Trip.com Group Limited Q1 FY2025 earnings call

• The travel industry showed strong growth in 2025 driven by high consumer confidence, resilient demand, and favorable policies. Trip.com benefited from its diversified market presence with a balanced portfolio mitigating risks from regional economic fluctuations.
• Inbound travel became the fastest-growing segment in China, with inbound travel bookings surging ~100% year-over-year in Q1, and South Korea, Thailand, Malaysia, and Indonesia being some of the fastest-growing source markets.
• AI is a cornerstone of the long-term strategy, with TripGenie seeing a ~50% increase in average user session duration and AI chatbots/self-service tools handling over 80% of inquiries.
• International business saw overall travel bookings grow over 60% year-over-year, with APAC as a major growth engine and the mobile platform contributing 70% of international bookings. The joint venture with JTB in Japan strengthened product offerings.
• Inbound travel in China gained strong momentum with inbound arrivals growing 40% year-over-year in Q1 and inbound bookings on the platform up ~100% year-over-year. Outbound travel from China sustained steady growth with cross-border flight capacity recovering to 83% of pre-pandemic level.
• Domestic travel demand remained robust with hotel bookings in China growing double-digit year-over-year. The silver generation market saw 100% year-over-year growth in both Old Friends Club users and GMV. Younger travelers showed strong demand for entertainment plus travel experiences with related revenue up over 400% year-over-year.
• Socially, Trip.com built 34 country retreats to support rural revitalization, launched Global SOS initiative after the Myanmar earthquake, and offered additional paid leave for employees with children under 18.

Trip.com Group's first quarter of 2025 saw net revenue reach RMB13.8 billion, a 16% year-over-year increase. Accommodation reservation revenue was RMB5.5 billion, up 23% year-over-year and 7% quarter-over-quarter. Transportation ticketing revenue was RMB5.4 billion, up 8% year-over-year and 13% quarter-over-quarter. Package tour revenue was RMB947 million, up 7% year-over-year and 9% quarter-over-quarter. Corporate travel revenue was RMB573 million, up 12% year-over-year but down 18% quarter-over-quarter. Adjusted EBITDA was RMB4.2 billion, up 7% year-over-year and 40% quarter-over-quarter. International OTA platform overall travel bookings grew over 60% year-over-year, with the mobile platform contributing 70% of international bookings. Inbound travel bookings on the platform surged ~100% year-over-year, and hotel bookings from key visa-free countries in APAC increased over 240% year-over-year.

• The business outlook is confident with a continued focus on innovation, customer experience, and operational excellence to navigate dynamic economic environments and capture future growth opportunities.
• Expect to continue benefiting from strong travel demand momentum in the second quarter and推进 various strategic initiatives.

Potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission, and the company does not undertake any obligation to update forward-looking statements except as required under applicable law.

Q: Could you share your perspective on how vertical AI agents compare to general AI agents within the travel industry and how you envision the future development of these technologies?

A: Vertical AI agents excel at providing real-time proprietary travel data and integrating products/services to enhance the travel experience, while general agents offer broader information but rely on vertical OTAs to complete bookings. AI plays a crucial role in Trip.com's development roadmap. We've introduced AI tools like TripGenie and Trip.Best and will continue to enhance them based on user feedback and technological advancements to be the most efficient and reliable one-stop travel service platform.

Q: Could management provide some color about your performance during the Labor Day holiday and the quarter-to-date?

A: We are very pleased with our very strong performance during the Labor Day holiday. Our domestic hotel bookings increased by over 20% compared to last year. And cross-border bookings saw a growth of around 30%, in which inbound bookings surged by approximately 150% year-over-year. The domestic air prices have increased year-over-year, and domestic hotel prices are nearing last year's level, both demonstrating significant improvement since the first quarter.

Q: Can you provide some color about your performance during the Labor Day holiday and the quarter-to-date?

A: Thank you, Yang. We are very pleased with our very strong performance during the Labor Day holiday. Our domestic hotel bookings increased by over 20% compared to last year. And cross-border bookings saw a growth of around 30%, in which inbound bookings surged by approximately 150% year-over-year. The domestic air prices have increased year-over-year, and domestic hotel prices are nearing last year's level, both demonstrating significant improvement since the first quarter.

Q: Could management provide some color about your performance during the Labor Day holiday and the quarter-to-date?

A: Thank you, Yang. We are very pleased with our very strong performance during the Labor Day holiday. Our domestic hotel bookings increased by over 20% compared to last year. And cross-border bookings saw a growth of around 30%, in which inbound bookings surged by approximately 150% year-over-year. The domestic air prices have increased year-over-year, and domestic hotel prices are nearing last year's level, both demonstrating significant improvement since the first quarter.

Q: Can you provide some color about your performance during the Labor Day holiday and the quarter-to-date?

A: Thank you, Yang. We are very pleased with our very strong performance during the Labor Day holiday. Our domestic hotel bookings increased by over 20% compared to last year. And cross-border bookings saw a growth of around 30%, in which inbound bookings surged by approximately 150% year-over-year. The domestic air prices have increased year-over-year, and domestic hotel prices are nearing last year's level, both demonstrating significant improvement since the first quarter.

Q: Could you provide some insights and more detailed colors into the first quarter performance, both operationally and also financially?

A: In the first quarter, Trip.com achieved a very strong growth despite a challenging comparison base with overall bookings increased by more than 60% year-over-year. APAC remains our top priority for the operations, marketing and growth driver. We are also expanding and growing rapidly in new markets such as the Middle East, which helped to diversify our market portfolio and strengthen our global presence. As Trip.com continues to scale, our service and personnel-related cost efficiency is also improving. Our marketing ROI remain aligned with our requirements despite a slightly higher marketing ratio due to the intensified efforts.

Q: Could you please share in which areas are we allocating more resources in international business and what kind of strategies have proven to be more successful or less effective that needs improvement? And also what's the plan ahead for this year?

A: Our product offerings and customer services are highly competitive, especially in Asia, helping us to intensify our marketing efforts in this region. We leverage all the marketing channels that meet our ROI requirements with direct app user acquisition proving most effective for the longer-term growth. In the first quarter, our native mobile app accounted for approximately 70% of our orders with even stronger performance in the APAC region. Additionally, we have launched multiple campaigns to boost our brand awareness, both online and offline, in the key Asian markets. Overall, we prioritize marketing ROI and maintain flexibility in our strategies. Our campaigns are currently delivering the desired outcomes with a rapid increase in our direct user and cross-selling opportunities, which is expected to further enhance our long-term marketing efficiency.

Q: How shall we see like which markets will lead in terms of bringing the underlying profit to your existing portfolio?

A: When we established our strategy, we focus on a couple of areas. First of all, we offer one-stop shopping platform, which gives consumers a comprehensive product offering. Therefore, if a customer is making their hotel reservation or flight reservation, we immediately will use AI to recommend, attach the services, which they need during their trip. And so far, that works very conveniently for our travelers. The second thing is our excellent customer services. We are very proud of our service team. The service level is, quote, very high at global level. At any time, if you want to call our call center, our team is always there for our customers timely to address any questions they might have. Thirdly is the app usage is excellent. Because Asia is a very active community. So we developed the design that is very well established for app users. And we will continuously put these efforts in. And as we increase our volume, our competitiveness in pricing and coverage also is enhanced. So these are the strengths we have seen when we extend our services from China to Asia and to the rest of the world.

Q: Could you help update us on the current revenue contribution of the inbound business?

A: Sure. I will highlight it on the policy level as well as what we have been so far as our team to strengthen the attractiveness of our products. At the policy level, more than 40 countries are given free visa. That makes the inbound travel much, much easier. On top of it, the policy also extended to in-transit visa from three days in-transit period to 10 days for in-transit travelers. That also makes business travelers much easier to travel inbound. So we are very encouraged to see the change in policy. The second thing is as the leading player in domestic market, we have the best coverage of all inventories with the most competitive pricing. And we also can cross-sell different products when consumers come to visit inbound. So we have seen a strong momentum for inbound travel. And we're very glad we delivered three digits growth, again, in Q1. We'll keep up with the strong momentum going forward.

Q: How should we think about the full year outlook on sales and marketing expense?

A: The sequential decrease in the marketing cost ratio was primarily due to seasonal shifts in China. As previously mentioned, our marketing investments are highly focused on ROI tailored to individual markets and different type of channels. We adjust our marketing investment in real time based on changing marketing conditions. Although our investment adhere to ROI criteria, variations in market and channel mixes can cause fluctuations in overall marketing expenses ratio. In the short term, we will continue to enhance our overall marketing investment as planned. Each quarter, the marketing ratio may fluctuate due to seasonality and the varying mix of different markets. In the longer-term period, we aim to improve marketing efficiencies by increasing direct mobile traffic, enhancing cross-selling opportunities as well as strengthening our customer loyalty on our platform.

Q: Could you provide an update on your capital return program and whether we should expect you would step up to buy more shares per quarter in the coming quarters?

A: Yes. We will step up with our efforts. For 2025, we have already given $200 million cash dividends to our shareholders. And so far, we have bought back about $85 million shares, and we'll continue with our efforts to buy back more shares when the market gives us more opportunities. Our board of directors has approved the total amount to be about $600 million. So there is still room for us to purchase back our shares. In addition to that, we also proposed to our shareholders to buy back shares in Hong Kong market. Upon approval, that will also increase our quota for buying back shares. Our commitment for capital return is firm. We will give our shareholders the opportunity on both cash dividends as well as stock buyback.