Q3 2023 Trip.com Group Ltd Earnings Call
[music].
Yeah.
Yeah.
Speaker 1: Good day and thank you for standing by. Welcome to TRIP.com Group 2023 Q3 Earnings Conference call. At this time all participants are in a listen early mode.
Good day and thank you for standing by welcome to your Chip Dot Com Group 2023, Q3 earnings conference call at this time, all participants in a listen only mode.
Speaker 1: After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 11 on your telephone. Your Dendian automated message advising your hand is raised.
After the Speakers' presentation there'll be a question and answer session to ask the question. During the session you will need to press star one on your telephone.
Well. Thank you an automated message advising you had it's rice.
Speaker 1: To withdraw your question, please press star 11 again.
Joel Your question. Please press Star one again please.
Speaker 1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Senior IR Manager, Michelle Qi. Please go ahead.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Senior IR manager Michelle Qi. Please go ahead.
Speaker 2: Thank you. Thank you, Maggie. Thank you, everyone. Good day. And welcome to Crypto.com Group's third quarter of 2023 earnings conference call. Joining me today on the call are Mr. James Lam, Executive Chairman of the Board, Ms. Jen Sun, Chief Executive Officer, and Ms. Cindy Wong, Chief Financial Officer.
Thank you. Thank you Maggie Thank you everyone. Good day and welcome to keep they'll come groups third quarter of 2023 earnings Conference call.
Any me today on the call are Mr. James Liang Executive Chairman of the Board Ms. Jane Sun, Chief Executive Officer, and MS. Cindy Wang Chief Financial Officer.
Speaker 2: During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995.
During this call we will discuss our future outlook and performance, which are forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker 2: forward-looking statements involved inheritories and uncertainties.
Forward looking statements involve inherit and uncertainties.
Speaker 2: As such, our results may be materially different from the views expressed today.
As such our results may be materially different from the views expressed today.
A number of potential risks and uncertainties are aligned interest they'll come group's public filings with the Securities and Exchange Commission.
Speaker 2: A number of potential risks and uncertainties are outlined in crypto come groups public filings with a security and exchange commission.
Speaker 2: Chip.com group does not undertake any obligation to update any forward-looking statement except as required under applicable law.
They'll come group does not undertake any obligation to update any forward looking statement, except as required under applicable law.
Speaker 2: James, Jen, and Cindy will share our strategy and business updates, operating highlights, and financial performance for the third quarter of 2023, as well as outlook for the fourth quarter of 2023.
Jim Jim and Cindy will share in all strategy and business updates operating highlights and financial performance for the third quarter up 2023, as well as the outlook for the fourth quarter of 2023.
Speaker 2: After the prepared remarks, we will have the Q&A session. With that, I will turn the call over to
After the prepared remarks, we will have the Q&A session.
That I will turn the call over to Jim.
Jim Please.
Thank you Michelle.
Speaker 3: Thank you, Michelle. Thank you, everyone, for joining us on the call today.
Thank you everyone for joining us on the call today.
Speaker 3: We are pleased to see the global travel market showing strong recovery in the third quarter.
The the global travel market.
Hi, Larry.
The third quarter.
Speaker 3: The Chinese travel market, in particular, has experienced a significant rebound driven by high demand during the summer season.
The Chinese travel market in particular.
Thank you.
Driven by high demand during the summer season.
Speaker 3: Our business has consistently performed well, breaking previous records in hotel and air booking.
Okay.
Consistently performed well.
The previous record in hotel.
Speaker 3: Additionally, outbound travel is rapidly recovering.
Additionally.
Travel is rapidly recovering.
Speaker 3: thanks to improvements in international airlift and travellers' robust desire for international experience.
The improvements internationally.
Yes.
For international experience.
So we anticipate continued strong demand.
Speaker 3: We anticipate a continuously strong demand for outbound travel in the coming year and are committed to enhancing our partner offerings to meet this demand.
In the coming year.
Yes.
Hey, David.
Thanks Anthony.
To meet this.
And then.
Speaker 3: We will also accelerate our global business growth by expanding and scaling our global
Salaries.
Thanks Danny.
Kelly.
Okay.
Speaker 3: While globalization remains a crucial aspect of our business.
Thanks, Jamie.
What aspect of our business.
Speaker 3: Kids.com group recognizes the significance of AI innovation in our long-term strategy.
Correct.
Innovation.
<unk> strategy.
Speaker 3: The pandemic has accelerated the digitization of travel industry, and advancements in AI technology have transformed consumer expectations.
And that one has been accelerated.
Thank you.
The Street.
Technology.
I have a transformed.
Expectations.
Speaker 3: In response to this trend, we have developed our unique AI technology, which is specifically designed for the travel industry.
In response to this trend.
Our unique AI technology.
Specifically designed for the travel industry.
Speaker 3: This, combined with our extensive travel knowledge, enables us to create a reliable database of accurate travel data and provide actionable recommendations for travelers.
Combined with our extensive travel knowledge enabled.
Okay great.
Please go.
Travel data.
Actionable recommendations for travelers.
Speaker 3: Moving forward, we will continue to enhance our capabilities and integrate AI into all aspects of our business.
Moving forward.
Continuing to enhance.
Capabilities and integrate AI into all aspects of our business.
Speaker 3: providing personalized booking experiences and tailored to recommendation.
Okay.
And tailored recommendations.
Speaker 3: In conclusion, travel is unique in that it is an inherently human-centric experience with infeasible demand.
In conclusion.
Travel is unique in that.
Emily human.
Spirit.
Hey, Matt.
Yes.
We will continue to push forward with our globalization.
Speaker 3: We will continue to push forward with our globalization and AI innovation to pave the way for the company's expansion.
<unk>.
To pave the way for the company's accelerated the growth.
Speaker 3: With that, I will turn the call over to Jane for Operational Atlas.
With that I will turn the call over to James.
Channel highlights.
Speaker 2: Thanks, James. Good morning, everyone. As a quick overview, our net revenue increase rate grew by approximately 100% year-over-year and has exceeded the 2019 level by 31%.
Thanks, and good morning, everyone as a quick overview on that revenue increased three grew by approximately 100% year over year and it has exceeded the 2019 level by 31%.
Speaker 2: The strong travel demand and robust momentum in travel bookings that we saw in the second quarter continued to extend into the third quarter. Our business performance continued to elevate and
The strong public demand and robust the momentum in the travel bookings that we saw in the second quarter continued to extend into the third quarter.
Our business performance continue to elevate and reached a new record amounts.
With hotel booking increased over 97% versus last year and air bookings increased by about 70% year over year.
Speaker 4: with hotel booking increased over 97 percent versus last year and air bookings increased by about 70 percent year over year.
In the China domestic market.
Speaker 4: In the China domestic market, trouble demand remained strong. Over the past three quarters, Chinese consumers have been increasingly prioritizing trouble spending over other discretionary spending. The positive trend that we saw in the second quarter continued all the way to the third quarter.
Demand remained strong.
Over the past three quarters Chinese consumers have been increasingly prioritizing turbo spending well, but other discretionary spending.
The positive trend that we saw in the second quarter continued all the way to the third quarter.
Speaker 4: Our domestic hotel reservations grew by over 90% year-over-year, and 70% versus 2019.
Our domestic hotel reservations grew by over 90% year over year, and 70% versus 2019 level.
Speaker 4: Long-haul hotel bookings have been the fastest year-over-year growth rate of 133 percent and our short-haul hotel bookings were also 66 percent above last year's level.
Noncore hotel bookings.
Fine.
Just year over year growth rate of one facility suite person in our short corporate type bookings were also 66% above last years level.
Speaker 4: while Chinese travelers remained keen to explore their home country.
Well the Chinese travelers remain keen to explore their home country.
Propensity to travel abroad continued to ramp up thanks to the steady improvement on the supply side.
Speaker 4: Capacity to travel abroad continued to ramp up thanks to the steady improvement on the supply side.
Speaker 4: In Q3, while the overall Chinese outbound market recovered to only about 50 percent of the pre-pandemic level, Chip.com Group's outbound hotel and air ticket reservation have already recovered to 80 percent of the pre-pandemic level, continue to lead the market by approximately 30 percent.
In Q3, why the overall Chinese outbound market to recovered to only about 50% of the pre pandemic level chip dotcom crews outbound hotel and air ticket towards innovation have already recovered to 80%.
The pre pandemic level continued to lead the market by approximately 30%.
APAC regions, such as Hong Kong, Macau, Thailand, Singapore Korea, Japan.
Speaker 4: APAC regions such as Hong Kong, Macau, Thailand, Singapore, Korea, Japan remain top outbound destinations due to the high recovery in flight capacity and easy visa application.
<unk> top outbound destinations due to the higher recovery in flight capacity and easy visa application.
Tricked to long haul destinations such as Europe have also.
Speaker 4: trips to long-haul destinations such as Europe have also seen the fastest growth rate when compared to where they were in the previous quarter.
The fastest growth rate when compared to where they were in the previous quarter.
Speaker 4: Increasing number of the overseas partners are gearing up to welcome Chinese travelers.
Increasing number of the overseas partners are gearing up to welcome Tony Hunt.
Speaker 4: In particular, hotels in more than 15 popular destinations, including Dubai, Paris, Kuala Lumpur, have offered tailored services such as Chinese language support and payment.
In particular hotels and more than 15 popular destinations.
In Dubai terrorists.
Paul has offered tailored services, such as Chinese language support and humans.
Speaker 4: These positive trends have enhanced the consumer's confidence when they travel abroad.
These positive trends.
Uh huh.
Hence the consumers' confidence when they travel abroad.
Speaker 4: We look forward to seeing further growth in Chinese outbound travel next year.
So we look forward to seeing further growth in Chinese outbound travel next year.
Turning to our global business, we continue to see resilience in the global travel demand.
Speaker 4: Turning to our global business, we continue to see resilience in the global travel demand.
Speaker 4: especially in impact regions, which is the key market and powerhouse of the growth.
Especially in APAC regions, which is the key market and powerhouse of the growth.
Speaker 4: Air ticket booking on our global OTA platform has nearly doubled year-over-year, and 80% about 2019.
Yeah ticket booking our global or P platform has nearly doubled year over year and 80% above 2019 level.
Speaker 4: Our overall hotel bookings on the global platform also hit a new record high and more than doubled.
Our overall hotel bookings on the global platform also hit a new record high and more than doubled.
1919 level.
Speaker 4: Following the country's goal to promote inbound tourism and roll out our favorable policies, we have also seen triple digits growth in inbound travel through our global platform.
The country schools to promote inbound tourism.
And rollout of favorable policy, we have also seen triple digits growth.
Inbound to Kabul through our global platform.
[noise] colorless.
Speaker 4: Travelers worldwide are increasingly opting for destinations abroad, which continue to drive the global travel momentum and present great opportunities for travel companies with global offerings.
Worldwide are increasingly opting for destination abroad, which continue to drive the global trouble momentum and present, great opportunity for travel companies with global offerings.
Speaker 4: Benefiting from the positive trend, our global business continues to excel and our focus remains on fostering organic growth in the mid to long term.
Benefiting from the positive trend our global business continued to excel and our focus remains on talks with organic growth in the mid to long term.
Speaker 4: Our global OTA platforms have experienced a significant growth.
Our global Otas.
Our platform has experienced significant growth with its contribution to the growth to the group steadily improved increasing and now representing nearly half of our total overseas visit.
Speaker 4: with its contribution to the group steadily increasing and now representing nearly half of our total overseas visitors.
Speaker 4: we see substantial potential for further expansion to serve users globally, as well as significant upside potential.
We see substantial potential for further extension to serve users globally.
There are significant.
Upside for profitability.
Speaker 4: Notably, in Q3, 60% of our global work
Notably in Q3, 60% of our global booking came directly through our global mobile App.
Speaker 4: came directly through our global mobile app.
Our APAC market.
Speaker 4: Our impact market, we have seen 70% of the orders are booked through our mobile app, which is even higher.
We have see 70% of the orders are booked through our mobile app.
Which is even higher than the global booking.
Speaker 4: To further capitalize on this opportunity, we have developed a comprehensive roadmap that leverage our strengths and resources to drive continuous growth.
To further capitalize on this opportunity we have developed a comprehensive roadmap that leverage our strengths and our resources to drive continuous growth.
Our strong foot hold in APAC markets, coupled with our commitment to customer services enable us to deliver exceptional product and service offerings to our users recognizing the immense potential in APAC region.
Speaker 4: Our strong foothold in APAC markets, coupled with our unwavering commitment to customer services, enable us to deliver exceptional product and service offerings to our users. Recognizing the immense potential in APAC region, we are dedicated to further enhancing our brand awareness to solidify our market position.
We are dedicated to further enhancing our brand awareness to solidify our market position.
Speaker 4: Notably we have achieved significant market share growth in key areas such as Hong Kong, Korea, Southeast Asia.
Notably we have achieved significant market share growth in key areas, such as Hong Kong Korea Southeast Asia.
And our strong product to provide a comprehensive one stop shopping service also enable us to capture the opportunities ahead.
Speaker 4: and our strong product income to provide a comprehensive one-stop shopping service also enable us to capture some opportunities ahead.
Speaker 4: We're also applying the same strategic approach to extend to the rest of the world by leveraging our product and service capability.
We're also applying the same strategic approach to extend to the rest of the world by leveraging our product and service capability.
In terms of accommodation, we have enhanced our product capabilities, while achieving a more balanced mix between our traditional strength in long haul and newly developed expertise in short haul.
Speaker 4: In terms of accommodation, we have enhanced our product capabilities by achieving a more balanced mix between our traditional strengths in long haul and newly developed expertise in the short haul.
Speaker 4: in response to evolving travel needs in the post-pandemic area.
In response to evolving <unk>.
In the post pandemic area.
Speaker 4: Our focus remained on the positive product innovation, aiming to deliver great value to both our customers and partners.
Our focus remained on the positive product innovation aiming to deliver great value to both our customers and our partners.
Speaker 4: Additionally, partners have the opportunity to join our trip plus program which enables them to connect with our high quality and loyal customers through our
Additionally partners have the opportunity to join our plus program, which enabled them to connect with our high quality and our loyal customers.
Through our rented membership.
Furthermore, we are extending our user base by pushing forward with our lower tier cities penetration with.
Speaker 4: Furthermore, we are extending our user space by pushing forward with our lower tier cities penetration.
Speaker 4: With these efforts, we aim to deliver the best possible value to both of our customers and upon.
These efforts.
Aimed to create a developed to deliver the best possible value to both of our customers and our partners.
Yes, the appetite for travel continued to grow.
Speaker 4: As the appetite for travel continues to grow, the further AI in application in travel is expected to focus on efficiency and highly personalized solution to tailor-made individual traveler's needs.
For the AI application in trouble is expected to focus on efficiency and highly personalized solution to meet individual travelers.
This vision not only seeking to fight the next phase of the travel industry, but also underscored the profound impact of AI in making trouble more convenient personalized and remember its also everyone.
Speaker 4: This vision not only signified the next phase of travel industry, but also underscored the profound impact of AI in making travel more convenient, personalized, and memorable for everyone.
Speaker 4: So far, we have launched a series of AI tools to refine travel booking experience.
So far we have launched a serious AI tours to refined travel booking experience.
Our AI travel assistant trip Jeanie enhanced that.
Speaker 4: Our AI travel assistant, Trip Genie, enhanced the user interface with our customers by leveraging natural language user's interface and providing actionable results.
The interface with our customers by leveraging natural language used users interface and providing actionable results.
Since its launch early this year, we have seen double order conversion rate improvement.
Speaker 4: Since its launch early this year, we have seen double order conversion rate improvement and also help our users retention.
And also help our users to retention.
We have also achieved remarkable both self service weight with the help of AI chatbot, which can handle numerous increase.
Speaker 4: We have also achieved remarkable self-service rate with the help of AI chatbot, which can handle numerous inquiries.
Speaker 4: using text and voice accuracy to enhance this service.
Using text and voice.
Accuracy.
To enhance this service.
Speaker 4: This streamlined approach results in improved self-service resolution.
This streamlined approach results in improved self service solution.
As the recovery of the travel industry is promising we continue to embrace the sustainable sustainability as a component of our long term growth strategy.
Speaker 4: As the recovery of the travel industry is promising, we continue to embrace the sustainability as a component of our long-term growth strategy.
Speaker 4: the remained, we remained committed to being environmental friendly, community friendly, and family friendly.
The remained we've remained committed to the environmental friendly community friendly.
And family friendly.
First for environmental friendly, we provide sustainable travel products.
Speaker 4: First, for environmental friendly, we provide sustainable tribal privacy.
Dedicated to supporting two enhancing communities.
Speaker 4: dedicated to supporting to an enhancing communities we are serving. We have taken significant steps to incorporate sustainable travel products into its various product lines, including light, car rentals, and
Our survey, we have taken significant steps to incorporate sustainable travel products into its various product lines, including like car rentals and corporate travel.
Speaker 4: Over 16 million users have already chosen sustainable travel options, favoring the
Over 16 million users have already choosing to sustain.
No more travel options.
Favoring the company's low carbon products.
We also are focusing on low carbon hotel standard.
Speaker 4: We also are focusing on low-carbon hotel standards.
Speaker 4: as part of our ongoing commitment to promoting our sustainable travel industry.
As part of our ongoing <unk>.
Determent to promoting our sustainable travel industry.
And the initiatives kept all co groups have engaged with nearly 1000 hotel partners and launched its low carbon hotel centered initiatives.
Speaker 4: the initiative, Crypto.com groups have engaged with nearly 1,000 hotel partners and launched its low-carbon hotel standard initiative.
Speaker 4: which aims to encourage eco-friendly practices and facilitate a shift.
Which aims to encourage eco friendly.
Practices and facilitate a ship.
Speaker 4: towards a more sustainable travel ecosystem by collaborating with these hotels.
Towards a more sustainable travel ecosystem by collaborating with these hotels.
Speaker 4: for community-friendly initiatives. We also have pushing forward with building countries retreats across the country to nurture travel talents and improve local travel services quality while also creating job opportunities and contributing to the global common prosperity.
Well community friendly initiatives.
We also have pushing forward with beauty countries retreats across the country.
Virtual travel with pilots and improve local travel services quality, while also creating job opportunities and contributing to the global commerce prosperity.
Speaker 4: For family-friendly, we have implemented subsidy program aiming to alleviate child birth expenses in order to support our employees to achieve work-life balance.
For family.
Friendly we have implemented subsidy program aiming to alleviating Coyote chorus expenses in order to support our employees to achieve work life balance.
Speaker 4: With our ongoing efforts to prioritizing these initiatives, we are proud to continue to make positive impact on society at large.
With our ongoing efforts to prioritizing. These initiatives we are proud to continue to make positive impact on society at large.
Speaker 4: In conclusion, we are encouraged by the robust travel demand across all business segments, and we anticipate these outbound travel will continue to be primarily catalyst for the growth in the short term.
In conclusion, we are encouraged by the robust travel demand across both business segments and we anticipate these outbound travel will continue to be primarily catalyst for the growth in the in the short term.
Speaker 4: Looking forward, our global business bolstered by enhanced offering and improved profitability will become the pivotal pillars in the long run.
Looking forward, our global business bolstered by enhance the offering and improved profitability will become the pivot top killers in the long run.
Speaker 4: Considering these promising prospects, as well as the efficiency gain achieved during the quarter and going forward by implementing of our AI initiatives, we remain an optimistic outlook for the market. And we are confident in the opportunities that lay ahead of us.
Considering these promising prospects as well as the efficiency gains achieved during the quarter and going forward by implementing <unk>.
Of our AI initiatives, we remain an optimistic outlook for the market and we are confident in the opportunities that lay ahead of us.
Speaker 4: With that, now I will turn the call to Cindy.
With that now I will turn the call over to Cindy.
Speaker 2: Thanks, Jane. Good morning, everyone. For the third quarter of 2023, Trip.com Group reported a net revenue of RMB $13.7 billion, representing a 99% increase from the same period last year and a 22% increase from the previous quarter, primarily due to strong recovery in the travel market.
Thanks, Jay Good morning, everyone for the third quarter of 2023 chip they'll come group reported a net revenue of RMB 13, 7 billion, representing a 99% increase from the same period last year and a 22% increase from the previous quarter.
Primarily due to strong recovery in the travel market accommodation reservation revenue for the third quarter was RMB five 6 billion, representing a 92% increase year over year, and a 30% increase quarter over quarter, which is 36%.
Speaker 2: Accommodation reservation revenue for the third quarter was RMB 5.6 billion, representing a 92 percent increase year over year and a 30 percent increase quarter over quarter, which is 36 percent higher than the 2019 level. Both domestic and outbound hotels have seen robust growth and outpaced the industry.
Higher at the end of 2019 levels, both domestic and outbound hotel have been robust growth and outpace the industry.
Speaker 2: Overall hotel booking have achieved a record high and have grown over 60% above the pre-pandemic level.
Overall hotel booking has achieved a record high and have grown over 60% above the pre pandemic level.
Speaker 2: Transportation ticketing revenue for the third quarter was RMB 5.4 billion, representing a 105% increase year-over-year and an 11% increase quarter-over-quarter, which is 44% higher than the 2019 level. This is mainly due to robust recovery of outbound air and strong growth in domestic and global air business.
Transportation ticketing revenue for the third quarter was RMB 5.4 billion, representing a 105% increase year over year, and 11% increase quarter over quarter, which is 44% higher at the end of 2019 level. This is mainly.
Due to robust recovery of outbound air and strong growth in domestic and global air business.
Speaker 4: Package tour revenue for the third quarter was RMB 1.3 billion, representing a 243% increase year-over-year and an 84% increase quarter-over-quarter, recovering to 81% of the 2019 level. Domestic package tour has outgrown the 2019 level, while recovery in the outbound package tour was still lagging behind.
Packaged tour revenue for the third quarter was RMB, one 3 billion, representing a 243% increase year over year, and 84% increase quarter over quarter recovering 281% of the 2019 level domestic package tour.
Has outgrown the 2019 level why recovery in the outbound package tour was still lagging behind.
Speaker 4: Corporate travel revenue for the third quarter was RMB $591 million, representing a 60% increase year-over-year and remained flattish quarter-over-quarter, which is 76% higher than the 2019 level, with air ticketing bookings increased by double digits above 2019 level and hotel bookings threefold the 2019 level.
Corporate travel revenue for the quarter was RMB 591 million $91 million.
Representing a 60% increase year over year and remained flattish quarter over quarter, which is 76% higher than the 2019 levels with air ticketing bookings increased by double digit above 2019 level and hotel bookings three four.
2019 level.
Speaker 2: Excluding share-based compensation charges, our total adjusted operating expenses were 19% higher than the previous quarter and 20% higher than the same period in 2019.
Excluding share based compensation charges, our total adjusted operating expenses were 19% higher than the previous quarter and 20% higher than the same period in 2019.
Adjusted product development expenses for the third quarter increased by 23% from the previous quarter and increased by 29% compared with the same period in 2019.
Speaker 2: Adjusted product development expenses for the third quarter increased by 23% from the previous quarter and increased by 29% compared with the same period in 2019.
Speaker 2: Adjusted GNA expenses for the third quarter increased by 9% from the previous quarter and increased by 21% from the same period in 2019. This is mainly due to increase in personnel-related expenses. The increase was mainly related to performance-based bonus in recognition of the exceptional performance achieved in the quarter.
Our adjusted G&A expenses for the third quarter increased by 9% from the previous quarter and increased by 21% from the same period. In 2019. This is mainly due to increase in personnel related expenses. The increase was mainly.
<unk> related to performance based bonus in recognition of the exceptional performance achieved in the quarter.
Speaker 4: while the total headcount of our product development and GNA teams was significantly lower than during the same period in 2019.
While the total head count of our product development and G&A teams was significantly lower.
And then during the same period in 2019.
Speaker 2: Adjusted sales and marketing expenses for the third quarter increased by 17 percent from the previous quarter and increased by 11 percent compared with the same period of 2019. The sequential increase was due to increased marketing activities that were in line with the higher seasonality.
Adjusted sales and marketing expenses for the third quarter increased by 17% from the previous quarter and increased by 11% compared with the same period of 2019.
The sequential increase was.
Due to increased marketing activities that were in line with the higher seasonality.
Adjusted EBITDA was RMB four 6 billion for the third quarter compared with RMB, One 4 billion in the same period last year and RMB three 7 billion in the previous quarter.
Speaker 2: Adjusted EBITDA was RMB4.6 billion for the third quarter compared with RMB1.4 billion in the same period last year and RMB3.7 billion in the previous quarter.
Speaker 2: Adjusted EBITDA margin was 34 percent for the third quarter compared with 21 percent in the same period last year and 33 percent in the previous quarter.
Adjusted EBITDA margin was 30, 34% for this quarter compared with 21% in the same period last year and 33% in the previous quarter.
Speaker 2: Diluted earning per ordinary share and per ADS were RMB 6.84 or U.S. dollar 94 cents for the third quarter of 2023.
Diluted earnings per ordinary share and per ads was.
What were RMB 6.8 for our U S. Dollar 94 cents for the third quarter of 2023.
Speaker 2: Excluding share-based compensation charges and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 7.26 or U.S. dollar one for the third quarter.
Excluding share based compensation charges and fair value changes of equity Securities investments exchangeable senior notes non-GAAP diluted earnings per ordinary share and per ads.
Or RMB 7.26, or U S dollars, one for the third quarter.
Speaker 2: As of September 30, 2023, the balance of cash and cash equivalents, restricted cash, shortened investment, held to maturity time deposit, and financial products was RMB 79 billion or U.S. dollar 10.8 billion.
As of September 32023, the balance of cash and cash equivalents restricted cash and short term investment.
Now to maturity time deposit and financial products was RMB seven nine.
<unk> 9 billion or U S dollar 10.8 billion.
Okay.
Speaker 2: Giving the rapid business growth this year has significantly strengthened the group's cash flow and we believe the company's share price is undervalued. As of November the 20th, 2023, we repurchased U.S. dollar 120 million of our shares and reduced our share count by 0.5 percent versus last year.
Given the rapid business growth. This year has significantly strengthened the group's cash flow and we believe the company's share price is undervalued as of November the <unk> 2021 'twenty two 'twenty three we repurchased U S dollar 120 million of our.
Shares.
Due to our share count by a 0.5% versus last year.
Speaker 4: Our Board of Directors has also approved a regular capital return policy, which is scheduled to commence in 2024.
Our board of Directors has also approved a regular capital return policy, which is scheduled to commence in 2000 22024.
Speaker 2: We are proud of this accomplishment, as it reflects both our commitment to returning capital to shareholders and our confidence in the long-term outlook of the travel industry and our own business.
We are proud of this accomplishment as it reflects both our commitment to returning capital.
To shareholders and our confidence in the long term outlook of the travel industry and our own business.
Speaker 2: To conclude, we are pleased with the continued momentum in the travel market and our team's solid execution in the third quarter. We are well-prepared and will remain key to drive long-term growth and to maximize return for shareholders.
To conclude we are pleased with the continued momentum in the travel market and our team's solid execution in the third quarter.
We are well prepared and will remain key to drive to drive long term growth and to maximize return for shareholders.
Speaker 2: With that operator, please open the line for questions.
With that operator, please open the line for questions.
Speaker 1: Thank you. We will now conduct the Q&A session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as we compile the Q&A roster.
Thank you.
We will now conduct the Q&A session.
To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby as we compile the Q&A roster.
Speaker 1: Our first question comes from Brian Gahn from Citi.
Our first question comes from Brian Gong from Citi.
Please go ahead Brian.
Speaker 5: Yes, thanks. Good morning, James, Cindy, and Michelle. Congrats on the different sub-quarter results. Thanks for sharing the exciting progress of the generative AI adoption at Trip.com. I have a quick question on this. Could you elaborate how the adoption of AI technology differs between our pure international platform Trip.com and our domestic Ctrip within the group? Thank you.
Yes, Thanks, Good morning, James Jane Cindy and Michelle Congrats on the quarter results and then thanks for sharing the exciting corporates also general adopt.
Adoption of chip dotcom.
Quick question on <unk> could.
Could you elaborate also adoption.
Technology differs between our.
Two international platform trip Dot com and our domestic Ctrip reading the group. Thank.
Thank you.
Speaker 3: Thanks for your question. We implement a consistent AI adoption strategy across all markets.
Thanks for your question when you implement consistent adoption strategy across all markets.
Speaker 3: focusing on improving productivity and efficiency in marketing, engineering, and customer service.
Improving productivity and efficiency in marketing engineering and customer service.
Speaker 3: Our goal is to offer users a smart AI assistant that can simplify and enhance their trip planning and research experience.
Okay.
March.
Okay.
Yes.
Okay.
Okay.
Yes.
Speaker 3: Through natural language interfaces and actionable recommendations, we aim to help users plan their trips more effectively.
So the natural language interfaces.
Actionable recommendations.
Thank you.
More effectively.
Speaker 3: Successful practices from each market will be shared and promoted across others.
Success and practices from each market will be shared.
Okay.
Speaker 6: ultimately becoming a global standard within our organization. Thank you very much.
Ultimately, becoming a global standards.
Jason.
Thank you very much.
Thank you.
Just a mobile phone next question please.
Next we have Alex Poon.
From Morgan Stanley. Please go ahead.
Alright, Thank you James Jane Cindy and Michelle Congrats on very strong quarter.
Speaker 7: Thank you, James, Cindy and Michelle. Congrats on a very strong quarter. For my question, could you share some details about the travel performance after the Golden Week and how should we interpret the momentum into Q4 and into 2024? Thank you so much.
Well my question could you share some details about the travel performance after the Golden week, and how should we interpret that momentum into Q4 and into 2024. Thank you so much.
Sure quarter to date, China Hotel, Revpar number and domestic air passenger volume was slightly below that of 2019, which reflects our normal seasonality post the summer.
Speaker 2: Sure. According to date, China Hotel rep part number and domestic air passenger volume was slightly below that of 2019, which reflects a normal seasonality post the summer.
Speaker 2: We continued to outpace the industry average growth with our domestic hotel booking surpassing 2019 level by around 60 percent and our outbound hotel and air reservations recovered to around 80 percent of the 2019 level.
We continued to outpace the industry average growth without domestic hotel bookings, surpassing 2019 level by around 60% and our outbound hotel and air reservations recovered to around 80% of the 2019 levels.
Speaker 2: Our global OTA platform has maintained a triple-digit growth over 2019 despite tough comparables.
Our global OTA platform has maintained a triple digit growth over 2019, despite a tough comparable.
Speaker 2: Look into the next year, 2024. Our users' short booking window makes it challenging for us to forecast the 2024 industry momentum. However, we are confident in our ability to consistently outpace the market growth.
A look into the next.
Next year 2024 hour use a short booking window makes it challenging for us to forecast the 2024 industry momentum.
However, we are confident in our ability to consistently outpace the market growth.
Speaker 2: For the China, in terms of a different market, for the China market, we expect robust growth in the outbound travel business due to further recovery of outbound flight capacity, along with steady growth in domestic business.
For the China.
It.
In terms of a different market for the China market, we expect to robust growth, India outbound travel business due to further recovery of outbound flight capacity, along with steady growth in domestic business.
Speaker 8: And for the global market, we anticipate our global OTA platform Trip.com to maintain high-speed growth, while Skyscanner and other overseas brands continue to grow healthily despite recent headwinds in the email region. Thank you. Thank you.
And for the global market, we anticipate our global Otas platform trip they'll call to maintain high speed growth why skyscanner and other overseas branch continue to grow has it healthily. Despite our recent wins in the EMEA region. Thank you.
Thank you. Thank you very much.
Yeah.
Next we have Natalie <unk>.
Speaker 1: from Hayton International, please go ahead.
From Haitong International Please go ahead.
Hi, Hi, Thanks for taking my question and congratulations on very solid quarter.
Speaker 4: Hi. Hi. Thanks for taking my question, and congratulations on very sorry.
Speaker 9: My question is regarding the Arbonne. We all acknowledge that Arbonne will continue to be the strongest driver in short term. And just wondering, the recovery pace of Arbonne flights recently seems to be a little bit slower than the market has initially expected.
My question is regarding the our bonds are we are we all acknowledge that all bonds will continue to be the strongest driver in short term and just wondering the recovery pace of all bonds Lite recently seems to be a little bit.
Slower than the market has initially expected so.
Speaker 9: So just wondering, is there any reason behind, is it due to insufficient consumer capacity?
I was just wondering is there any reason behind is it due to insufficient.
Consumer capacity, so just I'm wondering one does.
Speaker 9: So just wondering when does the management anticipate a full recovery of the urban business? Thank you.
<unk> anticipates, a full recovery of the outbound business. Thank you.
Yeah. So we're confident in the recovery of outbound if you look at our demand and supply side the demand already exceeded 2019 level. However on the supply side. There are two major hurdles, but first of all he is the visa application process.
Speaker 4: Yes. So we're confident in the recovery of our bond. If you look at our demand and supply side the demand already exceeded 2019 level. However on the supply side there are two major hurdles.
Speaker 4: The first one is the visa application process takes a little bit longer for certain regions such as Europe , United States, etc.
It takes a little bit longer for certain regions, such as Europe, United States et cetera. However.
Speaker 4: However, after the AIPAC meeting, I think there will be improvements on the visa application side.
After the APAC meeting I think there will be <unk>.
Movements on the visa application side, the second away is the slight capacity as of Q2.
Speaker 4: The second one is the flight capacity. As of Q2, as of Q3, the flight capacity only recovered 50%.
Q3, the flight capacity only recovered 50%, we hope going forward the flight capacity will further improved.
Speaker 4: We hope, going forward, the flight capacity will further improve, so with the visa application process being improved, as well as the...
The visa application process being improved as well as the increase.
Speaker 6: increased flight capacity. We believe next year, Albon will grow even stronger compared to this year. Thank you.
Increased supply capacity, we believe next year outbound will grow even stronger compared to this year. Thank you.
Thank you.
Next we have Simon Cheng.
Goldman Sachs. Please go ahead.
Speaker 7: Hi, thanks for taking my question. I have two questions.
Hi, Thanks for taking my question.
Two questions.
Speaker 7: I think in the consumer space, the trade-on seems to be a buzzword for everyone. I'm wondering whether you have observed a similar trend for this trade-on, whether it's for corporate travel or for leisure travel. And by the same token, to the extent that I think outbound travel is a higher-ticket item, how do you feel this trade-on trend will affect the pace of outbound travel going forward? That's the first question. The second question is...
I think in.
In the consumer space.
<unk> seems to be a bus work for everyone.
I'm wondering whether you have observed similar trends for all of these trade on whether you saw for corporate travel for leisure travel and by the same token.
The extent that I think outbound travel is a higher ticket item how do you view this.
<unk> trend would affect the pace.
Bound travel going forward.
The first question and then the second question.
Speaker 7: I think you have been able to preserve your sales and marketing expenses as percent of your revenue quite steadily at around 20% for quite a few quarters. I remember in the last couple of quarters you've been talking about maybe having to spend a bit more going forward.
I think half a point.
Thanks, Jeff your sales and marketing expenses as percent of revenue quite started yet.
For quite a few quarter.
I remember in the last couple of quarters, you've been talking about.
Having to spend a bit more going forward.
Speaker 7: How are you thinking about these in the near term? And correspondingly, we keep hearing all these Douyin competitions, whether you can have, share any comment on that front as well. Thank you.
Are you thinking about things.
And then your comment I'm just wondering if you can.
Hearing all the stock comp.
Competitions, whether you conduct.
Any comment on on that front as well thank you.
Speaker 2: Sure. So, for the first question, in the leisure segment, we have, to be honest, we have seen no signs, so far, we have seen no signs of consumption downward, and the average travel spending on our platform continues to exceed the 2019th level, both for new and existing users, on a like-for-like basis.
Sure.
So for the first question in the leisure segment, we have.
To be honest, we have seen no signs so far we have seen those size of consumption downward.
And the average travel spending all platform continues to exceed the 2019 level, both for new and existing users our like for like basis.
Speaker 2: In the business segment, corporate travelers have also been spending more than what they did back in 2019.
The business segment corporate travelers has also been spending more than what they did back in 2019.
Speaker 2: Looking at the long run, we are still confident in China's travel demand because on the supplier side, the ongoing expansion of air, rail, and highway networks, along with investments in other travel infrastructures in China, lay a strong foundation for the travel industry's prosperity.
Looking at the long run.
Still confident in China's travel they meant.
Because on the supplier side, the ongoing expansion of air rail and highway networks, along with investments in other travel infrastructures in China lay a strong foundation for the travel industry.
Prosperity.
Speaker 2: While on the demand side, we see leisure travel spending evolving from cyclical to more secular, driven by increasing disposable income and a consumption shift from goods to services and experiences.
On the demand side, we see leisure travel spending evolving from cyclical to more secular driven by increasing disposable income and consumption shift from goods to services and experiences. In addition, hotelier a stance to gaming.
Speaker 2: In addition, OTA stands to gaining from increased online penetration.
<unk> increased the online penetration.
Speaker 2: Although the business travel is typically more closely tied to the economic activities and may be impacted by economic concerns, we also see significant opportunities for us as more businesses will adopt managed corporate travel services to optimize their travel budgets.
Although the business travel is typically it's typically more close tie to the economic activities and maybe impact <unk>.
By economic concerns Oh, but we also see significant opportunities.
For us as more businesses will adopt managed corporate travel services to optimize their travel budget.
Speaker 2: For the second question, the sales marketing expenses, our marketing efficiencies have seen significant improvement this year, primarily due to enhanced conversion and cross-selling efforts.
Mm for the for the sales Mark for the second question are the sales and marketing expenses, our marketing efficiencies has seen significant improvement this year.
Primarily due to enhance the conversion and cross selling efforts are Additionally, we made significant savings due to the strong release of pent up demand.
Speaker 2: Additionally, we made significant savings due to the strong release of pandemic demand.
Speaker 2: We do expect an increase in marketing spending as a percentage of revenue in the Q4 following a typical low seasonality in the fourth quarter. And also as a part of our efforts to normalize the marketing spending to stimulate future growth.
We do expect an increase in marketing spending as a percentage of revenue.
In the Q4.
Following our typical low seasonality.
Yeah.
In the next in this in the fourth quarter.
And also as a part of our efforts to normalize the marketing spending.
To stimulate that just spin late future.
<unk>.
Speaker 2: And in the long run, we are quite consistently to have to committed to an ROI-driven marketing investments approach, striving to balance the efficiency gains and the long-term investment needs in the overseas markets, as well as the opportunities in the lower tier cities in China. And with regard to the competition with the content.
And in the long run we are quite.
Quite consistently two half two committed to and our eye to the marketing investments approach are striving to balance the efficiency gains and the long term investment needs in the overseas markets as well as the opportunities in the lower tier cities in China.
And with regard to the competition with the.
Content.
Speaker 2: platform. I think so far what we observe, the competitive landscape in China domestic market is generally steady with some seasonal fluctuations in the marketing intensities among players.
<unk> platform.
I think so far what we observe the competitive landscape in China domestic market is generally steady with some seasonal fluctuations in the marketing and Kennedy's among players and I think Oh Ta and content platform has the total it.
Speaker 2: And I think the OTA and content platform have a totally different core competence.
Different core competence, our content platform excel at Cook, using creative content and sharing information make them effective that promoting training products. However, and most of the content platform. They lack very strong backend system to fulfill the book.
Speaker 2: a content platform excel at producing creative content and sharing information make them effective at promoting trending products.
Speaker 2: However, most of the content platform, they lack very strong backend system to fulfill the booking capabilities.
Our capabilities are.
Speaker 2: While OTA's core competence are firstly in the standard supplier chain and also more importantly the capabilities to provide reliable services.
Otas core competence in the firstly in the supplier chain extended supplier chain and also more importantly, the capabilities to provide reliable services.
Speaker 2: Therefore, of course, we will always be sensitive in terms of the competitions in the market. But at the end of the day, what we need to always focus is to strengthen, further strengthening our co-competence. Thank you.
Therefore of course, we will always be sensitive in terms of the competitions in the market, but at the end of the day, what we need to always focus is to strengthen further strengthening our core competence. Thank you.
Excellent. Thank.
Thank you.
Speaker 1: Thank you. Next, we have Alex Yao.
Thank you.
Next we have Alex Yao.
From J P. Morgan. Please go ahead.
Yeah.
Speaker 7: Good morning, management, and thank you for taking my question. First of all, congrats on a rock-solid quarter.
Good morning management and thank you for taking my question first of all congrats on a rock solid quarter.
Speaker 7: You today, you guys have delivered very impressive margin improvements relative to the historical level.
Year to date, you guys have delivered very impressive margin improvement relative to just historical level.
Speaker 5: Can you talk us through how did you achieve the current margin structure? For example, can you break down the margin structure across domestic outbound?
Talk us through how did you achieve the.
Core margin structure.
Paul can you break down the margin structure of course domestic <unk> international.
Speaker 5: international to international between now and the same period 2019.
National between now and the same period of 2019.
Speaker 5: And as we look into 2024,
As we look into 2024.
Speaker 5: apparently the outbound, which is a higher margin business, will very likely outgrow the domestic business.
Apparently the all bond, which has a higher margin business will very likely outgrow the domestic business.
Speaker 5: how should we think about the modern structure into 24 and beyond. Thank you.
Should we think about the margin structure in 2024 and beyond thank you.
Thank you Alex.
Speaker 9: In general, because we have very strong brand awareness.
In general our AR, because we have very strong brand awareness and the market share in the China market for both the China domestic as well as China outbound.
Speaker 9: and the market share in the China market for both the China domestic as well as China outbound. We have a very healthy margin to serve in the China market.
We have a very healthy margins.
To serving the China market and in the international market.
Speaker 9: and in the international market we grow very fast but still at current stage we are still in the investment cycle but at the same time we will balance
We grow very fast, but still at current stage, we are still in that investment cycle, but at the same time, we were balanced.
Speaker 9: the investment versus improving and toward a more healthy margin for the international market.
Investment versus improving.
And toward a more healthy margin for the international market. Yes, you are correct to moving into the year 2024.
Speaker 2: Yes, you are correct. Moving into the year 2024, we think that outbound travel as a percentage of the total revenue contribution to the whole group will definitely go in.
We think the outbound travel percentage as a percentage of the total revenue contribution to the whole group.
Often they play going forward.
Speaker 9: And Albon traditionally is a more healthy or higher margin business for us.
And our BOL traditionally is a more healthy.
Healthy a higher margin business for us.
Speaker 9: But I think the margin level that we achieved this year, there's some special
But I think the margin level that we achieved that this year there are some special.
So some of the special.
Speaker 9: factors impacted because especially in the first half of this year the strong rebound is to some extent out of our own expectation. So in terms of a readiness on both the service as well as the sales marketing we have a comparatively limited preparation to serve the
[noise] factors impacted because especially in the first half of this year.
The strong rebound is to some extent out of our own expectation. So in terms of our readiness on both the service as well as the sales and marketing.
We are have a comparatively limited.
Our preparation to to surf there.
Speaker 9: much higher than expected rebound, market rebound.
Not much higher than expected.
[noise] rebound market rebound.
Speaker 9: So, to be honest, our operating margin, especially high operating margin, especially for the first half of this year, is even higher than the normalized level. So next year, with the business moving into more normalized level, we should make investment
So to be honest to our.
Operating margin, especially high operating margin, especially for the first half of this year is even higher than the normalized level. So next year with the mm business moving into more normalized level.
We should make investment in.
Speaker 9: It's enough investment in both the service as well as the sales marketing effort. Our marketing expenditure will increase slightly to fuel the future growth of the business. Our margin level, operating margin level, will trend down a little bit compared with first half of the year.
Nothing that last month in both the service as well as the sales marketing effort, our marketing expenditure will increase slightly.
Slightly to a few of the future growth of the business our margin level operating margin level will trend down a little bit to compare with first half of this.
This year.
Speaker 9: but in general there's other factors like the increase of the outbound and continuously improve the margins in the international market will also help us to balance the total operating margin moving into the next year. So in the longer period
General are there some other factors like the increase of the outbound and and continuously improve the margins in the international market will also help us to balance.
To balance the total operating margin moving into the next year, so in a longer period.
Speaker 9: We think we will definitely achieve we previously we have give guidance to our shareholders that we will achieve the margin level to all like to the 20 to 30% level, we already achieved that level this year, and we have the full confidence to continuously to maintain a healthy margin level moving forward. Thank you.
We think we will definitely achieve.
We have previously we have give guidance to our shareholders that we will achieve the module level, two or like a to the 20% to 30% level. We already achieved that level. This year and we have the full confidence to continuously to maintain a healthy margin level.
Moving forward. Thank you.
Okay.
[noise].
Thank you Nick.
Speaker 1: Next, we have Jian Xiao from Barclays. Please go ahead.
We have Jiang Zhang from Barclays.
Go ahead. Thank you.
Speaker 10: Thank you very much for taking my questions. I have two, if I may, and let me add my congrats as well for the strong results.
Thank you very much for taking my questions I have two if I may and.
Let me add my congrats as well for the strong results.
You have had.
Speaker 10: You have had a, I think, at least a three, four quarters of very strong results since the COVID restrictions.
You have had I think at.
At least a three or four quarters of very strong results since.
Since the Covid restrictions are lifted.
Speaker 10: I think some of the investors are a bit worried that, oh, is this because the pent-up demand jump and then growth will be tapering off like some of your peers have seen in the West?
I think some of the investors.
Bit worried Oh is this because the pent up demand jump and then growth with.
Would be tapering off.
Some of your peers have seen in the West I was hoping you could share with us your thoughts about why so.
Speaker 10: I was hoping you could share with us your thoughts about why.
Speaker 10: sort of that's not going to be the case. Why the growth you mentioned about growth to continue, you know, in 24 and beyond. If you can share with us your thoughts around the longer term sort of three-year horizon, a growth drivers, a growth rate, that'd be great.
That's not going to be the case why the growth you mentioned about growth to continue.
In 'twenty four and beyond.
I can share with us your thoughts around the longer term sort of three year horizon. Our growth drivers are growth rate that'd be that'd be great.
Speaker 10: And a related question to the margin question you just expanded earlier, your gross margins reached 82% for the last three quarters.
And I related.
A question to the margin question you just the expanded earlier.
Gross margins.
Reached about 82% for the last three quarters.
Speaker 10: Is there any reason, you talk about investment in sales and marketing, but that's sort of below the gross margin line. Is there any reason we should not expect the gross margin stay where they are? And were there structural reasons behind a recent increase in gross margins?
Is there any reason that you talked about investment in sales and marketing, but that's sort of below the gross margin line is there any reason we should not expect the gross margin stay where they are and where.
Well there are structural reasons behind a reason increasing gross margins. Thank you.
Speaker 4: Thanks for your question. First of all we look at our growth in the long term. So there are a couple of baselines we look at. The first one is the GDP growth rate. So if the GDP growth rate is somewhere between 4 to 5 percent.
Thanks for your question.
First of all we look at our growth in the long term. So there are a couple of baselines.
We look at the first one is the GDP growth rate.
So if the GDP growth rate is somewhere between 4% to 5%. We believe the travel industry will outpace the GDP growth rate by a couple of percentage because people who can't afford to travel normally makes a more higher income.
Speaker 4: we believe the travel industry will outpace the GDP growth rate by a couple of percentage because people who can afford to travel normally makes a higher income. So GDP travel probably will grow at about 8 to 10 percent.
GDP it travel probably will grow at about 8% to 10% and we will also outpaced the travel industry growth.
Speaker 4: And we will also outpace the carbon industry growth by being more efficient.
By being more efficient.
Speaker 4: by moving more offline to online. So somewhere around three to four times the GDP growth rate is what our team is aiming at.
By moving more offline to online so somewhere around three to four times. The GDP growth rate is what our team is aiming at.
Speaker 4: Therefore, we cannot say, you know, the short term what we want to do, but in the long run, that is the goal for our team to strive for. So we always plan our business three years, four years out in order to make very consistent investment.
Therefore, we cannot say.
The short term.
What we want to do but in a long run that is.
Our goal for our team to strive for so we always plan our business three years four years out in order to make very consistent investment. If you look at the Covid three years our.
Speaker 4: the COVID three years, our engineering team.
Engineering team made tremendous progress during the slowdown season that is why when the industry recover we're able to.
Speaker 4: made tremendous progress during the slowdown season. That is why when the industry recovered we're able to take care of the pandemic.
Take care of the pent up demand.
Speaker 4: So we believe the growth into the next three to five years is very sustainable.
So we believe the growth into the next three to five years is very sustainable secondly on the margin.
Speaker 4: Secondly on the margin we believe the healthy and sustainable growth margin is our goal. In the short term if you want to even grow the market and margin higher we can do that. But we didn't want to do it in the way that we sacrifice the long term investment.
We believe the healthy and sustainable gross margin is our goal.
In the short run if you want to even grow the market.
And higher we can do that but we didn't want to do it in a way that we sacrifice the long term investment. So we are committed to grow our business with healthy margins between 20% to 30%.
Speaker 4: So we are committed to grow our business with healthy margins between 20 to 30 percent.
Speaker 4: And we will continuously make long term investment, particularly in the area of product engineer and also customer service.
And we will continuously make long term investment, particularly in the area of product engineer and also customer services.
Speaker 4: So that's the promise we have for our customers, for our partners and for our shareholders. Thank you.
So that's the promise we have for our.
Customers for our partners and for our shareholders. Thank you.
Thank you.
Okay.
Next.
Speaker 1: We have Wei Xiong from UBS, please go ahead.
We have waste Yang from UBS. Please go ahead.
Speaker 4: Hi, good morning, management. Thank you for taking my question, and congrats on a solid quarter. My question is regarding our pure international business, especially on the Trip.com side. I was wondering, could management share the current revenue contribution from Trip.com to the group revenue? And how should we think about its growth in the next three to five years? Also, in addition, what are our strategies to continue achieving such high growth? Thank you.
Hi, Good morning management. Thank you for taking my question and congrats on a solid quarter. My question is regarding our pure international business, especially on the Dot com side.
Was wondering could management share the the current revenue contribution from <unk> Dot com to the group revenue.
And how should we think about is growth in the next three to five years.
In addition, what are our strategy to continue achieving such a high growth. Thank you.
Speaker 9: Sure, TRIP.com represents approximately 6% of the total group revenue in the Q3, and its revenue contribution has been steadily approaching that of Skyscanner. And we expect TRIP.com to surpass Skyscanner in terms of revenue contribution in the near future.
Sure.
Sure they'll call represents approximately 6% of the total group revenue in Q3 and its revenue contribution has been steadily approaching that of Skyscanner and we expect the triple crown to surpass Skyscanner a rab in terms of a revenue contribution in the near future.
Speaker 9: With regard to the growth strategy, in the next three to five years, we expect that Triple Cone will maintain a robust mid-to-high growth strategy.
With regard to the growth strategy in the next three to five years, we expect that trip I'll call and maintain a robust to MIT.
Speaker 9: double-digit growth rate, becoming one of the primary growth drivers for the whole group.
Double digit growth rate, becoming one of the primary growth driver for the whole group.
Speaker 9: In terms of different markets in Asia, Trip.com is targeting to become the leading OTA. The combined size of its top market in the Asia-Pacific region exceeds that of the mainland China in terms of total growth booking. And Trip.com has already established a pretty solid foothold in this region with comprehensive local operations.
In terms of the different market in the Asia.
They'll call us targeting to become.
The leading otas the combined size of its top market in the Asia Pacific region exceed that of the mainland China.
In terms of total gross booking and trip VAALCO has already established.
Pretty solid foothold in this region with comprehensive for local operations.
Speaker 9: Despite starting with a comparatively small market share, Trip.com is confident in expanding its presence through its all-in-one mobile app.
Despite starting with a comparatively small market share chip they'll call us confident in expanding its presence through its all in one mobile app.
Speaker 9: competitive offerings, high quality services, and we are continuously, we will continuously to grow our brand and wellness in this region.
<unk> offerings high quality services, and we are continuously we will continuously to grow our brand awareness in this region.
Speaker 9: And in the Euro market our near term focus is more on the air travel. The air market in Europe is about twice the size of China's in terms of gross booking. This represents a significant opportunity for the group to capitalize through synergies among different brands within the group.
And in the Euro market, our near term focus is more on the air travel that are marketing Europe has about twice the size of China in terms of gross bookings.
<unk> represents a significant opportunity for the group to capitalize through synergies among different brands within the group.
Speaker 9: Furthermore, we are strategically expanding our service offering into other markets while upholding our ROI return standards. Thank you.
Furthermore, we are strategically expanding hours.
Service offering into other markets, while upholding our ally.
Our return standards. Thank you.
Yeah.
Thank you.
Next we have James Lee from Mizuho. Please go ahead.
Speaker 1: Next we have James Lee from Mizuho, please go ahead.
Speaker 11: Great. Thanks for taking my questions. Can you guys maybe talk about, maybe elaborate your strategy and plans to continue to gain share in the OTA space? You know, where do you see the most substantial opportunity? Now, in relation to those opportunities, are the foundational investment already made to drive those share gains, or do you need to kind of accelerate that investment pace to stabilize that opportunity?
Great. Thanks for taking my questions can you guys maybe talk about maybe elaborate your strategy implies continued page here in D. O T space, where do you see the most substantial opportunity now in relation to those opportunities.
Are the foundational investment already made to drive those share gains or do you need to kind of accelerate that investment pays to capitalize that opportunity. Thanks. So much.
Speaker 4: Thanks, James. We look at different regions with different angles. For domestic, we further provide excellent products for our high quality of the customers by enhancing our customer services and product innovation.
Thanks James.
We look at different regions with different angle for domestic.
Further provide excellent products to for our high quality of the customers by enhancing our customer services and product innovations and for the third tier fourth tier cities. We further penetrate into these cities by offering the product.
Speaker 4: And for the third tier fourth tier cities we further penetrate into these cities by offering the product that with lots of incentives in service and pricing. So we believe domestic China we still have a long way to go in terms of serving 1.4 billion customers.
That with lots of the incentives in service and pricing. So we believe domestic China, we still have a long way to go in terms of serving a $1 4 billion customers.
Speaker 4: The second opportunity is outbound customers with the supply side, which includes the visa applications, as well as the flight capacity improving, we'll be able to take more customers abroad and enable them to see the rest of the world.
Second opportunity is all gone to customers.
The supply side, which includes the visa applications as well as the flight capacity, improving we'll be able to take more customers abroad and enable them to see the rest of the world out there.
Speaker 4: The third party is the global customers because the inventory we developed for our customers can also be utilized by our global customers. We'll be able to empower the customers from overseas to travel abroad.
Third party is the global customers because the inventory we developed for our outbound customers can also be utilized by our global customers will be able to empowered customers are from overseas to travel abroad. So different segments, we look at different.
Speaker 4: So different segments, we look at different opportunities, but for each segment, we feel there is a lot of upside for us to drive to. And we will make sure we make investment to address our customers' needs, particularly in product.
The opportunities are better for each segments with you.
A lot of upside.
For us to try to and we will make sure we make investments to address our customers' needs, particularly in product and engineering and services.
Speaker 4: and engineering and services. Our customers from different regions will have different requests. The majority of the investments are being made. We just need to continuously make improvements so that our customers' new requests are being addressed.
A lot of customers from different regions will have different to request. The majority of the investment being made we just need to continuously making improvements so that our customers request.
I just thank you.
Thank you.
Thank you.
Yeah.
Next we have Sean from HSBC. Please go ahead.
Speaker 1: Next we have Paraj John from HSBC, please go ahead.
Hi, Thank you.
Speaker 12: Thank you for taking my question and if I may shift your focus more towards capital return policy and it's very, very welcome.
Michelle.
Thank you. Thank you for taking my question.
So if your focus more towards capital return policy and it's a very very welcome move just wanted to understand how shall we think about it.
Speaker 12: I just wanted to understand how shall we think about...
Speaker 12: your balance sheet, let's say, in two years' time or in the medium to longer term, would you still want to carry a net cash balance sheet or given a steady state of your business, given the yield difference between the China market and the rest of the world, you think that you probably will be slightly more aggressive in terms of your buyback and return policy? And secondly, for your international-international business...
Our balance sheet, let's say two years time or in the medium to longer term would you still want to carry.
Net cash balance sheet are given.
The state of your business given the yield front between the China market and the rest of the World. We think that you probably will be slightly more aggressive in terms of your buyback policy and secondly for your international International business.
Speaker 12: How do you see the M&A market, and do you see any opportunity for Trip.com, Skyscanner, to jumpfrog in terms of overall relevance for the group through M&A?
How do you see the M&A market and do you see any opportunity for dot com skyscanner too to jump frog and pumps offer.
Overall relevance for the group through M&A. Thank you.
Speaker 9: Sure, thank you. For the first question, our board of directors has approved the multiple share buyback plan several years ago and with no expiration date.
Sure. Thank you.
For the for the for the first question.
Our board of directors has approved the multiple share buyback plan several years ago.
And with no expiration date.
Speaker 9: As previously discussed, there was approximately U.S. dollar 505 million of the quote still unused before our current repurchase.
As previously discussed there was approximately <unk> dollars five 5 million of the quote to steel and used it before our current repurchase.
Speaker 9: And in the last quarter, the rapid business growth in this year has significantly improved our cash flow. Additionally, we have increased our overseas cash reserves, ensuring we have sufficient funds for the buyback without affecting our regular operations.
And.
In the in the last quarter the rapid business growth in this year has significantly improved our cash flow.
Additionally, we have increased our overseas cash reserves, our reserves, ensuring we have the sufficient funds for the buyback.
Without affecting our regular operations.
Speaker 9: And the recent share price volatility due to purely external factors has resulted in a generally low valuation making it a suitable time for us to make this buyback.
And the recent share price volatility due to purely external factors has resulted in a generally low valuation make him a suitable time for us to make this buyback and going forward. We plan to proceed with the buyback without us.
Speaker 9: And going forward, we plan to proceed with the buyback without a specific timeline or price target, as long as our overseas cash reserves remain sufficient for operational needs, as well as the short-term debt obligations.
Specific timeline, all priced pocket as long as our overseas cash reserves.
<unk> sufficient for operational needs and as well as the short term debt obligations.
Obligations.
Speaker 9: and with regard to the M&A strategy for the international market.
And with regard to the M&A strategy for the international market.
Speaker 9: We are quite confident that we already have almost the best assets in the international market to fuel our growth, future growth.
We are we are quite confident that we already have the the almost the best asset in the international market to feel our.
Gross future growth. So we were pretty much focus to grow our market outside of China from the organic growth.
Speaker 9: So we were pretty much focused to grow our market outside of China from the organic growth.
Speaker 9: and most importantly to achieve the maximized synergies among different brands within the group. Thank you.
And most importantly to achieve the maximize the thing about cheese among different brands within the group. Thank you.
Thank you so much.
Thank you.
Speaker 1: Next we have Thomas Chung from Jeffries. Please go ahead.
Next we have Thomas Chong from Jefferies. Please go ahead.
Speaker 12: Hi, good morning. Thanks management for taking my questions and congratulations on a solid set of results. My question is about the trend in operating expenses. Given that we have seen product development expenses increase significantly quarter on quarter and versus 2019, what factors actually contribute to this growth and how should investors project this pattern going forward? Thank you.
Hi, Good morning, Thanks management for taking my questions and congratulation on a solid set of results my.
Question is about the trend in operating expenses.
We have seen product development expenses increased significantly quarter on quarter and versus trying to 19.
What factors actually contribute to this growth and how should investors.
Jack.
And going forward. Thank you.
Thank you Thomas.
Speaker 9: The product development expense is primarily comprised of personal related costs, especially the engineering team. In Q3, the total number of employees in product development remained significantly lower than the levels.
Product development expenses, primarily.
Price of personnel related cost, especially the Ah Ah Ah engineering team in Q3, the total number of employees in product development remain significantly lower than the levels in.
Speaker 9: in 2019. And the increasing expenses was mainly due to the performance-based bonus in recognition of the outstanding achievement during the quarter. And we anticipate that the absolute dollar amount of the product development expenses will decrease sequentially in the Q4 just because of the seasonality.
In 2019, and the increasing its bad this was mainly due to the performance related performance based bonus in recognition of the outstanding achievement during the quarter and we anticipate that the absolute dollar amount of the product development expenses were decreasing.
Italy in the Q4, just because of the seasonal.
Seasonality.
Speaker 9: and as Jane explained, we are targeting to grow our business in the long run. So going forward, we are continuously to balance our growth, healthy growth, as well as to control our total cost at a reasonable level that we achieved in the past few quarters. Thank you.
And what.
As Jane explained.
We are targeting to grow our business in the long run so going forward, we will continuously to balance our growth healthy growth.
As well as to control our total cost at a reasonable level that we achieved in the pasta.
Few quarters. Thank you.
Okay.
Thank you.
Next we have a lead Jang from Macquarie. Please go ahead.
Speaker 1: Next, we have Ali Zhang from Macquarie. Please go ahead.
Hi, Good morning management and thank you for taking my question.
Speaker 4: Good morning, management. Thank you for taking my question. I just would like to understand a bit more about our overseas product trip.com. Could you comment on trip.com current profitability and how will it look like in the next 3 to 5 years or in a longer run? Thank you.
I just would like to understand a bit more about our overseas product with dotcom could you comment on dot com current profitability and how will it look like in the next three to five years or even longer run. Thank you.
Sure.
Speaker 9: Taking into account all the markets that Trip.com is currently operating in, Trip.com has already achieved a break-even on a contribution margin basis.
Taking into account all the markets that Triple is currently operating in.
I'll call has already achieved breakeven and.
All a contribution margin basis.
Speaker 9: excluding fixed costs and the shared cost on the group level. Moreover, our business contribution continuously, with our business continues to scale up, the profitability will consistently improve across market.
Excluding fixed costs and the duck share and a share of the cost on the group level. Moreover, our business contribution a continue.
Continuously with our business.
<unk> to scale up the profitability will consistently improve across market.
Speaker 9: and with regard to the margin of different markets.
With regard to the.
Margin of <unk>.
Current market in Asia Pacific ridges chip they'll call is project to be breakeven within the next two to three years of our net profit level, while in the rest of the world are our current primarily private.
Speaker 9: In Asia-Pacific regions, Trip.com is projected to break even within the next two to three years on a net profit level, while in the rest of the world, our current primary focus is still to increase Trip.com's incremental contribution to the group, which has been showing consistent improvement in the past few years. Thank you.
Primary focus is still to increase chipped off cause incremental contribution to the group, which has been showing consistent improvement in.
In the in the past few years. Thank you.
Yeah.
Thank you.
Speaker 1: Next, we have Teng X. Hyun from TH Capital. Please go ahead.
Next we have 10 X June from T. H capital. Please go ahead.
Yeah management.
Speaker 4: Yeah, management have a congratulation on a good quarter. This is 10. so.
Congratulations on a good quarter. This is Tim so.
Oh, yes.
Speaker 4: Yeah, I have two questions. One is related to the profit level. So, you mean the perfect profit level can, you know, maintain the current and continue to improve.
Yes, I have.
Two questions one is related to the profit level.
You mean, the perfect perfect level.
You know maintain the current and continue to improve so I just want to understand.
Speaker 4: So, I just want to understand, you know, what part of your P&L can drive up the improvement.
What part of your P&L can drive up the improvement.
Speaker 4: how the revenue and cost and expense structure will be.
How the revenue and cost and expense structure will be to lead that improvement that is the first question. The second question is related to your AI. So my understanding is the AI at this point to is much more a cost center.
Speaker 4: to lead that improvement? That is the first question.
Speaker 4: The second question is related to your AI. So my understanding is...
Speaker 4: The AI at this point is much more a call center.
Speaker 4: and is much more like a revenue or profit center. So can management elaborate a little bit about your AI in which part of your AI practice is a profit center or revenue center?
It's much more like a.
Our revenue or profit center, so can management elaborate a little bit about your AI in which part of your practice is a profit center or revenue center. Thank you.
Speaker 4: Sure, I will see if Cindy will take the first question and I will take the second question. Thank you.
Sure our CFO Cindy will take the first question and I'll take the second question. Thank you.
Speaker 9: In terms of the long-term profitability of the business, we expect to overcome our current short-term high base and to drive the long-term margin expansion mainly through operational scalability as well as the favorable revenue mix.
Okay.
Yeah.
In terms of the long term profitability of the business, we expect to overcome our current short term high base and to drive the long term margin expansion mainly through operational scalability.
As well as the favorable revenue mix.
Speaker 9: For example, in the long run, we think AI probably is one of the key drivers for us to help us to continuously to improve our operational efficiency in the service center. And we are, in the long run, we are confident of achieving a margin that is comparable to our international global peers.
For example in the Lora, we think AI is probably is one of the key drivers for us to help us to continuously to improve our operational efficiency in our service center.
And we are in the long run we are confident of achieving a margin that is comparable to our international global peers.
Jamie.
Speaker 4: So, for the second question on AI, we use AI for mainly four areas. The first one is to improve user interface. I think the TrapGenie really enabled our customers to find their relevant and tailor-made products much easier. The second one is to improve the efficiency for our engineering team by using co-pilot.
So for the second question on AI.
We use AI for me the four areas. The first one is to improve user interface.
I think the <unk> really enable our customers to.
Find they are relevant and tailor made products much easier. The second one is to improve the efficiency for our engineering team by using co pilot.
Speaker 4: The third one is also to improve our efficiency for content generation and make sure all the content in the recommendation list are accurate and based on the reliable data.
Third one is also to improve our efficiency for content to generation and make sure all the content and the recommendation list.
Accurate and based on the Ah.
Reliable data.
Speaker 4: And lastly, we also are using AI to further improve our efficiency for customer service team. So these are the four areas which we are utilizing our AI capability and we will make investment accordingly. Thank you. Okay, may I ask one
And lastly, we also are using AI to further improve our efficiency for customer service.
So these are the four areas, which we.
Utilizing our AI capability, and we will make investments accordingly, thank you.
Okay May I ask one more question so.
Speaker 4: So, the question is about your announced the share repurchase plan. So, I understand you, you know, you guys think the valuation is undervalued.
Question is about your AR announced a share repurchase plan so.
I understand you <unk> you.
I think the valuation is undervalued.
I agree with you and Jim but isn't.
Speaker 4: and about isn't there a better use of U.S. dollars? You know, for example, the U.S. you know, government's short-term debt is already reaching almost six percent of the yield.
Isn't there a better use of U S dollars.
For example, the U S.
Governments short term debt is already reaching almost 6% of the yield.
Speaker 4: So if you buy back your own shares, you're sure you can generate more than 6% yield. So I just want to think about, want to ask a question. So do you think buy back share versus investing in the better yield, which one's the better?
So if you buy back your own shares.
Sure.
You know generally more than 6% yield so I just wanted to.
Think about it once.
Wanted to ask a question.
So do you think buybacks here versus investing in the best yields and you know which ones are better option.
Yeah.
Speaker 9: Yeah, thank you for your question. To be honest, ever since we established, we're always in the travel industry. And I think the reason that our investors invest in us is not because we have the
Yeah. Thank you for your question to be honest, we are ever since we established it we always in the travel industry.
And I think the reason that the our investor invest us is not because we have the expertise to making investments rather actually we are the experts in the travel industry. So we should be as always be very consistently focus on our core business, which is travel and they came back.
Speaker 9: expertise to making investments rather actually we are the experts in the travel industry so we should be as always be very consistently focused on our co-business which is travel and make investment in ourselves is the top opportunity is the best opportunity for our shareholders. Thank you.
In our self is the <unk>.
Our opportunity is the best opportunity for our shareholders. Thank you.
Thank you.
There are no further questions at this time I will now hand, the conference back to Michel for closing remarks. Thank you.
Speaker 1: There are no further questions at this time. I will now hand the conference back to Michelle for closing remarks.
Speaker 9: Thank you. Thanks everyone for joining us today. You can find a transcript and webcast of today's call on investorsdopetrip.com. We look forward to speaking with you on the fourth quarter of 2023 earnings call. Thank you and have a nice day.
Thank you everyone for joining us today, you can find the transcript and webcast of today's call on our Investor field trip Bill Com, We look forward to speaking with you on the fourth quarter of 2023 earnings call.
And have a nice day.
Speaker 1: Thank you. This concludes today's conference. Thank you all for participating. You may now disconnect.
Thank you. This concludes today's conference. Thank you all participating you may now disconnect.
[music].
Okay.
Okay.
[music].
Okay.
[music].
Hum.
Yes.
[music].
Okay.
[music].
Sure.
[music].
Yeah.
[music].
Yeah.
[music].
Okay.
Okay.
[music].
Okay.
Yes.
Okay.
Okay.
Okay.
[music].
Okay.
Yeah.
[music].
Okay.
[music].
Yes.
[music].
Okay.
Yes.
[music].
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
[music].
Great.
Okay.
[music].
Okay.
Okay.
Yes.
[music].
Okay.
Yes.
[music].
Yes.
[music].
Yes.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Sure.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
[music].
Okay.
Yes.
Okay.
Yes.
Yes.
[music].
Okay.
Yes.
Okay.
Yes.
[music].
Okay.
[music].
Okay.
Yes.
Yes.
Yes.
Okay.
[music].
Yes.
Thank you.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Thanks.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
[music].
Okay.
Thank you.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
[music].
Okay.
[music].
Sure.
Okay.
Yes.
[music].
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Yes.
[music].
Okay.
Yes.
Yeah.
Sure.
Yes.
Okay.
Yes.
Okay.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Yes.
Thank you.
Yes.
Okay.
Okay.
Okay.
Hum.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Right.
Okay.
Okay.
Hi.
Okay.
Okay.
Speaker 1: Good day and thank you for standing by. Welcome to Trip.com Group 2023 Q3 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Good day and thank you for standing by welcome to trip Com Group 2023, Q3 earnings Conference call. At this time, all participants are in a listen only mode.
Speaker 1: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is right.
After the speaker's presentation, there will be a question and answer session.
Ask the question during the session you will need to press star one on your telephone.
We will send you an automated message advising Johan is raised to withdraw your question. Please press star one again.
Speaker 1: To withdraw your question, please press star 11 again.
Speaker 1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Senior IR Manager Michelle Chee. Please go ahead.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Senior IR manager Michelle Qi. Please go ahead.
Speaker 2: Thank you. Thank you, Maggie. Thank you, everyone. Good day. And welcome to Crypto.com Group's third quarter of 2023 earnings conference call. Joining me today on the call are Mr. James Lam, Executive Chairman of the Board, Ms. Jen Sun, Chief Executive Officer, and Ms. Cindy Wong, Chief Financial Officer.
Thank you. Thank you Maggie Thank you everyone. Good day and welcome to trip Dotcom groups third quarter of 2023 earnings Conference call.
Joining me today on the call are Mr. James Liang Executive Chairman of the Board Ms. Jane Sun, Chief Executive Officer, and MS. Cindy Wang Chief Financial Officer.
Speaker 9: During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995.
During this call we will discuss our future outlook and performance, which are forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker 9: forward-looking statements involved inheritance and uncertainties.
Forward looking statements involve inherent risks and uncertainties.
Speaker 9: As such, our results may be materially different from the views expressed today.
As such our results may be materially different from the views expressed today.
Speaker 9: A number of potential risks and uncertainties are outlined in CryptoCom Group's public filings with the Security and Exchange Commission.
A number of potential risks and uncertainties are aligned interest will come group's public filings with the Securities and Exchange Commission.
Speaker 9: Chip.com group does not undertake any obligation to update any forward-looking statement except as required under applicable law.
Chip they'll com group does not undertake any obligation to update any forward looking statement, except as required under applicable law.
Speaker 9: James, Jen, and Cindy will share our strategy and business updates, operating highlights, and financial performance for the third quarter of 2023, as well as outlook for the fourth quarter of 2023.
Jim Jim and Cindy will share in our strategy and business update operating highlights and financial performance for the third quarter of 2023 as well as the outlook for the fourth quarter of 2023.
Speaker 9: After the prepared remarks, we will have the Q&A session. With that, I will turn the call over to Jane.
After the prepared remarks, we will have the Q&A session.
That I will turn the call over to Jim.
Jim Please.
Yeah.
Speaker 3: Thank you, Michelle. Thank you, everyone, for joining us on the call today.
Thank you Michelle.
Thank you to everyone for joining us on the call today.
Speaker 3: We are pleased to see the global travel market showing strong recovery in the third quarter.
I'm pleased to see the global travel market.
A strong recovery.
In the first quarter.
Speaker 3: The Chinese travel market in particular has experienced a significant rebound, driven by high demand during the summer season.
Chinese travel market in particular has experienced.
Thank you.
Each rebounds.
Demand during the summer season.
Speaker 3: business has consistently performed well, breaking previous records in hotel and air booking.
Our business has consistently performed well previously.
Previous record.
Thank you.
Thanks.
Speaker 3: Additionally, outbound travel is rapidly recovering.
Additionally.
Travel is rapidly recovering.
Speaker 3: thanks to the improvements in international airlift and travellers' robust desire for international experience.
Yes.
Internationally I missed.
Yes.
For international experience.
So we anticipate the continuously strong demand.
In the coming year.
Okay.
David.
Okay.
To meet this demand.
Speaker 3: We also accelerate our global business growth by expanding and scaling our global.
Yes.
Salaries.
Thanks Danny.
Scaling.
Sure.
Yeah.
Speaker 3: While globalization remains a crucial aspect of our business.
Thanks Shannon.
Please go ahead aspect of our business.
Speaker 3: Crypto.com group recognizes the significance of AI innovation in our long-term strategy.
Your line is.
Okay.
Alicia.
In terms of strategy.
Speaker 3: The pandemic has accelerated the digitization of travel industry, and advancements in AI technology have transformed consumer expectations.
Thanks Sam.
Yes.
The Street.
And then the management team.
Energy.
So my expectations.
Speaker 3: In response to this trend, we have developed our unique AI technology, which is specifically designed for the travel industry.
In response to this trend.
Our unique.
LNG.
Specifically designed for the travel industry.
Speaker 3: This, combined with our extensive travel knowledge, enables us to create a reliable database of accurate travel data and provide actionable recommendations for travelers.
Combined with our extensive travel knowledge.
Okay.
Great travel data.
Actionable recommendations for travelers.
Speaker 3: Moving forward, we will continue to enhance our capabilities and integrate AI into all aspects of our business.
Going forward.
Can you just.
Thank you.
All aspects of our business.
Speaker 3: providing personalized booking experiences and tailored to recommendation.
Personalized.
And then just and tailored recommendations.
Speaker 3: In conclusion, travel is unique in that it is an inherently human-centric experience with insatiable demand.
Conclusion.
And that it is.
Emily human centric experience.
Thank you.
Speaker 3: We will continue to push forward with our globalization and AI innovation to pave the way for the company's expansion.
We will continue to push forward.
Thank you Alicia.
Yes.
So paving the way for the company accelerated its growth.
Speaker 3: With that, I will turn the call over to Jane for Operational Allies.
Yes.
I'll turn the call over to Jay.
Hey.
Alex.
Speaker 4: Thanks, James. Good morning, everyone. As a quick overview, our net revenue increase rate grew by approximately 100% year-over-year and has exceeded the 2019 level by 31%.
Thanks, James and good morning, everyone as a quick overview, our net revenue increased three grew by approximately 100% year over year and has exceeded the 2019 level by 31%.
Speaker 4: The strong travel demand and robust momentum in travel bookings that we saw in the second quarter continued to extend into the third quarter. Our business performance continued to elevate and
The strong travel demand and robust momentum in a travel bookings that we saw in the second quarter continued to extend into the third quarter.
Our business performance continue to elevate and reached a new record amounts.
Speaker 13: with hotel booking increased over 97% versus last year, and air bookings increased by about 70% year over year.
With hotel booking increased over 97% versus last year and air bookings increased by about 70% year over year.
Speaker 13: In the China domestic market, trouble demand remained strong. Over the past three quarters, Chinese consumers have been increasingly prioritizing trouble spending over other discretionary spending. The positive trend that we saw in the second quarter continued all the way to the third quarter.
In the China domestic market.
Demand remained strong.
Over the past three quarters Chinese consumers have been increasingly prioritizing turbo spending over other discretional spending.
The positive trend that we saw in the second quarter continued all the way to the third quarter.
Speaker 13: Our domestic hotel reservations grew by over 90% year-over-year and 70% versus 2019 level. Long-haul hotel booking
Our domestic hotel reservations grew by over 90% year over year, and 70% versus 2019 level.
Noncore hotel bookings has been the <unk>.
Speaker 13: the fastest year-over-year growth rate of 133 percent. And our short-haul hotel bookings were also 66 percent above last year's level.
Fastest year over year growth rate of 133% and our short or hotel bookings were also 66% above last years level.
Speaker 13: while Chinese travelers remained keen to explore their home country.
While Chinese travelers remained keen to explore their home country.
Speaker 13: Capacity to travel abroad continued to ramp up thanks to the steady improvement on the supply side.
Propensity to travel abroad continued to ramp up thanks to the steady improvement on the supply side.
Speaker 13: In Q3, while the overall Chinese outbound market recovered to only about 50 percent of the pre-pandemic level, Trip.com Group's outbound hotel and air ticket reservation have already recovered to 80 percent of the pre-pandemic level, continue to lead the market by approximately 30 percent.
In Q3.
The overall Chinese outbound market to recovered to only about 50% of the pre pandemic level chip Dotcom Grus outbound hotel and air ticket to reservation have already recovered to 80%.
The pre pandemic level continue to lead the market by approximately 30%.
Speaker 13: APAC regions such as Hong Kong, Macau, Thailand, Singapore, Korea, Japan remain top outbound destinations due to the high recovery in flight capacity and easy visa application.
APAC regions, such as Hong Kong, Macau, Thailand, Singapore, Korea, Japan remain top outbound destinations due to the higher recovery in flight capacity and easy visa application.
Speaker 13: Trip to long-haul destinations, such as Europe , have also seen the fastest growth rate when compared to where they were in the previous quarter.
Tricked to long haul destinations such as Europe have also seen.
Seeing the fastest growth rate when compared to where they were in the previous quarter.
Speaker 13: Increasing number of the overseas partners are gearing up to welcome Chinese travelers.
Increasing number of the overseas partners.
Going up to welcome Chinese Ah.
Travelers in particular hotels in more than 15 popular destinations, including Dubai terrorists Tolerable has offered tailored services, such as Chinese language support and containment.
Speaker 13: In particular, hotels in more than 15 popular destinations, including Dubai, Paris, Kuala Lumpur, have offered tailored services such as Chinese language support and payment.
Speaker 13: These positive trends have enhanced the consumer's confidence when they travel abroad.
These positive between half.
Enhance the consumers' confidence when they travel abroad.
Speaker 13: We look forward to seeing further growth in Chinese album travel next year.
So we look forward to seeing further growth in Chinese outbound travel next year.
Speaker 13: Turning to our global business, we continue to see resilience in the global travel demand.
Turning to our global business, we continued to see resilience in the global travel demand.
Speaker 13: especially in impact regions, which is the key market and powerhouse of the world.
Especially in APAC regions, which is the key market and powerhouse of the growth.
Speaker 13: Air ticket booking on our global OTA platform has nearly doubled year over year, and 80% about 2019.
Air ticket booking our global <unk> platform has nearly doubled year over year and 80% above 2019 level.
Speaker 13: Our overall hotel bookings on the global platform also hit a new record high and more than doubled.
Our overall hotel bookings on the global platform also hit a new record high and more than doubled.
2019 levels.
Speaker 13: Following the country's goal to promote inbound tourism and roll out our favorable policies, we have also seen triple digits growth in inbound travel through our global platform.
Following the country's goal to promote inbound tourism.
And rollout of favorable policies, we have also seen triple digit growth.
Inbound travel through our global platform.
Speaker 13: Travelers worldwide are increasingly opting for destinations abroad, which continue to drive the global travel momentum and present great opportunity for travel companies with global offerings.
Call us.
Good wide are increasingly opting for destination abroad, which continue to drive the global travel momentum and present, great opportunity for travel companies with global offerings.
Speaker 13: Benefiting from the positive trend, our global business continues to excel and our focus remains on fostering organic growth in the mid to long term.
Benefiting from the positive trend our global business continues to excel and our focus will remain on fostering organic growth in the mid to long term.
Speaker 13: Our global OTA platforms have experienced a significant growth.
Our global Otas.
Our platform has experienced significant growth with its contribution to the growth to the group steadily improved increasing and now representing nearly half of our total overseas vision.
Speaker 13: with its contribution to the group steadily increasing and now representing nearly half of our total overseas business.
Speaker 13: we see substantial potential for further extension to serve users globally as well as significant upside.
We see substantial potential for further extension to serve users globally.
There are significant.
Upside for profitability.
Speaker 13: Notably, in Q3, 60% of our global population
Notably in Q3, 60% of our global booking came directly through our global mobile App.
Speaker 13: came directly through our global mobile app.
Speaker 13: Our APAC market, we have seen 70% of the orders are booked through our mobile app, which is even higher.
Our APAC market.
We have see 70% of the orders are booked through our mobile app.
Which is even higher than the global booking.
Speaker 13: To further capitalize on this opportunity, we have developed a comprehensive roadmap that leverage our strengths and resources to drive continuous growth.
To further capitalize on this opportunity we have developed a comprehensive roadmap that leverage our strengths and our resources to drive continuous growth.
Speaker 13: Our strong foothold in APAC markets, coupled with our unwavering commitment to customer services, enable us to deliver exceptional product and service offerings to our users. Recognizing the immense potential in APAC region, we are dedicated to further enhancing our brand awareness to solidify our market position.
Our strong foot hold in APAC markets, coupled with our unwavering commitment to customer services enable us to deliver exceptional product and service offerings to our users recognizing the immense potential in APAC region.
We are dedicated to further enhancing our brand awareness to solidify our market position.
Speaker 13: Notably, we have achieved significant market share growth in key areas such as Hong Kong, Korea, Southeast Asia.
Notably we have achieved significant market share growth in key areas, such as Hong Kong Korea Southeast Asia.
Speaker 13: and our strong product income to provide a comprehensive one-stop shopping service also enable us to capture some opportunities ahead.
And our strong product to provide a comprehensive one stop shopping service also enable us to capture the opportunities ahead.
Speaker 13: We're also applying the same strategic approach to extend to the rest of the world by leveraging our product and service capability.
We're also applying the same strategic approach to extend to the rest of the world by leveraging our product and service capability.
Speaker 4: In terms of accommodation, we have enhanced our product capabilities by achieving a more balanced mix between our traditional strengths in long-haul and newly developed expertise in the short-haul.
In terms of accommodation, we have enhanced our product capabilities, while achieving a more balanced mix between our traditional strength in long haul and newly developed expertise in short haul.
Speaker 13: in response to evolving travel needs in the post-pandemic area.
In response to evolving travel needs.
In the post pandemic area.
Speaker 13: Our focus remained on the positive product innovation, aiming to deliver great value to both our customers and partners.
Our focus remained on.
The positive product innovation aiming to deliver great value to both our customers and our partners.
Speaker 13: Additionally, partners have the opportunity to join our trip plus program, which enabled them to connect with our high quality and loyal customers through our
Additionally partners have the opportunity to join our trip plus program, which enabled them to connect with our high quality and our loyal customers.
Through our branded membership.
Speaker 13: Furthermore, we are extending our user space by pushing forward with our lower tier cities penetration.
Furthermore, we are expanding our user base by pushing forward with our lower tier cities penetration with these efforts we aimed to create a developed to deliver the best possible value to both of our customers and our Pos.
Speaker 13: With these efforts, we aim to deliver the best possible value to both of our customers and our partners.
Thanks.
Speaker 13: As the appetite for travel continues to grow, the further AI in application in travel is expected to focus on efficiency and highly personalized solution to tailor-made individual traveler's needs.
As the appetite for travel continued to grow further.
For the AI in application in travel is expected to focus on efficiency and highly personalized solution to tailor made individual travelers' needs.
Speaker 13: This vision not only signified the next phase of the travel industry, but also underscored the profound impact of AI in making travel more convenient, personalized, and memorable for everyone.
This vision not only seeking to fight the next phase of the travel industry, but also underscores the profound impact of AI in making travel more convenient personalized and memorable for everyone.
Speaker 13: So far, we have launched a series of AI tools to refine travel booking experience.
So far we have launched a serious AI tools to redefine travel booking experience.
Our AI travel assistant trip Jeanie enhanced that.
Speaker 13: Our AI travel assistant, Trip Genie, enhanced the user interface with our customers by leveraging natural language user's interface and providing actionable results.
User interface with our customers by leveraging natural language used users interface and providing actionable results.
Speaker 13: Since its launch early this year, we have seen double-order conversion rate improvements and also help our users' retention.
Since its launch early this year, we have seen double order conversion rate improvement.
And also help our users retention.
Speaker 13: We have also achieved remarkable self-service rate with the help of AI chatbot, which can handle numerous inquiries.
We have also achieved remarkable self service rate with the help of AI chatbot, which can handle numerous inquiries.
Speaker 13: using text and voice accuracy to enhance this service.
Using text and voice.
Accuracy.
We enhanced the service.
Speaker 13: This streamlined approach results in improved self-service resolution.
This streamlined approach results in improved self service solution.
Speaker 13: As the recovery of the travel industry is promising, we continue to embrace the sustainability as a component of our long-term growth strategy.
As the recovery of the travel industry is promising we continue to embrace the sustainable sustainability as a component of our long term growth strategy.
Speaker 13: the remained, we remained committed to being environmental friendly, community friendly, and family friendly.
The remained we've remained committed to the environmental friendly community friendly.
And family friendly.
Speaker 13: First, for environmental friendly, we provide sustainable tribal private.
First for environmental friendly.
Provide sustainable travel products.
Speaker 13: dedicated to supporting and enhancing communities we are serving. We have taken significant steps to incorporate sustainable travel products into its various product lines, including light, car rentals, and
Dedicated to supporting two enhancing community.
We are sure survey, we have taken significant steps to incorporate sustainable travel products into its various product lines, including light.
Car rentals and corporate travel.
Speaker 13: Over 16 million users have already chosen these sustainable travel options, favoring the
16 million users have already chosen.
Sustainable travel options.
February the company's low carbon products.
Speaker 13: We also are focusing on low carbon hotel standards.
We also are focusing on low carbon hotel standard.
Speaker 13: as part of our ongoing commitment to promoting our sustainable travel industry.
As part of our ongoing <unk>.
Determent to promoting our sustainable travel industry.
Speaker 13: the initiative, Crypto.com groups have engaged with nearly 1,000 hotel partners and launched its low-carbon hotel standard initiative.
And the initiatives Kip dotcom groups have engaged with nearly 1000 hotel partners and launched its low carbon hotel standard initiatives.
Speaker 13: which aims to encourage eco-friendly practices and facilitate a shift.
Which aims to encourage eco friendly.
Practices and facilitate a ship.
Speaker 13: towards a more sustainable travel ecosystem by collaborating with these hotels.
Towards a more sustainable travel ecosystem by collaborating with these hotels.
For community brand building initiatives.
Speaker 13: For community-friendliness initiatives, we also have pushing forward with building countries' retreats across the country to nurture travel talents and improve local travel services quality while also creating job opportunities and contributing to the global common prosperity.
We also have pushing forward with beauty countries retreats across the country.
Virtual travel talents and improve local travel services quality, while also creating job opportunities and contributing to the global commerce prosperity.
For family.
Speaker 13: For family-friendly, we have implemented a subsidy program aiming to alleviate child birth expenses in order to support our employees to achieve work-life balance.
Currently we have implemented subsidy program aiming to alleviating child birth expenses in order to support our employees to achieve work life balance.
Speaker 13: With our ongoing efforts to prioritizing these initiatives, we are proud to continue to make positive impact on society at large.
With our ongoing efforts to prioritizing. These initiatives we are proud to continue to make positive impact on society at large.
Speaker 13: In conclusion, we are encouraged by the robust travel demand across all business segments, and we anticipate these outbound travel will continue to be primarily catalyst for the growth in the short term.
In conclusion, we are encouraged by the robust travel demand across all business segments and we anticipate these outbound travel will continue to be primarily a catalyst for the growth in the in the short term.
Speaker 13: Looking forward, our global business bolstered by enhanced offering and improved profitability will become the pivotal pillars in the long run.
Looking forward, our global business bolstered by enhanced offering and improved profitability will become the pivot toward killers in the long run.
Speaker 13: Considering these promising prospects, as well as the efficiency gain achieved during the quarter and going forward by implementing of our AI initiatives, we remain an optimistic outlook for the market. And we are confident in the opportunities that lay ahead of us.
Considering these promising prospects as well as the efficiency gains achieved during the quarter and going forward by implementing.
Of our AI initiatives, we remain an optimistic outlook for the market and we are confident in the opportunities that lay ahead of us.
Speaker 13: With that, now I will turn the call to Cindy.
With that now I will turn the call to Cindy.
Speaker 2: Thanks, Jane. Good morning, everyone. For the third quarter of 2023, Trip.com Group reported a net revenue of RMB $13.7 billion, representing a 99% increase from the same period last year and a 22% increase from the previous quarter, primarily due to strong recovery in the travel market.
Thanks, Jay Good morning, everyone for the third quarter of 2023 trip Com Group reported a net revenue of RMB 13, 7 billion, representing a 99% increase from the same period last year and a 22% increase from the previous quarter.
Primarily due to strong recovery in the travel market accommodation reservation revenue for the third quarter was RMB five 6 billion, representing a 92% increase year over year, and a 30% increase quarter over quarter, which is 36%.
Speaker 2: Accommodation reservation revenue for the third quarter was RMB 5.6 billion, representing a 92 percent increase year over year and a 30 percent increase quarter over quarter, which is 36 percent higher than the 2019 level. Both domestic and outbound hotels have seen robust growth and outpaced the industry.
Higher at the end of 2019 levels, both domestic and outbound hotel have been robust growth and outpace the industry.
Speaker 2: Overall hotel booking has achieved a record high and has grown over 60% above the pre-pandemic level.
Overall hotel bookings have achieved a record high and have grow over 60% above the pre pandemic level.
Speaker 2: Transportation ticketing revenue for the third quarter was RMB 5.4 billion, representing a 105% increase year over year and the 11% increase quarter over quarter, which is 44% higher than the 2019 level. This is mainly due to robust recovery of outbound air and strong growth in domestic and global air business.
Transportation ticketing revenue for the third quarter was RMB, five 4 billion, representing a 105% increase year over year, and 11% increase quarter over quarter, which is 44% higher at the end of 2019 level. This is mainly.
Due to robust recovery of outbound air and strong growth in domestic and global air business.
Speaker 2: Package tour revenue for the third quarter was R and B 1.3 billion, representing a 243% increase year over year, and an 84% increase quarter over quarter, recovering to 81% of the 2019 level. Domestic package tour has outgrown the 2019 level, while recovery in the outbound package tour was still lagging behind.
Packaged tour revenue for the third quarter was RMB, one 3 billion, representing a 243% increase year over year, and 84% increase quarter over quarter recovering 281% of the 2019 level domestic package tour.
Has outgrown the 2019 level why recovery in the outbound package tour was still lagging behind.
Speaker 2: Corporate travel revenue for the third quarter was RMB $591 million, representing a 60% increase year over year, and remained flattish quarter over quarter, which is 76% higher than the 2019 level, with air ticketing bookings increased by double digits above 2019 level, and hotel bookings threefold the 2019 level.
Corporate travel revenue for the third quarter was RMB 591 million $91 million.
Representing a 60% increase year over year and remained flattish quarter over quarter, which is 76% higher than the 2019 levels with air ticketing bookings increased by double digit above 2019 level and hotel bookings three fold.
2019 level.
Speaker 2: Excluding share-based compensation charges, our total adjusted operating expenses were 19% higher than the previous quarter and 20% higher than the same period in 2019.
Yes.
Excluding share based compensation charges, our total adjusted operating expenses were 19% higher than the previous quarter and 20% higher than the same period in 2019.
Speaker 2: Adjusted product development expenses for the third quarter increased by 23 percent from the previous quarter and increased by 29 percent compared with the same period in 2019.
Adjusted product development expenses for the third quarter increased by 23% from the previous quarter and increased by 29% compared with the same period in 2019.
Speaker 2: Adjusted GNA expenses for the third quarter increased by 9% from the previous quarter and increased by 21% from the same period in 2019. This is mainly due to increase in personnel-related expenses. The increase was mainly related to performance-based bonus in recognition of the exceptional performance achieved in the quarter.
Adjusted G&A expenses for the third quarter increased by 9% from the previous quarter and increased by 21% from the same period. In 2019. This is mainly due to increase in personnel related expenses. The increase was mainly.
Related to performance based bonus in recognition of the exceptional performance achieved in the quarter.
Speaker 2: while the total headcount of our product development and GNA teams was significantly lower than during the same period in 2019.
While the total head count of our product development and G&A teams was significantly lower.
And then during the same period in 2019.
Speaker 2: Adjusted sales and marketing expenses for the third quarter increased by 17% from the previous quarter and increased by 11% compared with the same period of 2019. The sequential increase was due to increased marketing activities that were in line with the higher seasonality.
Adjusted sales and marketing expenses for the third quarter increased by 17% from the previous quarter and increased by 11% compared with the same period of 2019.
The sequential increase was due.
Due to increased marketing activities that were in line with the higher seasonality.
Speaker 2: Adjusted EBITDA was RMB4.6 billion for the third quarter compared with RMB1.4 billion in the same period last year and RMB3.7 billion in the previous quarter.
Adjusted EBITDA was RMB four 6 billion for the third quarter compared with RMB, One 4 billion in the same period last year and RMB three 7 billion in the previous quarter.
Speaker 2: Adjusted EBITDA margin was 34 percent for the third quarter compared with 21 percent in the same period last year and 33 percent in the previous quarter.
Adjusted EBITDA margin was 30, 34% for the third quarter compared with 21% in the same period last year and 33% in the previous quarter.
Speaker 2: Diluted earnings per ordinary share and per ADS were RMB 6.84 or U.S. dollar 94 cents for the third quarter of 2023.
Diluted earnings per ordinary share and per ads.
What were RMB six eight for our U S dollar 94.
For the third quarter of 2023.
Speaker 2: Excluding share-based compensation charges and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 7.26 or U.S. dollar one for the third quarter.
Excluding share based compensation charges and fair value changes of equity Securities investments exchangeable senior notes non-GAAP diluted earnings per ordinary share and per ads.
Or RMB 726.
U S dollar.
One for the third quarter.
Speaker 2: As of September 30, 2023, the balance of cash and cash equivalents, restricted cash, shortened investment, held to maturity time deposit, and financial product was RMB 79 billion or U.S. dollar 10.8 billion.
As of September 32023, the balance of cash and cash equivalents restricted cash and short term investment.
Oh, two maturity time deposit and financial products was RMB seven 9 billion are U S dollar 10.8 billion.
Okay.
Speaker 2: Getting the rapid business growth this year has significantly strengthened the group's cash flow, and we believe the company's share price is undervalued. As of November the 20th, 2023, we repurchased U.S. dollar 120 million of our shares and reduced our share count by 0.5 percent versus last year.
Given the rapid business growth. This year has significantly strengthened the group's cash flow.
We believe the company's share price is undervalued.
As of November the <unk> 2000, 22023, we repurchased U S dollar $120 million of our shares and reduced our share count by 0.5% versus last year.
Speaker 2: Our Board of Directors has also approved a regular capital return policy, which is scheduled to commence in 2024.
Our board of Directors has also approved a regular capital return policy, which is scheduled to commence in 2023 2024.
Speaker 2: We are proud of this accomplishment as it reflects both our commitment to returning capital to shareholders and our confidence in the long-term outlook of the travel industry and our own business.
We are proud of this accomplishment as it reflects both our commitment to returning capital.
To shareholders and our confidence in the long term outlook of the travel industry and our own business.
Speaker 2: To conclude, we are pleased with the continued momentum in the travel market and our team's solid execution in the third quarter. We are well-prepared and will remain key to drive long-term growth and to maximize return for shareholders.
To conclude we are pleased with the continued momentum in the travel market and our team's solid execution in the third quarter.
We are well prepared and will remain key to drive <unk>.
<unk> long term growth and to maximize return for shareholders.
Speaker 2: With that operator, please open the line for questions.
With that operator, please open the line for questions.
Speaker 1: Thank you. We will now conduct the Q&A session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as we compile the Q&A roster.
Thank you.
We will now conduct the Q&A session.
Reminder, to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby as we compile the Q&A roster.
Speaker 1: Our first question comes from Brian Gaughan from Citi.
Our first question comes from Brian Gong from Citi.
Please go ahead Brian.
Speaker 5: Yes, thanks. Good morning, James, Cindy, and Michelle. Congrats on recent quarter results. And thanks for sharing the exciting progress of the generative AI adoption at Trip.com. I have a quick question on this. Could you elaborate how the adoption of AI technology differs between our, you know, pure international platform, Trip.com, and our domestic Ctrip within the group? Thank you.
Yes, Thanks, Good morning, James Jane Cindy and Michelle Congrats.
Third quarter results and then thanks for sharing the exciting progress also general AI adoption of cheap dotcom.
Quick question on <unk> could.
Could you elaborate also adoption.
Technology differs between our.
True International platform trip Dot com and our domestic Ctrip reading the group. Thank you.
Speaker 3: Thanks for your question. We implement a consistent AI adoption strategy across all markets.
Thanks for your question when you implement consistent adoption strategy across all markets.
Speaker 3: focusing on improving productivity and efficiency in marketing, engineering, and customer service.
Okay.
Kind of activity.
And marketing and G&A.
And the customer services.
Speaker 3: Our goal is to offer users a smart AI assistant that can simplify and enhance their trip planning and the research experience.
Okay.
<unk>.
Yes.
Gladly.
Okay.
Yes.
Speaker 3: Through natural language interfaces and actionable recommendations, we aim to help users plan their trips more effectively.
So the natural language interfaces and actionable recommendations.
No.
And then more effectively.
Speaker 3: Successful practices from each market will be shared and promoted across others.
Success and practices from each market will be shared.
Okay.
Speaker 6: ultimately becoming a global standard within our organization. Thank you very much.
Ultimately, becoming a global standards.
The division.
Thank you very much.
Thank you.
Just a moment for our next question. Please.
Next we have Alex Poon.
From Morgan Stanley. Please go ahead.
Speaker 14: Thank you, James, Cindy and Michelle. Congrats on a very strong quarter. For my question, could you share some details about the travel performance after the Golden Week and how should we interpret the momentum into Q4 and into 2024? Thank you so much.
Alright, Thank you James Jane Cindy and Michelle Congrats on very strong quarter.
For my question could you share some details about the troubled performance after the Golden week, and how should we interpret that momentum into Q4 and into 2024. Thank you so much.
Speaker 2: Sure. According to date, China Hotel rep part number and domestic air passenger volume was slightly below that of 2019, which reflects a normal seasonality post the summer.
Sure.
Quarter to date, China Hotel, Revpar number and domestic air passenger volume was slightly below that of 2019, which reflects our normal seasonality post the summer we continued to outpace the industry average growth without domestic hotel bookings surpassing <unk>.
Speaker 2: We continued to outpace the industry average growth with our domestic hotel booking surpassing 2019 level by around 60 percent and our outbound hotel and air reservations recovered to around 80 percent of the 2019 level.
In 2019 level by around 60% and our outbound hotel and air reservations recovered to around 80% of the 2019 levels.
Speaker 2: Our global OTA platform has maintained a triple-digit growth over 2019 despite tough comparables.
Our global OTA platform has maintained a triple digit growth over 2019.
Despite a tough comparable.
Speaker 2: Look into the next year, 2024. Our users' short booking window makes it challenging for us to forecast the 2024 industry momentum. However, we are confident in our ability to consistently outpace the market growth.
Look into the.
Next year 2024 hour users short booking window makes it challenging for us to forecast the 2024 industry momentum. However, we are confident in our ability to consistently outpace the market growth.
Speaker 2: For the China, in terms of a different market, for the China market, we expect robust growth in the outbound travel business due to further recovery of outbound flight capacity, along with steady growth in domestic business.
For the China.
It.
In terms of a different market for the China market, we expect to robust growth in the outbound travel business due to further recovery of outbound flight capacity, along with steady growth in domestic business.
Speaker 8: And for the global market, we anticipate our global OTA platform trip.com to maintain high speed growth, while Skyscanner and other overseas brands continue to grow healthily, despite recent headwinds in the email region. Thank you. Thank you.
And for the global market, we anticipate our global Otas platform trip Dot com to maintain high speed growth, while skyscanner and other overseas brands continue to grow has it healthily. Despite our recent wins in the EMEA region. Thank you.
Thank you. Thank you very much.
Yeah.
Next we have Natalie <unk>.
Speaker 1: from Hayton International, please go ahead.
From Haitong International Please go ahead.
Speaker 2: Hi. Hi. Thanks for taking my question. Congratulations. Sorry.
Hi, Hi, Thanks for taking my question and congratulations on very solid quarter.
Speaker 15: My question is regarding the Armband, we all acknowledge that Armband will continue to be the strongest driver in short term, I'm just wondering the recovery pace of Armband flight recently seems to be a little bit slower than the market has initially expected.
My question is regarding the our bonds are we are we all acknowledge that all bonds will continue to be the are you. The strongest driver in short term and just wondering the recovery pace of all bonds.
<unk> recently seems to be a little bit slower than the market has initially expected.
Speaker 15: So just wondering, is there any reason behind, is it due to insufficient consumer capacity?
So I was just wondering is there any reason behind is it due to insufficient.
Consumer capacity. So just I'm wondering one does management anticipate full recovery of the outbound business. Thank you.
Speaker 15: So, just wondering when does the management anticipate a full recovery of the urban business? Thank you.
Speaker 13: Yes. So we're confident in the recovery of our bond. If you look at our demand and supply side the demand already exceeded 2019 level.
Yes, so we're confident in the recovery of outbound if you look at our demand and supply side the demand already exceeded 2019 level. However on the supply side. There are two major hurdles. The first way is the visa application process.
Speaker 13: However, on the supply side, there are two major hurdles.
Speaker 13: The first one is the visa application process takes a little bit longer for certain regions such as Europe , United States, etc.
Takes a little bit longer for certain regions, such as Europe, United States et cetera. However.
Speaker 13: However, after the APAC meeting, I think there will be improvements on the visa application side.
After the APAC meeting I think there will be <unk>.
Movements on the visa application side, the second way is the slight capacity as of Q2.
Speaker 13: The second one is the flight capacity. As of Q3, the flight capacity only recovered 50%. We hope going forward, the flight capacity will further improve. So with the visa application process being improved, as well as the
Q3, the flight capacity only recovered 50%, we hope going forward the flight capacity will further improved.
The visa application process being improved as well as the increase.
Speaker 6: increased flight capacity. We believe next year, Auburn will grow even stronger compared to this year. Thank you.
Increased drive capacity, we believe next year outbound will grow even stronger compared to this year. Thank you.
Thank you.
Next we have Simon Cheng.
Goldman Sachs. Please go ahead.
Speaker 7: Hi, thanks for taking my question. I have two questions.
Hi, Thanks for taking my question.
Speaker 7: I think in the consumer space, the trade-on seems to be a buzzword for everyone. I'm wondering whether you have observed a similar trend for this trade-on, whether it's for corporate travel or for leisure travel. And by the same token, to the extent that I think outbound travel is a higher-ticket item, how do you feel this trade-on trend will affect the pace of outbound travel going forward? That's the first question. The second question is...
Two questions.
I think in.
In the consumer space.
<unk> seems to be a bus work for everyone.
I'm wondering whether you have observed similar trends for all of these trade on whether you saw for corporate travel for leisure travel and by the same token.
The extent that I think outbound travel is a higher ticket item how do you view this.
<unk> trend would affect the pace of outbound travel going forward.
First question and then the second question.
Speaker 7: I think you have been able to pre-serve your sales and marketing expenses to send your revenue quite steadily at around 20% for quite a few quarters. I remember in the last couple of quarters you've been talking about maybe having to spend a bit more going forward.
I think you have.
Pretty sure of your sales and marketing expenses as percent of revenue quite started yet.
For quite a few quarter.
I remember in the last couple of quarters, you've been talking about.
Having to spend a bit more going forward.
Speaker 7: How are you thinking about this in the near term? And correspondingly, we keep hearing all these Douyin competitions, whether you can share any comment on that front as well. Thank you.
Are you thinking about.
And then your comment I'm, just wondering if you could.
Peering or destocking.
Competitions, whether you come back.
Any comment on that part as well thank you.
Speaker 2: Sure. So, for the first question, in the leisure segment, we have, to be honest, we have seen no signs, so far, we have seen no signs of consumption downward, and the average travel spending on our platform continues to exceed the 2019th level, both for new and existing users on a like-for-like basis.
Sure.
So for the first question in the leisure segment, we have.
To be honest, we have seen no signs so far we have seen those size of consumption downward.
And the average travel spending.
Platform continues to exceed the 2019 level, both for new and existing users on a like for like basis.
Speaker 2: In the business segment, corporate travelers have also been spending more than what they did back in 2019.
The business segment corporate travelers has also been spending more than what they did back in 2019.
Speaker 2: Looking at the long run, we are still confident in China's travel demand because on the supplier side, the ongoing expansion of air, rail, and highway networks, along with investments in other travel infrastructures in China, lay a strong foundation for the travel industry's prosperity.
Looking at the long run we are still confident in China's travel demand.
Because on the supplier side, the ongoing expansion of air rail and highway networks, along with investments in other travel infrastructures in China lay a strong foundation for the travel industry.
Prosperity.
Speaker 2: While on the demand side, we see leisure travel spending evolving from cyclical to more secular, driven by increasing disposable income and a consumption shift from goods to services and experiences.
On the demand side, we see leisure travel spending evolving from cyclical to more secular driven by increasing disposable income and consumption shift from goods to services and experiences. In addition, hotelier a stance to gaming.
Speaker 2: In addition, OTA stands to gaining from increased online penetration.
<unk> increased the online penetration.
Speaker 2: Although the business travel is typically more closely tied to the economic activities and may be impacted by economic concerns, but we also see significant opportunities for us as more businesses will adopt managed corporate travel services to optimize their travel budgets.
Although the business travel is typically is typically more close tie to the economic Abbott activities and may be impact by.
By economic concerns Oh, but we also see significant opportunities.
For us as more businesses will adopt managed corporate travel services to optimize their travel budget.
Speaker 2: For the second question, the sales marketing expenses, our marketing efficiencies have seen significant improvement this year, primarily due to enhanced conversion and cross-selling efforts.
Mm for the for the sales Mark for the second question the sales marketing expenses, our marketing efficiencies has seen significant improvement this year.
Primarily due to enhance the conversion and cross selling efforts. Additionally, we made significant savings due to the strong release of pent up demand.
Speaker 2: Additionally, we made significant savings due to the strong release of PANDA demand.
Speaker 2: We do expect an increase in marketing spending as a percentage of revenue in the Q4, following a typical low seasonality in the fourth quarter. And also as a part of our efforts to normalize the marketing spending to stimulate future growth.
We do expect an increase in marketing spending as a percentage of revenue.
In the Q4.
Following our typical low seasonality.
In the next in this in the fourth quarter and also as a part of our efforts to normalize the marketing spending.
To stimulate that just.
Then in late future.
Speaker 2: And in the long run, we are quite consistently to have to committed to an ROI-driven marketing investments approach, striving to balance the efficiency gains and the long-term investment needs in the overseas markets, as well as the opportunities in the lower tier cities in China. And with regard to the competition with the content.
And in the long run we are quite.
Quite consistently two half two committed to and our eye to the marketing investments approach are striving to balance the efficiency gains and the long term investment needs in the overseas markets as well as the opportunities in the lower tier cities in China.
And with regard to the competition with the.
Content.
Speaker 2: platform. I think so far what we observe the competitive landscape in China domestic market is generally steady with some seasonal fluctuations in the marketing intensities among players.
<unk> platform.
I think so far what we observe the competitive landscape in China domestic market is generally steady with some seasonal fluctuations in the marketing candidates among players and I think the OTA and content platform has the total it.
Speaker 2: And I think the OTA and content platform have a totally different core competence.
Different core competence.
Speaker 2: a content platform excel at producing creative content and sharing information, make them effective at promoting trending products.
Content platform excel at using creative content sharing information make them effective that promoting training products, however, and most of the content platform. They lack very strong backend system to fulfill the booking capabilities.
Speaker 2: However, most of the content platform, they lack very strong backend system to fulfill the booking capabilities.
Speaker 2: While OTA's core competence are firstly in the standard supplier chain and also more importantly the capabilities to provide reliable service.
Otas core competence in the firstly in the supplier chain extended supplier chain and also more importantly, the capabilities to provide reliable services.
Speaker 15: Therefore, of course, we will always be sensitive in terms of the competitions in the market. But at the end of the day, what we need to always focus is to strengthen, further strengthening our co-competence. Thank you.
Therefore of course, we will always be a.
Sensitive in terms of the competitions in the market, but at the end of the day.
What we need to always focus is to strengthen further strengthening our core competence. Thank you.
Excellent.
Speaker 1: Thank you. Next, we have Alex Yao.
Thank you.
Thank you.
Next we have Alex Yao.
From JP Morgan. Please go ahead.
Speaker 5: Good morning, management, and thank you for taking my question. First of all, congrats on a rock-solid quarter.
Good morning management and thank you for taking my question first of all congrats on a rock solid quarter.
Speaker 5: You today, you guys have delivered very impressive margin improvements relative to the historical level.
Year to date, you guys have delivered very impressive margin improvements relative to just historical level.
Speaker 5: Can you talk us through how did you achieve the current margin structure? For example, can you break down the margin structure across domestic outbound?
Talk us through how did you achieve.
Core margin structure.
Paul can you break down the margin structure across domestic <unk> international.
Speaker 5: international to international between now and the same period 2019.
Two international between now and the same period of 2019.
Speaker 5: And as we look into 2024,
As we look into 2024.
Speaker 5: apparently the outbound, which is a higher margin business, will very likely outgrow the domestic business.
Apparently the outbound which is a higher margin business will very likely outgrow the domestic business.
Speaker 5: how should we think about the modern structure into 24 and beyond. Thank you.
Should we think about the margin structure in 2024 and beyond thank you.
Thank you Alex.
Speaker 2: In general, because we have very strong brand awareness.
In general our because we have very strong brand awareness and market share in the China market for both the China domestic as well as China outbound.
Speaker 2: and the market share in the China market for both the China domestic as well as China outbound. We have a very healthy margin to serve.
We have a very healthy margins.
To serving the China market and in the international market.
Speaker 2: and in the international market we grow very fast but still at current stage we are still in the investment cycle but at the same time we will balance the investment versus improving and toward a more healthy margin for the international market.
We grow very fast, but still at current stage, we are still in that investment cycle, but at the same time, we were balanced.
The investment versus improving.
And toward a more healthy margin for the international market.
Speaker 2: Yes, you are correct. Moving into the year 2024, we think that Albon travel as a percentage of the total revenue contribution to the whole group will definitely go forward. And Albon traditionally is a more healthy or higher margin business for us.
Yes, you are correct to moving into the year 2024.
We think the outbound travel percentage as a percentage of the total revenue contribution to the whole group.
We're definitely going forward and our BOL traditionally is a more healthy.
They are higher margin business for us.
Speaker 9: But I think the margin level that we achieved this year, there's some special
But I think the margin level that we achieved that this year, there's a settlement special.
So some of the special.
Speaker 1: factors impacted because especially in the first half of this year the strong rebound is to some extent out of our own expectation. So in terms of a readiness on both the service as well as the sales marketing we have a comparatively limited preparation to serve the
[noise] sectors impacted because especially in the first half of this year.
The strong rebound is to some extent out of our own expectation. So in terms of our readiness on both the service as well as the sales and marketing.
We have a comparatively limited.
Our preparation to to surf that.
Speaker 2: much higher than expected rebound, market rebound.
Much higher day effected the Alba.
Rebound market rebound.
Speaker 2: So, to be honest, our operating margin, especially high operating margin, especially for the first half of this year, is even higher than the normalized level. So next year, with the business moving into more normalized level, we should make investment
So to be honest to our.
Operating margins are especially high operating margin, especially for the first half of this year is even higher than the normalized level. So next year with the business moving into more normalized level.
We should make investment in.
Speaker 2: It is enough investment in both the service as well as the self-marketing effort. Our marketing expenditure will increase slightly to fuel the future growth of the business. Our margin level, operating margin level, will trend down a little bit compared with first half of
In love in that last month in both the service as well as the sales marketing effort, our marketing expenditure will increase slightly.
Slightly to a few of the future growth of the business our margin level operating margin level will trend down a little bit to compare with first half of this.
Speaker 2: this year. But in general there's other factors like the increase of the outbound and continuously improve the margins in the international market will also help us to balance the total operating margin moving into the next year. So in a longer period
This year.
General Theres other factors like the increase of outbound and Ah Ah Ah Ah.
<unk> sleep improve the margins in the international market will also help us to balance.
To balance the total operating margin moving into the next year, so in a longer period.
Speaker 2: We think we will definitely achieve. Previously, we have given guidance to our shareholders that we will achieve the margin level to the 20 to 30% level. We already achieved that level this year, and we have the full confidence to continuously to maintain a healthy margin level moving forward. Thank you.
We think we will definitely achieve we.
We have previously we have give guidance to our shareholders that we will achieve the module level, two or like a to the 20% to 30% level. We already achieved that level. This year and do we have the full confidence to continuously to maintain a healthy margin level.
Moving forward. Thank you.
Okay.
Yeah.
Thank you.
Speaker 1: Next, we have Jian Xiao from Barclays. Please go ahead.
Next we have John Shaw from Barclays. Please go ahead. Thank you.
Speaker 10: Thank you very much for taking my questions. I have two, if I may, and let me add my congrats as well for the strong results.
Thank you very much for taking my questions I have two if I may and maybe.
Let me add my congrats as well for the strong results.
You have had.
Speaker 10: You have had a, I think, at least a three, four quarters of very strong results since the COVID restriction.
<unk> had.
At least the three full quarters of very strong results.
Since the Covid restrictions are lifted.
Speaker 10: I think some of the investors are a bit worried that, oh, is this because the pent-up demand jumped and then growth will be tapering off like some of your peers have seen in the West.
I think some of the investors a bit worried about Oh is this because the pent up demand jump and then growth with will be tapering off like <unk>.
Some of your peers have seen in the West I was hoping you could share with us your thoughts about why that's.
Speaker 10: I was hoping you could share with us your thoughts about why.
Speaker 10: sort of that's not going to be the case. Why the growth you mentioned about growth to continue, you know, in 24 and beyond. If you can share with us your thoughts around the longer term sort of three-year horizon, a growth drivers, a growth rate, that'd be great.
That's not going to be the case why the growth you mentioned about growth to continue.
24 and beyond.
I can share with us your thoughts around the longer term sort of three year horizon of growth drivers our growth rate.
That'd be that'd be great.
Speaker 10: And a related question to the margin question you just expanded earlier, your gross margins reached 82% for the last three quarters.
And a related.
A question to the margin question you just the expanded earlier.
Gross margins.
Reached about 82% for the last three quarters.
Speaker 10: Is there any reason, and you talk about investment in sales and marketing, but that's sort of below the gross margin line. Is there any reason we should not expect the gross margin stay where they are? And were there structural reasons behind a recent increase in gross margins?
Is there any reason that you're talking about investment in sales and marketing, but that's sort of below the gross margin line is there any reason we should not expect the gross margin stay where they are and where.
Are there structural reasons behind a reason increasing gross margins. Thank you.
Speaker 13: Thanks for your question. First of all we look at our growth in the long term. So there are a couple of baselines we look at. The first one is the GDP growth rate. So if the GDP growth rate is somewhere between 4 to 5 percent.
Thanks for your question.
First of all we look at our growth in the long term. So there are a couple of baselines.
We look at the first one is the GDP growth rate.
So if the GDP growth rate is somewhere between 4% to 5%. We believe the travel industry will outpace the GDP growth rate by a couple of percentage because people who can't afford to travel normally makes a higher income.
Speaker 13: We believe the travel industry will outpace the GDP growth rate by a couple of percentage because people who can afford to travel normally make more higher income. So GDP travel probably will grow at about 8 to 10 percent.
GBT, a travel probably will grow at about 8% to 10% and we will also outpaced the travel industry growth.
Speaker 13: And we will also outpace the trouble industry growth by being more efficient.
By being more efficient.
Speaker 13: by moving more offline to online. So somewhere around three to four times the GDP growth rate is what our team is aiming at.
By moving more offline to online so somewhere around three to four times. The GDP growth rate is what our team is in.
Speaker 13: Therefore, we cannot say in the short term what we want to do, but in the long run, that is the goal for our team to strive for. So we always plan our business three years, four years out, in order to make very consistent investments.
Therefore, we cannot say.
The short term, what we want to do but in the long run that is.
Our goal for our team to slide four so we always plan our business three years four years out in order to make very consistent investment. If you look at the cobot three years our.
Speaker 13: the COVID three years, our engineering team.
Engineering team made tremendous progress during the slowdown season that is why when the industry recover we're able to.
Speaker 13: made tremendous progress during the slowdown season. That is why when the industry recovered we're able to take care of the pandemic.
Take care of the pent up demand.
Speaker 13: So we believe the growth into the next three to five years is very sustainable.
So we believe the growth into the next three to five years is very sustainable secondly on the margin.
Speaker 13: Secondly on the margin. We believe the healthy and sustainable growth margin is our goal in the short term. If you want to even grow the market and margin higher we can do that. But we didn't want to do it in a way that we sacrifice the long term investment.
We believe the healthy and sustainable gross margin is our goal.
In the short run if you want to even grow the market.
And higher we can do that but we didn't want to do it in a way that we sacrifice the long term investment. So we are committed to grow our business well with healthy margin between 20% to 30%.
Speaker 13: So we are committed to grow our business with a healthy margin between 20 to 30 percent. And we will continuously make long-term investments, particularly in the area of product engineering and also customer service.
And we will continuously make long term investment, particularly in the area of product engineer and also customer services.
Speaker 13: So that's the promise that we have for our customers, for our partners and for our shareholders. Thank you.
So that's the promise we have for our.
Customers for our partners and for our shareholders. Thank you.
Thank you.
Next.
Speaker 1: We have Wei Xiong from UBS, please go ahead.
We have ways Cheng from UBS. Please go ahead.
Speaker 4: Hi, good morning, management. Thank you for taking my question, and congrats on a solid quarter. My question is regarding our pure international business, especially on the Trip.com side. I was wondering, could management share the current revenue contribution from Trip.com to the group revenue, and how should we think about its growth in the next three to five years? Also, in addition, what are our strategies to continue achieving such high growth? Thank you.
Hi, Good morning management. Thank you for taking my question and congrats on a solid quarter. My question is regarding our pure international business, especially on the Dot com side.
I was wondering could management share the current revenue contribution from <unk> Dot com to the group revenue and.
And how should we think about <unk> growth in the next three to five years.
Also in addition, what are our strategy to continue achieving such a high growth. Thank you.
Speaker 2: Sure, Trip.com represents approximately 6% of the total group revenue in the Q3 and its revenue contribution has been steadily approaching that of Skyscanner. And we expect Trip.com to surpass Skyscanner in terms of the revenue contribution in the near future.
Sure.
They'll call represents approximately 6% of the total group revenue in the Q3.
And its revenue contribution has been steadily approaching that of Skyscanner and we expect the triple crown to surpass Skyscanner a rab in terms of a revenue contribution in the near future with regard to the growth strategy in the next three to five years, we expect that trip out.
Speaker 2: With regard to the growth strategy, in the next three to five years, we expect that Triple Coin will maintain a robust mid-to-high growth strategy.
<unk> maintained a robust to mid double digit growth rate, becoming one of the primary growth driver for the whole group.
Speaker 2: double-digit growth rate, becoming one of the primary growth drivers for the whole group.
Speaker 2: In terms of different market in the Asia, Trip.com is targeting to become the leading OTA. The combined size of its top market in the Asia-Pacific region exceed that of the mainland China in terms of total growth booking. And Trip.com has already established.
In terms of the different market in the Asia trip the archives targeting to become.
The leading otas the combined size of its top market in the Asia Pacific region exceed that of the mainland China in terms of total gross booking and trip VAALCO has already established a pre.
Speaker 2: a pretty solid foothold in this region with comprehensive local operations.
<unk> solid foothold in this region with comprehensive for local operations.
Speaker 2: Despite starting with a comparatively small market share, Trip.com is confident in expanding its presence through its all-in-one mobile app.
Despite starting with a comparatively small market share chip they'll call us confident in.
In expanding its presence through its all in one mobile app.
Speaker 2: competitive offerings, high quality services, and we will continuously grow our brand and wellness in this region.
Competitive offerings high quality services, and we are continuously we will continuously to grow our brand awareness in this region.
Speaker 2: And in the euro market our near term focus is more on the air travel. The air market in Europe is about twice the size of China's in terms of gross booking. This represents a significant opportunity for the group to capitalize through synergies among different brands within the group.
In the Euro market, our near term focus is more on the air travel that are marketing Europe is about twice the size of China in terms of gross booking this represents a significant opportunity for the group to capitalize through synergies among different brands within the group.
Speaker 15: Furthermore, we are strategically expanding our service offering into other markets while upholding our ROI return standards. Thank you.
Furthermore, we are strategically expanding our.
Service offering into other markets, while upholding our ally.
Our return standards.
<unk>.
Okay.
Thank you.
Speaker 1: Next we have James Lee from Mizuho, please go ahead.
Next we have James Lee from Mizuho. Please go ahead.
Speaker 11: Great. Thanks for taking my questions. Can you guys maybe talk about, maybe elaborate your strategy and plans to continue to gain share in the OTA space? You know, where do you see the most substantial opportunity? Now, in relation to those opportunities, are the foundational investment already made to drive those share gains, or do you need to kind of accelerate that investment pace to potentialize that opportunity?
Great. Thanks for taking my questions can you guys maybe talk about maybe elaborate your strategy implies continued page here in D. O T space, where do you see the most substantial opportunity now in.
Two to those opportunities.
Are the foundational investment already made to drive those share gains or do you need to kind of accelerate that investment pays to capitalize the opportunity. Thanks. So much.
Speaker 13: Thanks, James. We look at different regions with different angles. For domestic, we further provide excellent product for our high quality of the customers by enhancing our customer services and product innovation.
Yeah.
Thanks James.
We look at different regions with different angle for domestic.
We further provide excellent product to for our high quality of the customers by enhancing our customer services and product innovations and for the third tier fourth tier cities. We further penetrate into these cities by offering the product.
Speaker 13: And for the third tier fourth tier cities we further penetrate into these cities by offering the product that with lots of incentives in service and pricing. So we believe domestic China we still have a long way to go in terms of serving a one point four billion customers.
That with lots of incentives in service and pricing. So we believe domestic China, we still have a long way to go in terms of serving a $1 4 billion customers. The second opportunity is also on the customers with the supply side.
Speaker 13: The second opportunity is outbound customers with the supply side, which includes the visa applications, as well as the flight capacity improving, we'll be able to take more customers abroad and enable them to see the rest of the world.
<unk>, which includes the visa applications as well as the flight capacity, improving we will be able to take more customers abroad and enable them to see the rest of the world. The third party is the global customers because the inventory we developed for our outbound customers can't.
Speaker 13: The third party is the global customers because the inventory we developed for our album customers can also be utilized about our Global customers will be able to empower the customers from overseas to travel abroad.
Also be utilized by our global customers will be able to empowered customers are from overseas to travel abroad. So different segments, we look at different opportunities.
Speaker 13: So different segments, we look at different opportunities, but for each segment, we feel there is a lot of upside for us to drive to, and we will make sure we make investment to address our customers' needs, particularly in product.
For each segments with your theory.
A lot of upside.
For us to drive to and we will make sure we make investments to address our customers' needs, particularly in product and engineering and services.
Speaker 13: and engineering and services, our customers from different regions will have different requests. The majority of the investments are being made. We just need to continuously make improvements so that our customers' new requests are being addressed. Thank you.
Customers from different regions will have different to request the majority of the investment <unk> made we just need to continuously making improvements so that our customers new request.
<unk> addressed.
<unk>.
Thank you.
Thank you.
Speaker 1: Next we have Paraj John from HSBC, please go ahead.
Next we have Sean from HSBC. Please go ahead.
Speaker 12: Thank you for taking my question and if I may shift your focus more towards capital return policy and it's very, very welcome.
Hi, Thank you.
Michelle.
Thank you for taking my question, if I may shift your focus more towards capital return policy and it's a very very welcome move just wanted to understand how shall we think about.
Speaker 12: I just wanted to understand how shall we think about...
Speaker 12: your balance sheet, let's say, in two years' time or in the medium to longer term, would you still want to carry a net cash balance sheet? Or given a steady state of your business, given the yield difference between the China market and the rest of the world, do you think that you probably will be slightly more aggressive in terms of your buyback and return policy? And secondly, for your international-international business...
Our balance sheet, let's say two years time or.
Medium to longer term would you still want to carry.
Cash balance sheet are given to the state of your business given the yield front between the China market and the rest of the World. We think that you probably would reflect the more aggressive in terms of share buyback and return policy and secondly for your international International business.
Speaker 12: How do you see the M&A market, and do you see any opportunity for Trip.com, Skyscanner, to jumpfrog in terms of overall relevance for the group through M&A?
How do you see the M&A market and do you see any opportunity for tableau common skyscanner too to jump frog in terms of.
Overall relevance for the group through M&A. Thank you.
Sure. Thank you for.
Speaker 2: Sure, thank you. For the first question, our board of directors has approved the multiple share buyback plan several years ago and with no expiration date.
For the for the for the first question.
Our board of directors has approved a multiple share buyback plan several years ago.
And with no expiration date.
Speaker 2: As previously discussed, there was approximately U.S. dollar 505 million of the quote still unused before our current repurchase.
As previously discussed there was approximately <unk> dollars five or $5 million of the quotes and used it before our current repurchase.
Speaker 2: And in the last quarter, the rapid business growth in this year has significantly improved our cash flow. Additionally, we have increased our overseas cash reserves, ensuring we have sufficient funds for the buyback without affecting our regular operations.
And.
The.
In the in the last quarter of the <unk>.
Rapid business growth in this year has significantly improved our cash flow. Additionally, we have increased our overseas cash reserves the reserves, ensuring we have sufficient funds for the buyback.
Without affecting our regular operations.
Speaker 2: And the recent share price volatility due to purely external factors has resulted in a generally low valuation making it a suitable time for us to make this buyback.
And does the recent share price volatility due to purely external factors has resulted in a generally low valuation make hint a suitable time for us to make this buyback and going forward. We plan to proceed with the buyback without <unk>.
Speaker 2: And going forward we plan to proceed with the buyback without a specific timeline or price target as long as our overseas cash reserves remain sufficient for operational needs as well as the short-term debt obligations.
Specific timeline all priced pocket.
As long as our overseas cash reserves.
<unk> sufficient for operational needs.
As well as the short term debt.
Obligations.
Speaker 2: and with regard to the M&A strategy for the international market.
And with regard to the M&A strategy for the international market.
Speaker 1: We are quite confident that we already have almost the best assets in the international market to fuel our growth, future growth.
We are we are quite confident that we already have the the almost the best asset in the international market to fill our.
Gross future growth. So we were pretty much focus to grow our market outside of China from the organic growth.
Speaker 2: So we were pretty much focused to grow our market outside of China from the organic growth.
Speaker 2: and most importantly to achieve the maximized synergies among different brands within the group. Thank you.
And most importantly to achieve the maximize the synergies among different brands within the group. Thank you.
Thank you so much.
Thank you.
Speaker 1: Next we have Thomas Chung from Jeffries, please go ahead.
Next we have Thomas Chong from Jefferies. Please go ahead.
Speaker 12: Hi, good morning. Thanks, management, for taking my questions and congratulations on a solid set of results. My question is about the trend in operating expenses. Given that we have seen product development expenses increase significantly quarter-on-quarter and versus 2019, what factors actually contribute to this growth and how should investors project this pattern going forward? Thank you.
Hi, Good morning, Thanks management for taking my questions and congratulation on a solid set of results.
My question is about the trend in operating expenses.
I think that we have seen product development expenses increased significantly quarter on quarter and versus 2019.
Gross after they contribute to this.
And how should investors.
Hello, Jack pattern going forward. Thank you.
Thank you Thomas.
Speaker 2: The product development expense is primarily comprised of personal related costs, especially the engineering team. In Q3, the total number of employees in product development remained significantly lower than the levels.
Product development expenses, primarily comprised of personnel related cost, especially the Ah Ah Ah engineering team in Q3, the total number of employees in product development remain significantly lower than the levels in.
Speaker 2: in 2019. And the increasing expenses was mainly due to the performance-based bonus in recognition of the outstanding achievement during the quarter. And we anticipate that the absolute dollar amount of the product development expenses will decrease sequentially in the Q4 just because of the seasonality.
In 2019, and the increasing expenses was mainly due to the performance related performance based bonus in recognition of.
The outstanding achievement during the quarter and we anticipate that the absolute dollar amount of the.
Product development expenses will decrease sequentially in Q4, just because of the seasons.
Seasonality.
Speaker 2: and as Jane explained, we are targeting to grow our business in the long run. So going forward, we are continuously to balance our growth, healthy growth, as well as to control our total cost at a reasonable level that we achieved in the past few quarters. Thank you.
And what.
As Jane explained.
We are targeting to grow our business in the long run so going forward, we will continuously to balance our growth healthy growth.
As well as to control our total cost at a reasonable level that we achieved in the pasta.
Good quarter. Thank you.
Yeah.
Thank you.
Speaker 1: Next, we have Ali Zhang from Macquarie. Please go ahead.
Next we have early Jang from Macquarie. Please go ahead.
Hi, Good morning management and thank you for taking my question.
Speaker 13: Good morning, management. Thank you for taking my question. I just would like to understand a bit more about our overseas product trip.com. Could you comment on trip.com current profitability and how will it look like in the next 3 to 5 years or in a longer run? Thank you.
Just would like to understand more about our overseas product with dot com could you comment on sort of dot com current profitability and how will it look like in the next three to five years or even longer run. Thank you.
Okay.
Sure.
Yeah.
Speaker 2: Taking into account all the markets that Trip.com is currently operating in, Trip.com has already achieved a break-even on a contribution margin basis, excluding fixed...
Taking into account all the markets that Triple is currently operating in.
<unk> has already achieved breakeven.
All a contribution margin basis.
Excluding fixed costs and that of share and a share the cost on a group level. Moreover, our business' contribution continuously with our business continues to scale up the profitability will consistently improve across market.
Speaker 2: and the share and share the cost on the group level. Moreover, our business contribution continuously with our business continues to scale up the profitability will consistently improve across markets.
Speaker 2: and with regard to the margin of different markets in Asia-Pacific regions, Crypto.com is
With regard to the margin of different market in Asia Pacific ridges Chip Dot Com is project to be breakeven within the next two to three years, our net profit level, while in the rest of the world Our current primarily private.
Speaker 2: to be break-even within the next two to three years.
Speaker 2: on a net profit level, while in the rest of the world, our current primary focus is still to increase Trip.com's incremental contribution to the group, which has been showing consistent improvement in the past few years.
<unk> primary focus is still to increase chipped out cause incremental contribution to the group, which has been showing consistent improvement.
In the past few years. Thank you.
Yeah.
Thank you.
Speaker 1: Next we have Teng X. Hyun from TH Capital, please go ahead.
Next we have 10 X June from T. H capital. Please go ahead.
Speaker 4: Yeah, management have a congratulations on a good quarter. This is 10. so.
Yes management.
Congratulations on a good quarter. This is Ken so.
Speaker 4: Yeah, I have two questions. One is related to the profit level. So, you mean the perfect profit level can, you know, maintain the current and continue to improve.
Oh, yes.
Yes, I have.
Two questions one is related to the profit level. So you mean, the perfect profit level can you maintain the current and continue to improve so I just want to understand you know.
Speaker 4: So, I just want to understand, you know, what part of your P&L can drive up the improvement.
What part of your P&L can drive up to improvement.
Speaker 4: how the revenue and cost and expense structure will be.
How the revenue and cost and expense structure will be to lead that improvement that is the first question. The second question is related to your AI. So my understanding is the AI at this point to is much more a cost center and is much more.
Speaker 4: to lead that improvement? That is the first question.
Speaker 4: The second question is related to your AI. So my understanding is
Speaker 4: The AI at this point is much more a call center.
Speaker 4: and is much more like a revenue or profit center. So can management elaborate a little bit about your AI in which part of your AI practice is a profit center or revenue center?
Life.
The revenue or profit center, so can management elaborate a little bit about your AI in which part of your practice is a profit center or revenue center. Thank you.
Speaker 13: Sure, I will see if Cindy will take the first question, and I will take the second question. Thank you.
Sure.
Our CFO Cindy will take the first question and I will take the second question. Thank you.
Speaker 15: In terms of the long-term profitability of the business, we expect to overcome our current short-term high base and to drive the long-term margin expansion mainly through operational scalability as well as the favorable revenue mix.
Okay.
Yeah.
In terms of the long term profitability of the business, we expect to overcome our current short term high base and to drive the long term margin expansion.
Through operational scalability.
As well as the favorable revenue mix for.
Speaker 2: For example, in the long run, we think AI probably is one of the key drivers for us to help us to continuously to improve our operational efficiency in the service center. And in the long run, we are confident of achieving a margin that is comparable to our international global peers.
For example in the long run we think AI is probably is one of the key drivers for us to help us to continuously to improve our operational efficiency in the service center.
And we are in the long run we are confident of achieving a margin that is comparable to our international global peers.
Speaker 13: So for the second question on AI, we use AI for mainly four areas. The first one is to improve user interface. I think the TrapGenie really enabled our customers to find their relevant and tailor-made products much easier. The second one is to improve the efficiency for our engineering team by using copilots.
Jamie.
So for the second question on AI.
We use AI, forming these four areas. The first one is to improve user interface.
I think the <unk> really enable our customers to.
Find they are relevant in telematics products much easier. The second one is to improve the efficiency for our engineering team by using co pilot.
Speaker 13: The third one is also to improve our efficiency for content generation and make sure all the content in the recommendation list are accurate and based on the reliable data.
Third one is also to improve our efficiency for content to generation and make sure all the content and the recommendation list.
Accurate and based on the.
Reliable.
Speaker 13: And lastly, we also are using AI to further improve our efficiency for customer service team. So these are the four areas which we are utilizing our AI capability, and we will make investment accordingly. Thank you.
And lastly, we also are using AI to further improve our efficiency for customer service.
So these are the four areas in which we.
Utilizing our AI capability, and we will make investments accordingly, thank you.
Okay May I ask one more question. So the question is about your AR announced a share repurchase plan. So.
Speaker 4: So, uh, the question is about your, uh, announced the share the purchase plan. So, uh, uh, I understand, uh, you, you know, you guys think the valuation is undervalued.
I understand to use you guys think the valuation is undervalued.
I agree with you and Jim but isn't there a better use of U S. Dollars for example, the U S.
Speaker 4: and about isn't there a better use of U.S. dollars? You know, for example, the U.S. you know, government's short-term debt is already reaching almost six percent of the yield.
Governments short term debt is already reaching almost 6% of the yields and so.
Speaker 4: So if you buy back your own shares, you're sure you can generate more than 6% yield. So I just want to think about, want to ask a question. So do you think buy back share versus investing in the better yield, which one is better?
So if you buy back your own shares.
Sure.
You know generally more than 6% yield so I just want to.
Think about it once.
Wanted to ask a question. So do you think buybacks here versus investing in the best yields and you know which ones are better option.
Speaker 15: Yeah, thank you for your question. To be honest, ever since we established, we're always in the travel industry. And I think the reason that our investors invest in us is not because we have the
Yes. Thank you for your question.
To be honest.
Ever since we established or we always in the travel industry.
And I think the reason that the our investor invest us is not because we have the expertise to making investments rather actually we are the aspirate in the travel industry. So we should be as always be very consistently focus on our core business, which is travel and they came back.
Speaker 1: expertise to making investments rather actually we are the experts in the travel industry. So we should be as always be very consistently focused on our core business which is travel and make investment in ourselves is the top opportunity is the best opportunity for our shareholders. Thank you.
In our self is the <unk>.
Our opportunity is the best opportunity for our shareholders. Thank you.
Thank you.
There are no further questions at this time I will now hand, the conference back to Michel for closing remarks. Thank you.
Speaker 1: There are no further questions at this time. I will now hand the conference back to Michelle for closing remarks.
Speaker 9: Thank you. Thanks everyone for joining us today. You can find a transcript and webcast of today's call on investorsdopetrip.com. We look forward to speaking with you on the fourth quarter of 2023 earnings call. Thank you and have a nice day.
Thank you everyone for joining us today, you can find the transcript and webcast of today's call on the Investor doctrine Dotcom, we look forward to speaking with you on the fourth quarter of 2023 earnings call.
And have a nice day.
Speaker 1: Thank you. This concludes today's conference. Thank you all for participating. You may now disconnect.
Thank you. This concludes today's conference. Thank you all participating you may now disconnect.