Thank you for standing by and welcome to the Meituan Second Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Scarlett Xu, Vice President and Head of Capital Markets. Please go ahead. Thank you, Alprita. Good evening and good morning, everyone. Welcome to our second quarter of 2025 earnings conference call. Joining us today are Mr. Xing Wang, Chairman and the CEO, and Mr. Shaohui Chen, Senior Vice President and the CFO of Meituan. For today's call, management will first provide a review of our second quarter of 2025 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 standard 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 a detailed discussion of risk factors and non-IFRS accounting standard measures, please refer to disclosure documents in the IFRS section of our website. Now, I will turn the call over to Mr. Xing Wang. Please go ahead, Xing. Thank you so much, Scarlett. Hello, everyone. In the second quarter, the competitive dynamics of both food delivery and more generally the on-demand retail evolved rapidly. Our business maintained steady growth, with revenue increasing by 11.7% year-over-year to RMB 91.8 billion. The total MAU exceeded 600 million, while the MAU of our Meituan app alone surpassed 500 million. Annual transacting frequency hit a new record, with the average user transaction volume transacted at least once a week. This underscores Meituan's position as the preferred platform for local services among a growing number of consumers. Leveraging our extensive categories and merchant coverage, and coupled with our industry-leading efficiency, efficient, reliable on-demand delivery network, we deliver comprehensive, high-quality, and convenient services to our consumers. Looking ahead, we will further enhance our products and services to better address consumer needs. By applying technology and rolling out more innovative supplies, we will continue to empower the local service industry and further unlock the industry's long-term potential. In the second quarter, the on-demand delivery industry entered a new phase and another round of intense competition. Yet, drawing on the operational capability and the unparalleled efficiency we have built over a decade, we further solidified our market leadership, hitting an important milestone in July, as our highest daily on-demand delivery order finally surpassed 150 million orders that day, not per day. That being said, what truly matters more than these figures is our steadfast commitment to service quality and consumer experience. More importantly, the intensified competitive landscape will not change our commitment in building a healthy ecosystem. We understand deeply that only by fostering a sustainable ecosystem can we ensure long-term development and deliver sustainable win-win outcomes for all participants. In the second quarter, our food delivery business successfully attracted a larger base of new users while solidifying the loyalty of our core users. This achievement stems from our comprehensive offerings of valuable money products across all price bands and the reliable service experience that we offer. Using Meituan membership and diversified marketing initiatives, we effectively enhanced user stickiness and transaction frequency among our core users, while deepening penetration into high-value scenarios such as family meals and premium meal options. As a result, we maintained an unrivaled market leadership in the food categories. Meanwhile, we remained focused on building a sustainable ecosystem for the whole industry. Through collaborative efforts with merchants to drive supply-side innovations, we continue to lead the industry-wide advancement in quality standards and user experience. In July, we had partnered with over 800 restaurant chains to launch more than 5,500 branded satellite stores, while helping them optimize their online operational efficiency and lower cost with our AI-powered business tools. Our target is to expand this network to over 10,000 branded satellite stores by the end of this year. Our centralized kitchen initiative, Raccoon Cloud Kitchen, continues its expansion, setting new benchmarks for food safety across the industry. It delivers end-to-end infrastructure support to restaurants of all types, encompassing supply chain management and bright kitchen programs, Meitu Liang Zhao, and digital operations, all under a unified food safety management framework. Over the next three years, we plan to invest in building 1,200 Raccoon Cloud Kitchens nationwide, enabling tens of thousands of restaurants to upgrade quality and creating a fully traceable and trustworthy food delivery model for consumers. In addition, we continue to iterate the supply diversity and service quality of our Pin Hao Fan and Shen Qiang Shou, making sure they meet consumer demand for value for money across different price ranges. Notably, Pin Hao Fan has emerged as the fastest growing innovative product in the industry over the past five years, serving as a reliable revenue stream for small and medium-sized merchants, as well as restaurant brands. Recently, we launched the One Japan Pai Jihua, a 10,000 brands initiative for Pin Hao Fan, which provided tailored support for 10,000 branded restaurants nationwide. Throughout the second quarter, we continue to promote the Meitu Liang Zhao, a bright kitchen program, directing more traffic to participating quality merchants and providing hardware subsidies to small and medium-sized merchants. We also simplified our marketing schemes to alleviate operational burden on merchants, redirecting industry focus toward quality enhancement. Moreover, we are committed to developing robust welfare schemes for couriers, ensuring competitive compensation, flexible hours, and safety protection. Starting July 1, we have expanded the coverage of occupational injury insurance to all couriers in 17 provinces and cities. Following successful pilot in Quanzhou and Nantong, our pension insurance subsidy program will be expanded nationwide by the end of this year. We expect it to cover more than 1 million couriers. We have also upgraded additional supportive measures for couriers. For example, we set up an RMB 1.6 billion summer subsidy fund. Our critical illness fund has been expected to cover more disease and now includes children for our part-time crowdsourcing couriers. In collaboration with ecosystem partners, we have built Xizhou Zijia couriers' homes in multiple provinces and cities, offering free services such as emergency assistance, rest areas, supplies, and battery replacement and charging facilities to all couriers, even including couriers from other platforms. In the second quarter, Meituan Instant Shopping solidified its leading position with a rapid growth of on-demand retail industry and evolving consumer needs. GTV achieved a much stronger growth than order volume. User growth also accelerated. Not only did more food delivery users convert to Meituan Instant Shopping users, but also around 20 million new users have tried our 30-minute delivery service for the first time this quarter. Transaction frequency of core users increased notably with the consumption scenarios expanding beyond grocery to encompass 3C electronics, cosmetics, mother and child products, and more. This quarter marked our first June 18th shopping festival, Liu'er Ba, for on-demand retail, during which we helped nearly 1 million offline stores serve over 100 million users. It was a June 18th event dedicated to offline merchants, enabling brick-and-mortar retailers to enjoy the benefit of online shopping festivals and drive sales growth through on-demand retail channels. During this June 18th shopping festival, GTV for over 60 product categories on our platform doubled, while overall GTV of Meituan Instant Shopping and Santian Shang nearly doubled. High AOV items such as mobile phones or Chinese liquor, Baijiu, and milk powders and home appliances experienced a 200% GTV growth. In the liquor category, we enhanced the shopping experience for chilled beer and strengthened consumer mindsets of purchasing Chinese liquor on Baijiu or Meituan. Through the introduction of national subsidy and a series of shopping protection measures, we significantly elevated the shopping experience for 3C electronics. We also added more snack discount stores to enrich the supply of leisure food on our platform. On the service front, we launched a service insurance plan, Anxin Shang Gou, upgrading services across three dimensions: the service experience, fulfillment, and post-sales support. Notably, we partnered with numerous home appliances brands to offer value-added services such as half-day delivery and installation service through offline stores. As the on-demand retail industry grows, we continue to lead supply-side transformation. By the end of the second quarter, we have collaborated with retailers and brands to set up over 50,000 Instant Marts nationwide at Santian Shang. Through Instant Marts, we facilitated the digital transformation of numerous local mom-and-pop stores, expanding the service radius and enhancing operational efficiency. This quarter, our in-store business maintained its strong growth momentum, with order volume surging over 40% year-over-year, annual transacting users increased by more than 20%, and annual active merchants hit a new high. GTV of hotel and travel during the Labor Day Golden Week also reached a new high. On the merchant side, we have actively seized the emerging opportunities in the service retail industry, such as the new categories, innovative supply models, and the growth potential of lower tier cities, and continue to promote merchants' digital upgrade and standardization by providing integrated services, including chain store management, business decision-making, marketing, customer acquisition, and organizational management. We help merchants improve their efficiency and their business skill. We remain committed to empowering merchants to build their online presence and strengthen their online brand images. For example, we help merchants refine store page displays with more sophisticated, more accurate, and diversified information, help them simplify store management through more efficient systems, and leverage digital assets such as user reviews, photos, and videos, and various featured rankings and lists to enhance their brand influence. In addition, we've helped over 1 million independent artisans digitize their profile, matching them with consumer demand while providing them with more convenient online management tools. Our goal is to turn good craftsmanship into good business, [Foreign language]. Recently, we launched a series of AI business assistants in the merchant interface, which have started to be rolled out to more services and retail merchants. On the consumer side, we have further solidified the consumer mindset of finding stores and deals on Meituan. Particularly, we leveraged the Meituan membership to provide consumers with richer benefits and better service experiences. This quarter, we launched more in-store benefits for members of different tiers, such as member-exclusive free offers and member-exclusive discounts, covering various categories, including restaurant, dining, beverage, leisure, and entertainment, as well as housekeeping and laundry services. These efforts have continuously improved user loyalty, transaction frequency, and the efficiency of cross-selling across different businesses. We also leveraged Meituan membership to direct high-quality users to the hotel and travel business, upgrading the membership benefits in hotel and travel to deliver greater value. Notably, we have witnessed a growing trend among high-tier members to expand their engagement with our travel-related products and explore more categories on our platform. For example, the proportion of the high-tier members purchasing hotels and travel offerings grows markedly during the Labor Day holiday. This quarter, we deepened our strategic partnership with Marriott International with the official launch of our joint membership program. On the first day of the partnership, the number of bookings of Marriott hotels on our platform surged by 88% year-over-year, with bookings from young users under the age of 13 surging over 148%, a clear indicator of our expanding growth potential in the high-star hotel segment. Next, let's turn to our new initiatives. In the second quarter, we refined our grocery retail strategy while accelerating the overseas expansion of our food delivery brand, Keeta. In June, we launched a strategic transformation for Meituan Select. We exit underperforming regions with sustained losses while continuing to explore this next-day delivery plus self-pickup model and new community retail formats in core regions. Concurrently, we are accelerating the expansion of our Xiaoxiang Supermarket, and that's our self-operated on-demand grocery business, with a clear roadmap to gradually extend this model to all first and second-tier cities nationwide. During this quarter, Xiaoxiang Supermarket maintained a very high growth, significantly outpacing the industry average. We now operate nearly 1,000 front distribution centers in 20 cities. In Beijing, Shanghai, Guangzhou, Shenzhen, all Xiaoxiang Supermarket locations have extended operating hours to 2:00 A.M., enhancing coverage of consumers' nighttime shopping needs. We are also continuously elevating product qualities and diversities, with both the number of our private brand products and their contribution to our total sales growing steadily. On the international front, Keeta delivered very robust growth in both order volumes and GTV this quarter. In Hong Kong, our first market, we further strengthened our leading position while driving continuous improvements in efficiency. In Saudi Arabia, Keeta's footprint has expanded to 20 cities by the end of July. Additionally, we officially launched Keeta in Qatar last week. Looking ahead, we will continue to leverage our strengths in product, technology, and operations know-how to bring superior experiences to consumers around the world. Over the years, we have stayed committed to pursuing what's challenging yet right in the long term. Guided by our retail plus technology strategy, we have deepened our roots in the retail sector while driving industry growth through relentless innovation. We believe that industry progress does not come from a temporary scale expansion driven by massive short-term subsidies. Instead, it lies in empowering merchants to reduce operational costs, enhance operational efficiency, and improve quality through digital transformation. This is exactly why we are firmly against the involution nature. We aim to remain our focus toward improving user experience and enhancing supply and bringing competition back to the track of value creation. As a platform that connects hundreds of millions of users, tens of millions of merchants, and millions of couriers, we adhere to the principle of achieving win-win outcomes for all stakeholders. Whether through technology breakthrough or business model innovations, we will always prioritize sustainable industry growth, foster a healthy ecosystem, and unlock greater consumption potential. With that, I will turn the call over to Shaohui for an update on our latest financial results. Thank you, Xing. Hello, everyone. I will now go through our second quarter financial results. During this quarter, our total revenue increased by 11.7% year-over-year to RMB 91.8 billion. Cost of revenue ratio increased 8.1 percentage points year-over-year to 66.9%. This was primarily driven by, first, higher incentives for our couriers to maintain industry-leading delivery service quality and reliability amid the current intensified competition. Second, the increased cost in our overseas operations. These factors were partially offset by the improved gross margin of our grocery retail business. Selling and marketing expenses ratio increased 6.5 percentage points year-over-year to 24.5%, reflecting our strategic investments in promotion, advertising, and the user incentives to enhance our brand awareness, accelerate new user conversion, enhance core users' frequency, and stickiness in the competitive market. Both R&D expense ratio and G&A expense ratio maintained stable year-over-year at 6.8% and 2.9% respectively. This quarter, total segment operating profit and adjusted net profit declined significantly this quarter to RMB 1.8 billion and RMB 1.5 billion, respectively. The significant financial volatility reflects unprecedented competitive intensity across the on-demand delivery sector, with industry-wide subsidy reaching record highs. In response, we deliberately increased investments to defend our market leadership while fortifying long-term competitiveness. Throughout this process, we maintained unwavering focus on operation efficiency with industry-leading service quality for consumer merchants and riders. We are cultivating structural modes whose value compounds independently beyond the current market condition. Turning to our cash position, as of June 30, 2025, we maintained a strong net cash position with our cash and cash equivalents and short-term treasury investments totaling RMB 171 billion. However, cash generated from operating activities reduced meaningfully year-over-year to RMB 4.8 billion, primarily due to our competitive investments that pushed operating profitability. Now, let's review our segment results, starting with core local commerce. This quarter, our core local commerce segment maintained healthy growth in both order volume and GTV. However, revenue growth significantly lagged behind scale expansion, with segment revenue increasing 7.7% year-over-year to RMB 65.3 billion. This is mainly due to a large portion of incentive counter-delivery service revenue as a result of higher incentive spending. In time, we also stepped up marketing investments to reinforce our on-demand delivery brand awareness and price competitiveness on the user side. We also provided more incentives to couriers to guarantee a stable competitive delivery capacity, providing consumers with better delivery experience. As a result, segment operating profit declined year-over-year to RMB 3.7 billion, with margin contracting to 5%-7% this quarter. However, both our food delivery and Meituan Instant Shopping sustained their leadership. The overall on-demand delivery order volume achieved a modest year-over-year growth acceleration this quarter, while the year-over-year growth in GTV maintained the same pace as compared to net talk in last quarter despite AOV drop. It's important to highlight that core user engagement metrics across both businesses have showed sustained improvement this quarter. Our demonstrated ability to drive higher purchase frequency and the stickiness among core user base will serve as the key efficiency of our innovative supply models. Meanwhile, the interior operation efficiency model of our innovative supply model, such as Pin Hao Fan and Shen Qiang Shou, allow us to cost-effectively serve our rapidly expanding price-sensitive user base while delivering an increasingly diverse and stable selection of value-for-money offerings. Our core competitive strengths remain structurally intact throughout the period. Our operational strengths also continue to allow us to deliver better unit economics than industry average, positioning us well for the eventual market normalization. Our in-store business maintained strong growth momentum this quarter, achieving record highs in both order volume and GTV, with upgraded supplies and enhanced service quality. We've successfully capitalized on elevated consumer spending in local service, especially during peak holiday period. During this quarter, various categories, including fitness, photography, education, and others, delivered robust growth across the board. As on-demand delivery traffic grew rapidly, our upgraded membership program has deepened cross-business collaboration within core local commerce. Through tailored short-term promotions, integrated market service benefits, and long-term loyalty benefits, our membership program is driving higher engagement across core user groups while converting growing food delivery demand into incremental transaction growth for in-store hotel travel business, demonstrating the strong flywheel effect of our local commerce ecosystem. Turning to our new initiative, during this quarter, segment revenue grew by 22.8% year-over-year to RMB 26.5 billion this quarter. The accelerated year-over-year growth was primarily driven by the fast expansion of our grocery retail operation and overseas business development. The segment's operating loss and operating loss ratio both narrowed on a quarter-over-quarter basis to RMB 1.5 billion and 7.1% respectively, thanks to our efforts in improving operating and marketing efficiency in our grocery retail business and other new initiatives. The year-over-year increase in operating loss was mainly due to our increased investment in overseas business. In closing, while we expect there will be continued fierce competition in the near term, and that will bring negative impact on our financial results, I want to emphasize that resilience of our core local commerce business has been proven across multiple cycles. Every challenge eventually will strengthen our competitive positioning, sharpening our execution, and driving operation excellence. Look beyond short-term volatility; we have full confidence in our ability to sustain healthy quality growth over the long term. With that, we are now open for Q&A. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Thomas Chong with Jefferies. Please go ahead. Hi, good evening. Thanks, management, for taking my question. My question is about competition. Given that competitors continue to offer high subsidies, could management elaborate on our response strategies and their effectiveness? Has the competition significantly impacted our market share? What is our view on the impact of the industry evolution driven by price war? Thank you. Thank you, Thomas. Allow me to begin with a very clear message. We are firmly against the involution. We have foundation. The regulators have made it very clear that's not something they want to see in the market. That being said, when the competition continues and becomes, as I'm saying, even more fierce, we will do our part to defend our market position. This is not the first time we face this kind of intense competition. In the past many years, we grew and we grew through competition. Through competition, we had shaped our leading position. Let's focus on what makes us the market leader in the past and what we plan to do to continue innovating and being the market leader. I think at the end of the day, on-demand retail is a format of retail. To succeed in retail business, after all kinds of fancy stuff, it all boils down to the fundamentals, the basics, the selection, and the price, and the service, or to be more specific, the delivery. We have always focused on doing the right things. We make sure we can deliver, we have the best and growing selection, and we make sure we can have a fast and reliable delivery, and we make sure we have a consistently affordable price. Nothing fancy, just go back to the basics. Also, in the past, I can put it this way. For investors who have been with us for a long time, going back to 2018 during our IPO roadshow, we showed the roadmap, and we promised we can grow to, back then, our average daily number of daily orders is below 20 million. We set a goal, we said we can grow to 100 million orders per day by 2025. We are going to make RMB 1 profit per order. That's our two very easy-to-understand goals that we set seven years ago. In the past year or two, in quite several quarters, we have proven that we can, we get to RMB 1 profit per order per day. I think that's reasonable because it's about 3% profit margin if you count the average order value. It's around RMB 30. RMB 1 profit, that's just about 3%. I think that's a reasonable long-term profit margin. Also, this past quarter, because of the very fierce competition, we not only reached the 100 million daily orders, actually, we have significantly surpassed that, reached 150 million. At the same time, we were not able to get to RMB 1 per order. I think we have reached each of the two goals at different stages. I think it would take several more years' effort to be able to achieve those two goals at the same time. It would take some time, but I think we are on the right track. No matter what happens in the market, in the competition, we are focused on doing the right things, going back to the basics, that's providing a better selection, and making sure we can do a fast and reliable delivery, and making sure we offer a consistently affordable price. That's how we operate our business, and that's how I think we are going to grow the market, grow the volume, and over a longer term, improve the unit economics, and deliver more values to both consumers, merchants, and couriers. That's our plan. We are not going to be greatly affected by short-term price war. That's it. Thank you. Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead. Thank you, Xing Wang, Shaohui, Scarlett, and Wang. I want to ask, could management share your kind of what are the core advantages that could sustain our competitiveness given this intense competition? Do we have kind of any new insights in the long-term kind of TAM, which is a total addressable market for the food delivery sector? What are our medium to long-term growth targets for order volume, GTV, and market share, given what you've shared just then, Xing Wang? How can we quantify the impact on both short-term profits and the medium to long-term profit recovery trajectory? Thank you. Thank you, Ronald. Let me get back to your sub-questions one by one. The first one is on competition advantage, I believe. I think, to echo what Xing just mentioned, our competitive advantage always builds on really focusing on the right thing, on the right fundamentals of the whole business model by providing the value that consumers are looking for. Early in the industry development, we already understand our business is essentially part of the retailing business. We need to have good selection and good services and a good price. For the selection, we have been working very hard to bring the merchants on board, digitize their operating process, and help them build the capability to operate online. We also invest heavily to build a standardized large-scale inter-city fulfillment network and continue to improve the delivery efficiency. We also work very hard on the supply side innovation and efficiency of the whole ecosystem to continue to offer good price deals for the consumers. Through elevated diverse service and diverse supplies, we have accumulated a large base of high-quality users with increasing engagement. We have seen all the cohorts of our previous and existing consumers continue to show very strong traction. The longer they stay with us, the higher loyalty they showed. Our competitive moats in the user, merchant, rider flywheel and operational efficiency reflect over a decade of committed investment and continuous acceleration. Our team has also demonstrated strong execution capability through various challenges in the past. Today, our core local commerce continues to enhance cross-business synergies. We also continue to invest in the industry ecosystem and solidify long-term moats and drive high-quality industry growth. This is for the competition advantages. For your next questions on the total addressable market, in our previous quarters, we have always emphasized that food delivery has been an indispensable part of consumers' daily lives and of the whole food service industry. We are very certain it will really become a lifestyle for the new generation of consumers. It has very clear long-term growth potential. This is also why, as Xing mentioned, that early on, we already committed to a long-term goal of 100 million average daily orders. Current intense competition is likely to accelerate order volume growth. We have seen that 100 million orders is no longer just a long-term target. It's an achievable daily number. At the same time, we have seen the AOV volatility during this competition. We believe not just the order volume, but also the high-quality orders over the long term are more meaningful. While the food industry acceleration has speeded up, we believe that when the competition normalizes, consumers, merchants, and couriers will ultimately choose the platform with richer supply, higher quality services, and optimal operational efficiency. We remain committed to a healthy ecosystem and also very confident in the long-term leadership and GTV for our food category. To your last question on the financial impact, we are very certain that we remain absolute industry-leading operation efficiency. Actually, based on our market intelligence compared to the industry peers, our unit economics advantage, the UE gap, has further widened amid intensified competition during this period. Having said that, we do expect the core local commerce to incur substantial loss in Q3, driven by strategic investments. The investments will cover the higher incentive to secure price competitiveness and the industry-leading delivery services. It will also be spent on marketing to strengthen our brand awareness. We will adjust these investments dynamically. For the longer term, we remain very confident that the unit economics of this business will come back and we will return to a reasonable level. Thank you. Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead. Hi. Thank you for the opportunity. I have a question regarding on-demand retail. As major e-commerce companies continue to expand investment in on-demand retail, what differentiates a competitive edge does Meituan hold in this market? What kind of progress has been made in recent category expansions? Given the current competitive landscape, has management formed new perspectives on long-term TAM and profit potential of on-demand retail? What are Meituan Instant Shopping's medium to long-term growth and profit targets? Thank you. All right. Thank you, Gary. As I mentioned a moment ago, to succeed in this on-demand retail, we have to go back to the basics, focus on doing the right things. The three most important things are selection, delivery, and price. Because we started earlier in this, and we have the largest network, I'm confident to say that in on-demand retail, we have the largest selection. Because we are in a hyper-local business, it's not just one unified national supply. You have to make sure you have a good supply in each cell. Because we have been doing this work since 2018, we have the best selection. Also, because we have the largest delivery network built on top of not only other on-demand services, but also the restaurant, we have the scale and the density. That's why we are able to offer fast and reliable delivery. We have invested a lot in building the infrastructure, including the IT system and all kinds of marketing tools to help a seller streamline their operation, to make sure we have a consistently affordable price. That's the three most important things. Compared with restaurant delivery, I would say the more general on-demand retail is still in a relatively early stage of market penetration. In this part of the second quarter, we have seen more e-commerce players ramping up their investment in this sector. I think that underscores its growth potential. Similar to food delivery, we believe that by delivering stable, high-quality services and better supply, on-demand retail can be truly cultivated and become a consumption habit for more and more users. That will grow the whole industry and create a real incremental value for the retail industry. Now we have accumulated over 1 million retailers spread out over the country. That enables us to provide consumers with access to nearly all offline retail categories. To further grow the supply, we have launched a lot of new supply formats. One of the most important initiatives is Meituan Instant Shopping, like a Meituan Instant Mart. Many years ago, we started with trying to work with existing suppliers. For all kinds of reasons, it didn't work out very well. We decided many years ago that we need to grow with new supply formats. Meituan Instant Mart has been growing for many years. Leveraging the years of industry insights and all the data we have accumulated, now we have empowered tens of thousands of Meituan Instant Shopping locations. They operate in many different categories and effectively address the unmet consumer demand from traditional supply. This innovation model is very rapidly penetrating not only the top-tier cities, but also the lower-tier markets. I would say they perform even better in lower-tier markets because before we go there, the offering in those markets is significantly less than in top-tier cities. Along the way, we have deepened the collaboration with brands to explore offline inventory tailored to the on-demand retail channels. You need to go deeper and deeper; you cannot just offer existing inventory through a new channel. You have to tailor the offering to the specific channel. Beyond the supply expansion, we have enhanced the supply quality and expanded all kinds of use cases and improved user experience. For example, from time to time, people need to buy medicines. We work with not only a lot of pharmacies, but we also build a new initiative that's our 24-hour pharmacy. You never know when you will need some medicines. The 24-hour pharmacy is very popular because it can meet the nighttime consumption needs. Also, for another category, the flowers, we have built our own Yohua Yang. That's the brand for premium flower shops, and they can meet high-end gifting needs. That's a very important subcategory of flowers. Those all represent incremental market opportunities and are untapped by offline retail or traditional e-commerce. At the same time, we are also upgrading the service experience. For example, on Meituan, you cannot only buy beers, you can also get the chilled beers because you don't want your beer to be not chilled. In order to be able to offer chilled beer, we have the Weima Songjiu. They can make sure you get your beer quickly and it's chilled. That's a better user experience. We take a lot of efforts to guarantee the freshness of the fruit cut, gochujang, and all kinds of fresh food. We offer seven-day return service for many categories. Through this evolving supply ecosystem and the stable fulfillment and elevated consumer experience, we have established a strong consumer mindset of having everything delivered to the doorstep within 30 minutes. That's becoming a lifestyle, a consumer habit. A growing number of Meituan Instant Shopping users are naturally converted from our food delivery business. Most of them have a strong consumption power, quite high loyalty, and rely heavily on this convenient and reliable lifestyle. For our core users, we continuously refine the user experience and introduce a membership benefit to boost purchase frequency and category expansions. We are confident that as industry competition rationalizes, we will capture a larger portion of the consumer wallet with the richest supply and most reliable services. In the past quarter, this year marks our first June 18th promotion, Liu Yao Ba. Finally, we are in the main game of e-commerce. We have long explored extending traditional e-commerce categories such as 3C electronics, daily necessities, apparels. Through our first June 18th marketing campaign, we further strengthened the consumer mindset in Instant Shopping for Everything on Meituan, with a standout performance in high-value categories. For example, GTV of Baidu surged over 10 times, with an average 28 minutes delivery time. GTV of a large home appliance, Dada Dian, grew over 11 times. GTV of early educational Hui rose over three times. Notably, our members demonstrated a strong purchasing power. The average spending of our top-tier members was three times that of our entry-level members during that event, thanks to our high-value membership coupons. Moreover, the growth momentum of lower-tier markets was more outstanding, with over 50% year-over-year growth rate. Going forward, we will continue to build a differentiated supply and expanding the product categories while deepening supply chain innovations. The increased investment from other players will help accelerate the whole industry penetration in the long run. I believe the on-demand retail markets will become much bigger than most people have originally thought. However, the low price demand is stimulated by short-term very aggressive subsidy. They can only replace existing offline or traditional e-commerce. I don't think that's the best way to create real value. I think the true incremental demand requires not just subsidy, but it requires a consistent supply side cultivation. We will remain patient and continue to strengthen the core capabilities. Overall, we are increasingly confident in Meituan Instant Shopping's growth rate over the next few years. We believe we can capture more incremental demand amid the market expansion. Regarding profitability, Meituan Instant Shopping has been profitable for several consecutive quarters in the past. Now we are in a different and a new stage of the growth. In the short term, we will prioritize growth over profitability. We will continue to invest to solidify consumer mindset and ensure stable user experience so as to maintain the market leadership. However, our long-term profit target remains unchanged. As the subsidy went down, hopefully over the years, preferably not over the quarters, I think Meituan Instant Shopping's profitability will return to a reasonable value. All in all, I understand because a lot more investment has been put into this industry in the past quarter. We expect even more to come in in the coming quarters. I would say there's nothing more exciting than being an underdog in a bigger game. That's very exciting. Thank you. Your next question comes from Kenneth Fong with UBS. Please go ahead. Hi. Good evening, management. Thanks for taking my question. I want to shift here to the in-store business. What is the competitive landscape latest? Also, could management elaborate on the recent progress for in-store dining and service retail? Additionally, since the launch of Meituan membership, any positive developments to share, particularly like cross-selling along with quantitative results? Thank you. Thank you. Regarding the competition in-store, our primary focus remains on long-term healthy development of the business. We differ from competitors in business models and operational strategy, with unique strengths in category mix, merchant ecosystem, and operational efficiency. Recently, amid growing demand for value for money in-store dining and services, we have expanded coverage of high-quality, low-price offerings, refined subsidy strategy, and enhanced consumer mindset. To address service retail merchants' rising needs for enhanced online operation and customer acquisition, we have extended the scenario coverage of our AI-powered business assistants. We try to cover end-to-end workflows, from simple daily tasks to complex operations, helping merchants reduce costs and improve efficiency. In lower-tier markets, we have strengthened our marketing capabilities and launched targeted group-buy products. As a result, both transacting users and GTV in lower-tier markets grew rapidly. Currently, industry-wide subsidy levels remain stable, and the merchants are increasingly focused on ROI for daily operations and marketing. Competition in our core categories also remains stable, and we are confident in further solidifying our advantage in the in-store. As for the Meituan membership, it has continued to make positive progress. We have rolled out member benefits spanning from food delivery, in-store dining, service retail, hotel and travel, Meituan Instant Shopping, medical and health, bike-sharing, enriching the benefit scheme, and driving sustainable growth and member engagement. In the second quarter, the net number of members who upgraded their membership tiers exceeded 10 million, with a higher proportion among top-tier Black Gold and Black Diamond members, fueling faster growth in their order volume and GTV. Rotating benefits across different services has boosted cross-sales. Additionally, we are working to position Meituan membership as a universe program for local service. By partnering with external merchant membership schemes, we offer members more premium benefits while enabling merchants to precisely reach target customers. For example, we have launched a joint membership program with Marriott Hotel Group. Going forward, we will introduce more joint membership benefits and expand the ecosystem's reach. Thank you. Thank you. Your next question comes from Yan Zhang with CITIC Securities. Please go ahead. Thank you. Thanks for taking my question. My question is regarding the new initiative segment. We see that Meituan recently announced a significant scaling back of Meituan Select and also accelerated expansion of Xiaoxiang Supermarket. Besides, we noticed that Meituan plans to explore the offline hard discount model through Happy Monkey in Chinese Swallow Hole. Could you please share the rationale behind these adjustments? What are your key considerations for exploring the hard discount model? After scaling back Meituan Select, what's your capital investment plan in grocery retail? Additionally, what's the growth expectation for Xiaoxiang Supermarket over the next two to three years? How should we view its long-term profit potential? Thank you. Thank you, Zhang Yan. As I explained in the previous questions, I think in order to further grow on-demand retail, it's very important to target different categories. There are so many different categories. Grocery is probably one of the most important ones, both because grocery can be very big and also because it really fits our mission to help people eat better and live better. We have been working and investing in grocery through different formats for many years since 2018. most recent progress in the past quarter is that you have mentioned that all. We scaled back on Meituan Select. At the same time, we accelerated the expansion of Xiaoxiang Supermarket, and we also have planned to explore a different format. Let's start with Xiaoxiang Supermarket. I can confidently say that Xiaoxiang is growing very quickly, and I believe we are among the largest online grocery operations. Also, because we are among the top two and we are growing the fastest, I think we are in a very good position to provide the best offering in online groceries. We control the supply, and we can iterate and improve the selection. I think that we are particularly strong in those fresh foods. We plan to invest more in Xiaoxiang Supermarket. Actually, many of my friends told me besides Meituan food delivery, Xiaoxiang Supermarket is the most frequently used Meituan business they rely on because grocery is just a high-frequency behavior. Along the years, we realized Xiaoxiang Supermarket can probably cover more cities than we originally thought. Today, we have almost 1,000 Xiaoxiang Supermarkets across 20 cities. Following the restructuring of Meituan Select, I think we will have more resources to invest in the expansion of Xiaoxiang Supermarket, and we plan to cover all first and second-tier cities. We anticipate that Xiaoxiang Supermarket will continue to outpace the overall industry growth in the coming years. In terms of profitability, I think we never expect grocery to be a hugely profitable business, but I think when we grow to a big scale with a good overall efficiency, we should be able to target to achieve a low single-digit profit margin. I think the 3% is a rule of thumb. You also mentioned a new initiative, the Happy Monkey. I think China's grocery retail market has very substantial growth potential, and there's still a lot of users who prefer, especially in lower-tier cities, to shop in stores. Here we have to try more like an omnichannel model, not only online but also offline. Discount retail is just a term, so we don't obsess with the term. I think we are trying to offer a new format with a limited selection and with a very competitive price and mostly in-store shopping. This is still in a very, very early stage, so I think we don't have much detail to share at this stage. It's just an experiment. Next quarter, I think we will have a little bit more detail to share with all investors. That being said, because we have been planning this, I think we will fully consider the capital needs of the business because we have scaled back Meituan Select. The overall CapEx in our whole grocery division will be significantly less than the past two years. I think we are patient in this. After the streamlining, I think we are in a better position to get to the long-term growth. Thank you. Thank you, Xing Wang. Very clear. Your next question comes from Alicia Yap with Citi Group. Please go ahead. Yeah. Good evening. Thanks for taking my questions. I have a question on your overseas business. Beyond Saudi Arabia, Keeta has just launched in Qatar and also plans to enter Brazil in the coming months. Could management share the updates on Keeta's overseas progress and also the future expansion plans? What competitive edge does Meituan or Keeta have over the local players given the need to allocate resources to cope with the intense competition in the domestic food delivery market? Will the company actually control the pace and also the scale of the overseas investment? Thank you. Thank you, Alicia. Thank you for your interest in Keeta. As I said in the past, Meituan is going to be a global company and will remain open to new market opportunities in the international markets. At the same time, in terms of the expansion pace, we are not in any hurry. We didn't start Keeta until 2023, and it's slightly over two years old. I think we have already made very good progress. Now we are already number one in Hong Kong, and we entered Saudi Arabia in last September. We are barely one year old there, but I think we have become one of the top two players in Saudi Arabia. I think we have been able to make very fast progress because, again, we focus on doing the right things, the three basics: the selection, the fast and reliable delivery, and consistently affordable price. We have operated at a huge scale in China, and we have built the IT infrastructure. We have been able to reuse that and adapt that to the different needs in different markets. Because we have the better IT infrastructure, we were able to get to scale and achieve efficient operation at a quite fast pace. In July, we covered more cities in Saudi Arabia. Now we operate in about 20 cities in Saudi Arabia. I think we have mostly done with geographical expansion in Saudi Arabia. Also, we have entered a new market, Qatar. Qatar is our second destination in the GCC in the Gulf States. Qatar is not a country with a huge population, but its GDP per capita is among the highest in the world. Qatar consumers have a strong willingness to pay for services, which provides a good foundation for the development of food delivery or more generally on-demand retail in the future. I think we are going to keep growing in both Saudi Arabia and Qatar. As for Brazil, I think we are still doing market research. We have a small team there, and we plan to grow our team there. We are prepared for the market entry, and we are quite optimistic about the potential. We understand it's among, although it's big, it's among the world's top five food delivery markets in terms of GMV. We understand that the competition is also going to be quite fierce. I don't see what we want to. We are not in any rush. We want to make sure we do our research. We have built a good team. We have a good team in place, and then we can truly create new values for consumers and merchants and couriers. I think for Keeta in general, we are very optimistic about the long-term growth potential. Our plan is to get to RMB 100 billion run rate GMV in 10 years. Since we started in Hong Kong in May 2023, the 10-year goal is set at May 2033. We are not in any hurry. We will take consideration of all the recent situation in both domestic and international markets. We will grow in our existing markets and make good preparation for launch in new markets. That's the overall strategy. Thank you. Thank you. Your next question comes from Charlene Liu with HSBC. Please go ahead. Thank you. Good evening, management. Thanks for taking my question. I would like to ask if the company plans to set a cap for overall investment when addressing competition in food delivery and on-demand retail in the short term. Obviously, we have seen core local commerce profit come under pressure. How would it affect the company's budget for investment in overseas expansion and grocery retail going forward? Can we ask the management to kindly outline the company's capital allocation priorities and strategies and share a little bit more on whether the increased business investments could potentially impact shareholder return, including buyback? Thank you. Thank you, Charlene. I understand the question is mainly focused on how we plan to allocate our capital going forward. Similar to the philosophy that was shared in previous quarters, the key principle for us to consider capital allocation needs is what makes the best ROI, what's the best way of the use of the capital and generate long-term return. In the domestic opportunity, we truly believe that our core business, including the food delivery, broader on-demand retail, as well as our in-store business, has huge potential. It's also our core business. We will always prioritize our resources for this core business. We believe this is a market with huge potential and still at its early stage. While there are different levels of competition in different segments, we feel this will all help in educating the market and speed up the growth of the market. We will always see from a long-term perspective whether we can create value to this segment. Specifically, as we mentioned earlier, we believe the value we create for this business is by providing the best selection, the best services, and the best price. As long as our investment can help us build on those long-term capabilities, we will be very determined to invest. At the same time, we do not like the irrational spending in an unsustainable manner. We believe that it's important that we make investment but focus on ROI. Given the competition now is very intense, and we expect the competition will continue in the short term, we expect there will be significant loss for both food delivery and our core local commerce segment in Q3. At the same time, I want to highlight that our efficiency and growth quality have consistently outpaced peers with recent trends indicating that this competitive gap is widening further amid intensified competition. While the short-term profit may fluctuate due to the increased investments, we anticipate core local commerce will be able to generate stable cash flow once the industry's subsidy is back to a rational level. For your questions on allocation into new business, particularly the grocery retailing and Keeta, as Xing mentioned, we have very clear long-term targets and have very strong confidence about the potential of these two areas. At the same time, we are also taking a more long-term view and long-term patience in growing this business. For gross retail, we have accelerated growth in our self-operating on-demand retail, such as Xiaoxiang Supermarket and Xiaoshu. This will also strengthen our overall capability in this self-operating model. We also respect the complexity in covering more cities and building more frontier warehousing. We will manage the pace to make sure the growth is high-quality growth. For Keeta, as mentioned, we will consider resource availability and market opportunity while we are very determined that the investment can generate high ROI. We respect the complexity in managing overseas. It is very important we learn along the way to understand the local market demands and local different industry dynamics. Both gross retail and Keeta have very clear long-term profitability potential at scale. We will continuously optimize the operation efficiency to drive the high-quality growth. Meanwhile, as mentioned in earlier quarters, we continue to believe share repurchase is our current most effective approach for enhancing shareholder returns. At the same time, given the opportunity we mentioned, we plan to prioritize the use of cash onto our core business. We will continue to evaluate the market situation and seize favorable market windows to reduce the outstanding shares and enhance shareholder return. For a longer period of time, we believe we can create solid shareholder returns for our shareholders. Thank you. Thank you. That does conclude our question-and-answer session. I'll now hand back to Scarlett Xu for closing remarks. Okay. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you for your support. That does conclude our conference for today. Thank you for participating. You may now disconnect.