May 26 (NBD) -- Shares of Chinese biggest on-demand service provider Meituan Dianping (3690.HK) surged by 17.2 percent in the past 2 days and closed at 138.9 Hong Kong dollars (17.9 U.S. dollars) on Tuesday. With its market value surpassing 100 billion U.S. dollars, the company became the third Chinese Internet firm that reaches the key milestone after Alibaba (NYSE: BABA) and Tencent (0700.HK).

However, it's noticed that Meituan Dianping posted declining revenue and widening operation loss.

File photo/NBD

Commission revenue falls but new initiatives grow 

In the first three months of this year, Meituan Dianping's total revenue decreased by 12.6 percent year-over-year to 16.8 billion yuan, but beat the expected 15.6 billion yuan. Its adjusted net loss registered 216.3 million yuan, which is also less than analysts' estimate of 1.11 billion yuan.

Besides, the company's operating loss expanded to 1.7 billion yuan, rising from 1.3 billion yuan for the same period of 2019, while operating margin decreased from negative 6.8 percent to negative 10.2 percent.  

Commission revenue, as Meituan Dianping's largest contributor of revenue, reached 10.8 billion yuan with a year-on-year decline of 41.3 percent, while all of the company's businesses were affected by the COVID-19 pandemic.

According to the report, food delivery business and in-store, hotel & travel businesses, known as the two major segments of the company, were severely challenged on both the supply side and demand side. The decrease in purchase frequency of consumers and temporary commission rebate and exemption policies the company carried out led to a drop of commission revenue.

National Business Daily noticed that in contrast to the two major businesses, Meituan Dianping's new initiatives and others segment generated revenue of 4.2 billion yuan in the first quarter of 2020, up 4.9 percent year over year. The new initiatives include bike-sharing services, car-hailing services, and B2B (business to business) food distribution services.

Tapping new fields to boost growth

Founded in 2010, Meituan Dianping reported losses for nine years before turning profitable in the second quarter of 2019. However the company again posted quarterly loss this year.

Saying that the weak financial earnings were expected, Meituan Dianping co-founder and chief executive Wang Xing warned of further challenges for the company in the next few quarters. "There are still uncertainties and potential downsides amid the ongoing evolution of the COVID-19 situation," Wang mentioned in a conference call on Monday.

Like companies in the food delivery industry and other service sectors, Meituan Dianping is making efforts to survive the epidemic. It's noticed that the lifestyle platform is seeking growth by improving services in food delivery industry and setting foot in new markets.

For food delivery, the company launched contactless delivery services and plans to invest in autonomous delivery technologies. Meituan Dianping held that the COVID-19 outbreak will play a positive role in the food delivery industry's long-term development and the epidemic has motivated more branded restaurants to go online and stimulated technological innovation.

In addition to food delivery and in-store, hotel & travel domain, Meituan Dianping has made deployment in various fields including ride-hailing services, restaurant management and online groceries.

Email: gaohan@nbd.com.cn