(Bloomberg) — Meituan’s quarterly revenue grew 25%, after the Chinese food delivery titan withstood the economic fallout from coronavirus-related lockdowns in cities such as Shanghai.
Sales rose to 46.3 billion yuan ($6.9 billion) in the three months ended March, propelled by a 47% surge in revenue from the division that groups new businesses such as ride-hailing and community commerce. Revenues exceeded the average analysts’ estimate of 45.3 billion yuan, but marked the slowest pace of growth for the company in almost two years.
Beijing-based Meituan is one of the few Chinese tech companies that appear to have maintained its momentum in a challenging macro environment. China’s retail sales in April contracted 11.1% from a year ago, underscoring the impact of a Covid Zero policy that’s snarled the country’s supply chains and hammered consumer sentiment. Led by high-profile billionaire Wang Xing, the company is also under scrutiny over the welfare of its delivery riders and the commissions it charges restaurants.
China has declared victory over Shanghai’s coronavirus outbreak as the nation reported its fewest new cases in more than three months, vindicating Covid Zero in the eyes of Beijing despite the policy’s rising economic toll. Yet uncertainty persists because of the readiness with which the government is expected to clamp down on any future outbreaks, with unknown consequences.
China’s internet firms are also grappling with a wide-ranging government crackdown that’s chilled a once-frenetic pace of industry expansion. Gaming conglomerate Tencent Holdings Ltd. last month reported near-zero revenue growth for the March quarter, while e-commerce titan Alibaba Group Holding Ltd. grew revenue at its slowest pace since its 2014 listing.
Sentiment concerning China’s internet industry has swung wildly in recent weeks. Investors initially saw economic czar Liu He’s pledge to support the digital economy as a signal of an easing, if not an end, to the country’s crackdown on Big Tech. But Chinese tech executives including Tencent President Martin Lau told analysts during recent earnings calls that it will take time for regulators to enact policies in line with that sweeping endorsement.
Quarterly sales from Meituan’s core food delivery business matched analyst projections. climbing 17% to 24.2 billion yuan, while its in-store, hotel and travel unit generated revenue of 7.6 billion yuan, up 16%. Its net loss widened to 5.7 billion yuan, versus the market estimate for a 6 billion yuan loss.
Meituan’s shares closed down 1.3% in Hong Kong before the earnings announcement. Its share price has shed about 20% this year.
(Updates with business segment sales numbers in paragraphs 2 and 7)
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