Tuniu(TOUR) - 2022 Q3 - Quarterly Report

Tuniu Second Quarter 2022 Financial Results Management Commentary Despite the severe impact of a COVID-19 resurgence on the tourism industry in Q2 2022, Tuniu's management observed continued high public enthusiasm for travel and signs of industry recovery, focusing on high-quality products, new offerings, and optimized internal management to lower costs - The company's strategy during the quarter included focusing on high-quality products and services, exploring new product areas while consolidating strengths in packaged tours, adhering to the 'customer first' principle, and optimizing internal management and implementing cost control measures to improve efficiency[2] - Management expressed confidence in the long-term development potential of the tourism industry despite the challenges on the road to recovery[2] Financial Highlights Tuniu's Q2 2022 financial performance was significantly impacted by the resurgence of COVID-19, with net revenues falling sharply by 77.0% year-over-year to RMB 37.0 million and a net loss of RMB 128.5 million primarily driven by a large goodwill impairment charge Q2 2022 Key Financial Metrics | Metric | Q2 2022 (RMB million) | Q2 2021 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | 37.0 | 161.0 | -77.0% | | Gross Profit | 16.5 | 69.0 | -76.1% | | Loss from Operations | (122.9) | (26.2) | Increased | | Net Loss | (128.5) | (14.0) | Increased | Revenues Net revenues for Q2 2022 were RMB 37.0 million, a 77.0% decrease year-over-year, primarily caused by a 92.5% collapse in revenues from packaged tours due to COVID-19 resurgences in China, with other revenues also declining by 20.4% Q2 2022 Revenue Breakdown | Revenue Stream | Q2 2022 (RMB million) | Q2 2021 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Packaged Tours | 9.5 | 126.5 | -92.5% | | Other Revenues | 27.4 | 34.5 | -20.4% | | Total Net Revenues | 37.0 | 161.0 | -77.0% | Cost of Revenues and Gross Margin Cost of revenues decreased by 77.8% to RMB 20.4 million in Q2 2022, in line with the decline in business volume, while gross margin slightly improved to 44.7% from 42.9% in the prior-year period - Cost of revenues was RMB 20.4 million, a year-over-year decrease of 77.8%[4] - Gross margin for Q2 2022 was 44.7%, compared to 42.9% in Q2 2021[5] Operating Expenses Total operating expenses surged 46.5% year-over-year to RMB 139.4 million, primarily due to a significant goodwill impairment charge of RMB 112.1 million, though excluding non-GAAP items, operating expenses decreased by 37.8% - A goodwill impairment of RMB 112.1 million was recorded due to the severe adverse impact of COVID-19[6] - The company recorded a gain on disposals of subsidiaries of RMB 32.8 million, which was included in other operating income[6] Q2 2022 Non-GAAP Operating Expenses (YoY) | Expense Category | Q2 2022 (RMB million) | YoY Change | | :--- | :--- | :--- | | Research & Product Development | 13.1 | +1.8% | | Sales & Marketing | 23.3 | -46.7% | | General & Administrative | 21.6 | -43.0% | | Total Non-GAAP Operating Expenses | 55.7 | -37.8% | Profitability The company's loss from operations widened significantly to RMB 122.9 million in Q2 2022 from RMB 26.2 million in Q2 2021, leading to a net loss attributable to ordinary shareholders of RMB 126.5 million, compared to RMB 13.1 million in the prior-year period Q2 2022 Profitability Metrics (GAAP vs. Non-GAAP) | Metric | Q2 2022 GAAP (RMB million) | Q2 2022 Non-GAAP (RMB million) | Q2 2021 GAAP (RMB million) | | :--- | :--- | :--- | :--- | | Loss from Operations | (122.9) | (38.9) | (26.2) | | Net Loss | (128.5) | (44.6) | (14.0) | | Net Loss Attributable to Ordinary Shareholders | (126.5) | (42.6) | (13.1) | Financial Position and Liquidity As of June 30, 2022, Tuniu held RMB 1.0 billion in cash, cash equivalents, restricted cash, and short-term investments, which management believes is sufficient to meet working capital and capital expenditure needs for the next twelve months, despite a decrease in total assets to RMB 2.12 billion mainly due to goodwill impairment - As of June 30, 2022, the company had cash and cash equivalents, restricted cash and short-term investments of RMB 1.0 billion (US$151.9 million)[13] - Management believes available cash and investments are sufficient to meet working capital requirements for the next twelve months[13] Key Balance Sheet Items (RMB thousands) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total current assets | 1,421,205 | 1,475,442 | | Goodwill | 117,470 | 232,007 | | Total assets | 2,117,657 | 2,297,809 | | Total current liabilities | 974,541 | 979,013 | | Total liabilities | 1,024,761 | 1,044,668 | | Total equity | 1,065,696 | 1,225,941 | Business Outlook For the third quarter of 2022, Tuniu anticipates net revenues to be between RMB 74.5 million and RMB 80.2 million, representing a year-over-year decrease of 30% to 35%, indicating continued pressure on the business - The company expects to generate RMB 74.5 million to RMB 80.2 million of net revenues for Q3 2022[14] - This forecast represents a 30% to 35% decrease year-over-year[14] Non-GAAP Financial Measures The company provides non-GAAP financial measures to supplement its GAAP results, excluding items such as share-based compensation, amortization of acquired intangible assets, gain on disposals of subsidiaries, and impairment of goodwill, which management believes are useful for assessing underlying business performance and trends - Non-GAAP measures exclude items such as share-based compensation, amortization of acquired intangible assets, gain on disposals of subsidiaries, and impairment of goodwill[19] Reconciliation of GAAP Net Loss to Non-GAAP Net Loss (Q2 2022, RMB thousands) | Description | Amount | | :--- | :--- | | GAAP Net Loss | (128,538) | | Share-based Compensation | 2,677 | | Amortization of acquired intangible assets | 1,939 | | Gain on disposals of subsidiaries | (32,786) | | Impairment of goodwill | 112,102 | | Non-GAAP Net Loss | (44,606) |