Meituan’s fourth-quarter revenue jumps on strong orders, while losses from new initiatives narrow further

The Beijing-based company posted 73.7 billion yuan (US$10.2 billion) in revenue for the three months ended December 31, better than the 72.7 billion yuan consensus estimates according to analysts surveyed by Bloomberg.

Quarterly net income came in at 2.22 billion yuan, compared with a net loss of 1.08 billion yuan a year earlier.

For the full year 2023, Meituan’s revenue rose 25.8 per cent to 276.7 billion yuan.

The company’s local e-commerce business – its bread-and-butter segment that includes on-demand deliveries of food and other items, hotel and travel bookings, as well as services that help merchants engage with consumers – saw operating profit grow by 11.1 per cent to 8 billion yuan in the fourth quarter.

The number of on-demand delivery transactions surged 25 per cent year on year to over 6 billion.

Meituan’s shares closed at HK$88.25 on Friday ahead of the earnings announcement, down 4.39 per cent.

The company’s strong performance is expected to continue through 2024, according to Wang Xiaoyan, equity analyst at 86Research.

“We’re optimistic about its full-year outlook, especially on the profits front,” Wang said on Thursday, ascribing her rosy forecast to softened competition and vastly reduced losses from Meituan’s new initiatives.

The operating loss of Meituan’s new initiatives segment – which includes its online supermarket and community group-buying services – narrowed to 20.2 billion yuan last year from 28.4 billion in 2022, the company said.

Meituan has been under heightened pressure since ByteDance’s Douyin, the Chinese sibling of TikTok, dialled up its push into the country’s food delivery market in mid-2022 through a tie-up with Meituan’s main rival Ele.me, owned by Post owner Alibaba Group Holding.

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Meituan has built relationships with a large number of merchants through more than a decade of ground operations, so is able to offer a wide variety of choices to customers on its platform, according to Chen.

Meituan has also invested in short-video and live-streaming content to enhance user engagement and boost orders, while many consumers also appreciate the faster and higher-quality services provided by the company’s self-operated delivery fleet, he added.

Meituan had 6.24 million food delivery riders and over 9.3 million merchants on its platform as of the end of 2022, according to the company. In comparison, Douyin said it had 2 million merchant partners as of April 2023.