Meituan Outperforms China Tech Peers With 31% Revenue Growth
Fourth-quarter sales were boosted by food delivery and new businesses
Meituan’s fourth-quarter revenue rose 31% from a year earlier on the back of significant new business sales and stable food-delivery growth, outperforming much of China’s technology industry that has been hit by a government crackdown.
Meituan, which is China’s third-most valuable internet company, posted revenue of 49.52 billion yuan, equivalent to $7.78 billion, thanks to a 21% rise in its food-delivery business, its main source of income. An extra boost came from a 59% jump in revenue from new businesses, including grocery delivery and group-buying offerings.
Meituan’s revenue growth well surpassed that of China’s other two biggest tech companies Tencent Holdings Ltd. and Alibaba Group Holding Ltd., whose revenues in the past quarter rose by 8% and 10%, respectively. Those were the two companies’ weakest top-line growth rate since they went public—Tencent in 2004 and Alibaba in 2014.
Meituan’s growth came at the expense of heavy investments that weighed on profitability. The company’s net loss during the period widened to 5.34 billion yuan from a loss of 2.24 billion yuan a year earlier, as its sales and marketing expenses surged 46%. This marked Meituan’s fifth consecutive quarter in the red, after the company embarked on a spending spree since late 2020 to build up new business lines.
The company’s revenue and loss figures beat expectations of analysts polled by FactSet.
Meituan’s new businesses include community group-buying operations, which is an emerging e-commerce niche in China where people band together to buy food and household goods at lower prices. That business has accounted for the bulk of Meituan’s losses in recent quarters, but it also attracted most of its new users in the past year.
“Strictly adhering to regulatory requirements is our top priority, as we continue to strive for balanced, high-quality growth,” Meituan said. The emerging community group-buying market has begun to draw some regulatory attention over the past year, as companies raced to gain users with aggressive price competition and steep discounts.
For its overall operations, Meituan echoed its peers’ muted tone about its growth outlook for early 2022, as China battles with its latest surge of pandemic outbreaks and a slowing economy.
“We still face challenges from Covid control measures and a weakening consumption environment,” Meituan said.