By Casey Hall
SHANGHAI (Reuters) -Chinese food delivery giant Meituan posted a bigger-than-expected 21.4% rise in quarterly revenue on Friday as it fended off competition from powerful rivals such as Alibaba-backed Ele.me.
Meituan – whose so-called super app provides services ranging from bike-sharing, movie ticketing, mapping, to food delivery and restaurant bookings – said its total revenue rose to 60.13 billion yuan ($8.76 billion) for the three months ended December, from 49.52 billion yuan a year earlier.
Analysts on average expected a revenue of 57.88 billion yuan, data from Refinitiv shows.
Its net loss for the fourth quarter narrowed to 1.08 billion yuan, from a loss of 5.34 billion yuan a year earlier.
Meituan was hit hard by COVID-19 curbs last year but it swung to a profit in the third quarter as it cut back investment on new initiatives.
Its fourth-quarter revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 17.4% to 43.47 billion yuan.
Operating profit for the segment jumped 56.8% on a year-over-year basis to 29.5 billion yuan.
Quarterly revenue from Meituan’s in-store, hotel booking, and travel sector businesses declined due to the impact of COVID curbs in China. The firm described the year-on-year decline as being “to a similar extent as that of the second quarter”.
CEO Wang Xing flagged more positive trends for the travel sector from the start of this year, however.
“We are delighted to see the growth trends sustained in the first two months in 2023 and we have full confidence for the prospects of the travel industry in China,” he said on a call with analysts following the earnings announcement.
Meituan’s services pits it against rivals such as Alibaba’s delivery platform Ele.me and ride-hailing firm Didi Global, backed by Japan’s SoftBank Group Corp.
An up-and-coming rival is ByteDance’s short video platform Douyin, the Chinese version of its hit app TikTok, that has ventured into food delivery in some cities.
The South China Morning Post newspaper reported that Douyin plans to expand its food delivery services to more cities, a move CEO Wang described as having “a limited impact”.
“We welcome new players to expand and explore the market but we have confidence in our competitive advantage,” he said.
Meituan remains China’s top delivery platform, with 69% share of the 1 trillion yuan market, according to industry research firm ChinaIRN.
The company, however, is experimenting with its investments in other spaces, such as ChatGPT-like AI technology.
Meituan co-founder and CEO Wang Xing posted on social media this month about his intention to join a Series A investment round in fellow Meituan co-founder Wang Huiwen’s AI startup.
But it has also been looking to cut costs in other areas, such as in its ride-hailing unit where it plans to restructure, reducing the number of staff it has working on the platform and moving to a aggregator model.
Like Meituan, many of its tech peers, including giants Tencent and Alibaba, are evaluating non-core businesses and cutting costs as China’s economy recovers but modestly after being squeezed by three years of COVID-19 restrictions.
($1 = 6.8641 Chinese yuan)
(Reporting by Casey Hall; Editing by Himani Sarkar and Chizu Nomiyama)
