Tuniu Corporation (TOUR) on Q2 2025 Results - Earnings Call Transcript
Operator: Hello, and thank you for standing by for Tuniu's 2025 Second Quarter Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Ms. Mary Chen. Please go ahead. Mary Chen: Thank you, and welcome to our 2025 2nd quarter earnings conference call. Joining me on the call today are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer; and Anqiang Chen, Tuniu's Financial Controller. For today's agenda, management will discuss business updates, operation highlights and financial performance for the second quarter of 2025. . Before we continue, I refer you to our safe harbor statement in earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Yu. Dunde Yu: Thank you, Mary. Good day, everyone. Welcome to our second quarter 2025 earnings conference call. In the second quarter, we saw a robust performance across the travel sector as the 3 holiday period helped sustain strong consumer demand. During this holiday, Tuniu recorded year-over-year growth in both transaction volume and the number of trips. During the quarter, the company continued to maintain consistent growth momentum with net revenues increasing by 15% year-over-year and revenues from packaged towards growing by 26%. . Tuniu's robust supply chain has allowed us to execute our product strategy effectively with positive results. By expanding our range of offerings, we are meeting the needs of diverse customer segments while attracting more customers through competitive pricing. Together, these efforts are driving sustained growth across the business. In addition, our diversified sales channels have enabled us to reach a broader customer base. We are seeing more and more of our sales coming from new channels like live streaming and off- line stores. At the same time, we are closely monitoring the ROI of each channel and maintaining strict cost control over internal operations. In the second quarter, we once again achieved moderate profitability on both a GAAP and non-GAAP basis. Let me walk you through some of our key initiatives in more detail. In the second quarter, we continued to strengthen our supply chain, which remains simple to delivering high-quality products at competitive pricing. First, we further enhanced our direct and centralized procurement strategies in order to lower purchasing costs. Second, we focused on resource integration. For example, by leveraging our nationwide sales network with consolidated international flight resources and introduce connecting flights for certain outbound travel products. This approach allows us to consolidate customers from across the country to depart from key hub cities, expanding our departure city coverage and making travel more convenient for customers in different regions. It also enabled us to take advantage of airline discounts available in those hubs, allowing us to offer even more competitive pricing to our customers. In addition, we support our suppliers by offering more favorable payment terms as well as providing systems and technical support. This initiative helped us attract high-quality suppliers to collaborate closely with us in delivering better products and services to our customers. On the product side, our various product lines continue to provide more targeted solutions for different types of customers. Niu Tour target mid- to high-end customers and maintain a high repurchase rate by focusing on quality. Over half of the customers booking Niu Tour products are Tuniu's loyal customers. Niu Select products have gained popularity among customers due to its cost-effective value proposition, especially on live streaming channels. We continue to expand the offering of Niu Select products, covering more destinations and itineraries. In the second quarter, transaction volume for Niu Tours, Niu Select products grew by more than 25% year-over-year. In terms of product innovation, we continue to explore new definition offerings. For example, Niu Tour launched its first tour in the emerging destination of the Caucasus region, which received a 100% satisfaction rate. In response to strong demand we expanded beyond the premium organized tours and introduce more price-competitive Caucasus products under our Niu Select line. As the summer peak season approach, we conducted a live streaming show in the region in July. As a result, transaction volume for Caucasus products in the second quarter grew by over 150% year-over-year. We also continue to diversify our sales network during the quarter, with emerging channels contributing an increasing share of total transaction volume. During the second quarter, both payment and verification volume through our live streaming channels achieved double-digit year-over-year growth, backed by our leading position in travel live streaming as well as strong brand recognition and product reputation, we expanded our live stream offerings to include higher price items such as luxury hotels, outscale island destinations and long-haul outbound tours. With over a decade of deep experience in the outbound travel segment, we successfully brought our expertise into the live streaming channels. Operating products tailored to live stream viewers supported by professional presentations and the comprehensive services such as visa assistance. As a result, we quickly emerged as a leading outbound travel supplier through live streaming. For example, one of our in-house products for Dubai has already surpassed 10,000 paying customers since its launch earlier this year. For live streaming leader travel products, we've been encouraging more influencers to step out of their studios and conduct live streaming shows directly from the destination, offering customers a more immersive experience. At the same time, we partnered with a number of top and mid-tier influencers to host a dedicated live streaming shows and jointly promote our offerings. In the second quarter, live streaming contribution to the company's total transaction volume continued to grow, rising from over 15% in the previous quarter to nearly 20%. In the second quarter, we continue to strengthen our offline store network. We expanded coverage in key cities, particularly popular departure cities, tourist destinations and the transportation hub to build local scale and drive down operating costs. As a result, transaction volume from offline stores grew by over 20% year-over-year during the quarter. On the technology front, we continue to explore the application of AI agents across various scenarios, with a focus on enhancing customer experience and improving internal operational efficiency. We are pleased to see that more and more customers and employees are actually using our AI tools to help book trips and the complete task. We will continue to enhance our and update our technology tools in response to user feedback. In concurrence with the arrival of the summer season, the travel industry is entering its peak period, while managing the surge in travel demand, we are also closely observing shifts in customer behavior, including booking habits, travel preferences and the product choices and are continuously refining our products and the services in response. Our goal is to ensure that more new and regular customers think of Tuniu first when it comes to planning their trips. I'll now turn the call over to Anqiang, our Financial Controller, for the financial highlights. Anqiang Chen: Financial Controller: Thank you, Donald. Hello, everyone. Now I will walk you through our second quarter of 2025 financial results in greater detail. Please note that all monetary amounts are in RMB, unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. For the second quarter of 2025, net revenues were CNY 134.9 million representing a year-over-year increase of 15% from the corresponding period in 2024. Revenues from packaged tours were up 26% year-over-year to CNY 113.4 million and accounted for 84% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours and the self-drive tours. Other revenues were down 21% year-over-year to CNY 21.5 million and accounted for 16% of our total net revenues. The decrease was primarily due to the decrease in the fees for advertising services provided to tourism boards and bureaus. Gross profit for the second quarter of 2025 was CNY 86 million, up 2% year-over-year. Operating expenses for the second quarter of 2025 was CNY 78.9 million, up 58% year-over-year. Research and product development expenses for the second quarter of 2025 were CNY 16.4 million, up 29% year-over-year. The increase was primarily due to the increase in research and product development personnel-related expenses. Sales and marketing expenses for the second quarter of 2025 were CNY 45 million, up 12% year-over- year. The increase was primarily due to the increase in sales and marketing personnel related expenses and promotion expenses. General and administrative expenses for the second quarter of 2025 were CNY 17.8 million, down 18% year-over-year. The decrease was primarily due to the reversal of current expected credit losses allowance. Net income attributable to ordinary shareholders of Tuniu corporation was CNY 14.5 million in the second quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation which excluded share-based compensation expenses and amortization of acquired intangible assets was CNY 16.5 million in the second quarter of 2025. As of June 30, 2025, the company had cash and cash equivalents, restricted cash, short- term investments and long-term deposits of CNY 1.2 billion. Cash flow generated from operations for the second quarter of 2025 was CNY 46 million. Capital expenditures for the second quarter of 2025 were CNY 1 million. For the third quarter of 2025, the company expects to generate CNY 199 million to CNY 208.3 million of net revenues, which represents a 7% to 12% increase year-over-year. Please note that this forecast reflects Tuniu current and preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions. Operator? Operator: [Operator Instructions] The first question is Ms. [ Lisa Lu ], Investor. Unidentified Analyst: I've got 2 questions. First, can management share the revenue breakdown by destinations for this quarter? And which destinations drove the growth of packaged tour revenues? Second, can you give more details about the bookings in the summer vacation? Dunde Yu: Thank you for your questions. As you know, our packaged tour revenue increased 26% year-over-year, making a solid growth. In terms of key drivers for the growth, domestic destinations achieved double-digit growth during the quarter, outbound tours growth faster than domestic tours in terms of GMV. Europe, Japan and Maldives all posted double-digit year-over-year growth. Some emerging destinations had higher growth rates. For example, South America increased over 50%. Sri Lanka and the Caucasus both increased over 100%. But the headwind from some Southeast Asia countries have slowed down and lowered demand from -- for the destination. Southeast Asia declined roughly 30% during the quarter. In terms of destination breakdown, domestic tours contributed about 2/3 of our total GMV and outbound tours about 1/3 during third quarter. Within outbound destinations, Europe is the top 1 destination, which contributed about 1/3 of our outbound towards GMV. Japan and Maldives each contributed about over 10%. Middle East and Africa as well as America less than 10%, respectively. For the rest of the outbound destinations each contributed less than 5%. For the second question about summer vacation. The demand has increased significantly during the peak season. Families with children are one of the main customer growth during the summer. Domestic city tours are hot, especially cities with museums such as Xi An and the Nanjing as well as cities with theme parks such as Shanghai and Guangzhou. For long-haul tours, Huizhou is a public destination due to its cool weather. Following the shift of our customer habits, this summer, we launched more small growth tours at more competitive prices and sell our products through live streaming shows as scenic spots in Guizhou. For outbond travel, although we don't have full picture now, we have seen double-digit year-on-year growth in Japan, Europe and certain islands, including Maldives in July. For Southeast Asia, in spite of headwinds in Thailand and Cambodia. Singapore and Malaysia are gaining popularity since the summer vacation. Our Niu Select itinerary is covering both Singapore and Malaysia launched this summer have passed 10,000 paying customers through live streaming shows so far. In general, the market continues its growth momentum in the peak season. As a result, we expect 7% to 12% net revenues growth in the third quarter and we will try to make profit again. Operator: [Operator Instructions] We are now approaching the end of our conference call. I would now like to turn the call over to Tuniu's Director of Investor Relations, Ms. Mary Chen. Please go ahead. Mary Chen: Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Tuniu Corporation's Financial Performance and Competitive Positioning
Tuniu Corporation (NASDAQ:TOUR) is a leading Chinese online leisure travel company, offering a comprehensive range of travel-related services through its robust online platform. As the travel industry in China continues to expand, Tuniu navigates a competitive landscape populated by other online travel agencies and service providers.
In assessing Tuniu's financial health, two critical metrics stand out: the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC). Tuniu's ROIC is reported at 4.06%, juxtaposed with a WACC of 14.68%. This discrepancy signals that Tuniu is currently not generating returns above its cost of capital, a potential red flag for investors. The ROIC to WACC ratio, sitting at 0.28, further underscores the company's inefficiency in capital utilization.
When placed in comparison with its industry counterparts, such as Cheetah Mobile Inc. (CMCM), Leju Holdings Limited (LEJU), Xunlei Limited (XNET), and Phoenix New Media Limited (FENG), Tuniu's financial performance is somewhat more encouraging. Despite the industry-wide trend of negative ROICs, Tuniu's relatively better ROIC to WACC ratio suggests a more efficient use of capital, albeit still below its WACC. This comparative analysis highlights the broader challenges faced by companies in this sector in generating adequate returns to cover their capital costs.
For investors evaluating Tuniu's financial health and its potential for future improvement, the company's ability to enhance its capital efficiency could be a critical factor. Despite the current underperformance in generating returns above its cost of capital, Tuniu's position relative to its peers suggests there may be room for optimization and growth.
Tuniu Corporation's Financial Performance and Competitive Analysis
- Tuniu Corporation (NASDAQ:TOUR) is struggling to generate returns above its cost of capital with a ROIC of -4.36% and a WACC of 10.78%.
- Among its peers, Xunlei Limited (XNET) stands out with a positive ROIC to WACC ratio, indicating better capital efficiency and potential for growth.
- The majority of Tuniu's competitors, including Cheetah Mobile Inc. (CMCM) and Phoenix New Media Limited (FENG), also show negative ROIC to WACC ratios, highlighting industry-wide challenges in generating profitable returns.
Tuniu Corporation (NASDAQ:TOUR) is a Chinese online leisure travel company that offers a wide range of travel-related services, including packaged tours, accommodation reservations, and transportation ticketing. The company operates primarily through its online platform, catering to the growing demand for travel services in China. Tuniu faces competition from other travel service providers and online platforms in the region.
The analysis of Tuniu's financial performance, particularly its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC), reveals some concerns. Tuniu's ROIC is -4.36%, while its WACC is 10.78%, resulting in a ROIC to WACC ratio of -0.40. This negative ratio indicates that Tuniu is not generating returns above its cost of capital, which can be a red flag for investors.
When comparing Tuniu to its peers, Cheetah Mobile Inc. (CMCM) has a ROIC of -13.34% and a WACC of 11.17%, leading to a ROIC to WACC ratio of -1.19. Leju Holdings Limited (LEJU) shows a ROIC of -0.07% and an exceptionally high WACC of 366.63%, resulting in a ROIC to WACC ratio of -0.00019. Both companies, like Tuniu, are struggling to generate returns above their cost of capital.
Xunlei Limited (XNET) stands out among the peers with a positive ROIC of 0.86% and a WACC of 8.95%, resulting in a ROIC to WACC ratio of 0.096. This indicates that Xunlei is the only company in the group generating returns above its cost of capital, suggesting better capital efficiency and potential for growth. Investors may find Xunlei more attractive based on this metric.
Phoenix New Media Limited (FENG) also shows a negative ROIC of -7.19% against a WACC of 6.70%, leading to a ROIC to WACC ratio of -1.07. This further highlights the challenges faced by Tuniu and its peers in achieving profitability above their respective costs of capital. The analysis suggests that Xunlei Limited is currently the most efficient in generating returns relative to its cost of capital.
Tuniu Corporation's Financial Performance and Competitive Analysis
- Tuniu Corporation (NASDAQ:TOUR) is struggling to generate returns above its cost of capital with a ROIC of -4.36% and a WACC of 10.78%.
- Among its peers, Xunlei Limited (XNET) stands out with a positive ROIC to WACC ratio, indicating better capital efficiency and potential for growth.
- The majority of Tuniu's competitors, including Cheetah Mobile Inc. (CMCM) and Phoenix New Media Limited (FENG), also show negative ROIC to WACC ratios, highlighting industry-wide challenges in generating profitable returns.
Tuniu Corporation (NASDAQ:TOUR) is a Chinese online leisure travel company that offers a wide range of travel-related services, including packaged tours, accommodation reservations, and transportation ticketing. The company operates primarily through its online platform, catering to the growing demand for travel services in China. Tuniu faces competition from other travel service providers and online platforms in the region.
The analysis of Tuniu's financial performance, particularly its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC), reveals some concerns. Tuniu's ROIC is -4.36%, while its WACC is 10.78%, resulting in a ROIC to WACC ratio of -0.40. This negative ratio indicates that Tuniu is not generating returns above its cost of capital, which can be a red flag for investors.
When comparing Tuniu to its peers, Cheetah Mobile Inc. (CMCM) has a ROIC of -13.34% and a WACC of 11.17%, leading to a ROIC to WACC ratio of -1.19. Leju Holdings Limited (LEJU) shows a ROIC of -0.07% and an exceptionally high WACC of 366.63%, resulting in a ROIC to WACC ratio of -0.00019. Both companies, like Tuniu, are struggling to generate returns above their cost of capital.
Xunlei Limited (XNET) stands out among the peers with a positive ROIC of 0.86% and a WACC of 8.95%, resulting in a ROIC to WACC ratio of 0.096. This indicates that Xunlei is the only company in the group generating returns above its cost of capital, suggesting better capital efficiency and potential for growth. Investors may find Xunlei more attractive based on this metric.
Phoenix New Media Limited (FENG) also shows a negative ROIC of -7.19% against a WACC of 6.70%, leading to a ROIC to WACC ratio of -1.07. This further highlights the challenges faced by Tuniu and its peers in achieving profitability above their respective costs of capital. The analysis suggests that Xunlei Limited is currently the most efficient in generating returns relative to its cost of capital.
Tuniu Corporation's Financial Efficiency in the Competitive Online Travel Industry
- Tuniu Corporation (NASDAQ:TOUR) has a negative ROIC/WACC ratio, indicating inefficiency in generating returns above its cost of capital.
- Xunlei Limited (NASDAQ:XNET) stands out with a positive ROIC/WACC ratio, showcasing its efficiency in value creation for investors.
- Comparative analysis reveals Tuniu's need for strategic adjustments to improve its financial health and operational efficiency.
Tuniu Corporation (NASDAQ:TOUR) operates in the highly competitive online travel industry, offering a broad range of travel-related services. This sector is known for its tight margins and intense competition, not just from direct peers but also from larger, diversified companies with travel divisions. Understanding the financial health and efficiency of Tuniu Corporation requires a comparison with its closest peers, particularly through metrics like Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). These metrics are vital as they provide insight into how well a company is using its capital to generate returns, a crucial aspect for investors.
Tuniu's ROIC stands at -4.33%, with a WACC of 9.48%, resulting in a ROIC/WACC ratio of -0.457. This negative ratio indicates that Tuniu is currently not generating returns above its cost of capital. In the competitive landscape of online travel agencies, where efficient capital utilization is key to sustaining operations and achieving growth, this places Tuniu at a disadvantage. It suggests that the company is struggling to use its invested capital efficiently to create value, a situation that requires strategic adjustments to improve its financial health.
When compared to its peers, Tuniu's position is somewhat in the middle of the pack. For instance, Xunlei Limited (NASDAQ:XNET) showcases a positive ROIC/WACC ratio of 0.045, the only company among the compared peers to generate a return above its cost of capital. This indicates that Xunlei Limited is more efficient at creating value for its investors, making it a potentially more attractive investment opportunity based on this metric alone. On the other hand, companies like Cheetah Mobile Inc. (NYSE:CMCM) and Phoenix New Media Limited (NYSE:FENG) have even lower ratios than Tuniu, highlighting greater challenges in generating value over their cost of capital.
The analysis of these companies, especially in the context of their ROIC and WACC ratios, is crucial for investors looking to understand which companies are efficiently managing and utilizing their capital to generate returns. While Tuniu Corporation is not at the bottom of the list, its negative ROIC/WACC ratio signals a need for improvement in its operations and financial strategies to enhance its value creation capabilities. This comparison sheds light on the competitive dynamics within the online travel industry and highlights the importance of financial efficiency in sustaining business growth and investor confidence.
Tuniu Corporation's Financial Efficiency in the Competitive Online Travel Industry
- Tuniu Corporation (NASDAQ:TOUR) has a negative ROIC/WACC ratio, indicating inefficiency in generating returns above its cost of capital.
- Xunlei Limited (NASDAQ:XNET) stands out with a positive ROIC/WACC ratio, showcasing its efficiency in value creation for investors.
- Comparative analysis reveals Tuniu's need for strategic adjustments to improve its financial health and operational efficiency.
Tuniu Corporation (NASDAQ:TOUR) operates in the highly competitive online travel industry, offering a broad range of travel-related services. This sector is known for its tight margins and intense competition, not just from direct peers but also from larger, diversified companies with travel divisions. Understanding the financial health and efficiency of Tuniu Corporation requires a comparison with its closest peers, particularly through metrics like Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). These metrics are vital as they provide insight into how well a company is using its capital to generate returns, a crucial aspect for investors.
Tuniu's ROIC stands at -4.33%, with a WACC of 9.48%, resulting in a ROIC/WACC ratio of -0.457. This negative ratio indicates that Tuniu is currently not generating returns above its cost of capital. In the competitive landscape of online travel agencies, where efficient capital utilization is key to sustaining operations and achieving growth, this places Tuniu at a disadvantage. It suggests that the company is struggling to use its invested capital efficiently to create value, a situation that requires strategic adjustments to improve its financial health.
When compared to its peers, Tuniu's position is somewhat in the middle of the pack. For instance, Xunlei Limited (NASDAQ:XNET) showcases a positive ROIC/WACC ratio of 0.045, the only company among the compared peers to generate a return above its cost of capital. This indicates that Xunlei Limited is more efficient at creating value for its investors, making it a potentially more attractive investment opportunity based on this metric alone. On the other hand, companies like Cheetah Mobile Inc. (NYSE:CMCM) and Phoenix New Media Limited (NYSE:FENG) have even lower ratios than Tuniu, highlighting greater challenges in generating value over their cost of capital.
The analysis of these companies, especially in the context of their ROIC and WACC ratios, is crucial for investors looking to understand which companies are efficiently managing and utilizing their capital to generate returns. While Tuniu Corporation is not at the bottom of the list, its negative ROIC/WACC ratio signals a need for improvement in its operations and financial strategies to enhance its value creation capabilities. This comparison sheds light on the competitive dynamics within the online travel industry and highlights the importance of financial efficiency in sustaining business growth and investor confidence.
