Trip.com Group Ltd. Q4 FY2024 earnings call

Key Points - AI Innovation: Focus on AI tools to personalize travel, with Trip.Best, Trip.Trends, etc., and TripGenie saw traffic surge by 200%, browsing time up nearly 100%, and conversations up 200% in 2024. - International Business: International business represented 14% of group revenue in Q4 and 10% in 2024; inbound travel bookings in Q4 and full year 2024 up over 100% y-o-y. - Domestic Travel: 2024 saw 5.6 billion domestic trips in China. - Senior Travel: Launched Old Friends Club for travelers aged 50+, with 10% of user base and 30% higher purchasing power. - Entertainment Plus Travel: Integrated entertainment with travel to cater to younger travelers' demand for experiences like concerts, etc. - Sustainability: Developed country retreats for rural revitalization, elevated MSCI rating to A, and UN Global Compact highlighted retreats as a case study. - Employee Support: Call center staff can work from home during Chinese New Year; global employees with children under 18 get extra paid leave.

In Q4 2024, Trip.com Group's net revenue was RMB 12.7 billion, a 23% year-over-year increase but a 20% quarter-over-quarter decrease. Full year 2024 net revenue was RMB 53.3 billion, up 20% year-over-year. Accommodation reservation revenue in Q4 was RMB 5.2 billion, up 33% y-o-y but down 24% q-o-q; full year accommodation reservation revenue was RMB 21.6 billion, up 25% y-o-y. Transportation ticketing revenue in Q4 was RMB 4.8 billion, up 16% y-o-y but down 15% q-o-q; full year transportation ticketing revenue was RMB 20.3 billion, up 10% y-o-y. Packaged tour revenue in Q4 was RMB 870 million, up 24% y-o-y; full year packaged tour revenue was RMB 4.3 billion, up 38% y-o-y. Corporate travel revenue in Q4 was RMB 702 million, up 11% y-o-y; full year corporate revenue was RMB 2.5 billion, up 11% y-o-y. Adjusted EBITDA in Q4 was RMB 3.0 billion, and full year adjusted EBITDA was RMB 17.1 billion, a 22% year-over-year growth.

Guidance - Board authorized strategic capital return initiatives for 2025, including a share repurchase program of up to USD 400 million and a cash dividend totaling approximately USD 200 million. - Cash dividend of $0.30 per ordinary share and per ADS payable on record as of March 17, 2025. - Focus on overseas business expansion and AI-driven solutions to enhance operational efficiency and drive long-term growth.

Risks - Forward-looking statements involve inherent risks and uncertainties, as outlined in Trip.com Group's public filings with the Securities and Exchange Commission. No specific operational failures discussed in detail in the transcript.

Q: Congratulations on decent first quarter results. With the rise of AI agents and new large language models, how do you think recent exciting developments could impact OTAs like Trip.com?

A: We focus on deploying AI technology throughout operations. AI agents will complement OTAs, not replace them. They may replace traditional search engines as primary traffic entry points, opening new customer acquisition channels. Trip.com provides value with real-time proprietary travel insights and end-to-end service model. We're committed to further investing in AI.

Q: How do you view the current leisure and business travel demand and growth trajectory for 2025? What are the primary drivers of revenue growth?

A: Travel demand is resilient. Domestic travel has young people's enthusiasm and event-plus travel trend. Early retired generation has strong travel demand. Border opening and recovered direct flights are drivers. Will invest in services and products globally, especially in Asian markets outside China.

Q: Your operating margin reached a record high in 2024. How do you expect margin to trend in 2025 and beyond?

A: We don't set specific margin targets. Prioritize overseas expansion and AI-driven solutions to enhance operational efficiency. No structural limitation to profit margins in longer term, supported by innovation, global expansion, and investments.

Q: Could management share updates of performance during Chinese New Year and post-holiday trend, hotel price changes, and 2025 outlook?

A: Chinese New Year travel demand was healthy, travel radius expanded. Post-holiday travel momentum continued. Hotel prices below last year but approaching, supply increased. Anticipate travel demand growth and supplier normalization to stabilize hotel prices in 2025.

Q: Update on outbound flight capacity improvement in 2025, impact of Thailand incident and FX changes on outbound travel, and how to keep outperformance?

A: Outbound flight capacity to recover to over 90% of 2019 level by 2025. Some travelers switched destinations due to Thailand incident. No significant correlation between FX rate and international air price. Keep outperformance by enhancing product offering, service quality, and investing in Trip.com business.

Q: Outlook for Trip.com platform in 2025 and initiatives, and response to competitors?

A: Trip.com platform growing rapidly. Focus on one-stop shopping, excellent user experience, customer service, and AI investment. Focus on internal strengths despite competition, will naturally grow footprint.

Q: Current contribution of inbound travel to business and expected growth rate, and long-term contribution outlook?

A: Inbound travel has great potential. China is starting to promote inbound travel with free visas and extended transit visas. Anticipate inbound travel can contribute significantly to GDP in China over next 5-10 years, with Trip.com well-positioned due to comprehensive inventory and outstanding service.

Q: Dividend payout date for 2025 and update on share buyback, and future capital return programs?

A: Dividend registration date for Hong Kong shareholders on March 21, U.S. shareholders on April 1. 2024 fully executed USD 300 million share repurchase plan. 2025 program includes up to USD 400 million share repurchase and USD 200 million cash dividend. Will remain committed to shareholder returns through sustainable growth and capital return programs.