Earnings call transcript: Trip.com Q2 2025 sees strong growth in revenue

Trip.com Group (TCOM) delivered robust Q2 2025 results, with net revenue climbing 16% year-over-year to RMB 14.8 billion and non-GAAP diluted EPS reaching US$1.01, fueled by strong accommodation bookings and over 100% growth in inbound travel. Despite this operational strength and an optimistic outlook, including a new $5 billion share repurchase program and a $100 million tourism innovation fund, the stock saw a minor after-hours dip, reflecting cautious market sentiment.

Analysis

Trip.com Group (TCOM) reported a robust second quarter for 2025, with net revenue growing 16% year-over-year to RMB 14.8 billion and non-GAAP diluted EPS reaching US$1.01. The performance was underpinned by strong growth in its core accommodation reservation segment, which saw a 21% YoY revenue increase, and a notable surge in travel demand across key strategic areas. Specifically, inbound travel bookings to China increased by over 100% YoY, and international platform bookings grew by over 60% YoY, highlighting successful execution of the company's globalization strategy. Furthermore, the company's outbound hotel and air bookings surpassed 120% of 2019 levels, outpacing the broader market recovery. Despite these strong results and an optimistic outlook supported by initiatives like a US$100 million tourism innovation fund and a new US$5 billion share repurchase authorization, the stock experienced a slight after-hours decline. This cautious market reaction may reflect concerns over management's commentary on pricing pressure and declining ADRs in the domestic market, which is partially offsetting strong volume growth, as well as the competitive landscape.

Key Decisions for Investors

• Investors should weigh the company's exceptional growth in high-potential segments, particularly the over 100% YoY increase in inbound China bookings and 60% growth on its international platform, against the muted stock reaction.
• It is crucial to monitor the trend in Average Daily Rates (ADRs) for domestic travel, as management noted pricing softness is partially offsetting strong volume growth, potentially impacting future margin expansion.
• The newly authorized US$5 billion multi-year share repurchase program signals strong management confidence and provides a significant potential catalyst for shareholder returns and stock price support.
• Given the positive operational momentum and strategic initiatives in AI and new travel segments, the slight share price dip post-earnings could be evaluated as a potential entry point, especially considering the stock is reportedly trading below its fair value estimate with a strong analyst buy consensus.