Tuniu Corp. Q3 FY2024 earnings call

• Revenues and profit continued to grow in Q3, with GAAP net income reaching a record high since listing and net income for the first three quarters exceeding RMB100 million.
• Market demonstrated robust demand in Q3, especially for outbound travel with double-digit year-over-year growth in transaction volume of outbound products.
• Focus on creating differentiated products and services to meet diversified customer demand, including strengthening in-house product development, optimizing product lines, and collaborating with third-party suppliers.
• Optimized in-house product line, with new tool products maintaining high customer satisfaction rates, and new tour products customized for specific customer segments.
• Launched new select products in response to travel trends, embraced live streaming for promotion with significant growth in payment and verification volumes from live streaming shows.
• Expanded offline stores, collaborated with traffic platforms, and partnered with tourism bureaus of several countries to boost business.
• Focused on service quality, maintaining customer engagements, promoting non-volume policy for flight tickets, and displaying product satisfaction ratings on the website.

In the third quarter of 2024, net revenues were RMB186 million, a year-over-year increase of 4%. Packaged tours revenue was RMB159.3 million, up 6% year-over-year, accounting for 86% of total net revenue. Other revenues were RMB26.7 million, down 5% year-over-year, accounting for 14% of total net revenues. Gross profit was RMB121.8 million, up 6% year-over-year. Operating expenses were RMB92.6 million, up 11% year-over-year. Research and product development expenses were RMB13.6 million, down 26% year-over-year. Sales and marketing expenses were RMB60.6 million, up 53% year-over-year. General and administrative expenses were RMB18.6 million, down 31% year-over-year. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB44.4 million in the third quarter, and non-GAAP net income was RMB46.6 million.

• For the fourth quarter of 2024, the company expects net revenues to be RMB100 million to RMB105 million, representing a 0% to 5% increase year-over-year.
• Q4 is off-season for tourism, so revenues will drop compared to the previous quarter due to seasonality, with low single-digit year-over-year growth expected for total revenues.
• Outlook for next year: Tourism industry to maintain steady growth; new holiday policy encourages travel; demand for travel continues to grow post-pandemic; domestic market demand diversified; outbound travel to continue growth momentum with regional differences in recovery.

Q: Congratulations on another profit quarter. My questions are about the outlook for the fourth quarter. Could you please share the reasons for the slowdown of revenue growth and any guidance on the bottom line? Also, can you share some insights on next year's market for both domestic and outbound tours?

A: Fourth quarter is off season for tourism. Revenues will drop compared to last quarter due to seasonality. On a year-over-year basis, we expect low single-digit growth for our total revenues. For domestic market, the two main themes for winter travel are ice and snow tourism and heading for the storm. In the North, the ice and snow period tourism was very hot last year and has continued its popularity this year. But for the purpose of avoiding the crude weather, people have more choices this winter. Over the definitions were fully opened since the fourth quarter of 2023. And this winter, there are more products launched for popular destinations, such as Southeast Asia and Australia. Together with favorable visa policy in some Southeast Asia countries, traveling abroad can be as convenient as domestic tours. Generally speaking, last year was comparatively high base for both domestic and outbound tours due to the release of pent-up demand. For the bottom line, we don't give any specific guidance as revenues declined due to seasonality in the fourth quarter, limitations in scale effects will lead to lower profit for the period. However, since we have already achieved non-GAAP profitability for six consecutive quarters, we will try our best to keep the momentum. For the next year, the tourism industry will maintain steady growth. Also the launch of new holiday policy in November, we further encourage travel, especially air travel during certain holidays. From the demand side, we see continued growth after the pandemic. Travelling is become mean part of the life of more and more people regardless of their ages and locations. For example, we have many silver generation VIP guests. We cover a lot with Tuniu new tours. They have more 3x and disposable income to enjoy travel. Also, with the widespread popularity of live streaming shows and short videos travelers from lower-tier cities have increased their bookings through Internet. Many of them were broad for the first time and be a very promising growth for upbound travels. With the emergence of more transportation hub, we may bring more travelers from lower-tier cities to overseas destinations. For domestic market, customer needs become more diversified. We need to provide products relied in destinations, itinerary activities, group sizes and prices to catch different customer growth. This trend may continue in the coming year and we are already -- we are always prepared to launch new products and services. For outbound travel, it will continue its growth momentum, but the recovery will rise from region to region, depending on the resuming of airlines and the supply chains. For example, Southeast Asia recovers faster this year, while North America is behind. Therefore, we see chances for growth of long distance outbound travel next year.