Chinese Food Delivery Giant Meituan Surpasses Expectations with 25% Increase in Quarterly Revenue
Meituan reported a 25% growth in first-quarter sales, exceeding experts' expectations. The company's revenue growth is driven by its core local commerce businesses, which include meal delivery. Meituan intends to spread its services to international markets, starting with Riyadh, Saudi Arabia.
The company's robust performance was fueled by its core local commerce operations, specifically food delivery services.
Meituan's first-quarter sales was 73.3 billion yuan (about US$10.1 billion), up from 58.6 billion yuan the previous year. The company's on-demand delivery transactions increased by 28.1% to 5.5 million. These remarkable statistics surpassed the average analyst forecast of 70.3 billion yuan published by the London Stock Exchange Group.
Meituan also saw a huge increase in profit, with earnings for the quarter totaling 5.4 billion yuan, a 60% increase over the previous year.
Wang Xing, Meituan's co-founder and CEO, expressed pleasure with the company's performance, saying, "We effectively captured the industry rebound and invigorated local consumption, leading to our robust performance in the first quarter." This success indicates Meituan's ability to prosper in the face of mainland China's weak economic recovery following the pandemic.
Despite the excellent news, Meituan's Hong Kong-listed shares were practically steady at HK$112.70 on Thursday, soon before the quarterly earnings announcement.
Looking ahead, Meituan intends to expand its services into new international areas. Wang Xing said, "In the long run, our goal is to bring our product and services to a global audience, offer better services and experiences to both consumers and merchants globally." The company has already been looking into potential in Southeast Asia and is apparently planning to debut its international food-delivery network in Riyadh, Saudi Arabia's capital.
Meituan's core local commerce businesses, which include on-demand food and grocery deliveries, hotel and vacation bookings, and merchant marketing services, had a huge 27.4% revenue increase to 54.6 billion yuan. This rise was mostly driven by subsidised orders, which helped Meituan compete with ByteDance-owned Douyin and Alibaba Group Holding's Ele.me, a food delivery company.
In addition to its main activities, Meituan expanded the reach of its Pin Hao Fan group-buying service to new cities in China. Through its Shen Qiang Shou campaign, the corporation also offered reduced lunches at popular chain restaurants. Furthermore, Meituan sponsored marketing campaigns and offered a variety of coupon bundles and discounts to boost customer demand throughout the holidays.
While these strategies increased order volume, they also reduced average order value, according to a research report by Jamie Chen, an analyst with investment consultant Third Bridge.
Meituan's new initiatives business area, which includes its online supermarket and community group-buying services, reduced its operating loss to 2.8 billion yuan from 5 billion the previous year.
Meituan reports a 25% increase in first-quarter revenue, surpassing analysts' estimates.
The company's core local commerce operations, including food delivery, drive the revenue growth.
Meituan aims to expand its services to international markets, with plans to launch in Riyadh, Saudi Arabia.
Source: SCMP