Meituan Dianping posts Q2 profit bolstered by food delivery high season

2 min read
A Meituan delivery driver in Shanghai on March 23, 2019. (Image credit: TechNode/Shi Jiayi)

Share prices for China’s food delivery super platform Meituan Dianping jumped on surprise second quarter profits of RMB 875.8 million ($123.7 million) boosted by the summer high season for food delivery during its first profitable quarter since it listed in September 2018. The company booked RMB 7.7 billion in losses the same period a year ago.

Why it matters: Despite its massive scale, the Chinese services platform has been facing scrutiny for its subsidy-fueled growth which has resulted in heavy losses, and its acquisition of bike rental platform Mobike for $2.8 billion in April 2018 which has weighed on profits.

  • CFO Chen Shaohui said during a call with analysts that he expects that quarter’s profitability was due to seasonality, and that the company will continue to prioritize scale over profit for its food delivery business.
  • Meituan’s revenue from food deliveries reached RMB 12.84 million during the quarter, roughly double rival Ele.me’s RMB 6.18 million during the same period.

“Going forward, we will continue to execute our ‘Food + Platform’ strategy and explore new initiatives to drive long-term growth and create value for both consumers and merchants.”

—Xing Wang, Meituan chairman and CEO

Details: Meituan’s total revenues increased 50.6% year over year to RMB 22.7 billion from RMB 15.1 billion in the same period a year ago, beating analyst forecasts of RMB 21.87 billion. The company attributed the growth to surging revenue across sectors driven by its food delivery and travel businesses.

  • Meituan’s selling and marketing expenses rose to RMB4.1 billion in the three months ended June 30 from RMB3.9 billion in the same period of 2018.
  • Overall monetization rate increased to 14.3% during the quarter from 12.2% in the same period of 2018.

Context: Though its core business is food delivery, Meituan is evolving into a one-stop “super app” offering consumers more than 30 types of services such as movie ticket purchasing, hotel and travel bookings, and payments.

  • Meituan’s bike rental unit Mobike will continue to be a drag on overall company profitability, a research report from equity firm China Tonghai Securities said.
  • Meituan’s hotel booking unit overtook Ctrip to rank first in China  in order volume and nights booked in Q2, 2018 according to data from by monitoring firm Trustdata.
  • Venture capitalist Mary Meeker singled the company out as a leader in China’s “super app” trend in her latest report.