Tuniu Corp. Q1 FY2025 earnings call

• Core business maintained steady growth with packaged tour revenues up 19% y-o-y. Domestic travel had consistent growth, outbound tours had double-digit y-o-y growth in transaction volume despite some Southeast Asian headwinds.
• Adopted proactive strategies: leveraged differentiated products and high-quality services to attract premium customers and increase repurchase rate; capitalized on supply chain advantages to reduce procurement costs; remained committed to open collaboration; embraced AI technologies to enhance customer experience and operational efficiency.
• Product strategies: differentiated and high-quality products are core advantages; expanded destinations and product offerings, e.g., New Tour's first tour to Caucasus region with 100% satisfaction; introduced new select products to attract price-sensitive travelers, with transaction volume up over 80% q-o-q in first quarter.
• Sales channels: live streaming channels had strong growth, contribution to total transaction volume increased from 10% to over 15%; expanded offline stores to nearly 300; developed other sales channels like traffic platforms and corporate clients.
• Technology: launched self-developed travel AI agent Xiao Niu, providing one-stop services, and observed increased user engagement during Labor Day holiday.

For the first quarter of 2025, net revenues were RMB 117.5 million, representing a year-over-year increase of 9%. Revenues from packaged tours were up 19% year-over-year to RMB 99 million, accounting for 84% of total net revenues. Other revenues were RMB 18.5 million, down 26% year-over-year, accounting for 16% of total net revenues. Gross profit was RMB 69.3 million, down 15% year-over-year. Operating expenses were RMB 80.1 million, up 15% year-over-year. Research and product development expenses were RMB 14.5 million, up 12% year-over-year. Sales and marketing expenses were RMB 43.2 million, up 17% year-over-year. General and administrative expenses were RMB 22.8 million, up 11% year-over-year. Net loss attributable to ordinary shareholders was RMB 4.7 million. Non-GAAP net income was RMB 0.8 million. As of March 31, 2025, cash and equivalents etc. were RMB 1.2 billion. For the second quarter of 2025, net revenues are expected to be RMB 131 million to RMB 136.8 million, representing a 12% to 17% year-over-year increase.

• Second quarter of 2025 net revenues expected to be RMB 131 million to RMB 136.8 million, representing a 12% to 17% year-over-year increase.
• This forecast reflects current and preliminary view on industry and operations, subject to change.

Q: Please give more color on why and how the company offers more competitively priced products in the first quarter and how the price strategy impacts revenues and profits; also ask about the outlook for the second quarter and if it will be profitable.

A: First, quality is priority, diversifying price range to attract different customers. Competitively priced products attract new and lower-tier city customers and enhance repurchase. Consolidated supply chain via centralized direct procurement to lower costs, used tech including AI for product pricing. Increased supply of new select products. Competitively priced products help attract more customers and increase GMV. Gross profit ratio will be lower this year but will control internal costs and try to achieve profitability in second quarter