SHANGHAI (Reuters) – China’s Meituan Dianping, an online food delivery-to-ticketing firm, said its fourth-quarter operating loss more than doubled as fast revenue growth was offset by sharply rising labor costs as it took on more staff.
FILE PHOTO: Wang Xing, co-founder, chairman and chief executive officer of China’s Meituan Dianping hits the gong during the debut of the company at the Hong Kong Exchanges in Hong Kong, China September 20, 2018. REUTERS/Tyrone Siu/File Photo
The company, which is backed by tech giant Tencent Holdings Ltd and listed on the stock market last September, said its revenue grew 89 percent in October-December to 19.8 billion yuan ($2.9 billion).
Food orders made up the majority of sales in the quarter, as they did in the third quarter and the company reported a growing user base and increasing gross merchandise volume for its delivery service. However, these gains were offset by having to pay higher labor costs as order volumes jumped.
As a result, Meituan reported a net loss of 3.4 billion yuan for the quarter ended Dec. 31, increasing from a 2.2 billion yuan loss in the year-earlier period.
The company, which raised $4.2 billion in its IPO, faces stiff competition from rivals such as Alibaba Group Holding Ltd’s delivery platform Ele.me and also ride-hailing firm Didi Chuxing, backed by Japan’s SoftBank Group Corp.
Meituan said its overall transaction volume grew 32.5 percent in the fourth quarter from a year earlier.
Meituan is a so-called super app, offering many services and is a sort of cross between U.S. discounting platform Groupon Inc and online review firm Yelp Inc.
Revenues from “New Initiatives and others” which includes Meituan’s bike-sharing division Mobike and its new ride-hailing service, made up 21.2 percent of total sales.
Meituan’s September IPO was seen by some as a gauge of China’s tech sector, which seemed poised for a slowdown after years of rising stock prices and free-flowing venture capital funding. But its stock has since lost nearly a fifth of its value.
Tencent, which is due to report fourth-quarter results later this month, has seen slowing revenue growth over the last four quarters while companies such as JD.com and Didi Chuxing have announced layoffs in recent months.
Reporting by Josh Horwitz, editing by Louise Heavens and Susan Fenton