Trip.com Group Limited Price & Performance (TCOM)

After the prepared remarks, we will have a Q and A session. With that, will turn the call over to Gin. James, please.

Thank you, Michelle. And thanks, everyone, for joining us on this call today Over the past year, the travel market has proven to be resilient with people's desire to explore the world and create unforgettable experiences growing strong Consumers Increasingly prioritizing experiences that bring joy and fulfillment over material goods, In 2024, our core OTA businesses achieved achieved a GMV of over RMB1.2 trillion or $169,000,000,000 At trip.comgroup, we focus on AI innovation as one of our key priorities. Our suite of AI tools is designed to make travel more accessible and personalized From the planning phase, we inspire users with tailored recommendations and exclusive deals. Trip Best curates, top rated hotels, restaurants, and activities based on millions of user reviews. Trip trends, trip deals, and trip events dynamically adjust in real time to reflect the latest traveler preferences. Itinerary helps users generate travel plans with interactive routes and daily overviews which can be easily shared with friends and family. User can also rely on Trip Genie for seamless assistance via voice and text commands in multiple languages throughout their journey. Additionally, they receive intelligent updates for hotels, airport transfers, and activities according to their existing itinerary In 2024, Trip Genie saw traffic surge by 200%, browsing time increased by nearly 100%, and the total number of conversations rise by 200%.

Our international business continues to to show robust growth representing 14% of group revenue in Q4 and ten percent in 2024. We are also committed to promoting inbound travel as it fosters cultural exchange and creates job opportunities Every new visitor creates a ripple effect across industry [indiscernible] reinforcing the travel ecosystem by investing in initiatives to position our country as an attractive destination We contribute to sustainable growth that benefits the sector in the long term. Our commitment to rural revitalization a key part of our sustainability initiatives. By developing country retreats in rural areas we support local economies by creating jobs, and fostering small businesses by incorporating renewable energy sustainable construction practices, and eco friendly materials, we aim to make our retreats green and sustainable. Helping to safeguard the planet for future generations. Looking ahead, we're excited about the opportunities in the evolving travel market we remain committed to driving innovation and enhancing the traveler experience and we look forward to another year of and success alongside our partners. With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. As a quick overview, our net revenue in Q4 grew by 23% year over year, reflecting the continued strength of travel demand. For the full year of 2024, our total net revenue saw a year over year growth of 20%. Outbound travel continues to show robust growth, maintaining the positive momentum we observed in previous quarters. The easing of Visa application processes and the increasing availability of international flights have further fueled this upward trajectory. In Q4, the industry level cross border flight capacity reached over 80% of the pre pandemic level.

Concurrently, our outbound hotel and air ticket bookings have recovered more than 120% compared to 2019, consistently outperform the industry by 30 to 40%. In 2024, China saw a remarkable surge in domestic travel. With 5,600,000,000 trips taken this growth highlights travel's increasingly essential role in Chinese daily lives.

As the sector becomes an economic cornerstone, initiatives such as consumption vouchers are expected to further stimulate travel spending and fuel domestic travel. China's inbound travel sector is emerging as a key driver of [indiscernible] and cultural vibrancy. The extension of the transit visa to two forty hours and the expansion of visa free arrangements have led to a remarkable surge in international arrivals. Official data shows that in 2024, Visa applications rose by 20% year over year, and Visa free entry percent from the previous year. This influx is fueled by strong demand from diverse source markets. In Q4 and full year of 2024, inbound travel bookings on our platforms increased year over year with those from visa free countries rising by over 150%.

In response, Trip.com Trip.com introduced free city tours for international travelers four. In December, we launched a complimentary half day Beijing tour offering free shuttle transfers, multilingual guided commentary Attraction tickets, and WiFi.

Travelers can sign up for the tour at the Terminal 3 of Beijing Capital International Airport. To date, travelers from nearly 50 countries, including Australia, The United Kingdom, Germany, France, and Singapore have participated. With its rich cultural heritage, stunning landscapes and favorable travel policies, China's inbound travel market holds immense potential. As global connectivity strengthens, China is well positioned to become one of the world's most cost effective and safe tourist destinations. On the international front, we have strengthened our presence in key APAC markets and successfully expanded into new regions. By leveraging our one stop shop model, high quality service and advanced mobile technology, we have significantly increased our global reach. OTA platform grew by over 70% year over year, with APAC bookings rising by around 80%. To build on this momentum, we are making strategic investments in technology and talent acquisition. Our 16 global call centers solidify our commitment to maintaining high service standards worldwide. Our workforce has also grown, to include thousands of travel professionals across 28 countries. With consistently improving customer service, and a global customer satisfaction rate of nearly 90%, Trip.com has earned multiple accolades, including contact center of the year and global support services of the year at the International Customer Relations Excellence Awards.

As well as Asia's leading online travel agency 2024 at the World Travel Awards. These recognitions underscore our commitment to putting customers first Offering 20 fourseven global support and service to international travelers at every stage of their journey. Active and healthy seniors projected in the coming years, the senior travel market is poised to RMB in value. In early twenty twenty four, we launched the o Friends Club initiative to cater to travelers aged 50 and above who now represent 10% of our user base, and have 30% higher purchasing power than average. We offer excellent value for money to customers and help suppliers balance demand during off peak seasons creating a win win solution. Currently, users can choose from over 7,000 travel products across more than 50 trending destinations on our Old Friends Club channel, featuring boutique hotels, hot springs, cruises, and more. We plan to expand our selection to meet growing demands. In addition to serving the silver generation, we are excited about trends among younger travelers. Their increased travel spending is evident in the growing demand for experiences such as live concerts, music festivals, exhibitions, and sporting events. Which integrate entertainment with travel, providing young travelers with unique opportunities for dynamic, culture rich experiences.

Through this initiative, we aim to satisfy their desire for [indiscernible] social connection, and immersive experiences beyond traditional tourism. Committed to serving diverse traveler with innovative offerings, we align our business practices with a broader sense of purpose. Beyond developing country retreats to create jobs and support local economies, We are dedicated to establishing a comprehensive development framework for the industry, ensuring long term ecological and social benefits. These efforts elevated our MSCI rating by two levels to an A and the United Nations Global Compact highlighted also support our employees with various measures. Calls staff can work from home during Chinese New Year to enjoy family reunions. Additionally, we provide global employees with children 18 and extra three days of paid leave to balance family and career. These initiatives have strengthened our reputation as an exemplary employer earning us numerous best employer awards for our inclusive and nurturing workplace culture. In conclusion, the market outlook is promising with significant growth potential. We are well positioned to deliver high quality travel services globally and remain dedicated to forging partnership within the travel ecosystem. Together, we aim to achieve mutual success and make a meaningful contribution to the economy. With that, I will now turn the call over to Thanks, Jane.

For the fourth quarter of twenty twenty four, Trip.comGroup reported a net revenue of RMB12.7 billion, representing a 23% increase from the same period last year. And a 20% decrease from the previous quarter. For the full year of 2024, net revenue was RMB53.3 billion, representing a 20% increase year over year. This is primarily due to the resilient travel demand and consumption throughout the year. Accommodation reservation revenue for the fourth quarter We RMB5.2 billion, representing a 33% increase year over year and a 24% decrease quarter over quarter. We have observed robust growth across our domestic out bound and international segments for the full year of 2024, accommodation reservation revenue was 21,600,000,000.0 RMB representing a 25% increase year over year. Transportation ticketing revenue for the fourth quarter was 4,800,000,000.0 RMB representing a 16% increase year over year and a 15% decrease quarter over quarter.

Our domestic and outbound air bookings continue to exceed market growth. While our international air business also demonstrates strong expansion for the full year of 2024. Transportation ticketing revenue was 20,300,000,000.0 RMB, representing a 10% increase year over year. Packaged tour revenue for the fourth quarter was $870,000,000 RMB representing a 24% increase year over year and a 44% decrease quarter over quarter. The year over year growth was mainly driven by international business, which has increased by around 100%. For the full year of 2024, packaged tour revenue was RMB4.3 billion, representing a 38% increase year over year. Corporate travel revenue for the fourth quarter was RMB702 million, representing an 11% increase year over year and a 7% increase quarter over quarter. This was driven by more companies adopting our managed corporate travel services, for the full year of 2024, corporate revenue was 2,500,000,000.0 RMB representing an 11% increase year over year. Excluding share based comp compensation charges, adjusted product development expenses for the fourth quarter increased by 18% year over year. Adjusted G and A expenses for the fourth quarter increased by 24% year over year. These are mainly due to increase in personnel related expenses. For the full year of 2024, the combined total of adjusted product development expenses and adjusted G and A expenses increased by 8% year over year.

Adjusted For the fourth quarter, remained flattish compared to the previous quarter and increased by 45% from the same period last year. For the full year of 2024, adjusted sales and marketing expenses as percentage of net revenue was 22% compared to 20% last year. The increase was primarily driven by enhanced marketing efforts. Particularly focused on strengthening our global business and brand awareness. Adjusted EBITDA was RMB3.0 billion for the fourth quarter. Compared with 2,900,000,000.0 RMB in the same period last year and RMB5.7 billion in the previous quarter. For the full year of 2024, adjusted EBITDA was 17,100,000,000.0 RMB representing a growth of 22% year over year. Diluted earnings per ordinary share and per ADS were RMB3.09 or $0.42 for the fourth quarter of twenty twenty four, excluding share based compensation charges and fair value changes of equity securities investments and exchangeable senior notes long GAAP diluted earnings per ordinary share and per ADS were 4 point 0.35 RMB or 0.6 for the fourth quarter.

For the full year of 2024, diluted earnings per ordinary share and per ADS were RMB24.78 or US3.39 dollars Excluding share based compensation share and per ADS were RMB26.20. Or US3.59 dollars As of December 31, 2024, the balance of cash and cash equivalents, restricted cash, short term investment, held to maturity time deposit and financial product. Was RMB90 billion or 12,300,000,000.0 US dollars. As part of our ongoing commitment to delivering value to our shareholders and in line with our regular capital return policy, the Board of Directors has recently authorized the implementation of strategic capital return initiatives for 2025. These initiatives will include a share repurchase program of up to $400,000,000 and a cash dividend totaling $200,000,000 the cash dividend will be US0.30 dollars per ordinary share and per ADS payable to holders of ordinary shares and ADS of record. As of 03/17/2025. Dividends to holders of ordinary shares are expected to be paid on or around March 27, 2025 and dividends to holders of ADS are expected to be paid on or around 04/04/2025. We believe these initiatives reflect our strong financial position and our continued focus on delivering attractive returns to shareholders.

Conclusion, the continued strength across key business segments underscores our ability to execute effectively and adapt to market dynamics as we advance into 2025, our enhanced capital return reaffirms our commitment to delivering value to our shareholders. We remain confident in our strategic direction and are dedicated to fostering sustainable growth and long term success. With that operator, please open the line for Thank you. Our first question is going to come from the line of Brian Gung with Citi. Your line is open. Please go ahead. Good morning, James, James, Cynthia and Michelle. Congrats Congratulations on this in the fourth quarter results.

I have a very quick question on recent With the rise of AI agents and the new large language models, could management share your thoughts? I mean, how do you think all recent development could impact OTASelectTrip.com. Thank you.

Thank you for your We focus on the deployment of AI technology throughout our business operations New AI models present great potential to enhance our services by making travel planning more personalized and efficient. We believe AI agents will not replace OJ's Instead, they will complement us. They are likely to replace traditional search engines as primary entry points for traffic opening new customer acquisition channels for OTAs Trip.com provides value that AI alone cannot replicate particularly in two areas: Firstly, our extensive real time proprietary travel insights are key to delivering accurate and personalized travel recommendations. Secondly, our end to end service. Model and open platform approach enable us to offer competitive service standards and pricing tailored to diverse customer preferences We recognize the vast potential of AI in the travel industry and are committed to furthering our investment in this field. We are eager to introduce more user friendly and valuable features in the future.

And our next question comes from the line of Alex Yao with JPMorgan. Your line is open. Please go ahead. Thank you management for taking my question.

So my question is how do you view the current leisure and business travel demand how do you view the growth trajectory for 2025? And lastly, what are the primary drivers that's going to support the revenue growth?

Thank you.

Thank you, Alex. We have seen how industry is very resilient, particularly after COVID is over, the surge of the travel demand is really strong. In particular, there are a couple of segments we're targeting in The first one is domestic travel market. We have seen young people have shown great enthusiasm travel around the world to visit different sites And event plus travel is really a trend for young people. The secondary traveling force is for the early retired generation is a generation which has money is energetic, and is very curious to explore the world. So we have special package for silver generation. The third driving force is the further opening up of the borders. We have seen many countries offer [indiscernible] to Chinese travelers So that gives another engine for us to bring people around the world. And we also see the recovery of direct flights based on the official APAC, by the end of this year, direct flights will recover to approximately 90% to 95% of pre COVID level So all these factors give us very strong [indiscernible] for the travel industry's growth And going forward, for the next three to five years, we'll make strong investment to further provide excellent services and comprehensive products for our customers around the world.

If you look at Asian market, it's about 150% compared to the China market. So it's huge potential. Our results have shown as we grow in the Asian market outside of China at a rate of more than 80% year over year. So we'll keep up with the strong investment to make sure we offer services for the global customers. Thank you. Thank you. One moment as we move on to our next question. Next question comes from the line of Ying Liu with Morgan Stanley. Your line is open. Please go ahead.

Question over the past decades. How do you expect the margin to trend in 2025 and beyond? Thank you.

Yes, we actually never set a specific margin target. Instead, we consider margin as a natural outcome of a dynamic business mix and continuous improvement in our operational efficiency across each business unit.

In the near term, we will continue to prioritize our overseas business expansion which are strategic essential for unlocking significant long growth opportunities. As well Additionally, we are also very excited about the [indiscernible] potential of AI driven solutions which will play a key role in enhancing our enhancing [indiscernible] operational efficiency streamlining our operations and mitigating cost pressures over time. In the longer term period, we see no structural limitations to our profit margins. It could be comparable to those of our international peers. Supported by our innovative strategy global expansion as well as forward looking investments. Thank you. Thank you. One moment as we move on to our next question. Our next question comes from the line of Joyce Jewett Bank of America. Your line is open. Please go ahead. Good morning, James. James, Ying, Cindy and Michelle, congrats for the strong results and thanks for taking my question. My question is recent business trend related. Could management share updates of your performance during the Chinese New Year? And post holiday trend with us? How did hotel price such as ADR or take rate trends recently? What is the outlook for '25. Appreciate any colors. Thank you. During the Chinese New Year, we observed several encouraging trends.

The old first lates the overall travel demand remained very healthy Many travelers choose to leave earlier or return late to avoid peak traffic. Resulting in a more even distribution of demand during and around official public holiday, And second, Travelers is ended their travel radius to more distant destinations. Partly thanks to the longer period of the public holiday period. With cross border trips being particularly popular, despite headwinds in certain areas. And our outbound travel booking increased by over 20% year over year. While inbound travel maintained triple digit growth.

During the Chinese New Year holidays.

After the holiday, what we observed is the travel activities maintained a healthy momentum. Thank you. [indiscernible] Sorry, for the hotel prices, and outlook for the 2025 the industry data shows that [indiscernible] still below last year's level. But they're gradually approaching them. The hotel supply increased by mid to high single digit percentage year over year.

Reflecting continued market confidence in the travel industry And we believe the ongoing improvement the travel infrastructure will further benefit the industry in the longer term period. And looking ahead to the year 2025, we anticipate that the growing travel demand and normalizing supplier growth was stabilized the hotel price. Thank you. Thank you. Thank you. One moment as we move on to our next question. And our next question comes from the line of Wei Shen with UBS. Good morning, management. Thank you for taking my question. And congrats on the very good growth this quarter. My question is about the outbound travel. So could you please update on the outlook for outbound flight capacity improvement this year? Have we seen any impact on outbound travel demand from the recent incident in Thailand? Also the higher prices due to FX changes. Also for our group, our outbound travel growth have consistently been outperforming the industry. How do we keep this outperformance going forward? Thank you.

Thank you. Our all box flight capacity reached over 80% of twenty nineteen's level in the fourth quarter and increased further during the Chinese New Year holiday.

And according to the CAAC, total international flight capacity could recover to more than 90% by 2025.

Indicating a double digit year over year growth. Despite cat wings in certain major destinations, our total outbound booking grew by 20% to 30% during the Chinese New Year holiday. We believe that some travelers Just simply switched their destinations And with regard to the impact from ForEx changes, as far as today, there is with no significant we see no significant correlation between the forest rate and international enterprise so far. For the continuous outperformed industry growth, what we focus is just by continuously enhancing our product our product offering as well as the service quality. And with the continuous investment in the Trip.com business, we are able to further enhancing our international product off offerings. To some extent, it will also benefit and fuel our growth for the outbound business. Travel. Thank you.

Thank you.

Our next question is going to come from the line of Simon Chung with Goldman Sachs. Your line is open. Please go ahead.

Hi. Thanks for taking my question and also the presentations. Just one quick question on the follow-up on the Trip.com platform. Notice that you have accelerated growth over 70% in the fourth quarter. Wondering what is the outlook for 2025 and what are some of the initiatives that you are planning to do? I remember that you did mention now you have coverage of over, I think 30 countries globally, for example. And then secondly, I think whether you have starting to see some response from some of your local competitor or even some of the global competitor like our Golden Booking? Thanks for that. Thank you.

Yes. So for the chip.com business, it's growing very rapidly. I think we focus on our internal strength which includes providing one stop shopping platform, which makes travel very convenient for our travelers. Secondly, the user's experience is excellent. And thirdly, we also focus to provide focus on providing excellent customer service to the global customers. And lastly, we also invest heavily in AI So with all these concerted efforts, we have seen very promising growth going forward. We'll keep up with our efforts. Travel is very robust industry. So ever since Trip.com was established, we have seen competition from different players. But our focus has always been [indiscernible] to provide the best service and best product for our customers and naturally our footprint will grow. Thank you.

Thank you.

Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Jack Juwon with Mizuho Securities. Your line is open. Please go ahead.

Great. This is James Lee of Mizuho. On A quick question on inbound travel in general. It sounds like you had you guys are off to a great start. Just curious what the current business And what is sort of expected growth rate going forward? And maybe big picture question over longer term several years from now, how should we think about the level of contribution for inbound travel? Thank you so much.

Yes, inbound travel has great potential. Globally, if you look at the countries, which are attacks lots of inbound customers, it can inbound travel can contribute anywhere between 2% to even 10% of their GDP depending on different countries. For China, we just started the inbound travel we have given more than 40 countries free visa We also extended in transit visa from three days to ten days that makes the inbound travel very convenient.

Last year, we invited more than 2,000 global partners to Shanghai for summit. And after that, we chartered four planes to take them from Shanghai to Zhangjiajiajia, where the movie Avatar was filmed.

And the feedback we got was very positive. All the people told us that they were very pleasantly surprised what they have seen It's a very clean [indiscernible] people are very friendly. The history is very rich. And the infrastructure is excellent. So we can see as long as we put concerted efforts to promote inbound travel, it can become Trip.com dollars contribution for this industry. And cryptopay is very well positioned because our inventory is the most comprehensive service is outstanding. So we would like to work more friends from all over the world to come and visit us. So this is a very promising field. For us to make our investment going forward in the next five to ten years.

Great. Thank you so much.

Thank you.

Thanks.

Thank you. Our next question is going to come from the line of Jian Shao with Barclays. Your line is open. Please go ahead.

Thank you very much for taking my question. I'm glad you talked about the enhanced capital return program.

For '25 earlier. I was just wondering, could you firstly remind us when is the dividend payout date? For that $200,000,000 and for your $400,000,000 buyback this year? Any updates so far Have you bought any shares back?

Could you also remind us sort of what's beyond this year if you have announced any other program beyond 2025. Thank you so much.

Dividend registration date For the Hong Kong shareholder is on the March 21, '27, sorry. And The U. S. Shareholders the registration date is on the [indiscernible] In the year 2024, we fully executed US300 million dollars share repurchase which reduced approximately 1% of our outstanding shares. And for the year 2025, the Board of Directors authorized a new capital return program and this include a share repurchase program of up to US400 million dollars and a cash dividend totaling approximately 200,000,000 effectively doubling the size of our 2024 capital return [indiscernible] And looking ahead, we will remain committed to increase our shareholder returns through sustainable business growth while also actively seeking opportunities to further enhance the values through our capital return program.

Thank you very much.

Thank you. And I would like to hand the conference back over to Mr. Chi for closing remarks. Thank you.

Thank you, 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 first quarter twenty twenty five earnings call. Have a good day. Thank you. Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.