Trip.com Group Limited (TCOM) on Q2 2022 Results - Earnings Call Transcript

Operator: Hello and thank you for standing by. Welcome to the Trip.com Group 2022 Second Quarter Earnings Conference Call. It is now pleasure to introduce Senior Director of Investor Relations, Michelle Qi. You may proceed. Michelle Qi: Thank you. Good morning and good evening. Welcome to Trip.com Group’s second 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 second quarter of 2022 as well as the outlook for the third quarter of 2022. After our 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 our call today. In the second quarter of 2022 despite the challenging market environments in April and May, due to the outreach of Omicron and stricter pandemic control measures we are encouraged to see the strong release of pent-up demand in the back half of this quarter. While sporadic resurgence of COVID continues to disrupt the recovery of domestic travel in China. The effect of travelers’ sentiment has been fading, and the market has shown its resilience. Following the easing of the restrictions, we're seeing overall domestic channel book hotel booking, platform quickly rebounded and surpassed 2019 level at the end of June. Such trajectory continued as we entered the July with authorities adopt milder and more precise control measures. On the international front, the global travel industry continued to its progress towards full recovery to 2000 pre-pandemic level, demand is staying strong despite the challenges facing the industry. In Q2, our revenues in Europe and US markets have already surpassed of 2019 level and that in our Asia Pacific markets are also rapidly growing, while pace of growth in the European market has moderated due to headwinds such as airline capacity shortage and labor strikes, our air reservations in Europe has been approaching the 2019 level and our hotel reservation in the same region increased by about 400% year-over-year. Travel activity to Asia- Pacific also rebounded with border reopening and further lifting of travel curbs and have started to recover faster than ever since the outbreak of COVID. Together with product innovation, service enhancement and the holiday demand, we expect this new recovery in APAC continue to accelerate in Q3. While in the short term, the world may still face challenges such as regional instability and inflation. The fact that travelers have not been deterred by these challenges point two industries’ are resilience and a strong recovery. With the governments continue to open up and COVID can becoming hopefully more manageable, traveler confidence grow together with a proven safety perception, which leads us to believe the market outlook only continue to improve. With our strengthened product capability, optimize the operating efficiency and enhance the value proposition, we are as confident as ever with our capabilities as a competitive position in the market, and then navigate through any uncertainties and challenges. We do not necessarily need a crystal ball if you're able to offer whatever exists in the market and match customers’ aspirations, and we will remain competence and positive in attractive long-term growth profile of the travel industry. With that, I'll turn the call over to Jane Sun for operating highlights. Jane Sun: Thank you, James. Good morning, everyone. I would like to start with a quick overview of our performance in the second quarter and updates our operational highlights. In the second quarter of 2022, China domestic travel industry was largely impacted by the resurgence of pandemic in multiple regions in China. Despite all the challenges, we are delighted to see that the fundamental demand for travel remained solid. Travel activities in the region that are less affected by COVID have recovered much faster. Hotel bookings in the Southern China and the western part of the country has surpassed 2019 level since mid-May. Our total domestic hotel bookings have fully recovered to and surpass to 2019 level in late June. Same city staycation hotel reservation in this quarter grew more than 30% versus 2019. Our business continued to recover in July, and it's also already adopted more precise pandemic control measures. On the other hand, the global market continues to show steady improvement as more and more countries choose to leave COVID behind and move forward with minimal restrictions. Our global business continued to ride on a growth trajectory. First, our international flights, overall air ticket booking on our global platform has increased over 100% year-over-year in which our global brand Trip.com has managed to increase approximately 608% year-over-year. The growth in Trip.com was mainly driven by strong recovery of international flights. And we're glad to see such momentum continued in Q3. In July, total air tickets bookings on Trip.com was heading towards 90% recovery of 2019 level. Second, international hotel. Overall hotel bookings on global platforms have increased by more than 50% above the 2019 level in the second quarter with domestic hotel bookings in non-China market, Trip.com increased by 300% versus 2019. We have outperformed the industry across all key markets, especially in Hong Kong, South Korea, Singapore, Malaysia, UK and the US also in triple digit growth in overall hotel bookings versus 2019. Hotel bookings in Europe markets also increased by nearly 400% year-over-year. Now let's talk about the operational highlights and the progress we have made in the strategic focus. First, on accommodation, in the China domestic market, we continue to modify our one stop service model with a combination at the core by strengthening our value proposition to our customers and a hotel partners. Our value added hotel package products now cover 20% more hotel since year end of 2021, 65% of which are high end hotels. We've continued to further expand the coverage in a solo or special perks and offerings to match customers demand for better value for money by helping partners to create incremental upside. Over 240,000 hotels has also joined us for our trip close program, and rewarded our loyal customers with extra benefits, over 50% of the reservations come from high end hotels. In the meantime, we also joined hands with hotel partners to launch co-branded membership programs, and currently have more than 30 million co-branded members significantly contributing to our user’s acquisition. Second, global business, from international front, we continue to work closely with local authorities and suppliers to strengthen our supply chain and improve the brand awareness of our international brands. Trip.com has been named the 10th most downloaded OTA app globally in the first half of 2022, with app download hitting record high. We also bask into post pandemic travelers evolved need and a source for truly unique product offerings to improve product competitiveness. While also working hard to enhance the reliability of our services. We continue to localize and fine tune our campaigns to align with heartbeats of the local markets, and better capital at the local demand. Our activity offerings in the overseas market have also been seen continuously improvements following the robust recovery of the global travel and tourism. On top of the achievements in the previous quarter, reservations for global in destination activities on our platform continued to grow by 24% sequentially, and maintained a three digits year-over-year growth in the first half of 2022. We will continue our work protecting customers through close collaboration with our global destinations and attractions. Third, content platform, updating on the status of our content platform development, we've continued to strengthen our content creation pipeline to provide better inspiration, and to help users to make educated to travel decisions. Catering to the new users’ needs under the pandemic and better serve the travel demand of the younger generation. We focused on providing inspiring content, help users exploring for ideas and tips to get better products, foods, activity, and transportation and accommodation experience especially for their local and short haul trips. Besides live stream and information tip, we also created bucket list of travel tactics based on our service quality in a customer's feedback to help users make well informed destination. For example, I want a domestic hotel bucket list and pick the high quality hotels and alternative accommodation properties and the different travel scenarios in various regions across the country due to stronger user cases, and their respond to users’ aspirations which also help improve the conversion rate. The amount of daily average user generated content increased by 16% year-over-year in the second quarter. The number of KOLs also increased by 17% over the first quarter. Despite pandemic influence, we are delighted to see user engagement level remains stable compared with that in the previous quarter. Average view duration continues to see sequential improvement. Average number of content viewed per user also increased by about 50%. Fourth, corporate responsibility, besides our rural revitalization initiatives, and a continued efforts in nurturing local alternative accommodation, and tourism talents, we are also committed to embrace the global transportation to sustainable and more environmentally responsible travel. As part of our sustainability initiative, we have partnered with choose to help customers adjust their co2 emissions by contributing towards a highly effective co2 migrating projects around the world. Our corporate travel teams also outperform 85% of other global companies and was awarded a Silver rating by EcoVadis, an internationally well recognized CSR rating platform. In our current alternative fuel vehicles rated order is also growing at an annual rate of approximately 140%. All these initiatives help make it easier and simpler for our users to improve awareness and travel more responsibly. Over the past few years, the travel industry has proved its resilience. With our confidence in a long-term growth of travel, and the years of hard work and a solid progress in maintaining our traditional advantage and further strengthening our competitiveness in domestic stronghold and international travel. We are optimistic that we're very well prepared to face any challenges that lies ahead. With that I’ll now turn the call over to Cindy. Cindy Wang : Thanks Jane. Good morning, everyone. For the second quarter of 2022 Trip.com Group reported net revenue of RMB 4 billion, representing a 32% decrease from the same period last year, and a 2% decrease quarter-over-quarter, primarily due to continued disruption from pandemics resurgences to the China's domestic travel industry. Our overseas markets, on the other hand, are becoming significant contributors to our top line and bottom line performance. Accommodation reservation revenue for the second quarter of 2022 was RMB 1.4 billion, representing a 45% decrease year-over-year and a 6% decrease quarter-over-quarter recovering to 40% of the 2019 level. This is mainly due to the severe impact from the Omicron outbreak in China and the following strict lockdown in several first tier cities. While offsetting by solid, local and shortfall demands. Transportation ticketing revenue for the second quarter of 2022 was RMB 1.8 billion, representing a 15% decrease year-over-year and a 6% increase quarter-over-quarter recovering to 52% of the 2019 level. The impact of travel restrictions in the first two months of this quarter was largely offset by the strong air reservation on our international platform, among which China domestic recovery momentum was largely disrupted by a resurgence of COVID while air reservations on our international platforms saw a significant increase. Packaged tour revenue for the second quarter of 2022 was RMB 122 million, representing a 67% decrease year-over-year and a 2% decrease quarter-over-quarter recovering to 12% of the 2019 levels. This is mainly due to pandemic related travel restrictions in domestic China market and largely muted outbound tourism. Corporate travel revenue for the second quarter of 2022 was RMB 210 million, representing a 46% decrease year-over-year and a 5% decrease quarter-over-quarter recovering to 68% of the 2019 level, primarily due to the impact of pandemic related drastic management in April and May. Excluding share based compensation charges, our total adjusted operating expenses decreased by 27% year-over-year, and was a saving of 44% compared to the same period in 2019, reflecting our continued efforts in pushing forward with effective cost control, and streamlining our operations. Adjusted product development expenses for the second quarter decreased by 13% from the previous quarter, it was a saving of 33% compared to the same period in 2019 as we continued to pursue lean operation. Adjusted sales and marketing expenses for the second quarter decreased by 3.3% 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 protocols. Adjusted G&A expenses for the second quarter decreased by 2% from the previous quarter. It was a saving of 29% when compared to the same period in 2019. Adjusted EBITDA was RMB 355 million for the second quarter, compared to RMB 916 million in the same period last year, and RMB 91 million in the previous quarter. Adjusted EBITDA margin was 9% for the second quarter, compared to 16% in the same period last year, and 2% in the last quarter. Diluted income per ordinary shares and per ADS are RMB 10 cents, or US $1.00 for the second quarter of 2022. Excluding share based compensation charges and fair value changes of equity security investment and exchangeable senior notes, non-GAAP diluted loss per ordinary share and per ADS were RMB 31 cents, or US $0.05 for the second quarter. As of June 30, 2022 the balance of cash and cash equivalents, restricted cash, short-term investments held to maturity term deposits and financial products were RMB 65.6 billion or US $9.8 billion. Turning to the third quarter of 2022. We will like to share some colors of our business. Robust pent-up demand release was seen in July and early August leading to a largely improved market outlook following the relaxation of travel restrictions. The industry level air passenger volume recovered to 60% to 70%. And industry level hotel RevPAR recovered to 80% to 90% of the 2019 level in the first half of Q3. In July. Our China domestic hotel bookings were about 20% growth above the 2019 level. We continued to grow over the 2019 level in August and achieve the higher growth versus 2021. Domestic travel momentum start due to the resurgence of COVID cases and related travel restrictions since late August. In the recent Mid-Autumn Festival, industry level air passenger volume was lower than 30% of its 2019 level, hotel business was relatively less affected with the support of staycation demand. Our local hotel bookings continue to recover well, and was about fully recovered when compared with the same holiday in 2019. Outbound travel remains rather muted in their current conditions. Outside of China, the recovering momentum in Europe and the US remains robust, while the Asia Pacific region is accelerating. Our international brands showed further improvements in July and August benefiting from the higher price and more long haul travel. Although, we are still catching up with the 2019 number, we expect to see a healthy revenue growth in Q3 on a year-over-year basis, which is driven by strong demand for summer travel in China and robust recovery in the global market. While global travel has been gradually moving towards a brighter future, we will probably still be experiencing pandemic related challenges in the near term, especially for the China domestic market. Solid execution paves the way for long-term growth. We will continue to stick with our prudent cost control protocols while remain cautious and flexible to capture the potential growth opportunities. With that operator, please open the line for questions. Operator: And our first question comes from the line of Thomas Chong with Jefferies. Thomas Chong: Hi, good morning. Thanks management for taking my questions. My questions about our meaningful cost savings in Q2 especially in the product and development segment. Given our solid cost control measures, how should we think about the further cost savings and margin trends in the next coming quarters? Thank you. Cindy Wang : Thank you, Thomas. In Q2, our total adjusted operating expenses decreased by 27% year-over-year and the 9% quarter-over-quarter. It was a saving of 44% compared to the same period in 2019 back to our largely flexible cost structure and effective cost control. Firstly, following a strict our driven investment protocol, our sales and marketing expenses were largely considered discretionary. And in the second quarter, we also swiftly reduced the marketing investment in the China domestic market, which was partially offset by the increase of marketing activities for the international brand. Decrease of personnel related expenses were mainly related to the flexible part of our performance based bonus. During the past two years, we have a streamlined our operations across the business line in addition to certain adjustments related to COVID. And we are also able to run a very lean and stay productive in our domestic operations with the current team structure and will continue to improve our operating efficiency. In addition, our improvement of the content as well as the cross-selling and technology have further lifted our marketing efficiencies. So we are very confident that we are going to deliver a very healthy operating margin once the market can go back to the normal. Thank you. Operator: And our next question comes from the line of Simon Chou with Goldman Sachs. Unidentified Analyst : Hi, can you hear me? Cindy Wang : Yes, we can. Unidentified Analyst : Oh, sorry, hi. Thanks James, Jane and Cindy for the thorough presentation. So I just have one or two quick questions, in relation to what you mentioned about the guidance on the third quarter that you're expecting a healthy growth year-on-year on the top line. So just wanted to do a bit more, would you be able to share with us how you're thinking about the hotel versus the transportation division respectively? How are you seeing the trends in the third quarter, if you can provide us with some guidance that will be great? And then secondly, I think Jane earlier mentioned that the take rate particularly on the hotel segment, actually trying to be better in the second quarter, as well as maybe in the third quarter as well, because of some scale downloads of the rebates, wondering, are you seeing the same trends and now that the travel starting to recover? Would you see the necessity to basically increase the rebate again? Thank you. Cindy Wang : Thank you, Simon. We, yes, as we said before, we are glad to see the domestic travel market, at least show some resilience, especially starting from this summer. Overall, our domestic China hotel reservations on our platform quickly rebounded and surpassed the pre-COVID level from late June, such trajectory continued with the authorities adopted by wider and more precise control measures, and the total domestic hotel bookings was around 20% higher than 2019 level in July. And we continued to grow over the 2019 level in August and achieve the higher growth versus 2021. And with the recent outbreak of COVID cases spreading to more than 20 provinces and locked down becoming more frequent, since late part of -- since late August. The long haul travels was significantly impacted and number of total domestic air passengers was down by 70% to 80% versus the 2019 level in the recent weeks, and hotel business was relatively less affected with the support of staycation demand. And this is basically the outlook for the Q3. And in terms of the long-term outlook, we are still very confident that as long as we can provide competitive product as well as a variety of product offerings, we are going to continuously to gaining market share both domestically, as well as in for the international market. As for the margins, or take rate of our hotel business, we are closely monitors the marketing. But as we always did, we will have different, slightly different strategy for both the mid to high end, as well as the lower end comparatively lower end of the market. For the lower end of the market, especially local demand for staycation, we will continuously to have competitive pricing, this always is the first priority for us. And for the mid to high end market. We will closely monitor and but overall we expected to have a very healthy margin for the quarters to come. Thank you. Operator: And our next question comes from the line of Alex Yao with JPMorgan. Alex Yao: Sorry, I was on mute. Good morning, management. Thank you for taking my question. I'd like to get an update on your international part of the business. Can you share with us the growth momentum and revenue contribution from Skyscanner and the Trip.com in second quarter, and also how do you expect these two operation units to perform in the second half this year? Thank you. Cindy Wang : Thank you, Alex. Was the easy and dropping off the travel restrictions in more and more countries outside of China, the global travel market quickly went back to recovery? And as we shared in the prepared remarks, the overall air ticketing bookings of global platforms have increased over 100% year-over-year in which our global brand Trip.com has managed to increase by approximately 680% year-over-year. The growth in Trip.com was mainly driven by the strong recovery of international flights. And we are happy to see such momentum to be continued in Q3. In July, our total air ticketing bookings on Trip.com was heading toward 90% recovery of the 2019 level. Overall, hotel bookings on our global platform also have increased by more than 40% above the 2019 level. In the second quarter, domestic hotel bookings in non- China markets on Trip.com increased by 300% versus the 2019 level. In terms of the financial contribution, driven by the growth of -- growing travel demand following relaxing travel restrictions and improving hotel ADR and air ticketing prices, revenues generated from our key international brands grew more than 200% year-over-year, and contributed 20% to 30% of our total revenue in Q2. Revenues generated by our Europe and American markets already surpassed the 2019 level. While revenues from the Asia Pacific excluding China markets also on a faster recovery track. We are also glad to see adjusted EBITDA of some international brands has turned positive, supported by our fast business recovery and improved operational efficiency. Thank you. Oh, sorry, in terms of the outlook for our international market. While in the short term, there are still some uncertainties and challenges from the macro environment. We have but still -- we still have a very strong confidence in the consumers’ strong desire to travel across the world. With governments continued to open up and COVID becoming hopefully more manageable, travelers confidence grow together with improved the city perceptions, which lead us to believe the market outlook will further improve. And we will continuously to strengthen our one stop service capability, improve supply chain and technology and strengthen our cooperation among the different brands within the group. Thank you. Operator: Next question comes from the line of James Lee with Mizuho. James Lee: Great, thanks for taking my questions. My questions relating to outbound travel, I wondered can you guys talk about the pace of recovery in recent months as we’ve seen the length of quarantine has been reduced pretty meaningfully. And secondly, maybe any update on the reopening policy, I assume maybe give a sense once the border starts to reopen how fast you think the outbound travel demand will return. Thanks. Cindy Wang : Thanks you, James. Yes, Oh, Jane Sun, go ahead. Jane Sun: Okay. Yes, sure. I think the trend is quite positive as everyone observed we started with 21 days quarantine and then was reduced to 14 days and now it’s seven days. And in Hong Kong, it is further reduced to four plus three. So as more measures is being put in control and more people are getting vaccines, we are confident eventually the quarantine period will be shortened and therefore the release of the travel will be able to achieve. And when we look at the pent-up demand from our consumers, I think the pent-up demand is very strong. So once we're in a good stage to open the travel borders, we are confident with our coverage for comprehensive products we'll be able to capitalize on these opportunities. Thank you. Operator: Our next question comes from the line of Elinor Leung with CLSA. Elinor Leung: Hey. Thank you very much management taking my question. My first question is regarding the domestic competition. Can you comment on that under such difficult situations right now and the second question is follow up on the international business. How fast the Skyscanner is has been recovering so far. And you talked about a contribution international business for the top line and how much is it contributes to the bottom line for the second quarter, thank you very much. Cindy Wang : Thank you, Elinor. In terms of the domestic competition, we believe the competitive environment in the domestic market is stable. Despite the up and downs in industry, we are happy to see that we are able to -- we were able to deliver very strong performance outpacing the market by 20% to 25% for the domestic hotel reservation. Firstly, over the past two years, we've built a very strong user cases for the short haul travel through multiple initiatives in product and marketing innovation. Now, short haul and local travel activities has become a key contributor to our domestic recovery, especially in Q2 despite the severe pandemic influence, especially on the long haul travel, our local hotel reservation increased -- our local hotel reservations still increased by more than 30% compared with the 2019 level, such growth momentum continued to gain steam and gained a lot of the local hotel reservations increased by more than 60% compared with the 2019 level in July and August, while the long haul travel also saw significant recovery during the same period. Yes. Secondly, on our cross-selling from the transportation to accommodation and other travel products has also achieved the significant improvements in the past two years. And so we are confident that once the pandemic is under effective control, or if there's any change of the pandemic control policies, we can enjoy a higher recovery potential in both our long haul and short haul travels. In terms of the contributions of our international brands, and as I explained earlier, they contribute about, the other international brands, they contribute about 20% to 30% on the top line. And we also see in terms of the adjusted EBITDA, almost all our major international brands, they have turned positive and becoming one of the key contributors of borderlines Thank you. Operator: Next question comes from the line of Tian Hou of T.H. Capital. Tian Hou: Good morning, management. I have a question regarding your international business strategy. So as China took a different approach for COVID control, so I guess the international market can become a much more attractive to us. So international business, contributing higher portion of your top line and bottom line. So can you help us understand your global expansion strategy at this point? Thank you. Jane Sun: Thank you, Tian. So following our local focus global vision strategy, we will continue to integrate and upgrade the supply chain and technology of our international brands and further strengthen the reliability and efficiency of our customer services. So we actually provide very strong value not only to the Chinese users, but also to our travelers around the world. Firstly, on the one stop shopping platform Trip.com actually was one of the largest the global air ticketing platform, and our team will continue to add more product categories onto the platform and improves the cross selling from air to other products, such as accommodation as well as the activity. So in the Q2, our overall hotel reservation through our key international brands grew more than 40% compared with 2019 level, which are, which also more than doubled of our 2021 level, which was benefit from -- it was benefited from both the strong demand of the domestic travel as well as the cross-selling for our recovery international air reservation. Second, we are an app based platform, we usually see higher user engagement and user retention on mobile app. In the second quarter, Trip.com was named the top 10 most downloaded OTA apps in the first half of 2022 with Trip.com mobile app installations reached the record high, and the mobile app contributed more than half of Trip.com’s order and reached more than 70% in certain Asia Pacific markets. And certainly, we provide high quality services. We believe a high quality in-house customer service team will continue to be a driving force behind our business success. And we have an in-house customer service team and have established our global call center with multi language capabilities to ensure a swift, responsive, customers can connect with us a receive direct solution with a human touch 24x7 via phone calls, free in app internet call and in act online chats or emails. And also with the help of the AI Chatbot self-serving -- self service functions and automatic prioritization mechanism, we are able to improve the efficiency and have our team handle more than and more complicated and urgent situations. And the automation rates of our global call center have reached around 80%, which are on par with our domestic call center. Thank you. Operator: The next question comes from the line of Wei Xiong with UBS. Wei Xiong: Hi, good morning, Management. And thank you for taking my question. I want to understand more about your content strategy. So could management share more color on the update of your content strategy? And how's the progress they're helping with our user acquisition and user engagement as well as our competitiveness against some other short video platforms? And also, as we further invest in the content side, how should we think about the potential financial implications in the coming quarters? Thank you. Jane Sun: Thank you. Despite the pandemic inference, our content strategy continues to progress in terms of the content generations and user engagement, pathway into the new user needs under the pandemic. And to better serve the travel demands of our younger generation. We first, we focused on providing inspiring content, help user expose for ideas and tips to get better foods, activities, transportation and accommodation experience, especially for their local and short trips. In the second quarter, the amount of the daily average user generated content increased by 16% year-over-year and the number of KOL further increased by 17% over the previous quarter. And we are also delighted to see user engagement level remain stable compared with that in the previous quarter. And the average view duration continue to see sequential improvement, average number of content views by producer also increases by about 50%. Besides the live streaming and information feeds, those are the product people may question maybe quite familiar with. We also created the bucket list of travel topics based on service quality and customer feedback to help users make well informed decisions. For example, our domestic hotel bucket list has picked up the high quality hotels and alternative accommodation properties under different travel scenarios in various regions across country to build strong user cases, and respond to the user aspiration, which also helped to -- help us to improve the conversion rate. In terms of the financial impact of the content, as I explained, we think the support or the improvement on the conversion is the top priority in terms of the content. And on top of that, we also see significant efficiencies of cost savings on the sales and marketing. And due to the very helpful content that's helped us to have a better engagement on our platform. And the content product itself also generated very healthy top line as well as the bottom line to our total financial. Thank you. Operator: Thank you. And that concludes our question and answer session. I will now hand the call back over to Senior Director of Investor Relations, Michelle Qi for any closing remarks. Michelle Qi: Thanks. Thank you everyone for joining us today. You can find the transcript and the webcast of today's call on investors.trip.com. We look forward to speaking with you on the third quarter of 2022 earnings call. Thank you. And have a good day. Thank you. Operator: Ladies gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.
TCOM Ratings Summary
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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.