In Meituan Dianping’s earnings announcement last week, the company said profit increased to 875.8 million yuan ($123.66 million) in the three months ending June 30, compared with a loss of 7.72 billion yuan in the same period of the previous year, its first profit since listing last September. Meituan Dianping’s stock price rose to $8.80 following the announcement.
The Chinese group buying platform’s total revenue rose 50.6% to 22.7 billion yuan ($3.2 billion) for the second quarter, from 15.07 billion yuan ($2.1 billion) a year earlier, beating most estimates. And their stock price rose to 74.95 HKD ($9.56), a 7.07% increase after the release.
The profit was partially due to a seasonal surge in summertime food delivery orders, as gross transaction volumes grew 28.7% to 159.2 billion yuan ($22.3 billion), with the number of users climbing to 422.6 million. Food delivery reported a gross profit of 2.86 billion yuan ($400 million), more than double the 1.41 billion yuan ($200 million) for the same period last year.
Apart from Meituan’s main business food delivery, revenues from in-store, hotel booking and travel sector businesses also increased. It rose 42.8% to 5.2 billion yuan ($730 million).
Revenues from the company’s New Initiatives segment were 4.6 billion yuan ($640 million), with a total profit of 421.1 million yuan ($59.0 million) compared to a year-on-year loss of 1.9 billion yuan ($270 million). The platform’s flowers and medicine orders were among the successful new initiatives, as the gross transaction volume for these services increased by over 100% compared to the same period last year.
During the earnings conference call, the company highlighted the success of their Food Membership program in partnership with Tencent Video, which 400,000 users subscribed.
The company also stated that they employed around 2.7 million delivery drivers and offer various career development programs “for the new urban youth,” as the Chinese economy transitions to a more service-based model over manufacturing and agriculture.
“On behalf of the Board, I would like to express our sincere gratitude to our consumers, merchants and partners for their trust in our platform, our delivery riders for their reliable and efficient services, our entire staff and management team for their outstanding contributions, and our shareholders for their continuous support,” said Wang Xing, chairman of Meituan Dianping.