Meituan’s losses widen due to Mobike – even as its core businesses grew

Meituan-Dianping saw its losses more than double in the final quarter of 2018, with “new initiatives” – including its ride-hailing business and Mobike subsidiary – accounting for much of the deficit.

Photo credit: Mobike

The Beijing-based company also indicated that it will fully integrate Mobike into its own platform, after recent reports that the bike-sharing service would cease operations in some ex-China markets.

The Chinese “super-app” hauled in US$2.95 billion in revenue and US$667 million in gross profit in Q4, representing a year-on-year increase of 89 percent and 33.7 percent, respectively, according to Q4 results released yesterday.

Its FY 2018 revenue clocked in at US$9.71 billion, while gross profit for the year stood at US$2.25 billion, marking annual growth of 92.3 percent and 23.6 percent in each.

However, Meituan’s annual operating loss ballooned by 190 percent to US$1.65 billion.

Meituan’s core food delivery and “in-store, hotel, and travel” businesses both managed to turn a profit. While the company’s “new initiatives and others” segment – which comprises its ride-hailing and bike-sharing businesses, among others – saw FY revenue grow 450 percent to US$1.67 billion and gross transaction volume double to US$8.34 billion, it made an overall loss of over US$634 million.

Since 2017, Meituan has launched pilot ride-hailing services in Nanjing and Shanghai, looking to enter a market almost utterly dominated by Didi Chuxing.

However, at the time of its US$4.2 billion Hong Kong IPO last September, Meituan said it didn’t expect to expand these services due to “current market dynamics.”

In April last year, Meituan acquired bike-sharing unicorn Mobike in an equity and debt deal worth a reported US$3.4 billion.

The acquisition was seen as giving Meituan access to a treasure trove of user data, as well as something it hadn’t previously had: a footprint outside of China, with Mobike having launched operations throughout Asia Pacific, Europe, and North America.

Quitting Asian markets