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Chinese food delivery giant Meituan swung to profit in the second quarter of the year , though executives warned of headwinds for its core business in the quarter ahead.
Meituan reported a revenue of 67.9 billion yuan ($9.33 billion) for the quarter ended June 30, rising by 33.4% from 50.9 billion a year earlier, beating expectation of 66.7 billion yuan.
Net profit reached 4.7 billion yuan, compared to a loss of 1.1 billion yuan a year earlier, when China was under COVID-19 containment measures.
Revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 39.2% to 51.2 billion yuan.
CEO Wang Xing warned that the third quarter would likely be tougher for the food delivery business as macroeconomic headwinds and extreme weather events, including record-breaking rainfall in regions such as Beijing, prove challenging in the short term.
“The change of consumption power due to the macro environment will impact food delivery to a certain extent,” he said, adding he was confident about the sector’s long-term outlook and resilience compared with other consumer-related segments.
Quarterly revenue from Meituan’s in-store, hotel booking, and travel sector businesses benefitted from China’s domestic travel rebound in the second quarter and would continue to grow strongly on the back of summer travel in the third quarter, Wang said.
Since last reporting earnings in June, Meituan announced it was buying Light Year, an artificial intelligence (AI) startup established by Meituan co-founder Wang Huiwen, for $281 million. The purchase comes as major tech firms in China increase their bets on AI in the wake of excitement created by ChatGPT.