Impact of COVID-19 - The company's operations and performance were significantly disrupted by the COVID-19 outbreak since January 2020, leading to a decline in key metrics for the three and six months ended June 30, 2020, compared to the same periods in 2019[9]. - There was a notable recovery trend in the second quarter of 2020 for some key metrics, attributed to the restoration of economic activities and living orders in mainland China as the outbreak was contained[9]. - The decrease in travel demand was primarily due to reduced travel willingness and the implementation of travel restrictions and lockdown policies by governments worldwide[10]. - The travel industry in China showed clear signs of recovery as restrictions were relaxed in April 2020[23]. - The pandemic circumstances delayed users' decision-making, contributing to the decline in average MPUs[24]. - The company streamlined operations to capture recovery opportunities during the pandemic[23]. - The overall market confidence and demand improved significantly in the second quarter of 2020[24]. Financial Performance - Revenue decreased by 24.6% year-to-year to RMB1,200.1 million from RMB1,590.9 million in the same period of 2019, with a quarter-to-quarter increase of 19.4% in Q2 2020[11]. - Adjusted EBITDA dropped from RMB440.5 million in Q2 2019 to RMB267.3 million in Q2 2020, with a year-to-year decrease of 39.3%[11]. - Adjusted net profit for the period decreased by 43.2% year-to-year to RMB196.2 million from RMB345.6 million in the same period of 2019[11]. - For the six months ended June 30, 2020, revenue decreased by 34.6% year-to-year to RMB2,205.2 million from RMB3,374.3 million in the same period of 2019[13]. - Adjusted EBITDA for the six months ended June 30, 2020, decreased by 59.6% year-to-year to RMB426.3 million from RMB1,056.1 million in the same period of 2019[13]. - Adjusted net profit for the six months ended June 30, 2020, decreased by 65.5% year-to-year to RMB274.2 million from RMB794.0 million in the same period of 2019[13]. - Total revenue for the second quarter of 2020 was RMB1,200.1 million, a decline of 24.6% year-on-year from RMB1,590.9 million in Q2 2019, but an increase of 19.4% quarter-on-quarter from RMB1,005.1 million in Q1 2020[26]. - Adjusted net profit for the second quarter of 2020 was RMB196.2 million, with an adjusted net profit margin of 16.3%[26]. User Metrics - Average MAUs decreased by 3.3% year-to-year from 181.6 million in the same period of 2019 to 175.6 million, but increased by 18.3% quarter-to-quarter[12]. - Average MPUs decreased by 32.9% year-to-year from 27.7 million in the same period of 2019 to 18.6 million, with a quarter-to-quarter increase of 25.7%[12]. - The average MAUs for the same period declined by 15.0% year-to-year to 162.0 million, down from 190.5 million in 2019[21]. - The average MPUs also saw a significant decline of 34.3% year-to-year, reaching 16.7 million, compared to 25.4 million in 2019[21]. - In the second quarter of 2020, the average MAUs improved by 18.3% quarter-to-quarter to 175.6 million, despite a year-to-year decline of 3.3%[24]. - The average MPUs for the second quarter increased by 25.7% quarter-to-quarter, indicating a recovery trend[24]. Market Strategy and Initiatives - The company achieved better financial results than the industry in the second quarter and the first half of 2020, despite the pandemic's impact[23]. - The company launched a "Search + Travel" ecosystem in collaboration with Weixin to enhance user engagement[27]. - The company implemented various initiatives to support users and suppliers during the pandemic, including a self-service online cancellation function and the "Safe Room" initiative for hotel guests[26]. - The company expanded its traffic channels through live streaming promotions in collaboration with local governments and tourist attractions[28]. - The company focused on offline user acquisition by collaborating with hotels, bus operators, and tourist attractions, yielding initial positive results[28]. - The company aims to capture recovery opportunities and outperform the industry by leveraging its core competitive advantages, including stable traffic channels and advanced technology innovations[33]. - The ongoing development and investment in infrastructure in China are expected to provide immense growth potential for the travel industry[33]. - The company plans to further penetrate the travel market in lower-tier cities by leveraging diversified and cost-effective traffic sources[33]. - The transformation from an OTA to an ITA will be pursued by enhancing products and services with technology innovations[33]. - The company will strengthen long-term relationships with suppliers to build a more efficient travel ecosystem[33]. - The company is actively looking for merger and acquisition opportunities to boost future growth[32]. - The market uncertainties are expected to remain for the rest of the year, prompting the company to adjust strategies swiftly according to market dynamics[33]. Expenses and Cost Management - Cost of revenue decreased by 40.8% from RMB561.2 million for the three months ended June 30, 2019, to RMB332.5 million for the same period in 2020[45]. - Order processing cost fell from RMB243.6 million to RMB134.1 million, a decrease of 44.9% due to reduced GMV[45]. - Cost of pre-purchased inventory-risk-taking products decreased from RMB101.8 million to RMB49.7 million, a decline of 51.2%[45]. - Service development expenses decreased by 14.7% from RMB352.2 million to RMB300.4 million, primarily due to a reduced number of IT employees[45]. - Selling and marketing expenses decreased by 9.3% from RMB407.2 million to RMB369.5 million, attributed to a decrease in sales headcount and agency commission expenses[45]. - Administrative expenses increased from RMB99.5 million to RMB106.3 million, mainly due to increased employee severance and one-time termination benefits[46]. Cash Flow and Investments - For the six months ended June 30, 2020, the company reported a net cash used in operating activities of RMB1,113.6 million, compared to a net cash generated of RMB618.0 million in the same period of 2019[64]. - The company generated net cash from investing activities of RMB1,216.5 million for the six months ended June 30, 2020, primarily from wealth management products, while in 2019, it used RMB1,389.7 million in investing activities[64]. - As of June 30, 2020, the company had cash and cash equivalents of RMB2,393.1 million, a slight increase from RMB2,376.8 million in 2019[61]. - The total capital expenditure for the six months ended June 30, 2020, was RMB64.5 million, significantly lower than RMB368.4 million in the same period of 2019[69]. - The company reported a total of RMB4,298,011 in level 3 investments as of June 30, 2020, compared to RMB4,622,921 in the previous period[192]. Shareholder Information and Corporate Governance - The company has adopted several share incentive plans, including the 2016 Share Incentive Plan and the 2019 RSU Plan, to motivate and retain employees[77]. - The company has complied with the Corporate Governance Code during the six months ended June 30, 2020[139]. - The Audit Committee has reviewed the interim financial results for the six months ended June 30, 2020, and found them compliant with relevant accounting standards[144]. - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2020[145]. - The company has maintained compliance with the standard code of conduct as of June 30, 2020[141]. Future Outlook - The company plans to fund long-term investments using cash flows generated from operations and net proceeds from the global offering[73]. - The completion timeline for utilizing the net proceeds will depend on the Company's future business development[152]. - There have been no material events after the end of the reporting period that require disclosure[153]. - The company reported net proceeds from the global offering of approximately RMB 1,319.3 million after deducting professional fees and other related expenses[145].
同程旅行(00780) - 2020 - 中期财报