Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tongcheng Travel Holdings Ltd (FRA:TEM, Financial) reported a net revenue of RMB4.2 billion for Q2 2024, representing a 48% increase from the same period in 2023.
- The company's air ticketing business achieved nearly 20% year-over-year growth, outperforming the industry average.
- International air ticketing volume grew by more than 150% year-over-year, indicating strong international expansion.
- The company's standalone app saw significant growth, with daily active users hitting historical highs during the Mayday holiday.
- Tongcheng Travel Holdings Ltd (FRA:TEM) achieved a solid adjusted net profit of RMB657 million, with an improved net profit margin of 15.5%.
Negative Points
- The company faced challenges due to adverse weather conditions, such as extreme heat and rainstorms, affecting travel demand.
- There is concern about potential slowdown in travel demand in the third quarter due to a high base from the previous year.
- The GMV growth slowed down in Q2, lagging behind the revenue growth for the core OTA business.
- Despite strong international growth, the international business still accounts for less than 5% of core OTA revenue.
- The company is investing heavily in international expansion, which may impact margins in the short term.
Q & A Highlights
Q: What are your observations for the third quarter, and will your full-year guidance remain unchanged given potential slowdowns?
A: Lei Fan, CFO: In July and August, we observed solid growth in the domestic travel market despite adverse weather conditions. Our business outperformed the industry, particularly in air ticketing. We expect a noticeable reduction in expenses and an increase in net margin for Q3, potentially exceeding pre-COVID levels. We remain optimistic about balancing growth and profitability.
Q: How do you plan to manage overseas expansion without impacting margins significantly?
A: Joyce Li, Chief Capital Officer: We have achieved fast growth in international business, focusing on efficiency and competitive pricing. We aim to minimize margin impact and believe our international business will eventually achieve better margins than domestic operations once mature.
Q: What are your expectations for core OTA growth and changes in travel behavior amid macro headwinds?
A: Lei Fan, CFO: We remain optimistic about China's travel market despite recent pressures. Our focus is on gaining market share and maintaining flexible operations to adapt to changes. We aim for sustainable development by balancing growth and profitability.
Q: Can you provide insights into the progress and impact of your self-developed app on the core OTA business?
A: Joyce Li, Chief Capital Officer: Our standalone app has shown significant growth, especially among high-frequency travelers. We are expanding partnerships with mobile vendors and investing in brand promotion. The app is expected to be a strong driver for future user base and revenue growth.
Q: What measures are you taking to protect margins amid macroeconomic challenges?
A: Lei Fan, CFO: We are optimizing sales and marketing investments and reducing headcount to improve ROI. Our focus is on efficiency and profitability, expecting higher margins in the second half of the year compared to previous periods.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
