holiday spending and emerging consumption trends. Our in-store business delivered steady growth this quarter, driven by strong performance across multiple fronts.

We continuing to see categories, including leisure and entertainment, sports and fitness, pet service, and etc., grow rapidly in both order volume and GTV. In turn, we also saw promising traction in service verticals like medical aesthetics, elder care, home renovation, and etc., as we bring more non-standard local service online and scale our skilled artisan community in those industry.

In hotel and travel, we also deliver steady growth as we capture robust travel demand during holidays. Our industry-leading position in the low-star hotel sector stayed strong.

Despite ongoing competition, our in-store, hotel, and travel business overall operating profit margin remained stable quarter-over-quarter. Now turning to our new initiative segment.

Revenue in Q1 was up 21.3% year-over-year to RMB 27 billion. Segment operating loss narrowed sequentially to RMB 2.1 billion.

First, our grocery retail business narrow their loss quarter-over-quarter, supported by operational efficiency gains and seasonal tailwinds. Given growing strategic importance and sustained growth, we have started to disclose their product sales separately this quarter.

The product sales, mainly generated from our grocery retail business, grew about 41% year-over-year this quarter, contributing meaningfully to the segment's growth. Second, Keeta delivered resilient growth in Middle East even in a challenging environment, further supporting its rapid revenue expansion.

The loss from Keeta reduced quarter-on-quarter as we improved operating efficiency across all of its markets. In closing, I want to reiterate our confidence in the company's long-term sustainable growth potential.

As we continue to execute our retail plus technology strategy, we will provide greater value to our merchants, consumers, and the whole business partners. This will further strengthen our competitive position in longer term.

With that, we are now open for your Q&A.

Thank you, Xing, Shaohui, Scarlett, and team. Want to ask about the food delivery business.

As the industry subsidies gradually rationalized, what marginal shifts have you seen in the competitive landscape? With seasonal tailwinds, do you expect the business to turn profitable for the second quarter and how should we think about the UE progression into the second half?

Just building onto that on order volumes, given tough comps, what is your outlook for order volume growth for the next few quarters? Stepping back, if we think about the TAM and key structural drivers for the overall market, could you just help us frame that and the long-term unit economics trajectory from here?

Thank you.

Thank you, Ronald. For your question on our food delivery subsidy and on the UE.

I think with industry-wide subsidy finally getting more rational, we are seeing competition shifting back to the fundamentals, that's operational efficiency and user experience. This transition plays direct to our strengths.

Even as we gradually pull back subsidies, we still continue to see healthy user growth and stronger engagement from our core users. We also solidified our leadership in mid to high-AOV order segment.

This is a natural result of our stronger user mindshare and better supply and service quality. Our structural advantage in operational efficiency are becoming increasingly evident at this stage and driving steady improvement in our financials.

If competition stays more rational, we expect a meaningful UE improvement in Q2 compared to Q1, supported by seasonal tailwind. We have sustained our market leadership in recent months, while also widening our UE gap advantage.

We will continue to monitor the market closely and adapt thoughtfully. Our focus stays on sustaining our leading position while driving operational efficiency improvement both for ourselves and our merchants.

However, our UE improve in the second half will still depend on how the competition environment evolves. Also keep in mind that delivery cost per order is seasonally higher in Q3 and Q4 compared with Q2.

On order volume, given a high basis from last year, we may see negative year-over-year order growth in the second half. We are seeing a healthier order mix as consumers are increasingly willing to pay for quality.

I would say this is a very positive sign for merchants who invest in quality supply. Therefore, we expect the net GTV growth to be more resilient than order volume growth.

That really comes down to our leadership in mid to higher-AOV segments and the expected AOV recovery supported by our user structure advantages. Looking longer term, we continue to see upside in China's food delivery market.

The service is becoming a high-frequency daily necessities for a broader and broader demographic, a structural shift that provides sustained momentum for deeper market penetration over time. As we broaden our reach, we also help merchant access a bigger customer base.

In fact, we are seeing the industry user base continue to expand. On one hand, food delivery is penetrating deeper into the lower price segment.

On the other hand, in our better-served consumer seeking premium and diverse options, driving steady expansion in the user base as well. We see high growth potential in purchase frequency and retention for the new users.

We believe our superior services and supply can well position us to capture this upside. Looking back, this wave of irrational competition proved one thing: volume acceleration driven solely by subsidy is not sustainable.

True long-term growth comes down to supply-side innovation and better matching of demand and supply across diverse use cases. Leveraging AI and other technologies to drive efficiency and experience improvement across the industry is also super important.

These are the true foundation for healthy, sustainable growth. That is exactly where we will continue to invest with conviction.

We have confidence in the industry's long-term growth potential, and achieving a sustainable high-quality 100 million order per day stays our target. On long-term unit economics, we expect competition to be more rational, particularly under regulatory guidance.

We are confident in sustaining our industry-leading operational efficiency, which will support our long-term competitiveness. We believe our food delivery long-term UE will get back to a reasonable level.

Beyond that, significant synergy potential remains untapped across our core local commerce businesses. We will actively drive cross-selling between food delivery and other services.

Ultimately, this will generate a long-term compounding value for the entire core local commerce segment. Thank you.

Thanks, Xing.

Hi. Good evening.

Thanks, management, for taking my question. Given the ongoing competitive pressure from Douyin, could management share some color about the recent trend for the in-store business?

Should we expect continued pressure on both the top-line growth and margin for the in-store business? In the longer term, how do you project the growth and margin trajectory, especially given the traffic disadvantage versus Douyin?

Thank you.

Thank you for the question. We have always viewed local in-store services as more than just a traffic-driven business.

It is a business built on physical world fulfillment and on consumers' trust. Traffic alone doesn't automatically translate into transaction.

In local services, Meituan has built strengths that cannot be replicated purely through traffic. First, it's our brand, our strong consumer mindshare for finding stores and deals, supported by a trustworthy information and review system.

Our value for money, group-buy offerings, verified merchant information, integrated services like online reservation and queuing system, and billions of authentic user-generating reviews together form a strong moat. Secondly, it's our continuous innovation across the whole value chain to build better and better experience.

We support millions of skilled artisans on our platform, and we have deeply penetrated into sectors like medical aesthetics, elderly care, and home maintenance. Our consumer protection initiatives have rebuilt consumer trust in prepaid service.

By transforming offline, non-standard, and long-tail services into reliable, standardized online SKUs, we have built a very differentiate supply ecosystem. These initiatives continue to help build a self-reinforcing cycle at scale, continue to provide the best experience in the industry.

We are also aggressively using AI technology with a focus to reshape the value that we deliver in the local service industry, transforming Meituan from a customer acquisition channel into a full-rounded, AI-powered business partner in the local ecosystem. While competition has created some near-term noise, we believed market players have to continue differentiate across category, merchant segment, and market scenarios.

Our position as a one-stop local service platform stays strong. Our in-store revenue keeps growing steadily, and we continue to lead in core categories.

We have also expanded into new service retail verticals and deepen our reach in lower-tier markets. Our investment strategy will adapt dynamically to the industry trends, with primary focus always being the long-term healthy development of the industry.

This year, we will focus on two things: strengthening our competitive edge in core categories and building a better digital infrastructure for local service merchants. As the industry subsidy gradually normalize, the value we deliver to merchants will matter even more in their day-to-day operations.

We expect the in-store margin to stay stable in the near term, with room to recover over the long term. We have the conviction and patience to keep leading the evolution of the local service sector.

Thank you.

Hi. Thank you, management, for the opportunity.

I have a question regarding AI. We've noticed that the Meituan app has recently launched the AI assistant Xiaotuan on its home page.

Could management share some color on the progress so far? Are there any other initiatives underway to accelerate AI integration on the product side?

What capabilities are you looking to build, and what goals do you aim to achieve on the AI front over the longer term? Thank you.

Thank you, Gary. Yes, you are exactly right.

We have placed our AI assistant, Xiaotuan, front and center in the Meituan app. In fact, in the middle of the bottom navigation bar for easier access.

I would say it is still at a very early stage. Anyhow, we are already seeing good initial results.

More and more users are coming to Xiaotuan, not just for very simple and short searches, but for more complex and cross-use cases queries, things like, please recommend a restaurant between two locations for guests who do not eat spicy food, or book an on-site repair service. What makes Xiaotuan different is its foundations.

It's the authentic consumer reviews and comprehensive POI information and a proprietary model trained specifically for local service businesses. Together, this gives Xiaotuan the ability to understand better the full context and provide users with personalized recommendations.

Particularly, when users change their mind and adjust criteria like price range, locations, or anything else, Xiaotuan can seamlessly factor that in all prior instructions and updates its recommendation accordingly. The May Day holidays was a good example.

Session volumes picked up meaningfully compared to Chinese New Year. More importantly, users weren't just coming to redeem coupons on Xiaotuan; they are actually using Xiaotuan to discover services, destinations, and ultimately plan and make purchase on our platform.

Beyond Xiaotuan, we are also embedding AI deeper into some specific verticals. A good example is Xiaotuan Health Assistant, [Xiaotuan Jiankang Guanjia?]

, our dedicated AI product for healthcare services. It's built on years of proprietary real-world data from pharmacies transactions and online medical consultations on our platform.

It's developed in close partnership with professional medical teams, because that's where you don't want to have any hallucination by AI. It brings health consultations, medication guidance, and medical reports interpretation all into one seamless experience, where users can consult and order medication or book appointments, all within the Meituan app.

Looking ahead, Xiaotuan will be one of our key AI products on the consumer side. We will continue to deepen its integration into Meituan app.

Beyond improving the effectiveness of user-agent interactions, we will deploy Xiaotuan's agentic task execution capabilities progressively across our business verticals. Our partnership between Meituan AI assistant, Xiaomei, and the Tencent's AI chatbot, Yuanbao, will also be launched soon.

When the user submits a local services-related request in Yuanbao, it will trigger an agent-to-agent communication with Xiaomei. This seamlessly connects the user to our services, such as online food ordering and delivery.

This collaboration will facilitate a streamlined, one-stop local service transaction experience for users. I think going forward, we will need to build capabilities not just for 2C, to consumers, or 2B, to businesses, and 2A, to agents, is actually become more and more important.

As I have said in the past Q&As, we try to play offense and not defense in AI. We consider AI to be a very important opportunity to deepen our moat and unlock new values.

We have been investing in our own large language model, LongCat. We are improving our agentic capabilities.

What really set us apart is the foundation, the data we have. We have full-spectrum local services coverage and verified merchant information, authentic user reviews, and fulfillment infrastructure.

Putting AI on top of these structural advantages, we will deliver superior AI-powered local service experience to users. Thank you.

Thank you.

Hi. Good evening, management, and thanks for taking my question.

Given the evolving industry and regulatory trends in the travel industry, could management share the recent performance of the company hotel and travel business, as well as its development strategy for the full year? Thank you.

Thank you, Kenneth. The hotel and travel industry has enter into a new phase in terms of regulation and competition.

Consumer preference have increasingly shifted toward value-for-money options, off-peak travel, lower-tier cities, and local leisure and short-distance getaway. In first quarter, our hotel and travel business delivered steady growth, and we further consolidated our leading position in the lower-star hotel area.

Riding on strong travel momentum during Spring Festival holiday, including home visits and leisure travel, we offer well-priced, high-quality accommodation with outstanding user experience, which effectively lifted transaction conversion rates. We also continue to deepen our presence across the industry supply chain, catering to the differential needs of merchants at various operational stage.

We provide end-to-end solutions covering brand establishment, targeted marketing, revenue enhancement, room renovation, and PMS system support. These tailor solutions help merchants improve online operational efficiency and achieve long-term sustainable growth.

On the high-star hotel front, amid evolving regulatory environment, we expand our high-star hotel portfolio to enrich accommodation choices for consumers. Earlier this April, we launched the 2026 Must-Stay list, featuring thousands of premium hotel across more than 200 cities nationwide.

This list has become a credible, curated guide for user seeking high-quality lodging experience. We partner with selected hotel merchants on the list to offer exclusive presale products for leisure travelers, bringing exclusive benefits, unique experience, and one-stop, high-quality vacation services.

Furthermore, we remain focus on strengthening our membership ecosystem. On the internal front, we wrap up cross-selling between accommodation and other businesses, provide high-tier Meituan members with exclusive perks, including complimentary room upgrades, free breakfast, late checkout, early check-in, and special discounts.

Externally, we continue to promote joint membership programs with global high-end hotel brands, such as Marriott, and launch exclusive membership benefit in partnership with Shanghai Legoland. Looking ahead to the full year, we recognize that the recent hike in airline fuel surcharge will bring near-term volatility to hotel and travel industry.

Long-distance travel and high-star hotels are likely to face headwinds, while short-distance leisure travel, local accommodations, and low-star hotels will remain resilient. Our structure advantage in these resilient domains position us well to navigate the current market cycle.

In addition, we will fully capture opportunity brought by ongoing regulatory updates. First, we will further solidify our core market leadership in the low-star hotel sector.

Second, we will continue to expand footprint in the mid-to-high-end hotels, deepen strategic partnerships with merchants, enrich our offerings, and strengthen our ecosystem synergies. We will also continue to leverage the Meituan membership program to deliver targeted services to high-value users and push for further progress in the high-star hotel domain.

We are confident in driving healthy, sustainable, and high-quality growth for our hotel and travel space. Thank you.

Thank you.

Thank you. Good evening, management.

Thank you for taking my question. I would like to ask about the Middle East situation.

Can you help us understand the operational impact on Keeta so far? On UE, are the UE improvements trends in Hong Kong and Saudi Arabia still on track for the quarter?

Finally, given the heightened geopolitical uncertainties globally, how are you thinking about Keeta's expansion and investment pace going forward? Thank you so much.

Thank you. Regarding the Middle East, we have seen some near-term fluctuations in our growth metrics, given what's happening in this region.

However, the impact has been manageable so far, and our long-term conviction for this market is unchanged. We still believe Middle East is one of the most attractive on-demand delivery markets globally.

The market is still growing fast, penetration remains low, and consumers there have strong willingness to pay. Notably, even in this challenging environment, we continue to see a clear acceleration and the transition from offline to online.

Consumer mindshare for on-demand retail continues to strengthen, and industry-wide online penetration is accelerating. On-demand delivery has clearly become an essential infrastructure.

This shows the structural resilience of this business model. Broadly speaking, going global is a long-term goal for us, and navigating geopolitical complexity is what we need to learn.

We will keep sharpening our risk management and building an organization that is better suited for global operations. As we do so, we will continue to grow alongside local players and create value for users, merchants, and riders in the local markets.

Operationally, Keeta maintained solid growth across all markets in Q1. Following Hong Kong's unit economics break-even in Q4 last year, we delivered further efficiency gains in both Hong Kong and Saudi Arabia this quarter.

This also is encouraging to see that the efficiency ramp-up in other Middle East markets and Brazil has been even faster, thanks to the operational experience accumulated earlier. We will prioritize operation improvement this year over new markets expansion.

In the longer term, we are confident in Keeta's potential to deliver on both scale and bottom-line growth. In many global markets, food delivery is still an occasional service for a small segment of consumers, not a daily necessity for the mass market.

This demonstrates significant growth potential. Going forward, we will explore market expansion opportunities thoughtfully, and we will be financially disciplined.

Food delivery is a proven business model globally, and Keeta's steady efficiency gains across existing markets validates our operational playbook. As we grow and keep optimizing our operations, we are confident we will eventually achieve sustainable profitability at scale.

Thank you.

Hi. Good evening, management.

Thanks for taking my questions. I have a question related to your grocery retail, Xiaoxiang Supermarket, business.

Amidst the on-demand delivery price war, we have seen Freshippo maintain a rapid growth recently. Could management provide some colors on Xiaoxiang Supermarket's recent performance?

Then specifically, how do you view the strategic value of the 1P models like the Xiaoxiang Supermarket within the Meituan's on-demand delivery ecosystem? What are your long-term targets for this business?

Thank you.

Thank you, Alicia. To answer your question, yes, we know that all our peers are growing fast, but I could say Xiaoxiang is growing even faster.

Thank you for paying attention to Xiaoxiang Supermarket. In today's very competitive online environment, we need to make sure we have the best supply on our platform.

For average consumers, they don't understand and they don't care about whether it's a so-called 1P model or 3P model. They only care about what they can buy from the platform and whether the suppliers, the stores, can provide good quality and also an equally important predictability, reliability.

Here, Xiaoxiang is competing on a level playing field on the Meituan platform. It's very important that as everything now becomes the new normal for more and more users, and they are raising their expectation on product variety, quality, and value.

They know they can get the same very fast delivery from any seller, but they are expecting more from the sellers. We believe the future growth of on-demand retail market will be driven by a hybrid model, including the so-called 3P model or like initiatives by Meituan Instashopping, together with a 1P model like Xiaoxiang Supermarket.

Xiaoxiang provides a very consistently high-quality supply with a very competitively priced product fulfillment. This position us strongly to capture the substantial growth potential in this evolving space.

We think it's a model built directly on our core strengths and has a clear path to profitability. On the other hand, we have a lot to learn in this grocery business.

On the operational side, Xiaoxiang has delivered a very robust GTV growth in 2025, significantly outperforming the whole industry. I'm glad to say that this momentum continued into Q1.

Recently, we accelerated our expansion. Now Xiaoxiang covers 55 cities as of end of Q1, with plans to enter more markets in the coming quarters.

Meanwhile, we continue to strengthen our merchandising capability and go deeper into the entire supply chain. As an example, our private brand product, PB products, are getting greater recognition from consumers, and now account for a growing share of our sales.

In our more established cities like Beijing and Shanghai, we have seen a notable increase in AOV over the past few quarters. This reflects our success in capturing more wallet share by expanding our high-quality and competitively priced product offerings.

Also to further strengthen our omnichannel capabilities, we are actively launching new physical stores. You may be aware that Xiaoxiang started as a pure online dark store model, but last December, we have opened our first physical store in Beijing in Haidian.

Building on the success of our first physical store, we opened a second one in Ningbo in this past April. We believe physical stores can broaden our user reach, allow the consumers or potential customers to see more directly our high-quality physical goods.

Because when you enter a physical store, you are going to have a much broader view compared to any screen, and you can not only see more, you can smell it, and you can touch it. This is much more attractive than any online presentations.

Physical store will be a very good channel to strengthen Xiaoxiang's brand awareness over time. On the other hand, even with this very rapid expansion, we remain very focused on ROI, because grocery retail is a long game.

This reflect in our continued year-over-year improvement in margins in Q1. Looking ahead, we are confident that Xiaoxiang will become one of the leading players among online grocery stores.

We are targeting a sustainable low single-digit profit margin in the long run. What's most important is that we want to build Xiaoxiang to become one of the most loved grocery brands in future.

Because the mission of our company is to help people eat better. Besides food delivery, people who want to cook for themselves need to buy grocery.

We want to build Xiaoxiang to become one of the most loved grocery brands. That's our target.

Thank you.

Thank you.

Okay. Thank you all for joining our call.

We look forward to speaking with everyone next quarter. Thank you for your support.