Atour Lifestyle (ATAT) - 2023 Q3 - Quarterly Report

Financial & Operational Highlights Atour reported strong Q2 2023 growth in net revenues and net income, with hotel network expansion and key operational metrics surpassing pre-pandemic levels Q2 2023 Key Financial Highlights (Year-over-Year) | Metric | Q2 2023 | Q2 2022 | Growth | | :--- | :--- | :--- | :--- | | Net Revenues | RMB 1,093 Million | RMB 515 Million | +112.3% | | Net Income | RMB 239 Million | RMB 60 Million | +298.3% | | Adjusted Net Income (non-GAAP) | RMB 249 Million | RMB 60 Million | +312.9% | | Adjusted EBITDA (non-GAAP) | RMB 344 Million | RMB 104 Million | +232.4% | Q2 2023 Key Operational Metrics | Metric | Q2 2023 | Q2 2022 | Recovery vs. 2019 | | :--- | :--- | :--- | :--- | | ADR | RMB 475 | RMB 362 | 109.8% | | Occupancy Rate | 77.1% | 65.5% | 103.6% | | RevPAR | RMB 384 | RMB 251 | 114.8% | - The hotel network expanded to 1,034 hotels with 120,404 rooms as of June 30, 2023, representing a 24.0% year-over-year increase in the number of hotels[3] - Gross Merchandise Volume (GMV) from the scenario-based retail business reached RMB 267 million, a significant increase of 283.9% year-over-year[4] Management Commentary Management highlights full recovery in key operating metrics, record new hotel signings, and strong retail business growth, supporting the 2025 expansion goal - Management reports a full recovery across Occupancy (OCC), ADR, and RevPAR, with new hotel signings reaching a quarterly record high[5] - The company is on track towards its mid-term goal of having 2,000 premier hotels by 2025[5] - The scenario-based retail business is prospering by proactively discovering and satisfying customers' evolving demands beyond accommodation[5] Second Quarter 2023 Unaudited Financial Results Q2 2023 financial results show substantial growth in net revenues and income from operations, driven by broad-based business expansion and improved efficiency Net Revenues Net revenues surged 112.3% to RMB 1,093 million in Q2 2023, driven by strong growth across manachised, leased, and retail segments Q2 2023 Net Revenues Breakdown (Year-over-Year) | Revenue Source | Q2 2023 (RMB Million) | Q2 2022 (RMB Million) | Growth | | :--- | :--- | :--- | :--- | | Manachised hotels | 626 | 295 | +112.3% | | Leased hotels | 220 | 143 | +53.6% | | Retail revenues and others | 247 | 77 | +222.2% | | Total Net Revenues | 1,093 | 515 | +112.3% | Operating Costs and Expenses Operating costs increased in Q2 2023, but improved efficiency led to a decrease in hotel operating costs as a percentage of revenues - Hotel operating costs as a percentage of manachised and leased hotels' revenues decreased to 60.2% in Q2 2023 from 74.2% in Q2 2022, reflecting improved operational leverage[11] - Other operating costs, mainly for the retail business, increased by 189.9% but improved as a percentage of retail revenues to 49.0% from 54.4% year-over-year, showing better profitability[12] - Selling and marketing expenses grew 197.3% to RMB 94 million, driven by increased investment in branding and the growth of the online retail business[13] Profitability and Earnings Per Share Q2 2023 saw dramatic profitability improvement, with income from operations reaching RMB 307 million and net income surging to RMB 239 million Q2 2023 Profitability Metrics (Year-over-Year) | Metric | Q2 2023 (RMB Million) | Q2 2022 (RMB Million) | | :--- | :--- | :--- | | Income from Operations | 307 | 82 | | Net Income | 239 | 60 | | Adjusted Net Income (non-GAAP) | 249 | 60 | | EBITDA (non-GAAP) | 334 | 104 | | Adjusted EBITDA (non-GAAP) | 344 | 104 | - For Q2 2023, diluted income per share was RMB 0.57, and diluted income per ADS was RMB 1.71 (US$0.24)[16] Financial Position and Cash Flow The company maintained a strong financial position with RMB 2.5 billion in cash and RMB 520 million in operating cash inflow for Q2 2023 - Operating cash inflow for Q2 2023 was RMB 520 million[17] - As of June 30, 2023, the company held RMB 2.5 billion in cash, cash equivalents, and restricted cash[17] - Total outstanding borrowings were RMB 73 million, with an available unutilized credit facility of RMB 260 million as of the end of the quarter[17] Key Operating Data Q2 2023 saw the hotel network expand to 1,034 hotels, with key performance indicators like occupancy, ADR, and RevPAR showing strong recovery Hotel Network Expansion in Q2 2023 | Hotel Type | Opened in Q2 2023 | Closed in Q2 2023 | Total as of June 30, 2023 | Total Rooms | | :--- | :--- | :--- | :--- | :--- | | Manachised | 70 | 4 | 1,001 | 115,427 | | Leased | 0 | 0 | 33 | 4,977 | | Total | 70 | 4 | 1,034 | 120,404 | Key Performance Indicators by Quarter | Metric (All Hotels) | Q2 2023 | Q1 2023 | Q2 2022 | | :--- | :--- | :--- | :--- | | Occupancy Rate | 77.1% | 72.5% | 65.5% | | ADR (in RMB) | 474.8 | 442.9 | 361.8 | | RevPAR (in RMB) | 383.6 | 336.8 | 251.3 | Appendix The Appendix provides supplementary information, including conference call details, non-GAAP financial measure explanations, and unaudited financial statements Use of Non-GAAP Financial Measures The company uses non-GAAP measures like adjusted net income and EBITDA to provide supplemental performance insights by excluding non-cash expenses - The company utilizes non-GAAP measures including adjusted net income, EBITDA, and adjusted EBITDA to provide supplemental information on performance[19] - Adjusted net income and adjusted EBITDA exclude share-based compensation expenses to help investors better understand performance and compare trends on a consistent basis[20] Financial Statements and Reconciliations This section presents unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and GAAP to non-GAAP reconciliations - The report includes unaudited condensed consolidated balance sheets, statements of comprehensive income, and statements of cash flows[23][27][29] - A detailed reconciliation of GAAP to non-GAAP results is provided, showing adjustments for items like share-based compensation, interest, taxes, and depreciation[31][32][33] Conference Call Information An earnings conference call for Q2 2023 results is scheduled for August 17, 2023, at 8:00 AM U.S. Eastern time - A conference call to discuss Q2 2023 results is scheduled for 8:00 AM U.S. Eastern time on August 17, 2023[18]