Q2 2022 Trip.com Group Ltd Earnings Call
Hello, and thank you for standing by.
Welcome to the trip Dot Com group 2022 second quarter earnings.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
It is now my pleasure to introduce senior director of Investor Relations.
Mr.
Michelle Qi you May proceed.
Okay.
Thank you.
Thank you good morning, and good evening welcome to treat they'll come groups second quarter 2022 earnings conference call.
Joining me today on the call are Mr. Jim <unk> Executive Chairman of the Board Ms. Jane Sun, Chief Executive Officer, and lets them be warm Chief financial Officer.
This call, we will discuss our future outlook and performance, which are forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 995.
Forward looking statements involve risks and uncertainties.
As such our results may be materially different from the views expressed today.
A number of potential risks and uncertainties are outlined in chip they'll come group's public filings with the securities and they change Commission.
<unk> does not undertake any obligation to update any forward looking statement, except as required under applicable law.
James Jane and Cindy will share in our strategy and business update operating highlights and financial performance for the second quarter of 2022 as well as the outlook for the third quarter of 2022.
After our prepared remarks, we will have a Q&A session.
With that I will turn the call over to Jim.
Jim Please.
Thank you Michelle Thank you everyone for joining us on the call today.
In the second quarter of 2022, despite the challenging market environment in April and May due to the outbreaks of opening crowds and fix it and.
That makes control measures Brian Thanks, Steve This is John Elyse.
In the back half of this quarter.
Alright. Thanks.
<unk> continues to disrupt the recovery of domestic travel in China.
The sentiment has been trading in the market has shown its resilience.
Only the easing of restrictions on.
Our domestic China hotel booking.
Our platform quickly rebounded.
2019 level at the end of June .
Trajectory continues as we enter July with authority.
Mild and the most precise control methods.
On the international front, the global travel industry continue.
Its progress towards full recovery into 2000, and the pre pandemic level.
Demand is strong despite the challenges facing the industry.
In Q2, our revenues.
Europe and the U S markets have already surpassed.
On the national level.
In Asia Pacific markets also rapidly growing.
While the pace of growth in the European markets has moderated due to headwinds such as airline capacity shortage and labor strikes.
Reservations in Europe has been approaching management level, and then hotel reserve that you're seeing in the same region increase the buyout.
100% year over year.
Travel activity in Asia Pacific.
Also rebounded with quarterly opening further lithium trial.
That helps.
Recover faster than ever.
Outbreak of Covid.
Together with the content innovation service enhancements in the holiday demand we expect.
The recovery in APAC.
<unk> to accelerate in Q3.
In the short term.
We still face challenges such as regionally.
And the inflation.
I.
Have not been.
These challenges.
0.2 illustrates the resilience and a strong recovery.
What was the gallon levels continue to build on that.
And the Covid, becoming hopefully.
More manageable.
It sounds pedantic squirrel.
Yes.
Together with a cruise the safety perception, which lead us to believe the market outlook will only continue to improve.
With our strengthened the product capability to optimize the operating efficiency and enhance the value proposition.
As confident as ever without capabilities and competitive position in the market and then navigate through.
And challenges.
Not necessarily.
If we're able to off of whatever the market match customers' aspirations.
And we remain confident and positive.
Attractive long term growth profile of the travel industry.
With that I will turn the call over to Jane for operating highlights.
Thank you James good morning, everyone.
I'd like to start with our Pic.
And the second quarter.
Our operational highlights.
In the second quarter of 2022.
China domestic travel industry.
Actually impacted by the resurgence of pandemic.
All regions in China.
Hey, good morning, guys.
Okay.
As soon as the fundamental demand for travel remained solid.
Hello activities in the region.
Less affected by Covid.
Kathryn Kolbert.
Faster.
Okay.
And then China.
And part of the country.
Okay 19 nickel.
Okay.
Our total domestic local counsel Keith.
Good morning Albert.
Yes.
Okay.
Nicole.
Sure.
Thank you Keith and hotel reservation and this quarter.
More than 40% versus 2019.
Our business continued to recover in July Thanks, Bill sorry.
Sorry, Keith adopted.
More precise.
And Danny can control measures.
Hi, Dan.
The global market continues to show steady improvements.
More and more countries.
To leave behind and move forward with minimal restrictions.
We will continue.
<unk> continued to write.
Growth trajectory.
First.
International flights.
Hello Air ticket.
Our global platform has increased over 100%.
Year over year.
Our global brand.
Carl.
To increase <unk>.
600.
Year over year.
Gross and total comp was mainly driven by strong with coverage of international flights and all.
We're glad to see such momentum continued in Q3.
In July total.
Air ticket okay.
Carl.
Towards 90% coverage of 2019 level.
Second International Hotel.
Hotel bookings.
Global platforms have increased by more than 50% above to 2019 level in the second quarter with domestic hotel bookings.
China markets chip.
<unk> com.
Bye.
Versus 2019.
We have outperformed the industry across all key markets.
Tony Hong Kong, South Korea, Singapore, Yeah.
Yes, okay.
Yes.
Oh sure Yeah triple digits gorilla.
Okay.
Thank you Mike.
Hotel bookings in Europe markets also increased.
400% year over year.
Now, let's talk about our operational highlights and the progress we have made and the.
Our strategic focus.
First Kennedy.
And the China domestic market.
Can you quantify our gwinn stopped service model with accommodation.
Paul are strengthening our value proposition to our customers and our hotel partners.
Our value added packaged products cover 10% more hotel.
<unk>.
Of 2021, 65% of which.
And hotels.
We continue to further expand.
Great.
For special Perks, and I'll frame to match customer demand for better value.
Go ahead, Ken partners to create incremental upside.
240000 hotels have also joined us.
Our cloud program and rewarding our loyal customers with actual benefits.
After origination.
High end hotels.
In the meantime, we also joined hands with retail partners.
Co branded membership program.
Correct.
14 million co branded members significantly.
So our users acquisition.
Second global business.
The International front, we continue to work closely with local authority patient supplies to strengthen our supply chain and improved brand awareness of our international bridge that Alcoa has been named.
Ms Melissa downloaded <unk> globally in the first half of 'twenty two.
Please pass out seeking record high.
Lisa asked into post pandemic hazardous evolve.
And I suppose a truly unique product offerings to improve product competitiveness.
We're working hard to enhance the reliability of our services, we continue to localize and fine tuned our campaigns.
Aligned with.
Each of the local markets and that's a capsule of the local demand.
Our activity of race.
In OSB market.
Continuous improvement.
Following a robust recovery.
Global travel and tourism.
Top of the statement.
Good quarter.
For global in destination.
Keith.
Our platform continues to grow by 24% sequentially and then Ken Asbury.
Growth in the first half of 'twenty two.
We will continue.
Our work attracting customers through close collaboration with our global destinations and attraction.
Okay.
Alright.
Pat Vaughan.
Update on the status.
Our content platform development.
Continued participant in our content creation pathway to provide.
And to help users to make educated to talk with physicians.
Catering to the new users under.
Under the pandemic and better Sir.
How will the demand of the younger generation, we focused on providing inspiring content help.
L puces exploring ideas and tips.
<unk> gets better products foods activity transportation and <unk>.
Today's experience.
Especially for the local and installed.
Besides <unk> pain and inflammation.
We also grew.
Okay.
Chicago topics. Please.
Today's call Nikki and our customers' feedback to help users.
While in from the destination.
For example, our domestic hotel bucket list and.
<unk> high quality hotels, and alternative accommodation properties and the different scenarios.
Regimes across the country to do the stronger user cases.
Oh, who uses our ratios, which also will help improve the conversion rate.
Yes.
Daily average user generated content increase above 60%.
In the second quarter, the number of Kols also increased by 15% over the first quarter.
Despite pandemic influence we have delighted to see user engagement level remains stable compared with that in the previous quarter.
Rich do you duration potatoes to see sequential improvement.
Average number of content.
Per user also increased by about 50%.
Okay.
Corporate responsibility.
Besides our Guru revitalization initiatives.
Continued efforts.
Local alternative accommodation and tourism pallets.
We're still committed to embrace a global transportation to sustainable and more environmentally responsible travel.
As part of our sustainability initiatives, we have partnered with chose to help customers address data.
Hi, Collin kicking team tours are highly effective Q2 migrating projects around the world.
Our corporate Chicago Elisa.
Melissa outperformed 80, Saks fifth of other global company and it was awarded a silver rating by equal.
And international with localized CSR rating platform.
Our car rental business.
So shale vehicles right.
There is also growing at an annual rate of approximately 140 to stick.
This initiative helped make it easier and simpler.
To improve awareness and <unk>.
Oh.
More responsibility.
Over the past two years. The total industry has proved its resilience with our confidence in the long term growth.
And the years of hard work and a solid progress and when Kenny our traditional advantage.
And the further strengthening our competitiveness in the last you could fill that hole.
International travel.
We are optimistic that we're very well prepared.
Any challenges that lie ahead.
I will now turn the call over to Sandy.
Okay. Good morning, everyone for the second quarter of 'twenty 'twenty to trip Com group recorded net revenue of RMB 4 billion, representing a 32% decrease from the same period last year and a 2% decrease.
Quarter over quarter.
Primarily due to continued disruption from pandemic with surgery.
The China domestic travel industry.
Our overseas market on the other hand, becoming significant contributors to our topline and bottom line performance.
Accommodation reservation revenue for the second quarter of 2022 was RMB, one 4 billion.
Presenting a 45% decrease year over year, and a 6% decrease quarter over quarter.
Recovering to 40% of the 2019 level.
This is mainly due to the severe impact from the Army Corps operates in China and are following strict lockdown in several first tier city.
While offsetting by solid local and shopper demand.
Transportation ticketing revenue for the second quarter of 2022 was RMB, one 8 billion.
Representing a 15% decrease year over year, and a 6% increase quarter over quarter.
Recovering to 52% of the 2019 level.
The impact of travel restrictions in the first two months is up this quarter was largely offset by the strong air reservation.
Our international platform.
Our Merrill Lynch, China domestic recovery momentum with largely disrupted by refrigerant of Covid what are reservations on our international platform saw a significant increase.
Packaged tour revenue for the second quarter of 2022 was RMB $122 million.
Representing a 67% decrease year over year, and a 2% decrease quarter over quarter recovery to 12% of the 2019 level.
This is mainly due to pandemic related travel restrictions in domestic China market and largely muted outbound tourism.
Corporate travel revenue for the second quarter of 2022 was RMB $210 million.
Presenting a 46% decrease year over year, and a 5% decrease quarter over quarter.
Recovery to 68% of the 2019 level.
Primarily due to the impact of pandemic related.
Management in April and May.
Excluding share based compensation charges, our total adjusted operating expenses decreased by 27% year over year.
The saving of 44% compared to the same period in 2019.
Reflecting our continued effort in pushing forward with effective cost control.
Streamlining our operations.
Hi, Jeff.
The development expenses for the second quarter decreased by 13% from the previous quarter. It was the saving of 33% compared to the same period in 2019, as we continued to pursue lean operation.
Adjusted sales and marketing expenses for the second quarter.
Greece the by 3.3.
<unk>, 3% from the previous quarter.
It was the saving of 62%.
<unk> to the same period in 2019, as we continue to stick with our prudent marketing protocol.
Hi, Jeff.
G&A expenses for the second quarter decreased by 2% from the previous quarter.
It was a savings of 29% when compared to the same period in 2019.
Adjusted EBITDA was RMB $355 million for the second quarter compared to RMB 916.
Million.
I'm curious last year.
And RMB 91 million in the previous quarter.
Adjusted EBITDA margin was 9% for the second quarter compared to 16% in the same period last year and 2% in the last quarter.
Diluted income per ordinary share and per avs were RMB per U S dollar one.
The second quarter of 2022.
Excluding share based compensation charges and fair value changes of equity security investments.
Exchangeable senior notes.
non-GAAP diluted loss per ordinary share and per avs.
Were RMB 31.
Our U S dollars five for.
For the second quarter.
Okay.
As of June 32022, the balance of cash and cash equivalents restricted cash and short term investments.
<unk> to mature the time deposit and financial products was RMB 65 6 billion.
The us dollar nine 8 billion.
Turning to the third quarter of 2022.
We would like to share some color.
Isn't it.
Robust the pent up demand release, what's seen in July and early August leading to a largely improved the market outlook. Following the relaxation of travel restrictions.
The industry level air passenger volume recovered to 60% to 70%.
And industry level hotel revpar recovered to 80% to 90%.
The 2019 level in the first half of Q3.
In July our China domestic hotel bookings were about 20% ROE above the 2019 level.
We continued to grow over the 2019 level in August and achieved the hyper growth versus 2021.
Domestic travel momentum starts due to the resilience of Covid cases.
And related travel restrictions.
Late August .
In the recent mid Autumn Festival.
Industry level air passenger volume was lower than 30% of 2019 level.
Hotel business was relatively less affected with the support of vacation than men.
Our local hotel bookings continued to recover well and was about fully recovered when compared with the same holiday in 2019.
Okay.
I will travel remain rather muted under current conditions.
Outside of China, the recovery momentum in Europe , and the U S remains robust while the Asia Pacific region is accelerating.
Our international brand showed further improvement in July and August .
Benefiting from the higher price and more long haul travel.
Although we are still catching up with the 2019 number.
We expect to see a healthy revenue growth in Q3.
Year over year basis.
It's driven by strong demand for summer travel in China, and robust recovery in the global market.
Okay.
While global travel has been gradually moving towards a bright future will probably still be experiencing pandemic related challenges in the near term, especially for the China domestic market.
Solid execution paves the way for long term growth we.
We will continue to stick with our prudent cost control protocols, while remain cautious and flexible to capture the potential growth opportunity.
With that operator, please open the line for questions.
Okay.
Certainly.
As a reminder to ask a question you will need to press star one one on your telephone.
If you ask a question please press star one one.
The phone.
Okay.
And our first question comes from the line of Thomas Chong with.
Jeff.
Hi, Good morning, Thanks management for taking my question My question is.
About.
Our meaningful cost savings.
Especially in the product and development is that men.
Our solid cost control measures, how should we think about the further cost savings and margin trends in the next coming quarters. Thank you.
Thank you Thomas.
In Q2, our total adjusted operating expenses decreased by 27% year over year, and 9% quarter over quarter.
It was a saving of 44% compared to the same period in 2019, that's two hour largely flexible cost structure and effective cost control.
Firstly following a strict our.
Our investment protocol, our sales and marketing expenses were largely considered discretionary.
And in the second quarter, we also swiftly reduce the marketing investments in the China domestic market, which was partially offset by the increase of marketing activity.
For the international brands.
The decrease of personnel related expenses were mainly related to the.
Flexible park.
Our performance based.
<unk>.
During the past two years, we have streamlined our operation across business lines. In addition to certain adjustments due to COVID-19.
And we are also able to run a very lean.
Stay productive in our domestic operations.
The current <unk> structure, and we will continue to improve our operating efficiency.
In addition, our improvement.
The content as well as the cross selling and technology have further lifted our marketing efficiency.
So we are very confident that we are going to deliver a very healthy.
Operating margin once the market can go back to the normal.
Thank you.
Thank you.
Okay.
Thank you.
And our next question comes from the line of Simon Cheung with Goldman Sachs.
Yeah.
Hi can you hear me.
Yes, yes, we can.
Alright.
Thanks, James Jane and seen before for the <unk> presentation sorry.
One or two quick questions.
In relation to what you mentioned about the guidance.
Quarter that you're expecting a healthy growth.
On the on the top Mike I, just wanted to drill a bit more would you be able to share with us how youre thinking about the hotel with the transportation.
Transportation divisions.
Respectively.
Are you seeing the trends in the quarter, if you can provide us.
I think with some guidance that would be great.
And then secondly, I think I can comment.
You mentioned that you had no debt.
Great, particularly on the whole comes out.
Actually trend will get better in the <unk>.
Second quarter.
As well as maybe the fourth quarter as well because of some of.
The rebates.
Are you seeing the same trends and now that the.
The trough was talking to are we comfortable would you see the necessity to basically.
Increase the rebate okay. Thank you.
Thank you Simon.
Yes, we are.
As we.
As we said before we are glad to see the domestic travel market.
At least show some resilience.
Especially starting from September .
Overall, our domestic China Hotel reservation platform quickly rebounded and has surpassed the pre COVID-19 level from May to June.
Such trajectory continued with the authorities adopted wider and more precise.
Control measure and the total domestic hotel booking was around 20% higher than 2019 level in July and we continue to grow over the 2019 level in August and achieved a hyper growth versus 2021.
And with the recent outbreak of Covid cases ready to more than 20 provinces lockdown, becoming more frequent <unk> le Parc since late harvest.
The long haul travels with significantly impacted and number of total domestic air passenger was down by 70% to 80% versus 2019 levels in.
In the recent weeks and hotel business was relatively less affected.
Effective with the support of <unk>.
Vacation.
Net.
And this is basically the outlook for the for the.
Q3, and in terms of the long term outlook.
We are still very confident that as long as we can provide.
Competitive products as well as Scott.
Okay.
Variety of product offerings, we are going to continuously to gaining market share both domestically.
Well.
For the international markets.
As for the margins I'll take rate of our hotel business.
We are closely monitoring the marketing, but as we always said, we will have different slightly different strategy for both the mid to high end as well at the lower end comparatively lower end of the market, where the lower end of the market.
Especially local demand for vacation, we will continuously to have.
Our competitive pricing. This is the first priority for us.
And for the mid to high end markets, and we will closely monitor and but overall, we expect it to have a very healthy margin.
For the quarters to come.
Thank you.
Thanks, a lot. Thank you.
Thank you.
And our next question comes from the line of Alex Yao with JP Morgan.
Pardon me Alex Your line is now open.
Sorry, I was on mute.
Management. Thank you for taking my question.
Hum.
Updates on your international part of the business can you share with us the growth momentum of revenue contribution from Skyscanner and trip Com, Inc. Second quarter and also how do you expect it to accretion units to perform.
In second half this year. Thank you.
Thank you Alex.
The easy and dropping off but travel restrictions in more and more.
Outside of China, the global travel market quickly went back to.
Recovery and as we shared in the prepared remarks, the overall air ticketing booking our global platform has increased to over 100% year over year in which our global brand trip Com have managed to increase by approximately 680%.
Year over year.
The growth in <unk> was mainly driven by the strong recovery of international prices and.
We are happy to see such momentum to.
To be continued in Q3.
In July our total air ticketing booking trips alcohol was heading towards 90% recovery of the 2019 level.
Overall hotel Booker.
Bookings on our global platform also have increased by more than 40% above fiscal 2019 level in the second quarter.
With domestic hotel bookings in non China markets Entre Dot com increased by 300%.
The 2019 level.
In terms of the financial contribution driven by the growth.
Our growing travel demand following relaxing travel restrictions and improving hotel ADR and air ticketing prices revenues generated by our key international brands grew more than 200% year over year and contributed 20% to 30% of our total <unk>.
Revenue in Q2.
Yeah.
Revenues generated by our.
Europe and American market already surpassed the 2019 level.
While revenues from the Asia Pacific.
Excluding China market also a faster recovery track.
We are also glad to see the adjusted EBITDA of some international brand has turned positive supported by our box business recovery and improved operational efficiency. Thank you.
Oh.
Alright.
In terms of the in terms of the outlook for our international markets.
While in the short term <unk>.
Uncertainties and challenges around the macro environment.
We have a few.
We still have a very strong confidence in the consumer strong desire to travel across the world with governments continued to open up and Covid, becoming hopefully more manageable traveler confidence growth together with improved the safety perfection, which lead us to believe the market.
Outlook with further improve and we will continuously to strengthen our one stop service capability improved supply chain and technology strength.
Preston our collaboration.
<unk>.
The different brands within the group.
Thank you one moment please.
Yes.
And our next question comes from the line of James Lee with Mizuho.
Great. Thanks for taking my questions.
My question is relating to outbound travel I was wondering can you guys talk about the pace of recovery in recent months as we have seen the link of quarantine has been reduced pretty meaningfully.
And secondly, maybe is there any update on the reopening policy.
I assume maybe give us a sense once the borders start to reopen how fast do you think the outbound travel demand will return.
Okay.
Thank you Jay.
James Please go ahead.
Okay, Yeah sure.
Think the trend is quite positive.
As you observed.
We started with 21 days quarantine and then was reduced to 214 days and now it's seven days and in Hong Kong is further reduced to two full suite. So.
More measures is b protein controller and more people are getting vaccine.
Our confidence in cooling.
Quarantine periods will be shortened and therefore, the release of the album travel will be able to achieve and when we look at the pent up demand from our consumers I think the pent up demand is very strong so when we're in the stage two opened.
Talbot borders.
Confident with our coverage for comprehensive products, we will be able to capitalize on these opportunities.
Thank you.
Great. Thanks, Craig.
Roland please.
Yeah.
Okay.
And our next question comes from the line of Eleanor along with CLSA.
Yeah.
Thank you very much for management, taking my question.
My first question is regarding the domestic competition.
Can you comment on that.
Yeah.
Difficult situations.
Right now no.
And the second question. Please follow up on the international business.
<unk> is the Skyscanner has been recovering so Paul and you talk about the contribution of international business for the top.
Top line and how much does that contribute to the bottom line.
For the second quarter. Thank you very much.
Thank you Anna.
In terms of the domestic competition, we believe the competitive environment in the domestic market is stable.
The up and up.
And down in the industry. We are happy to see that we are able to we were able to deliver a very strong performance outpacing the market by 20% to 25%.
For the domestic hotel reservations.
Firstly over the past two years, we've built a very strong user cases for the short haul travel through multiple initiatives in product and marketing innovation.
Now shortfall and local travel activity has become a key contributor to our domestic recovery, especially in the Q2.
Despite the severe pandemic imprint.
Ashley on the long haul travel our local hotel reservation.
Increased it.
Our local hotel reservations do increase that by more than 30%.
<unk> with the 2019 level.
Such growth momentum continued to gain steam.
Say again.
A lot of local hotel reservation increased by more than 60% compared with the 2019 level in July and August .
While that long haul travel also saw significant recovery during the same period.
Yes, secondly of the our cross selling from the transportation to accommodation and other travel product has also achieved a significant improvement.
In the past two years.
We are confident that once the pandemic.
Effective control.
If there is any change of the pandemic control policies.
We can enjoy a higher recovery potential in both our long haul and.
Short haul travel.
In terms of the contribution of our international brand.
And as I explained earlier.
They contribute about it the other international.
<unk>, they contribute about 20% to 30% on the top line and we also see in terms of the adjusted EBITDA are almost all major international brand.
Have turned.
Positive.
The becoming one of the key contributors.
Got it.
Thank you.
Thank you Kimberly please.
And our next question comes from the line of Tien Ho with Th capital.
Good morning management.
I have a question regarding your international business strategy, So as China too.
So it could be from the coach for Colby control, So I guess the international market.
<unk> become much more attractive Q2 was so international.
International business.
Contributing a higher portion of your topline and bottom line.
Can you help us understand.
Your global expansion strategy at this point thank you.
Thank you Kim.
So following our local focus global vision strategy.
We will continue to integrate and upgrade the supplier chain and pathology of our international brands and further strengthen the reliability and efficiency of our customer services.
So we we actually provide very strong value not only to the Chinese users, but also to our travelers around the world.
Firstly on the one stop shopping platform.
On a trip I'll call Ashley was one of the.
Largest global air ticketing platform and our team will continue to add more product category onto the platform and improve the cross selling from air to other product.
Such as accommodation as well as the AR activity.
So in the in the in Q2, our overall hotel reservations through our key international brands grew more than 40%.
<unk> with 2019 level, which are which also have more than doubled.
Of our 2021 level, which was benefit from it was benefited from both the strong demand of the domestic travel as well as cross selling for a recovery International Air Reservation.
Second we are and assays the <unk> platform.
Usually the higher user engagement and user retention on our mobile app in the second quarter Triple call was named the top.
10, most downloaded app in the first half of 2022.
With chip Dot Com mobile App installations reached a record high and a mobile app contributed more than half of trip.
They'll call chip they'll cross border and reached more than 70%.
In certain Asia Pacific markets.
And thirdly, we provide high quality services.
Believe are high quality in house customer service team will continue to be a <unk>.
Driving force behind our business success.
And we have an in house customer service team and have established our global cost insurance with multi language capabilities to ensure a swift.
Responsive customers can connect with us receive direct solution with a human touch 2004, seven by phone call free App into next call.
Online chat or E mail.
And also with the help of the AI chat bot self serving.
Self service functions and automatic prioritization mechanics, and we are able to improve the efficiency and have our team handled more than more complicated and urgent situations and the automation rate of our global call Center App reached around 80% which aren't.
Uh huh.
Our domestic call center.
Yes.
Yeah.
Thank you.
Thank you.
Thank you one moment please.
Okay.
Our next question comes from the line of ways with UBS.
Hi, Good morning management. Thank you for taking my question.
I want to understand more about your content strategy, So could management share more color on the update of your content strategy and how is the progress there, helping with our user acquisition and user engagement as well as our competitiveness against some other short video platforms and also as we further in <unk>.
And the common side, how should we think about the potential financial implications in the coming quarters. Thank you.
Thank you.
Despite the pandemic here, Chris our contact strategy continues to progress in terms of the content generation and user engagement.
Catchweight into the new user needs and there is a pandemic and to better serve this travel demand of our younger generation with FERC, we focused on providing inspiring content, how user explores for ideas and tips.
To get better fluid activity transportation and accommodation experience, especially for their local as Shanghai.
Right.
In the second quarter.
So the daily average user generated content increased by 16% year over year and the number of Kols further increased by 17% over the previous quarter.
And we are also delighted to see user engagement level remains stable compared with that in the previous quarter and the average view duration.
Continue to see sequential improvement average number of content viewed by per user also increased it by.
By about 50%.
Besides the last streaming and information feeds.
Those are the products that people may question, maybe quite familiar with we also created that bucket Smith of travel top picks based on service quality and customer feedback to help users make a well informed the decision.
For example, our domestic hotel bucket list.
The high quality hotel and alternative accommodation properties under different travel scenarios in various regions across the country to build strong user cases and response.
To the user is aspiration, which also help too.
To help us to improve the conversion rate in.
In terms of the financial impact of the content.
As I explained.
We think that the.
The support or.
All the improvements on the conversion is the top priority.
In terms of the content.
And on top of that we also see significant efficiency.
Cost savings on the sales and marketing.
And due to the very helpful content that has helped us to have a better engagement.
Our platform.
<unk>.
The content product itself also generated very healthy top line as well as the bottom line to our total financial thank you.
Thank you.
That concludes our question and answer session I will now hand, the call back over to senior director of Investor Relations, Michelle Qi for any closing remarks.
Thanks. Thank you everyone for joining us today, you can find the transcript and webcast of today's call on investors don't trip Dot Com. We look forward to speaking with you on the third quarter of 2022 earnings call.
Do you have a good day. Thank you. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
Okay.