Trip.com Group Limited (TCOM) Earnings

Management highlights

- Inbound Travel Growth & Strategy * Set an ambitious long-term target to serve 200 million inbound travelers to China over the next 5 years; served 7 million inbound travelers in Q1 2026 alone, following 20 million total inbound travelers in 2025. * Engaged over 110,000 local partners in inbound-related services in Q1 2026, with 14,000 partners receiving their first ever overseas orders via the Trip.com platform. * Collaborate with 29 high-potential destinations to develop integrated, culture-focused travel experiences, such as the 'Taste of China' initiative, and market China as an attractive destination via global transit hub promotions, airline partnerships, and international content creator collaborations. * Key enabling policy tailwinds include expanded visa-free access for over 80 countries, 10-day free in-transit treatment for non-visa-free travelers, and new support for foreign credit cards on Alipay and WeChat Pay. - Artificial Intelligence Strategy * Developing and deploying an internal suite of AI agents to break down language barriers, improve content quality, enhance service responsiveness, and reduce operational burden for both travelers and supply partners; automated tools also generate rich marketing content like videos for suppliers. * Pursues a two-pillar strategy: strengthen in-house AI to improve user experience (including natural language and voice search for complex travel queries) and drive internal operational efficiency; open platform access to third-party AI agents via APIs, MCPs and native integrations to embed Trip.com's travel capabilities across leading AI ecosystems. * Aims to become the trusted travel infrastructure for AI agents, making Trip.com inventory, pricing, and transaction capabilities available wherever travelers start their planning. - Domestic Travel & Niche Segment Initiatives * Domestic travel saw strong seasonal demand during the Spring Festival holiday, with continued momentum for short-distance travel driven by demand for accessible, high-quality local experiences. * Silver Generation (senior traveler) initiatives gained traction: Q1 gross bookings for the Old Friends Club increased over 100% YoY, with combined offline and AI-powered digital tools to improve accessibility for senior travelers, and off-season travel promotion to boost partner capacity utilization. * Entertainment-driven travel grew 74% YoY in Q1, with global events (sports, concerts, cultural festivals) acting as strong catalysts for cross-regional and inbound travel. * Product innovation toward customized, small-group travel: domestic small group travel orders grew 27% YoY, with 55% higher per capita spending and 11% longer stays compared to traditional large group tours, supporting 50,000 travel-related jobs. - International Business Performance * International OTA platform gross bookings grew approximately 65% YoY in Q1 2026, with broad-based demand across APAC, Europe, and the U.S. Inbound travel gross bookings grew 90% YoY, with Europe and the U.S. now accounting for 25% of total inbound traffic, and Asia remaining the largest source market. * Expanding connected mobility offerings (airport express, transfers, bus services) to meet growing demand for integrated travel experiences beyond flights and hotels, and strengthening local digital infrastructure across key international markets.

Guidance

- For Q2 2026, management expects net revenue growth of 3-8% year over year, a moderation from the exceptionally strong growth recorded in Q1 2026. - The slower projected growth reflects multiple factors: rising energy prices and geopolitical tensions have pushed up airfares, reduced airline capacity, and caused disruptions on certain long-haul international routes; domestic air travel demand has softened as consumers adjust to higher prices, with travelers shifting trip choices and destinations. - The guidance also incorporates expected near-term headwinds from proactive compliance-related product adjustments across certain business lines, including adjustments to train ticketing value-added services per new regulatory guidance. - Inbound travel remains one of the company's strongest growth segments, driven by APAC source markets, though short booking windows result in limited visibility, so management maintained a prudent overall outlook. - For full-year 2026, the company remains optimistic about long-term global travel opportunities, with planned focused expansion in the APAC market, disciplined ROI-focused investment in other international markets, and continued strategic investment in AI, inbound travel, and global brand expansion balanced with near-term cost discipline.

Segment performance

Trip.com Group's Q1 2026 total net revenue is RMB 16.2 billion, representing a 17% year-over-year increase. Breakdown by segment: 1) Accommodation reservation: RMB 6.5 billion in revenue, up 17% YoY, accounting for 40.1% of total net revenue, driven by steady growth in international hotel bookings. 2) Transportation ticketing: RMB 6.1 billion in revenue, up 12% YoY, accounting for 37.7% of total net revenue, supported by global expansion and strong demand for international air and ground transportation solutions. 3) Packaged tour: RMB 1.1 billion in revenue, up 19% YoY, accounting for 6.8% of total net revenue, driven by expansion of international offerings and strong demand for small, customized tours aligned with shifting traveler preferences. 4) Corporate travel: RMB 690 million in revenue, up 20% YoY, accounting for 4.3% of total net revenue, reflecting continued penetration of managed corporate travel services among corporate clients. Adjusted EBITDA for the quarter is RMB 4.8 billion, up from RMB 4.2 billion in Q1 2025. Total core OTA gross bookings hit approximately RMB 300 billion for the quarter.

Risks & headwinds

- Geopolitical tensions and rising energy prices have driven higher airfares, tighter airline capacity, and route disruptions, particularly for long-haul international travel, creating demand fluctuations across travel corridors. - Evolving regulatory and compliance requirements in China have created short-term operational and financial pressure, with ongoing compliance adjustments expected to create near-term headwinds for certain business lines. - New regulatory guidance on train ticketing practices requires changes to existing value-added services, creating near-term financial headwinds that are already incorporated into the Q2 2026 guidance. - An ongoing regulatory review of the company's business creates uncertainty around timeline and potential outcomes, though the company is proactively cooperating and updating internal practices to align with new requirements. - AI-driven changes to travel discovery and planning create competitive pressure from new AI-native platforms, requiring ongoing investment to maintain market position. - Macroeconomic volatility across key international markets may create periodic fluctuations in travel demand.

Analyst Q&A

• Q: What is Trip.com's long-term positioning and investment plan for AI, and how will it leverage its vertical strengths to compete as AI agents change travel discovery? /

  A: Management notes AI improves travel planning but will not replace specialized travel platforms, as travel requires reliable execution that depends on decades-built infrastructure for real-time inventory, supply connectivity, and global service. The strategy has two pillars: strengthening in-house AI to improve user experience (adding natural language/voice search for complex queries) and drive internal efficiency, and integrating with external AI ecosystems to embed Trip.com's supply in leading AI platforms. The goal is to be positioned to deliver trusted execution wherever travel planning starts.

• Q: What key initiatives will support Trip.com's 5-year target of 200 million inbound travelers, and how do these enable international growth? /

  A: Favorable policy changes (expanded visa-free access, foreign credit card support for local payment apps) have created strong tailwinds for inbound growth. Key initiatives include inviting 1,000+ international KOLs to visit China and share authentic experiences on social media, offering 24/7 multi-language customer support for international travelers, onboarding 110,000+ local suppliers (14,000 first-time inbound suppliers) to expand available product, and offering a one-stop platform for all travel needs. These efforts have already driven 7 million inbound travelers in Q1 2026, building on 20 million total in 2025.

• Q: How would you characterize the current competitive landscape for China OTAs, including the impact of regulation and new AI-driven platforms? /

  A: Management states the domestic OTA market remains structurally rational, with competition centered on service quality, supply coverage, and user experience rather than aggressive pricing. New compliance requirements for platform governance and transparent pricing are supported by management, and while they create short-term pressure, they are seen as long-term market normalization. AI-native platforms are changing discovery, but travel remains a complex, service-intensive category where supply integration, reliable fulfillment, and after-sales service are critical core strengths. These dynamics reinforce the value of large, trusted OTAs like Trip.com.

• Q: What is the potential financial impact of new regulatory guidance on train ticketing value-added services? /

  A: Trip.com supports the new guidance and is aligning operations with requirements. While train ticketing remains an important user acquisition channel, its direct contribution to overall revenue has declined significantly as the business has diversified across accommodation and international travel. Optimization of related value-added services will create some near-term headwinds, but these impacts are already incorporated into the Q2 2026 guidance. Over the long term, the company's diversified business mix and efficiency gains will support resilient profitability.