Trip.com Group Limited (TCOM) on Q1 2022 Results - Earnings Call Transcript

Operator: Thank you for standing by and welcome to the Trip.com Group 2022 Q1 Earnings Conference Call. I would now like to hand the conference over to Michelle Qi. Please go ahead. Michelle Qi: Thank you. Thank you everyone for joining today. Good morning and welcome to Trip.com Group’s first quarter of 2022 earnings conference call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group’s public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements except as required under applicable law. James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the first quarter of 2022 as well as the outlook for the second quarter of 2022. After the prepared remarks, we will have a Q&A session. With that, I will turn the call over to James. James, please. James Liang: Thank you, Michelle. Thank you everyone for joining us on the call today. 2 years into the pandemic, the travel industry still faces pandemic-related challenges. The first quarter of 2022 showed a mixed picture in which the Chinese domestic market and the global markets have developed independently. In China, the first 2 months of the year were encouraging while March was relatively uneasy due to the outbreaks of Omicron in multiple regions, including the first tier cities. Such pandemic influence extended into April and May with strict pandemic control measures and travel curbs being imposed that largely limited the performance of the travel industry. While our short-term perspective may not seem optimistic, demand for travel is still strong, which offers a brighter outlook for the long-term. With sound COVID risk reduction measures and improved safety perception, user confidence growth and their desire for travel recovers. Global travel continues to recover at a strong pace as governments continue to open up. We anticipate to see a similar pattern in China once the restrictions are eased. In order to capture such travel demand, we continue to develop travel products to match consumers’ travel aspirations. With efforts in previous quarters, we enhanced our value proposition of our customers and partners in the China market with established strength in both long-haul and short-haul travels through bolstering our product capabilities, service qualities and business efficiency. In January and February, our domestic hotel bookings continued to deliver better than market performance, increased by more than 20% year-over-year. The market was again largely disrupted by outbreak since March, but we have already seen signs of recovery following the easing of static management measures. On the international front, we are encouraged to see benefits of global recovery from the pandemic with strong travel demand in many countries, especially across Europe and especially Asia-Pacific. Following these countries’ decisions to largely remove travel restrictions, we have been strengthening trends of business performance across our global platforms, with air bookings achieving triple-digit year-over-year growth and hotel bookings significantly improved in especially the Trans-Atlantic and Asia markets. It has been 2 years since the outburst of the pandemic. Fortunately, the green shoots of travel have already appeared along with opportunities to encourage continued growth with our local focus will continue to be nimble and adaptive to cater to the fast changing market environment and match our product and our service offerings to current demand. On the international front, we remain global vision to be keen to build on positive signals that we are seeing so far and further fortify our global footprint. With that, I will turn the call over to Jane for operational highlights. Jane Sun: Thank you, James. Good morning, everyone. I would like to start with a brief overview of our performance in the past quarter and updates on our strategic focuses. First of all, overall performance overview. In the first quarter of 2022, our total net revenue remained largely stable year-over-year, which was a net result of a relatively well performed first 2 months and a weaker March impacted by the latest round of Omicron outbreaks in China. In January and February, our domestic business sustained after the industry performance, with domestic hotel bookings increased above 20% year-over-year and will close to fully recover to 2019 level. However, since March, the whole market has been under severe impact of the pandemic related to restrictions. Overall speaking, in Q1, our hotel bookings were close to 2021 level with same-city vacation hotel reservations grew more than 20% year-over-year. Our air reservation was also recovered faster than the market. In Q2, although the China domestic market was largely affected by the pandemic controls and travel restrictions, we were delighted to see that the fundamental demand for travel was still solid. The recovery was much faster in areas less affected by COVID. For instance, hotel bookings in Southern China and Western China have already surpassed 2019 level in the recent months. In the past 2 weeks, our total hotel bookings have also surpassed 2019 level following the easening of COVID situation. The global market, on the other hand, continue to make major strides towards recovery to pre-pandemic level as more and more countries have substantially dropped their pandemic-related travel restrictions. Traffic on our global platforms, have already surpassed the 2019 level. The world is ready for a greater reopening. Overall, air ticket bookings on our global platform has increased over 270% year-over-year, in which our global brands, Trip.com, have managed to increase by approximately 400% year-over-year. In overseas market, domestic air ticket bookings on Trip.com have surpassed the 2019 level with growth more than 150% and have outpaced the industry average across all of our key markets. Overall, hotel bookings on our global platforms have also increased by more than 25% above 2019 level in the first quarter. Domestic hotel bookings in non-China markets on Trip.com increased over 200% when compared to the same period in 2019, especially in the markets such as Hong Kong, South Korea, Singapore, Malaysia, USA, UK, UAE, etcetera. The upward trends continued to gain momentum in the second quarter. We have also seen gradual recovery of international travel as more and more countries decided to lift restrictions and reopen their borders to accept international travelers. Second, operational highlights and strategic focuses. While the China market and the global market showed different path of development, it is important for us to stick with our local focus and global vision strategy and be flexible and adaptive to make the best out of the situation and focus on the following areas. First of all, accommodation, in the China domestic market, we continue to strengthen our value propositions to hotel owners and users through product innovation, such as hotel packages and our TripPLUS program to build a stronger user case and respond to the customers’ aspiration for better services and value for money. We worked hard to further enhance the quality of our value-added hotel package products, which covers over 10,000 hotels. High-end hotel packages contributed over 40% of reservations to these participating partners and a broad incremental upside to our hotel business partners. We also continued to strengthen our value proposition in our TripPLUS program, with about 240,000 hotels joined to reward customer’s loyalty with extra benefits for incremental volume. In the meantime, we have also upgraded our back-end system and streamlined service procedures. As a result, our order confirmation time was shortened by 45% when compared to the first quarter last year. Second, content platform. We continue to make solid progress in strengthening our content platform to better inspire and assist users to make well-informed travel decisions. On top of achievements in 2021, the amount of daily average user generated content further grew by 140% sequentially. In the first quarter, the number of KOLs also increased by 10%. While the amount of the content and our fleet of content creators continue to grow, we also focused on enhancing the efficiency of our content channels as well as improving the quality of our content. We are delighted to see higher user engagement in the first quarter with the number of average daily engaging users. Our content channel increased by around 40% year-over-year. Average number of content viewed per user also increased by around 40%. Average view duration has also seen a double-digit improvement and have continued to grow in the following months. Third, global business. On the international front, we continue to integrate and upgrade supply chain and technological capabilities of our international brands and further strengthened the reliability and efficiency of our customer services. In light of global travel recovery, we also worked on expanding our content strategy to cover our global businesses. Leveraging our successful experience in the China market, we managed to improve the daily average traffic of Trip.com content channel by 80% year-over-year, the content engagement rate increased by 150% year-over-year. This also helped to nearly double our users’ retention rate. Our activity offerings in overseas markets are also seeing continuous improvements since previous quarter. In 2021, reservations of global in-destination activities on our platform have already surpassed the pre-COVID 2019 level. On top of that, we continue to achieve triple-digit growth in the first quarter. We are encouraged and well prepared to further collaborate with global destinations and attractors to strengthen our market position and gain market share. Fourth, corporate responsibility. Following up with our rural revitalization initiative, we currently have 9 Trip.com group country retreats in operations with the latest one freshly opened recently. We continue to collaborate with local authorities to provide professional training to nurture local alternative accommodations and tourism practitioners in order to support the development of rural tourism. During the recent anemic outbreak, we also contributed to support the guarantee of supply of daily necessities in Shanghai by leveraging our resources and experience to help related to company’s personnel with hotel reservations. In total, our corporate travel team contributed 160,000 room nights and helped approximately 6,800 daily necessity supply personnel. With the relaxation of travel restrictions in many parts of the world, we are finally starting to see the light at the end of the tunnel. For the domestic market, we may still see a relatively weak second quarter due to pandemic impact. However, we will continue to show resilience in this fast changing market environment and be flexible with our strategies to swiftly seize growth opportunities. With that, I will now turn the call over to Cindy. Cindy Wang: Thanks, Jane. Good morning, everyone. For the first quarter of 2022, Trip.com Group reported net revenue of RMB4.1 billion, which was flattish compared to – compared with the same period last year and decreased by 12% quarter-over-quarter, primarily due to continued disruption to the travel industry from the recent wave of pandemic outbreak. Accommodation reservation revenue for the first quarter of 2022 was RMB1.5 billion, representing an 8% decrease year-over-year and 24% decrease quarter-over-quarter, recovering to 48% of the 2019 level. This is a net result of steady recovery in the first 2 months offset by the disruption of Omicron outbreak since March. Domestic hotel bookings were close to last year’s Q1 level with local hotel grew by more than 20% in year-over-year. Transportation ticketing revenue for the first quarter of 2022 was RMB1.7 billion, representing a 10% increase year-over-year and 10% increase quarter-over-quarter, recovering to 50% of the 2019 level, among which China domestic recovery momentum was largely disrupted by resurgence of COVID since March, while air reservations on our international platforms saw a significant increase mainly contributed by the recovery in Europe and Asia as a result of relaxation of travel restrictions. Packaged tour revenue for the first quarter of 2022 was RMB124 million, representing a 27% decrease year-over-year and 30% decrease quarter-over-quarter, recovering to 12% of the 2019 level. This is mainly due to pandemic-related travel restrictions in domestic China market and largely muted outbound travel tourism. Corporate travel revenue for the first quarter of 2022 was RMB222 million, representing a 12% decrease year-over-year and 40% decrease quarter-over-quarter, recovering to 93% of the 2019 level, primarily due to the impact of pandemic-related static management in March. Excluding share-based compensation charges, our total adjusted operating expenses decreased by 11% year-over-year and was a saving of 38% compared to the same period in 2019, reflecting our effective cost control and efficient operating management across business lines. Adjusted product development expenses for the first quarter decreased by 6% from the previous quarter. It was a saving of 19% compared to the same period in 2019 as we continue to run lean and maintain a stable headcount in a team. Adjusted sales and marketing expenses for the first quarter decreased by 33% from the previous quarter. It was a saving of 62% compared to the same period in 2019 as we continue to stick with our prudent marketing protocol. Adjusted G&A expenses for the first quarter decreased by 9% from previous quarter. It was a saving of 23% when compared to the same period in 2019. Adjusted EBITDA was RMB91 million for the first quarter compared to negative RMB216 million in the same period last year and RMB54 million in the previous quarter. Adjusted EBITDA margin was 2% for the first quarter compared to negative 5% in the same period last year and 1% in the last quarter. Diluted loss per ordinary share and per ADS were RMB1.52 or $0.24 for the fourth quarter of 2022. Excluding share-based compensation charges and fair value change of equity securities investments and exchangeable senior notes, non-GAAP diluted loss per ordinary share and per ADS were RMB0.06 or $0.01 for the first quarter. As of March 31, 2022, the balance of cash and cash equivalents, restricted cash, short-term investment, held-to-maturity time deposits and financial products was RMB63.3 billion or $10 billion. Turning to the second quarter of 2022. We would like to share some color of our recent businesses. Multiple rounds of Omicron outbreak across China, including first-tier cities such as Shenzhen, Shanghai and Beijing, largely impacted the entire China domestic travel industry. In the quarter-to-date, the industry level air passenger volume was down by 70% to 90%. And the industry-level hotel RevPAR was down by 40% to 60% compared to the same period in 2019, among which a significant portion was attributable to quarantine requirements. We are encouraged. However, we are encouraged by the recent business recovery as the outbreaks are more under control starting from June. In the past several weeks, our hotel reservations have surpassed the 2019 level, mainly contributed by local vacation demand, while long-haul travel is still under pressure. Outbound travel remains muted under current commissions. And outside of China, the recovery momentum in Europe, U.S. and Asia remain robust. Our international brands showed further improvement in April and May, benefiting from the relaxation of travel restrictions and reopening of country borders. As the COVID threat continues to loom in the China domestic market, we will continue to adopt strict cost control protocols while remain keen to seize the growth opportunity in the global market. With that, operator, please open the line for questions. Operator: Thank you. Your first question comes from Alex Poon with Morgan Stanley. Please go ahead. Alex Poon: Thank you, management, for taking my questions. It’s glad to see the global travel recovery. Can management share with us more about your global expansion strategy, your pure international business given the chance for outbound travel recovery in the near-term is still probably remote? Thank you very much. Jane Sun: Yes. Thank you. James will take the first question. James Liang: Thank you. We will continue to integrate and upgrade in the supply chain and technology of our international brands and further strengthen the reliability and efficiency of our customer service. In Asia markets, we have been working more closely with local suppliers to address the growing needs for state patients, which helps Trip.com market share with increasing brand awareness and app usage in the past 2 years and lay strong foundations for further growth once the cross-border travel restrictions are removed. In Europe, all of our brands have been in close collaboration throughout the previous quarters, giving a strong boost to our product comfort, tentativeness in the region. As more and more countries have dropped their pandemic-related travel restrictions, we are glad to see strong recovery and synergies across our international brands. As we shared in the prepared remarks, in Q1, overall air ticket booking on our global platform have increased over 270% year-over-year, in which our global brand Trip.com have managed to increase by approximately 400% year-over-year. Overall hotel reservations on our global platforms achieved 25% growth versus 2019 with significant contribution from domestic reservations in overseas markets. The upward trend continued to gain momentum in the second quarter. Jane Sun: Thank you, Alex. Operator: Thank you. Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead. Ronald Keung: Thank you, James, Jane and Cindy. I just want to ask how will the current kind of economic situation change your expectations on the future recovery – further recovery trend, first with domestic and then the outbound travel market? How does the current pandemic situation might have set your expectations for broader reopening and compounding recovery? And lastly, what is your expectation for the recovery momentum once the border reopens? Thank you. Jane Sun: Thank you, Ronald. We believe the demand for China domestic travel and the global travel is still very solid. In the areas with comparatively fewer travel restrictions, such as Southern China and Western China, we are very encouraged to see the hotel reservations have already surpassed the 2019 level in the recent months. And our total hotel reservations also quickly rebounded to the pre-COVID level in the past 2 weeks as the outbreaks got better controlled. And our global brands also see very strong recovery momentum in the domestic and international travel following the ease of travel restrictions across countries. Though being very optimistic about the pent-up demand for the outbound travel, especially where we noticed that the recent quick recovery of the domestic travel during the summertime, we do not expect to see drastic changes in the inbound and outbound travel policies in the near future but we strongly believe that the pent-up demand is there. It’s just a matter of time when the country decided to open the border. Thank you. Ronald Keung: Thank you, Jane. Operator: Thank you. Your next question comes from Brian Gong with Citigroup. Please go ahead. Brian Gong: Good morning, James, Jane, Cindy and Michelle. Thanks for taking my question. So how is the early booking situation for the summer session for domestic and the international market, respectively? And can you share more color about your overall outlook for the second half and next year? Thank you. Cindy Wang: Thank you. So far, we have comparatively limited visibility, given the very short booking windows happened recently. And we are cautious about the short-term perspective of the China domestic travel given the current COVID policies in multiple regions in China, including Shanghai, Beijing, the big cities. Nevertheless, we remain optimistic about the long-term prosperity because first, with the current health care measures and report a lower mortality rate, we are finally seeing the COVID becoming a hopefully more manageable threat. And meanwhile, we have recently seen the authority making efforts to reduce the potential disruption from Omicron cases such as relaxing unnecessary quarantine and lockdown measures and increasing the granularity of the scope of cross-province travel ban from province level to the country level. Yes. So we think it’s hard to predict the trend, the growth trend for the second half. But so far, what we noticed is that when the policy eased in China, we did see the pent-up demand growth for the China domestic market. But of course, for the – on the international front, the growth is there and we see huge growth potentials for the whole international business, including the international – including the domestic market as well as the cross-border business travel as well as the leisure travel demand is coming back. Thank you. Brian Gong: Thank you. Operator: Thank you. Your next question comes from Alex Yao with JPMorgan. Please go ahead. Alex Yao: Thank you, management for taking my question. The new waves of Omicron outbreak pushed down the industry even to the level of 2020 in the toughest two weeks. Can you share with us your strategies if the tight travel control situation continues or another wave of COVID re-surge in the rest of the year? Thank you. Jane Sun: Yes. So, thanks Alex. The new waves of the Omicron looks like, it’s quite less badly. It’s infectious, but the impact is minor – mild, so with the more vaccine is being taken and more data showed that the mortality rate is quite low. We look at the control procedures by the government. It’s also relaxed more. So, wherever we see a relaxation in the unnecessary lockdown, we see a boom in the industry. So, for the western part of China and a southern part of China business are growing very well. So, even with Shanghai and Beijing still being recovered in the past two weeks, our hotel bookings has already surpassed pre-COVID level of 2019. So, we are hopeful that with the more effective vaccine being taken by the more population and more experience being accumulated, we will be able to handle the upcoming challenges. And hopefully, the – with what we have seen from Q1, Q2 and ease of the unnecessary lockdown it’s on the uptrend for the business. Thank you. Operator: Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead. Thomas Chong: Hi. Thanks management for taking my questions. May I ask the question about the Accommodation segment? How should we think about the trend for the ADR as well as the take rate? Thank you. Jane Sun: Thank you, Thomas. Because the whole travel industry was negatively affected by the outbreaks in multiple provinces. So overall, our ADR was down especially in Q2, for example, our ADR down more than 20% domestically. And in Q1, our ADR was down by high teens in the Q1 compared with – these are all compared with the 2019 level. And on the international front, maybe because it’s an early start of the international travel, so we also see some negative impact on the ADRs on the international front. Thank you. Operator: Thank you. Your next question comes from Wei Xiong with UBS. Please go ahead. Wei Xiong: Good morning management. Thank you for taking my question. My question is if we look at longer term, some of these structural changes that we have seen since the COVID breakout, for example, the short-haul travel and vacation getting more popular, do we see them as incremental opportunities longer term? And how are we positioned to grab these opportunities. Also related to that, – how do we think about the role that the content-driven e-commerce or live streaming platforms could play in travel booking and how could that affect the competitive landscape for OTAs? Thank you. Jane Sun: Sure. So, for the short-haul travel, over the past 2 years, we are working very hard to build a very strong user case for the short-haul travel through multiple initiatives in product and marketing innovations. To-date, short-haul travel has become a key contributor to our domestic recovery, especially in the days where long-haul travel is restricted. For example, in Q1, our interprovincial hotel booking grew about 20% compared with the pre-COVID 2019 level with the local hotel bookings actually increased by over 60% compared with the 2019 level. For Ctrip, because we are actually famous for booking for the long-haul travel, so compared with the pre-COVID level, we did notice that more and more customers noticed or have awareness that if you come to future site or Ctrip app, you can easily find value for many products for the local travel booking. So, we believe this is part of it or a significant part of this incremental business for us. With regard to the content strategy, we have achieved multiple milestones in key metrics such as content generation, user engagement and conversion to orders. All these efforts and achievements allow us to better inspire and assist users to make well-informed travel decisions and make us a more effective, attractive marketing hubs for our advertising partners. In Q1, for example, our domestic travel advertising revenue increased over 20% compared to the pre-COVID level. So, we – so far, we are happy to see that our content strategy helped – started to help us, firstly, to increase the users’ engagement and secondly, have a positive contribution to our revenue. Thank you. Operator: Your next question comes from James Lee from Mizuho. Please go ahead. James Lee: Great. Thanks for taking my questions. Given all the on and off disruptions in the travel industry, I was hoping, Jane, that you can talk about maybe some of the government policies to support the tourism industry for both consumers and suppliers. Thank you. Cindy Wang: Yes. With the ongoing pandemic and intermittent lockdowns, the travel industry is still in need of more support from the authority and Jane and James have made a lot of efforts talking with related government authorities. And we are glad to see that the authority is making efforts to reduce the potential disruptions from Omicron cases. Especially recently, we see a lot of relaxations of unnecessary quarantine and lockdown measures in a lot of provinces in China and increasing the granularity of the scope of the cross-province travel bans from the province level to the county level. So, with the authority and industry players joining hand to improve our business environment and to stand against the challenges together, we are very confident that the travel industry will come back even stronger. Thank you. Operator: Thank you. Your next question comes from Tian Yao with TH Capital. Please go ahead. Tian Yao: Good morning management. I have a question related to your cash sustainability issue. As this COVID’s on and off and China continued its zero-COVID policy, and so the company in the last several quarters is in the position of burning some cash. So, how sustainable is the company’s cash position under the current situation – current environment? Is there any room for the company to achieve further cost saving, or is this company has any plans to further to raise some capital to enrich your balance sheet? So, that’s the question. Thank you. Jane Sun: Ctrip has been experienced up and down of the travel industry in the last almost 2 years, so we have reached experience to weather the storm. And we believe the most important part to survive or even become stronger is to have the sufficient liquidity to keep the sufficient liquidity in place. So, as of March 31st, the company had RMB33.3 billion or close to $10 billion on hand in cash assets including our held-to-maturity time deposits and financial products. And most importantly, our net cash was $1.9 billion as of March 31, this year. And our net working capital was $1.7 billion. We will frequently – we actually frequently assess our liquidity positions with latest business data and are confident to conclude that the combination of our existing cash reserves, cash flow from operations and financing sources are sufficient to meet our anticipated cash needs, including our working capital, capital expenditure and repayment of financial obligations for the foreseeable future. With regard to the cost savings, during the last – past 2 years, we have already streamlined our operations across business lines in addition to certain adjustments related to COVID. And in addition, our improvements on content, cross-selling and technology have further lifted marketing – our marketing efficiencies. For example, in Q1, our total adjusted operating expenses decreased 11% year-over-year and compared with pre-COVID level, it was a saving of close to 40%. Thanks to our largely flexible cost structures and very effective cost controls. And going forward, we expect to achieve further cost savings especially in the second quarter. Our largely discretional sales and marketing expenses will be adjusted according to the extent of business recovery and continue to be ROI driven. And also, we are able to run lean and stay productive, especially for our domestic operations, with the current team structure, and we will continue to improve our operating efficiencies. And for example, in the second quarter, part of the performance-based bonus maybe decreased due to the negatively impacted the top line growth. However, we – in the international, or in the overseas market, we may increase some investment to capture the pent-up demand depending on the growth momentum and business recoveries, but the impact to our group level cost structure will be pretty limited. Thank you. Operator: Thank you. That’s all the time we have for our question-and-answer session today. I will now hand back to Michelle Qi for closing remarks. Michelle Qi: Thank you. Thanks everyone for joining us today. You can find the transcript and webcast of today’s call on investors.trip.com. We look forward to speaking with you on our second quarter of 2022 earnings call. Thank you and have a good day. Jane Sun: Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
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Related Analysis

Trip.com Reiterated as Bernstein’s Top Pick Despite Macro Fears

Bernstein SocGen Group reaffirmed its Outperform rating on Trip.com (NASDAQ:TCOM), maintaining a $75 price target and naming it the firm’s top pick within its coverage universe. Analysts believe the current market valuation, hovering around 13 times forward earnings, significantly underestimates the company’s potential—even when factoring in conservative growth assumptions.

While macroeconomic headwinds remain a concern, Bernstein sees Trip.com as well-positioned to weather turbulence in the travel sector. In a modeled scenario of a 1% GDP decline, the firm expects a moderate impact on the company’s performance, with outbound travel dipping by 5% and hotel growth slowing by 2% due to consumer downtrading. However, analysts argue that a shift toward more affordable domestic travel could largely offset international softness, keeping overall revenue growth resilient—dipping only slightly from 16% to 14% for the full year.

Bernstein also compared Trip.com’s risk-reward profile to peers. Tencent Music Entertainment (TME) is viewed as a steady performer with stable earnings, though its valuation is already aligned with its current earnings trajectory. Baidu, on the other hand, is seen as more vulnerable, with its AI monetization efforts potentially derailed by greater exposure to macroeconomic volatility.

In contrast, Trip.com’s strong domestic market, diversified travel offerings, and potential to benefit from travel pattern shifts reinforce its appeal. With a compelling valuation and manageable risk factors, Bernstein continues to see substantial upside for the stock.

Jefferies Stays Bullish on Trip.com, Citing Strong Travel Trends and AI Upside

Jefferies reaffirmed its Buy rating and $77 price target on Trip.com Group (NASDAQ:TCOM), expressing confidence in the company’s ability to deliver on expectations for the current quarter and beyond.

Jefferies sees robust domestic demand driving growth in hotel bookings and air ticketing, with volume expansion as the primary catalyst. Outbound travel trends also continue to gain momentum, as more travelers extend their range, boosting international activity on the platform.

Trip.com is also expected to benefit from its accelerated adoption of artificial intelligence, which is enhancing both user experience and operational efficiency. Jefferies believes the integration of AI tools will play a key role in driving cost savings and increasing engagement.

Trip.com Group Limited's (NASDAQ:TCOM) Earnings Overview

Trip.com Group Limited, listed on NASDAQ as TCOM, is a leading travel service provider known for its comprehensive travel offerings. The company operates in a competitive landscape, with key players like Expedia and Booking Holdings. TCOM's recent financial performance highlights its resilience and strategic focus on growth, particularly in its international business segments.

On February 24, 2025, TCOM reported earnings per share of $0.67, exceeding the estimated $0.52. This performance reflects the company's strong operational execution and market positioning. TCOM's actual revenue of approximately $1.7 billion exceeding expected 1.69 billion.

The company's international business segments have shown significant growth, with outbound hotel and air ticket bookings surpassing 120% of pre-COVID levels from 2019. This growth underscores the travel market's resilience, as highlighted by Executive Chairman James Liang, who attributes it to travelers' increasing desire for exploration and cultural experiences.

TCOM's strategic investments in AI and inbound travel promotion aim to drive innovation and enhance the travel experience. CEO Jane Sun expressed confidence in the company's strong performance across market segments and its favorable market outlook, positioning TCOM for continued growth and success in the industry.

Ahead of the earnings call, TCOM shares rose by 1.4%, closing at $67.02. Benchmark analyst Fawne Jiang reiterated a Buy rating with a price target of $80, reflecting confidence in the company's future prospects. TCOM's financial metrics, such as a P/E ratio of 19.35 and a debt-to-equity ratio of 0.33, indicate a solid market valuation and moderate debt level, supporting its growth trajectory.

Trip.com Group Limited (NASDAQ:TCOM) Sees Optimistic Price Target and Strong Q3 Earnings

  • Trip.com Group Limited (NASDAQ:TCOM) received a bullish price target from CFRA, suggesting a significant upside.
  • The company reported earnings of $1.25 per share for Q3 2024, beating estimates and showing year-over-year growth.
  • Trip.com's international business segments have rebounded strongly, with outbound hotel and air reservations surpassing pre-COVID levels.

Trip.com Group Limited (NASDAQ:TCOM) is a leading travel service provider, offering a wide range of travel-related services including hotel reservations, transportation ticketing, packaged tours, and corporate travel management. The company operates globally, with a strong presence in the Chinese market. It competes with other major players in the travel industry such as Expedia and Booking Holdings.

On November 19, 2024, Siti Salikin from CFRA set a price target of $80 for TCOM, suggesting a potential price increase of approximately 91.02% from its then-current price of $41.88. This optimistic outlook comes on the heels of Trip.com's impressive Q3 2024 earnings report, which was discussed in a recent earnings call attended by key company figures and financial analysts from major firms.

During the Q3 2024 earnings call, Trip.com reported earnings of $1.25 per share, surpassing the Zacks Consensus Estimate of $0.91 per share. This marks an improvement from the $1 per share recorded in the same quarter last year. The company's net revenue for the third quarter increased by 16% compared to the previous year, highlighting its strong financial performance.

Trip.com has seen significant growth in its international business segments, with outbound hotel and air reservations reaching approximately 120% of pre-COVID levels from the same period in 2019. Additionally, air ticket and hotel reservations through its international online travel agency brand surged by over 60% year-over-year, showcasing the company's successful expansion efforts.

The company's net income for the quarter was reported at RMB6.8 billion, or $970 million, up from RMB4.6 billion in the same period of 2023. The adjusted EBITDA for the third quarter was RMB5.7 billion, or $808 million, showing an improvement from RMB4.6 billion in the previous year. As of now, TCOM's stock price is $62.74, with a market capitalization of approximately $40.41 billion.

Trip.com Group Limited (NASDAQ:TCOM) Sees Positive Analyst Sentiment and Stock Performance

  • Analyst price target for NASDAQ:TCOM has increased from $69.49 a year ago to $85 last month, indicating growing confidence in the company's prospects.
  • Recent upgrade to a Zacks Rank #1 (Strong Buy) reflects increased optimism about Trip.com's earnings potential and its position in the travel industry.
  • The stock's performance soared by 8.1% during the last trading session, suggesting strong investor interest and potential for continued strength.

Trip.com Group Limited (NASDAQ:TCOM) is a prominent player in the travel service industry, operating under well-known brands such as Ctrip, Qunar, Trip.com, and Skyscanner. The company offers a wide range of travel services, including accommodation reservations, transportation ticketing, packaged tours, and corporate travel management. As a key player in the expanding Chinese travel market, Trip.com is well-positioned to capitalize on the industry's growth.

Over the past year, the consensus price target for TCOM has seen a notable shift, reflecting changing analyst sentiment and market conditions. Last month, the average price target was $85, indicating a positive outlook from analysts. This suggests expectations for the stock to perform well in the near term, as highlighted by the recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade indicates increased optimism regarding the company's earnings potential.

Three months ago, the average price target for TCOM was $73.68, showing a significant increase over the past quarter. This suggests that analysts have become more optimistic about the company's prospects, likely due to the robust growth momentum in the travel industry. The recovery in tourism following the COVID-19 pandemic has bolstered Trip.com's performance, contributing to the upward trend in the price target.

A year ago, the average price target stood at $69.49, indicating a growing confidence in Trip.com Group Limited's business model and market position. Despite the challenges posed by the pandemic, the company has demonstrated resilience and adaptability, leading to increased analyst confidence. The recent surge in Trip.com's share price, soaring by 8.1% during the last trading session, further reflects strong investor interest and potential for continued strength in the stock's performance. Trip.com's stock is considered slightly undervalued, providing a margin of safety for investors. 

Trip.com Shares Surge 10% After Reporting Strong Q2 Earnings

Trip.com Group (NASDAQ:TCOM) saw its shares surge around 10% intra-day today after reporting stronger-than-expected second-quarter results for fiscal 2024. The travel service provider posted earnings per share of RMB7.25, surpassing Street estimates of RMB5.23, and revenue of RMB12.79 billion, slightly ahead of the consensus forecast of RMB12.76 billion.

Accommodation reservation revenue increased 20% year-over-year to RMB5.14 billion, while packaged-tour revenue soared 42% year-over-year to RMB1.03 billion.

Although transportation ticketing revenue came in slightly below estimates, the company attributed its overall growth to strong cross-border travel demand and highlighted future plans to harness AI for further innovation in the travel sector.

Morgan Stanley Remains Bullish on Trip.com

Morgan Stanley analysts reaffirmed their Overweight rating and a $64 price target for Trip.com Group (NASDAQ:TCOM), noting that the valuation is more appealing in the short term following the recent drop.

After the Q1/24 results, the company's stock fell more than 10%, mirroring the decline following Q4/23 results. Upcoming events like the Dragon Boat Festival (June 8-10) and the summer holiday season are expected to be catalysts. Domestic business year-over-year growth slowed in Q2/24 due to weaker hotel pricing and a one-time adjustment in air revenue/ticketing in late Q3/23. These factors are expected to normalize by Q4/24, potentially leading to accelerated growth in Q4 and bolstering market confidence in sustained domestic growth for 2025.

Outbound travel is anticipated to include more long-haul trips in Q3/24, which should boost prices for air travel and hotels during the summer. The current valuation is attractive at 15x 2024 estimated P/E and 12x 2025 estimated P/E, with projected profit growth of 28% in 2024 and 21% in 2025, corresponding to PEG ratios of 0.5x and 0.6x.