Q4 2019 Earnings Call
Thank you for standing boy and welcome to the trip Dot Com group. Once you know I'm, saying Q4 earnings conference call.
All participants are in listen only mode.
There will be a presentation, followed by a question and answer session.
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Oh no attending the conference I'd Love to showcase senior IR Director. Please go ahead.
Thank you Ben Thank you everyone. Good morning, welcome to trees don't come could you tell Nike Inc. Q4, and full year earnings conference call.
He today on the call our Mr., Jim Young Chief Executive Chairman of the Board Makena. Some change Executive Officer, I mean, if something one chief financial Officer.
In this call.
So the future although 10 for someone can you talk forward looking statements made on those favorable conditions. Yeah. Why these securities Litigation Reform Act like Nike side.
<unk> looking statements involve inherent risks and uncertainties I such always help maybe material at this one just on the views expressed today.
A number of central region, and uncertainties are aligned interest <unk> public filings with the Securities Exchange Commission.
They'll come so that's not enter take any obligation to update any forward looking statements, except as required under applicable.
Jim Jim I'm Sandeep or shared with you guys gave an update operating highlights and financial performance the fourth quarter and so you like to southern My kids.
Well the outlook for the first quarter I'm 2020.
I'm trying to prepare remarks, we will have an adjoining session.
I will turn the call back to Ken's JMP.
Thank you Michelle Thank you have [noise].
Yes on the call today.
Well, that's you know what's the walnut they've yet.
He celebrated 28 and I'd love to do you branding.
Thank you it sounds good looking back yeah.
This solid performance in talking to some.
Okay.
Total operating income increased to 94% yield would you ever reach you.
All these bodies feeling non-GAAP operating margin was <unk>.
Well it reached HM.
Hello My.
I'll begin my favorites like 2%.
Well I don't fight.
Well, let you know pockets.
We continue to moderate station told decided without Hughes rigorous exclusion.
Then last year across lots its yesterday.
In China, Oh, before then but it's the multiples of of course is well placed against the industry [noise].
Being particularly strong because it will go and see it fits into the city.
Outside of China.
Oh sure itself I'm glad that made solid progress entering new markets.
Gaining market share.
Hey, Texas region.
Have you ended 2019.
Hi, good stocks always operating.
So lucky that's according to plan languages.
For the full year 2019, Oh Gee brands achieved total GMB.
[music].
Oh, RMB 800 hospitals, well, yes, the under the plenty capacity.
Why people can you over you.
I'd like to check out came against the delivered excellent results like if we end up against it.
But you know 2000 and play.
That's a challenging for the travel industry worldwide due to the novel.
So one of those.
Yes, you outgoing well south of millions of cancellations during Chinese new year.
It was down to travel it seems to be after the holiday.
Yeah, we thought we were encouraged.
See I suppose that's less than 10 months has allowed us to China and then you should accelerate.
And that's been traveling securities.
Well it was the first thing they must reach the response to the pandemic instead of something.
It's actually measures, including please God population density policies and I'll talk to us it calls for what.
That's the outbreaks evolved over time.
You have expanded all the I'm teaching food, that's actually the tough somewhat worldwide.
We're extremely proud of how Kim.
For me.
For what they were able to achieve during this especially outside.
So what's the over the holidays.
After hours in order to handle the sub bike.
Uh huh.
I'd like to thank all fall team well, that's top quality services and that first and as John I guess, you pack is calling about Oh, it's not so much and now the company.
The third a illustrates our belief that people all most important methods.
And the retailing and multi leading talent will always be a top Bobby.
During this period.
Let's see the makes up the most crisis.
Oh, the timely and professional services.
I believe because some of this no [noise].
Translates into long term and do you mentioned that attention.
Which will support all sustainable growth.
Sure.
You also sincerely appreciate the support from all Bobby hardness and no set as much as.
Manage through this difficult period, along with a partner.
Well, let you provided [laughter] travel services I'm supposed to be caught us to once this outbreak.
Okay.
Lots the Mt Milligan licensees, Ohio sporadically.
Healthcare professionals all of the world.
Which have been fighting tirelessly to keep their goal is placed during the crisis.
I'm pleased to announce doesn't company, so nice one minute surgical masks.
Second countries worldwide.
Well provide LDR keep benefits.
Yeah, we will work closely to see China.
[noise], it's five years sometimes.
We believe these back some of the novel going about this is what everyone else we remain confident.
Well, the long term prospects as opposed to travel industry and all business fundamentals.
In hospice decades.
Travel industry has wouldn't let.
Listen Global Health crisis, each time global travel demand pool.
They are adding to the bottom is generally oh, yes.
[laughter], that's what some family.
Yeah, So yes catastrophe.
And that's the travel starts to pick up.
China continues on its path to recover.
But of course, they feel all I'm not.
And then also met its policies are building well measures to bolster the coverage tourism industry.
Now they.
Traveling that's become a necessity for more and more people in China and abroad. We believe the tone of I, let us know since it's a healthy fundamentals of China's travel market.
Well it sounded like does not show called the television and online penetration into local city [noise].
Similarly for international markets, we believe that underlying travel demand to remain promising.
And we expect to see strong recovery. It wasn't outbreak is get hot.
With that I'll tell you James Gordon Kinda [noise].
[noise]. Thank you James Good morning, everyone I would like to stock wake up quick recap off the last quarter Oftwenty 19.
Despite the market hopping around to the certain destinations that glad to see chip Dotcom group, they make a solid execution our strategies.
First what domestic travel market.
We continue to extend our market share, especially in politics second and it's good picky.
We can't compete so more than 60% of features you can't.
And hotels and the transportation products.
I have proven to be effective gateway products from new customers.
He took a blended no one hotel <unk>, Alex 60% year over year for both core pets.
In addition, I will also I still continue to actually thought all sidewalk cool strategy to increase I will influence in the low tier cities.
In the markets wherever you enjoy a clear evidence suggests we have seen working to further improve service quality.
Yes, I think.
I welcome Patrick opinion.
For example over 50000 hotels has agreed to provide outstanding benefit.
Well I watch transportation cross sell customers.
[laughter] boutique hotels, I see significant incremental volume through the program.
Second for the album problematic.
Let me try not off on destinations continued to be impacted.
Hi, Naco how does it.
Well I, either so close even faster pace.
In Q4 revenue growth for hotels.
Excluding great trying a destination reached 51% year over year.
For a while always comes from.
Skyscanner make additional pro progress increasing its delectable convention.
[laughter] Dotcom Brent recorded.
I'm not that strong quarter with triple digits Yep Yep gross.
International Air ticketing bother.
[noise] as James mentioned that they can often take home pay.
Wrapping challenges with the outbreak Oh, that's probably not pilot.
However, the strong operational efficiency and financial resources, we have field over the years.
Appeared to us well four times like this.
To date.
Tens of millions of travel or they have been canceled due to the outbreak.
Good morning over 41 billion RMB C.G.N. charts.
The company was the first an industry knowledge.
I'd now like I said, Oh customer protection measures.
Initial outlook.
We subsequently extended to become a most comprehensive [noise].
Providing strong boxes for our customers.
I will say spark cancellation telling to policy.
Customers in China.
Well it was able to cabo due to the troubled with fiction Oh I can look like.
Well I suppose.
Work, so hard at the medical sometimes.
The fight against the combined with.
The outbreak off the virus.
It's unfortunate.
It's an unfortunate gulfport the vitamin that have attracted many families and their lives.
Lastly, and interactive.
We still have indeed, it's our responsibility pact affected the customized.
It's about Oh, sorry about that maybe.
The company well pick one time, Simon <unk> cost as its out.
But we believe it's the right thing for us to do well, a customer's wallet industry and policyholders in a long way.
I can make it because the goodwill was delivering long lasting sustainable growth on the road.
Yes, I would like spend a minute to think about team for their contribution they went to special time.
Whether it's the most Oh I'm sorry.
Customer service team worked tirelessly they any Mike [laughter], our customers with changes in bankable pen.
Many of them sacrifice, a holiday and worked for extended hours, so I'll customers.
Good to see well taken care off as quickly as possible.
New record and my asphalt well reach.
Rich I extremely appreciative, which we are extremely appreciative and product.
During the Chinese new year, even though he called Baldwin with over 10 times.
All right getting less capacity.
Our customer satisfaction rate increase significantly.
Yeah addition, our technology and product. She also responded with great.
Well able to launch Oh consideration for thought to quantify par that's what's your policies issued.
It's great to have shortened the waiting time for our customers.
Approximately 90% of accommodation and transportation cancellations are priced well sell to compete on line.
So to speak immune responses reflect its troops dot com.
Hi, late dedication to service quality, especially during that time I'll speak for our customers.
We also what they like to sink our most valued hotel airlines and other trouble promise for their time that assistance during this difficult situation.
It's up to now more than 1 million global hotels have joined us for safe cancellation guaranteed initiative and over 110 domestic and international Airlines have agreed to provide a freak information for qualified to products.
In response to help our customers C. Diff Healy Oh economic hardship.
We also announced effect I feel I need to make a damper again.
These include [noise].
[noise] campaign, and marketing existence for participating hotels, Nawaf safeguards cancellation, Kevin key initiatives.
Could you, maybe any reducing marketing cost and offering additional camping these folks as.
Weighting of non refundable calls that package.
Suppliers.
Hi, good feeling to go into cancellation.
[noise] capitalization, so a lot mortality and other cobbled suppliers, including one building on these funds and the loans assistant program, which I was thinking partners.
And to over to some extent free online courses. So a lot depends on there.
In two weeks ago, we launched tourism, we need the advisable do plan.
Any sense for Victoria's secret contributed over 1 billion RMB, Oh resources to work with over more than 100 local destinations probably around industry partners and other organizations to prepare for the comfortably in China.
And we had two and deep interest coverage for [noise].
Internally, we have taken this opportunity to attend our myself.
[laughter] our core competencies.
In order to prepare for the business is probably once the virus is content.
Right, yeah, combining through products and services more details to improve our experience I.
Our customer satisfaction rate I pick a record high de Pops Tonight.
We are confident that.
Improved customer satisfaction rate will translate into longtime customer retention and investment.
Second.
Yeah right.
Streamlining and optimizing our operating processes.
Yes in technology and data prep for them to improve our infrastructure.
Correct, he will speed up our global Ization off the prospects and backend technology infrastructure in order to bring both sets of products and services troubled global users.
As we have started to see early signs of recovery in China, a virus continues to spread we.
Let's see quench decline in travel activities in the overseas market.
Therefore, we are preparing for domestic industry, we bombed why also getting ready for a prolonged battle against a potential weak international demand.
Actually break out we are executing on the ways to considering resources and adopting to the challenges along for the world.
Last week, we announced that senior management team well take one into it picks.
Up to 50% with James Tonight, taking share, it's zero salary and true with a situation improves.
We believe every challenge grains with an opportunity why the diverse present a challenge for the entire world. We also get out myself the opportunity to show our skin and extend our leadership.
The strong financial deserves to weather the storm, we will continue to elevate our services product technology and the Brent.
Together, we talk about employees and valued partners.
Not only overcome the challenge, but also beat their recovery off the travel industry [noise] hockey in China.
With that I know, what kind of cool <unk> CFO seem to.
Hi, Thanks.
I think [noise].
Okay, all flunking nicely trip they'll call group reported net revenue RMB 8.3 billion [noise].
Let's take them to a 10% T cell. The same theory is twice the 18.
It's like.
Right so.
Oh, that's exactly shows such as Hong Kong and Taiwan, We've delivered solid performance in other destinations.
Let's get the multiples off our kids business gross race against the industry [noise].
For the full year ended December 31st 29 too.
Net revenue was RMB 35.7 billion, representing a 15% decrease so I'm 28 to [noise].
[noise] accommodation reservation revenues for the fourth quarter of 29 to what I would be suite C. N O U.S. dollar 426 million.
Let's get into a 12% CP Sambasafety Buick see 28 two.
[noise] during the fourth quarter loan and hotels sustained strong do not gross well the field trip grant.
Reaching around 50% he all year.
It has become one not the most important getaways.
Yes to acquire new users.
What to expect.
The effectiveness of our dynamic pricing strategies.
In the domestic mid to high end hotel segment.
We also saw accelerated growth momentum [laughter] [noise].
We have raised our can pocketed melt as an increasing portion of mid to high and hotels joined our trip plus programs.
And accommodation plus transportation benefit package program.
Provided an extra discounts to enter users.
While gaining incremental wall [noise].
The recent macro and industry halfway through the bathroom shows such as Hong Kong has put pressure on related travel going down and hotel crisis.
However, it other overseas no great trying to destinations.
Glad to see hotel revenue growth over 50% young [noise].
The fourth quarter.
For the full year ended December 31st 29 to accommodate your rather they show wrapping it was RMB 13.5 billion or U.S. dollar 1.9 billion.
Representing a 17% increased from 22.
Transportation ticketing revenue for the fourth quarter of 29 to what's RMB 3.5 billion.
Our U.S. dollar 498 million.
Represented a 2% increase from the thank you Eric in 28 Q.
[noise] happening in certain international destinations continued to put pressure on a related to travel demand and prices in the fourth quarter.
It's hard to staff nations.
Gross rates for both domestic and international Air tickets business achieved higher multiples against the industry.
[laughter] Dot com, Brad recorded another strong quarter of triple digits Young adult International Air ticketing volume.
For the full year ended December 31st 20, My Kids Transportation ticketing revenue was RMB, four 2 billion or U.S. dollar 2 billion [noise].
[laughter] them too and 8% increased from 28 years.
Packaged tour revenues for the fourth quarter of 29 to what are the 800 million or U.S. dollar 150 million.
Representing an 11% increase from the same period in clunky 18.
For the full year ended December 31st 29 to.
Packaged tour revenues are the RMB 4.5 billion a U.S. dollar.
651 million.
Representing a 20% increase from 28 pm.
[noise] I'd ended the year [laughter] felt Congress passed around 8000, all flight French high so he operation in the pipeline.
Covering over 290 for sexual level cities.
And over 500 country level cities.
Oh I took the Mike the tore platform attracted more than 1800 to travel planning agencies.
6000 scanners.
So everything that is off customers.
[noise] My travels haven't deal for the fourth quarter up 29 to what I'd be swim hundred 73 million or U.S. dollar 54 million.
Representing a 33.
That concludes Thunder. Thank you it in 28 years.
Corporate travel saw sequential growth acceleration in the fourth quarter, primarily driven by fashion in corporate customer base and that optimize the product mix trend.
Oh for year ended December 31st to 29 to corporate travel Rapidio with I'd be telephone suite fit in our U.S. dollar 180 million.
Representing a 28% increase from 28 years.
Revenues for other business increased by 42% you all year in the fourth quarter of 29 should it certainly is like I said.
For the full year 29.
This was primarily driven by strong growth in all advertisement and financial service [noise].
[noise] well actually I was 79% for the fourth quarter of 20, Nike consistent with that what has changed here in 2018.
The previous quarter.
For the full year ended December 31st a 20 Nike.
Gross margin was 79% compared to 80% is 28 P.M. [noise].
Product development expenses for the fourth quarter I don't see nice decreased by one, yes, yes, yes, and five 3% quarter over quarter.
Cost saving you probably get how long enough [laughter] afterwards, if stream lining up operating process improving efficiency across brands entity in the past here.
For the full year ended December said, it's worth 2019.
Got it out on the extensive increased the by 11%.
So I was 28 T.
Excluding share based compensation charges non-GAAP product development expenses for the full year 20, Nike accounted for 27% off the match revenue compared to 28% It was 2018.
Sales and marketing expenses for the fourth quarter of 29 to decrease the by 5% you all year and remains consistent with those for the previous quarter.
Well the full year ended December 31st Taunting Nike.
So it's a market theres has decreased by 3%.
2018.
Excluding share based compensation charges, non-GAAP sales and marketing expenses accounted for 26% off the match what happened which decreased the fell 70% 80 2080.
But he pretty T cells and marketing expenses was due to the continue I like your than Maki strategies.
Decided our main brian's maintaining stable traffic flow consistent amount of new customers.
It's likely to continue or improvement in marketing efficiency.
Version and cross sell ratio also increase this that at least next to be enhanced the competitiveness of products and services.
[noise] DNA expenses for the fourth quarter of 29 to increased by 5%, Yeah with year end five 5% quarter over quarter.
I'd now many due to an increase in a January personnel related expenses.
For the full year ended December 31st to 29 too.
Yeah, they upstairs it increased by 17% from 28 team.
Excluding share based compensation charges non-GAAP DNA offensive accounted for 7% off the natural rapidly which remains consistent with 28.
The headcount what can they stop was largely stable throughout the year.
Excluding share based compensation charges.
Non-GAAP operating margin was 12% for the fourth quarter off 29 shoes.
Compared to 3% in the same period in 28 years.
For the full year ended December 31st 20, My cheat non-GAAP operating margin was 19% compared to 14% in 28 cheap.
Hi, looted earning per adss.
[laughter] RMB 3.2 suite, a U.S. dollar 46 cents for the fourth quarter of 29 team.
It's quota share based compensation charges and fair value changes of equity security investments.
Non-GAAP diluted earnings per Ats War I'm, the 1.9 full our U.S. dollar 28 cents for the fourth quarter of 29 should.
What a four year ended December 31st the taunting Nike.
Hi, looted urban Craig Yes, Laurie.
Hi, and he 11.5.
Are you I start a 1.65.
Excluding share based compensation charges and fair value changes, so how could be security [noise].
Non-GAAP diluted earnings per 80, yes, what's RMB 10.75, all you I thought a one point.
Four or five.
Hi, self December 31st 29 team [noise] data itself cash and cash equivalents restricted cash shocked the investment how to maturity time deposits in financial caught up was RMB 59.9 billion or U.S. dollar eight point.
6 billion.
Now turning to their first quarter of Twentytwenty.
Original outlook exactly accumulation, often momenta last year, which includes the stage topline growth.
Got it translate into lower tier cities over to eat food expansion and margin improvement [noise].
No what they're likely to see January booking up to the Twentys grew at double digits yell, yes.
Obviously, the development of the Corona virus has seen close to significant disruption in China and the global travel industry.
Does for the first quarter of Twentytwenty, but how can they currently expect not too happy to decreased by 45.
250% Yeah yeah.
Excluding share based compensation.
Including a one time expenses related to all customer protection measures, especially during the Chinese new year holidays.
The company expects non-GAAP operating Max Ross.
What we eat a range false I'd be 1.75 billion to RMB 1.85 billion [noise].
[noise] its full cost reflects tripped off all the group's <unk> current and preliminary view, which is subject to change.
The increase the uncertainty due to the Colorado virus outbreak further restricted our visibility we will continue to monitor the market and provide more color to investors in time.
Is that we will open up for Kelly operator city.
Thank you.
I wish to ask a question. Please press star one on your telephone and white feeling that to be announced if you wish to cancel your request. Please press star too.
So on a speakerphone, please pick up the handset to off your questions.
Please limit questions to analysts aren't ladies and to rejoin the queue. If you wish to ask a follow up question.
Your first question comes from Ronald Kim of Goldman Sachs. Please go ahead.
Thank you James Jane Cindy on the show and out there for the very useful sharing my question would be all more on the demand side on the MCO Sargent somebody assumption that you talked about domestic travel may recover faster than international just could you share your strategies and priorities during these.
Todd.
And is any forward booking trends that you could actually she has helped us a gauge how how things are going up because it's part Becky.
[noise], Yeah, we are reasonably optimistic about the recovery.
Domestic travel a and b and in big cities like Shanghai They are there.
The government because the.
Removed some of the restriction so.
Oh no.
Okay then.
That's true.
And other.
Businesses Yeah.
For example, requiring worrying about probably would be just limited to.
Certain types of businesses and Ah we received many requests its own governments a tourist destinations true.
[laughter] help them to promote their travel products and.
I'm going to it or.
Trips to food deflation sooner so destinations.
But you do this coming weekend.
It looks like the interest is very strong and the government is really the next phase just there.
The tax will be shoot.
Accelerate their recovery the overall economy.
So.
Lets says the.
I'm not the outbreaks or.
Something I expected.
[noise].
The containment efforts.
I think given the general trends given the trends you're seeing today that we expect a very quick.
And strong recovery of the domestic travel Oh.
And so we certainly in the there is good because it seems to capture that demand.
So with only four wheel quite often must feel about the Mets travel.
Thank you.
Your next question comes from Thomas Chong of Jefferies. Please go ahead.
Hi, Good morning, Thank you all to King.
Our comments about.
But what do you know.
Using a into pick wage.
Each accommodation and air ticketing domestic and international travel and you seem to want as well.
But going into two to a and this morning.
I might also be Russian Oh.
Oh.
Operating expenses, given the fact that Oh, yeah phasing out the cool.
[laughter].
We are seeing.
Couple of meat and bone masterpiece amid a while I'm.
I wouldn't read that still something.
Going long or how should we think about powers, our spending and the margin outlook into two <unk> and beyond and just what do you get caught up would be great. Thank you.
Sure.
I tried it wouldn't have seen yes, I see shape.
So the first two he served as a means of January the volume growth for us, it's very strong as Cindy said, it's more than 20% email. They look really both sort them out to tick and outbound and international places, but Pat when the virus shifts a little bit setting a travel in snow.
Oh Wow in many places so we saw a decline are doing a stocking from the Chinese new year and it lasted for the past two nights I see the train is Ah the left side of things in shape. However, as something now we already see a positive there.
Properly in the China domestic travel business, we saw airlines, a head count and also the travel destination I put to break out there.
True the team on the business. So at the beginning a they were only very few airlines, taking specific calamos within China now we have seen more than 50% off the airlines a long time machine.
And then we saw that beginning the price because it's very cheap I, because I think eight a business partners wants to make sure seamless have confidence for the recovery I'm now the prices can comment.
Not to the fuel price yet, but it's on Oh, good claimed to coming up so.
We as James said I think are we have got lots topped with pasta from all over the country for the cobbled bureaus I try to participate.
Oh tweaking the Bible do you plan on these things still victory so everyone wants to put the Apple attracted to customers. So I like spectator. She is a for the people living in big cities. They probably would have thought with hobble nearby city by taking one day tool.
We can tool and gradually it can't be expand into oh trips to find yeah on some popular travel destinations. So what we have Dan first before is to initiate the leadership endeavor with my work plan onboard then a 100 take a destination has.
Participated in good plan by giving more than 50%.
Oh, 80% discount so the customers tend pre purchase not top products. The reaction from the market if family strong and the reaction from our partners families trial. So we are hopeful that we've become so to the assets by the government to continue yesterday.
Content the virus weve the continuous efforts by our troops dot com and I won't be seems palmer well be able to bring to demand a true I want. This is Tom is different the travel destinations in China.
And so regarding the cost to side.
It's coding onetime expenses related to our customer protection, Washington, especially during the Chinese new year, a rather than non-GAAP.
Operating expenses in the first quarter off it's back to decrease the 15 too.
25 cents.
Yeah, well, yes, Ah actually a large portion Oh well for example, the cost US a service as well as Maki expenses.
Ah either variable costs, all surely distraction caused us to test performance based marketing expenses. So these two items accounts for more than half all that's helpful announced that [noise].
Operating expenses.
Thank you.
Next question comes from Binnie Wong of HSBC. Please go ahead.
Hi, Good morning management, and that's just fall wish everyone, a safe and healthy I'm just times Oh. So a quick question here is that actually been slower top line you see we aren't the areas that you think don't in fashion or you're spending can be optimized steps to protect your margins in this quarter or.
May be in first half of that yeah, and then second one on you'll be customer reach a good news that you see the coverage side can you just comment on in terms of what's it like hotel Air maybe there's something when you think did because there's such a more visible and do things like solace is because when you look at the trough so try.
I'd say the answers injuries to treat cause he just it used to shop <unk> right beauty is a realistic unforeseen shows Vicki.
I think your opinion or maybe I will provide the awfully south <unk> each.
They take blotting, so the growth rates offset each business line atom tickets give you a sense.
Eight uplift Ctwo hundred 20 are we in fact accommodation reservation revenues to decrease 60% to 65% young yet and trust that he showed activation to decrease about 35% to 40% young yes, a packaged tour business Oh well be please.
About 50% to 60% yeah yeah.
With corporate travel business to decrease about 50% to 60% yeah. Yeah, a asks that Jay I mentioned earlier.
See they never solid double digit growth in the January up to the Twentys booking volumes. Okay. So commodity quickly talk to a about 10% to 20% of free there, yes level, a feeling to holiday and the following a week's across products estimate.
Ah in recent weeks. So we have observed a smaller response to over 30% of previous years level in the domestic transportation.
That's true up that with certain asking for the accommodation activity [noise].
The restriction for packaged tour business is still not yet in the state and corporate travel activities remain remain quite weak.
I saw an overseas business continue well continue to because they just by the evolving offering that situation.
Bought [noise].
Therefore, a actually it's very difficult for us to provide a reliable prediction of sort of for example, the second quarter or the food here due to the fast seems more central September mix situation and related death.
Travel restrictions.
But in general as sections and Jamie I say, it's really it's back to domestic accommodation and transportation to continue.
On track to watch it sounds like some comments level.
A while the I'll buy international a amazed week I'm truly maybe global situation improves.
Oh.
We think it's quite simple except outbreak test.
Oh, well, that's what I can take five December for most of which as you know won't a they tend to cautiously optimistic about does recover in the second half.
Oh gosh, a whole I'll just life such that if the outbreak extends into all Tonight, you know nature, when maybe looking at a four year impact given the.
Seasonality.
We will monitor the situation and stuff uptake out.
[noise] top holiday Ah basis.
Despite this and they have been challenges I said, James they sent out we believe that impact will be one off and we remain a vote of confidence for the long term, how fast those to travel industry and that our business fundamentals [noise].
I like upside yes.
On a qualified to ask why explains a lot portion at all costs and service and the marketing expenses either variable cost hall truly the slashing costs. So it's a low cap that Q1.
At cost to stuff. If you look have to call that you've done a lot of backhaul taking expenses. Excluding one time expenses related to that have come up here measurement actually our cost to walk down about 15% to 20%. He how you.
Thank you [laughter] they need.
Thank you so how salt.
Thank you.
The next question comes from Alex turn from Morgan Stanley. Please go ahead.
Hi management first before you wish everyone. Good health and Spacers and my question is about the opportunities in future. So the virus has just the fear damage to the travel industry. So can you give us an assessment of the whole tourism value chain upside.
Dream downstream, what's your better infrastructure, we source or a market leadership fuel recovery V plan et cetera, we ought to be opportunities do you think you can stream from your most in future and gain market share. For example, you mentioned about mid to high instruct hotel segment.
And how about the notes to make star hotels.
Also dish or we're never going back to normal or is it possible to grow even grow faster than before with the angelakis, you're getting over the spirit I get very much.
Thank you Alex Oh, we are very positive about the.
The flows in a long time for travel industry are doing this time, we'd have to spend a couple things mainly from suite friends first the fall to paint the hearts that from our customers doing to most to try to do time, a when the virus schick when they travel ban was installed a day.
Come to us asking for help and afterwards, the moment, we really put to customers' interest a in the center of our business a lot Tech team I worked overnight to launch products that allows our customers true also came so they are older our customer service.
He wants to stay in a night 24 hour some stop although the volume increased to 10 times. So as I said in the in the opening comments or the customer satisfaction rate. They didn't it's challenging time reached all time high so we believe the investment.
We put in the customer service and technology and infrastructure will benefit us in along with it and it helps us to accelerate a lot of technology products as well as the infrastructure I am quick enough frontline and so I want to parliament actually with accelerate.
During this challenging time.
The second thing is always so there's some trouble PAMA is Ah I know the occupancy to fit the pills.
I think the loading rate. The airlines is I know I suppose you listen call a promise and Bailey work clinic them to come up and we stay where they plan on that.
Well, it's in the Bible discipline was going to exit.
Hi industry players and feature.
The too and so we.
Ask them to come together with nobody to products by keeping a very good deals to the customers and our customers like April two parties for these customers afford these products. So it's a win win win situation, where oh. Upon this will be able to capture some castro doing this.
Challenging time, but our customers who will also kept very good deals.
If they happen to be down organs.
And certainly if I want to even doing disparaging. They were trying to time I like he is highly motivated picked up so we want to make sure I'm going to work. We will works really hard we talk about global team to make sure Oh, He spent together with our customers.
Thomas together onto a need to topics for recovery stocky from China, and so trying to market.
They markets overseas I enjoyed a different stage of the V shape. So try now we already see a bottom up a week, it's actually been bashes fight the commitment a we expect all we can be started recovery after tomasic travel market.
Would it be the next few months for the market outside of China, I think it down starting the process I take you care off the cancellation picking here all the customers need we already see the somebody like Tween C.
Korea, and Japan, South Korea, Japan is stabilizing and so we are confident about a week experience we accumulated a in the China market, we will be able to help unlock a liberal customers well Oh. So during this time that'd be good for us to take.
The responsibility to help our global customers. So we exchanged Sag you have told me T. I wasn't really in a masks to the country that's badly impacted.
Hi, good smiling.
I think could not when they are we will take care Austin's. He can punch fell comps customers. Thomas employees. We also want to make sure. We take the responsibility held a global community. During these challenging time. Thank you.
Thank you.
Your next question comes from not see anywhere from say see please go ahead.
Hi, good morning, So well just another question I wish everyone is safe and houses I just thought just Bob.
PBR actually announced the nation player that is just finding its share repurchase program. So that it can pay maximum flexibility through the leave us doing that Oh cemig has given us a lot of stuff just stopped destinations Garland Jeep in end of January.
Enabling us they try salacious, which is quite nice for your ecosystem partners. So just curious what's a financial implication I'll stop us it's got to family G. Potter teach them how to ensure you only get clarity or house, a healthy kashi so it's such a difficult.
Hi, Thank you.
Oh, I think it to date, yet committed suicide yazzie sort of canceled orders I reached animal fats, So 2 billion R&D.
Our product team worked very closely to without a lot supply upon this to reduce the potential loss.
Cost of by a free cancellation policies large majority off out of supply. So we're willing to wait relevant charges.
We expect a onetime costs related to customer cancellation is manageable and its already being reflected in our Q1 guidance.
That customer if I'm policy, mostly temporarily treat a al kaschalk. So a large majority of the recent with has paid a company that bounced back to we have come back that we fund. So we have black stuff on raw supply in weeks following the holidays.
Oh test flights, we actually have a very strong a calculator to whether through this that tough situation Oh by the end up 29 to what we have about twice its anyone else in cash and cash equivalents all about 60 billion 90.
If we include Shaukat investments and how to maturity deposit.
In addition, we happen to watch low cost had a facility from multiple commercial back [noise].
Therefore, we have a very strong cash reserves to support all thickness population, a halt maybe and even a prolonged recovery time line as well as paying back okay.
Thank you.
Thank you.
Your final question comes from Gregory Bell Barclays. Please go ahead.
Sorry about intercept so if you can my question I'm very passionate fisheries arterial house, so where I've two questions. The first to watch frequently recorder faster I don't recall back to 2003, just figured only to peel back to one quarter to recover to their levels.
Resolved that search golf Threeq. So you do fusion rebound doctors would be kind of housekeeping front teeth policies, you use credits that moment to stimulate.
Sure I don't like we can demand and or would it kind of policy you figure can do with her guarantee right. It's kinda situation, our two recovery to gross.
Why don't you want to understand what's the market competitive dynamics doing good all right you can make superior and I think Jeff mentioned that almost to fix the beating our cash position can we assume you're going strong balance sheet is more defense event Q2 can more I'm not sure from other smaller players so during the Oh tomorrow.
You need to trouble mark to the recovery on front too.
Yes. Thank you for your capture Oh seems the troubles and start to waste on the Chinese new year and now we already saw the market shows early signs of recovery and teachers to lead the efforts to encourage the consumers to.
Protect themselves are meanwhile, okay, so trouble lifting oh.
Safe arrogance within China, and SGN, James Sad right. After this call. He personally when I look at the efforts to go to different travel destinations and encouraged to consumers.
To travel a within China, we believe that pent up demand is there a because lots of customers before Chinese new year already booked today on chips within China and overseas and because of the virus outbreak.
The market it took a very who tend to view by isolating each family videos to prevent the fastest grant to ask why was it just the why thing to do and I keep it Chinese government was very perceptive, taking to like approach catching the virus in the control wake up there.
Oh, yeah picked it up its feet, so with that under control or we believe the market has already shown.
Sure does some thoughts recovery in the consumers have stuff I'm power odd to me him to travel we just need to make sure. It the contract and if there are the infrastructure, if there and see to its very well positioned us to bring that demand true I want depends upon those along with the country.
So we hope to bear a they coverage will be Oh, there is well underway. The second thing is the leadership, yeah, I think could normally feeling that difficult time is the best time for us to the child.
Both our consumer side as well as Oh, Hi, my side or with the strong reserves on our balance sheet, a we will be able to extend our leadership as we always do during a difficult time in my wife team. If they were well positioned for that thank you.
Thank you.
And that does conclude that human nice session today, Oh, no him back to Michel for closing remarks.
[noise], thanks to everyone for joining us today, you can find the transcripts to end the webcast of today's call. I mean, that's turned so could still can we look forward to speaking with you on this first quarter 20, Twond <unk> earnings call. Thank you and have a good day. Thank you very much. Thank you.
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