Meituan-Dianping (HKEX: 3690) generated RMB 16.8 billion (USD 2.4 billion) in revenue in the first quarter of 2020, a 12.6% decline year-on-year (YoY) as the COVID-19 pandemic ravaged the firm’s business, causing disruptions to both supply and demand. However, the company still exceeded market expectations of RMB 15.6 billion, sending its shares up 6.16% at market close.
On Monday, the company posted a loss of RMB 1.58 billion (USD 221.3 million) for the first quarter ended March 31, following three consecutive profitable quarters.
Beijing-based Meituan is China’s largest food delivery platform, while also offering travel and hotel bookings. These core businesses were devastated during the pandemic as many restaurants and merchants suspended their business, and travel restrictions resulted in empty hotels across China during the March quarter.
Specifically, revenue from Meituan’s food delivery business fell by 11.4% YoY compared to an 8% YoY decline for Alibaba-backed rival Ele.me. The average daily number of food delivery transactions also decreased by 18.2% YoY to 15.1 million.
However, Meituan CFO Shaohui Chen revealed that daily food delivery order volume has returned to roughly 90% of pre-pandemic levels as of the week of May 11. Although the COVID-19 presented near-term obstacles for the food delivery business, Meituan believes that the health crisis will provoke a broader adoption of food delivery services in the long term, as the average order value increased by 14.4% YoY during the March quarter, as the company mentioned on the earnings call.
Meanwhile, revenue from the in-store, hotel, and travel segment declined by 31.1% YoY. The segment is likely to take the longest to recover, as consumers are still hesitant to return to offline outlets or book travel arrangements.
Meituan warned of continued headwinds in its earnings release, “Moving on to the remaining of 2020, we expect that factors including the ongoing pandemic precautions, consumers’ insufficient confidence in offline consumption activities and the risk of merchants’ closure would continue to have a potential impact on our business performance.”
Despite the challenges that may persist for Meituan, CEO Wang Xing told investors on the earnings call that “there are challenges, but COVID-19 is not going to be the end of the world. We’ll keep investing and we’ll keep building.”