TRIP.COM(HK:09961)2025-04-11 10:44Corporate Structure and Compliance - The company is classified as a large accelerated filer under the SEC regulations[12]. - The financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP)[12]. - The company has submitted all required reports under the Securities Exchange Act of 1934 in the past 12 months[12]. - The company has an effective internal control report as per the Sarbanes-Oxley Act[12]. - The company is not a shell company as defined under the Securities Exchange Act[13]. - The company has not disclosed any unresolved staff comments from the SEC[15]. - The company has not reported any defaults on senior securities or dividend arrearages[15]. - The company has established a series of contractual arrangements with its variable interest entities (VIEs) and their shareholders, which include power of attorney, technical consulting and service agreements, equity pledge contracts, exclusive purchase rights agreements, and loan contracts[43]. - The contractual arrangements provide the company with effective control over the VIEs, allowing it to consolidate their operating results, financial position, and cash flows into its financial statements according to US GAAP[43]. - The company does not own equity interests in the VIEs, and investors in American depositary shares are purchasing shares of the Cayman Islands holding company, not the VIEs[48]. - The company has not verified the legality of its contractual arrangements in Chinese courts, which adds to the risk factors associated with its corporate structure[44]. - The company is subject to significant uncertainty regarding compliance with future regulatory developments, which may require cybersecurity reviews or other specific actions for companies listed on foreign exchanges[46]. - The company has obtained all necessary permits for its business operations in China, except for certain minor permits related to auxiliary services in transportation ticketing, which account for a negligible portion of transportation ticketing revenue[54]. - The company has not received any written rejections from government agencies regarding the necessary permits for its business operations as of the report date[54]. - The PCAOB has determined that it cannot fully inspect or investigate registered public accounting firms based in mainland China and Hong Kong, which may affect the company's compliance with the HFCAA[51]. - The company does not expect to be classified as a commission-recognized issuer under the HFCAA after filing its Form 20-F for the fiscal year ending December 31, 2024[52]. - The company is subject to various privacy and data protection laws across multiple jurisdictions, which could lead to sanctions and reputational damage if not complied with[131]. - The company is at risk of being classified as a "critical information infrastructure operator," which would impose additional obligations not currently applicable[132]. - The company must comply with foreign exchange registration requirements for Chinese residents participating in stock incentive plans, which could lead to fines and legal sanctions if not adhered to[172]. Financial Performance - Total revenue increased by 122% from RMB 20 billion in 2022 to RMB 44.6 billion in 2023, and further projected to grow by 20% to RMB 53.4 billion (USD 7.3 billion) in 2024[29]. - Net profit rose from RMB 1.4 billion in 2022 to RMB 10 billion in 2023, with a forecasted increase to RMB 17.2 billion (USD 2.36 billion) in 2024[29]. - Accommodation booking revenue accounted for 37%, 39%, and 40% of total revenue in 2022, 2023, and 2024, respectively, with figures of RMB 7.4 billion, RMB 17.3 billion, and RMB 21.6 billion (USD 3 billion) for those years[30]. - Transportation ticketing revenue represented 41% of total revenue in both 2022 and 2023, decreasing to 38% in 2024, with revenues of RMB 8.3 billion, RMB 18.4 billion, and RMB 20.3 billion (USD 2.8 billion) respectively[30]. - Travel vacation revenue increased significantly from RMB 797 million in 2022 to RMB 4.3 billion (USD 594 million) in 2024[31]. - Business travel management revenue grew from RMB 1.1 billion in 2022 to RMB 2.5 billion (USD 343 million) in 2024[31]. - Other business revenue, including online advertising and financial services, increased from RMB 2.5 billion in 2022 to RMB 4.6 billion (USD 634 million) in 2024[32]. - Operating profit surged from RMB 88 million in 2022 to RMB 11.3 billion in 2023, with a projected increase to RMB 14.2 billion (USD 1.94 billion) in 2024[35]. - Total operating expenses rose from RMB 15.4 billion in 2022 to RMB 29.1 billion in 2024, reflecting increased investment in product development and marketing[35]. - The company anticipates continued growth in revenue and profitability, driven by expansion in accommodation and transportation services[34]. - The company reported a total revenue of RMB 17,067 million for 2024, projecting a further increase in profitability[36]. - The company has significant debt obligations, with RMB 19.6 billion (USD 2.7 billion) due within one year and RMB 20.6 billion (USD 2.8 billion) due after one year as of December 31, 2024[88]. - The company's goodwill amounted to RMB 60.9 billion (USD 8.3 billion) as of December 31, 2024, and any significant decline in the recoverability of these assets may lead to substantial impairment charges[90]. Market Presence and Operations - The company has been expanding its global presence, particularly in the Asia-Pacific region, which is one of the fastest-growing areas for travel consumption[27]. - The company offers a comprehensive range of travel products and services, including accommodation booking, transportation ticketing, and business travel management[26]. - The Trip.com app has become one of the most downloaded online travel agency applications in several markets, including South Korea, Singapore, Thailand, and Hong Kong[23]. - The company has established nine customer service centers and sixteen call centers globally to enhance online channel competitiveness[24]. - Over 90% of total transaction orders were placed through mobile channels as of December 31, 2024[23]. - The open platform has approximately 1.5 million global accommodation services and over 640 airline partners as of December 31, 2024[25]. - The company has adopted an open platform business model to attract ecosystem partners to launch customized travel products[24]. - The company has a strong user base and competitive position in the travel market, leveraging advanced AI technology and industry insights[22]. - The company provides personalized, convenient, and inspiring travel experiences through various online channels, including mobile apps and localized websites[23]. - The company relies heavily on maintaining relationships with ecosystem partners, such as hotels and airlines, to ensure service availability and competitive pricing[78]. - The company generates revenue through commissions from ticket sales via airline partners, but there is a risk of unfavorable changes in partnership terms[80]. - Strategic alliances with ecosystem partners are crucial for revenue growth, and failure to establish or maintain these alliances could negatively impact market penetration and profitability[81]. Risks and Challenges - The company faces various legal and operational risks in China, including complex and changing regulations that may impact its ability to comply with regulatory requirements[46]. - The Chinese government's regulatory power may severely restrict or completely hinder the company's ability to issue or continue issuing securities to investors[47]. - The company may face significant adverse changes in its operations and the value of its American depositary shares due to risks associated with the Chinese legal system and regulatory environment[47]. - The company faces significant competition from both new and existing travel agencies, which may impact market share and business performance[92]. - Aggressive advertising and promotional campaigns by competitors have led to increased expenses, potentially affecting quarterly or annual operating profit margins[93]. - The company faces risks related to foreign investment restrictions in China, which may create significant uncertainties[68]. - The company faces significant operational and legal risks associated with conducting business in mainland China, which may impact growth and profitability[60]. - A severe or prolonged global economic downturn could have a significant adverse effect on the company's business and financial performance[61]. - The overall decline or turmoil in the travel industry may significantly adversely affect the company's business and operating performance[62]. - The company has incurred substantial debt and may generate additional debt in the future, potentially impacting its ability to meet cash obligations[62]. - The company faces risks from geopolitical uncertainties, natural disasters, and travel restrictions that could disrupt operations and financial performance[76]. - The company may struggle to implement its global expansion strategy due to challenges such as cultural differences and local market dynamics, potentially impacting its operational complexity[148]. - The company cannot guarantee successful management of risks associated with international business expansion, which may adversely affect its financial condition and operational results[152]. Regulatory Environment - The company faces significant compliance costs due to evolving legal and regulatory frameworks across various jurisdictions, impacting operational practices[153]. - The regulatory environment regarding consumer data collection and privacy is becoming increasingly stringent, with potential risks of sanctions and reputational damage if compliance is not met[154]. - The company faces uncertainties regarding the interpretation and implementation of antitrust guidelines in the internet platform economy, which may impact its business operations[165]. - The National Market Supervision Administration has emphasized compliance with antitrust laws, and companies are required to conduct self-inspections and rectify any violations, with potential for severe penalties for non-compliance[166]. - Future amendments to the Antitrust Law may complicate the company's past acquisitions and investments due to increased scrutiny and pre-filing requirements[167]. - The company is subject to various privacy and data protection laws across multiple jurisdictions, which could lead to sanctions and reputational damage if not complied with[131]. - The company must comply with foreign exchange registration requirements for Chinese residents participating in stock incentive plans, which could lead to fines and legal sanctions if not adhered to[172]. Technology and Innovation - The company invested RMB 13.1 billion (approximately USD 1.8 billion) in product research and development for the fiscal year ending December 31, 2024[70]. - The company is focusing on enhancing its content marketing capabilities and user engagement through innovative formats such as live streaming[71]. - The company is investing in artificial intelligence and cloud technology to improve its infrastructure and services[71]. - The company relies on an internally developed booking software system, and any inability to upgrade systems to meet future traffic demands may adversely affect business performance[101]. - The company faces increased costs due to the need to develop services compatible with various mobile operating systems and devices, which is critical for market penetration[102]. Human Resources and Management - The company's future success heavily depends on the continued service of its senior management, and losing them could severely disrupt operations[103]. - The company must attract and retain key personnel to support business expansion, and failure to do so may lead to unsatisfactory user experiences[104]. Economic Conditions - Global economic conditions, including inflation and geopolitical tensions, may significantly impact the company's growth and profitability[72]. - The travel industry downturn could adversely affect the company's business and financial performance due to its sensitivity to discretionary spending[74]. - The company may experience adverse effects on its business and financial performance due to unfavorable changes in government policies and economic conditions in China[158]. - China's economic growth rate has been gradually slowing since 2010, with the COVID-19 pandemic significantly impacting economic activity from 2020 to 2022, potentially reducing demand for the company's products and services[159].