Meituan’s Q1 2020 Performance Considerably Hampered by COVID-19

Chinese local services behemoth Meituan Diannping released its unaudited consolidated results for the three months ending March 31, 2020. The financial report shows that Meituan Dianping’s revenue in the first quarter was 16.75 billion yuan, a year-on-year decrease of 12.6%.

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The company’s total revenues decreased by 12.6% year-over-year to 16.8 billion yuan, while the operating loss for the first quarter of 2020 soared from 1.3 billion in 2019 to 1.7 billion in 2020. The oz perating margin decreased from negative 6.8% to negative 10.2%. Adjusted EBITDA and adjusted net loss were positive 41.3 million yuan and negative 216.3 million yuan, respectively. In Q1 2020, Meituan’s operating cash flow turned to negative 5 billion yuan, significantly lower than the positive 3.1 billion yuan in Q4 2019.

The company cited the COVID-19 pandemic as the main disruptor to its operations. Restaurants, hotels and other local services merchants that Meituan works with have had a rough couple of months since the beginning of the year which in return has exerted downward pressure on Meituan’s own operations. The company notes that business segments, such as food delivery and in-store, hotel and travel, have all faced significant challenges on both the demand side and supply side.

Sharing its expectations for the rest of 2020, Meituan remained realistic mentioning 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 its business performance.