Summary of the Conference Call on the China OTA Industry Industry Overview - **Industry**: China Online Travel Agency (OTA) Sector - **Key Focus**: Competitive dynamics and strategic updates within the OTA industry in China Core Insights 1. **High Entry Barriers**: The complexity of building OTA supply chains and service infrastructure creates significant entry barriers, which may take 3-5 years for new entrants to overcome. Established players have clear scale advantages [2][3] 2. **Transportation Supply Chain**: The transportation supply chain is simpler with around 100 airline carriers in China, but the ROI and margins are low due to limited direct monetization through commissions. Revenue opportunities lie in cross-selling value-added services [2] 3. **Hotel Supply Chain Challenges**: Establishing a hotel supply chain is more complex due to nearly 1 million suppliers, including alternative accommodations. Many small and independent hotels require extensive business development efforts [2] 4. **Customer Service Advantages**: Leading OTAs like Trip.com have developed large in-house customer service teams, providing superior service quality through a one-stop shop platform that can address cross-business issues [2] Competitive Landscape 1. **Stable Competition**: Despite new platforms showing interest in the OTA space, the competitive landscape remains stable. New entrants face constraints in supply capabilities, customer service, and user mindshare [3] 2. **Fliggy's Position**: Fliggy has gained traffic support post-Alibaba's restructuring but still lags in hotel inventory depth and price competitiveness compared to market leaders [3] 3. **Douyin's Strategy**: Douyin has shifted from a full OTA model back to a "content + voucher" approach due to slow hotel coverage and customer profile mismatches [3] 4. **JD.com's Early Stage**: JD.com is in the early stages of developing its hotel supply chain, focusing on service provider coordination and system integration [3] AI Disruption Concerns 1. **Limited Immediate Impact**: Concerns regarding AI disruption in the OTA sector are considered overblown at this stage. Current AI platforms are likely to serve as price comparators but face limitations in real-time price retrieval due to OTAs' defensive measures [4] 2. **Long-Term AI Integration**: For AI platforms to facilitate closed-loop bookings, they must improve their supply chains and services, necessitating ongoing monitoring [4] Stock Implications 1. **Earnings Visibility**: The stable competition in the OTA sector supports the earnings visibility of leading companies. The report is optimistic about the OTA sector's prospects in 2026, citing reasonable valuations [5] 2. **Valuation Metrics**: TCOM/Tongcheng is trading at 16x/11x 2026E PE, compared to 14x for the broader Chinese internet sector [5] Risks to Consider 1. **Evolving Competition**: The competitive landscape is subject to change, which could intensify competition [7] 2. **Technological Trends**: Rapid changes in technology and user preferences pose risks [7] 3. **Monetization Uncertainty**: Uncertain monetization strategies could impact profitability [7] 4. **Traffic Acquisition Costs**: Rising costs associated with traffic acquisition and brand promotions are a concern [7] 5. **Regulatory Changes**: Potential regulatory changes could affect the industry landscape [7] Additional Notes - The report emphasizes the importance of monitoring ongoing developments in the OTA sector and the potential for new entrants to disrupt the market in the future [4][5]

Summary of Tongcheng Travel Holdings 3Q25 Earnings Call Company Overview - **Company**: Tongcheng Travel Holdings - **Industry**: Online Travel Agency (OTA) in Asia Pacific - **Date of Earnings Call**: November 25, 2025 Key Financial Results - **3Q25 Revenue**: Revenue exceeded estimates by 1%, driven by a 15% growth in the core OTA business, outperforming peers in the domestic market [2][4] - **Gross Profit Margin (GPM)**: Achieved 65.7%, 1 percentage point better than estimates due to a favorable mix shift towards core OTA [2][4] - **Net Profit**: Beat estimates by 3%, with a year-over-year margin improvement of 1 percentage point [2][4] M&A Activity - **Wanda Hotel Management Acquisition**: Closed in mid-October, expected to contribute approximately RMB 160-180 million in revenue and RMB 20 million in profit for 4Q25. This acquisition includes 239 hotels, primarily high-end in tier two or lower cities, and is seen as a future growth engine [3][4] 4Q25 Outlook - **Revenue Growth Projection**: Anticipated growth of 10-15% overall, with core OTA growth at 15-20%. Accommodations expected to be the main contributor with 12-17% revenue growth [4] - **Transportation Revenue Growth**: Projected at 6-11%, driven by improved take rates and value-added service (VAS) adoption [4] - **Other Revenue Growth**: Expected to accelerate to 45-50% due to M&A contributions [4] - **Profit Guidance**: Adjusted profit range for 4Q25 is RMB 720-780 million, with no change to full-year guidance [4] Long-term Projections - **2026 Revenue Growth**: Management expects low to mid-teens organic core OTA revenue growth (13-18% including M&A) and a further 0.5 percentage point margin improvement [4] - **Marketing Investments**: Plans to increase marketing spending for emerging outbound business and its own app [4] Valuation Metrics - **Current P/E Ratios**: Trading at 13.6x for 2025 and 11.6x for 2026, considered attractive given the double-digit core OTA revenue growth and margin expansion [5] - **Price Target**: Set at HK$29.00, indicating a 34% upside from the current price of HK$21.62 [7] Risks and Considerations - **Upside Risks**: Strong pent-up demand and moderating competition in lower-tier cities could enhance margins [12] - **Downside Risks**: Softer macroeconomic growth in China and intensifying competition in lower-tier cities could impact performance [12] Additional Insights - **Market Capitalization**: Approximately RMB 45.203 billion [7] - **Average Daily Trading Value**: HK$253 million [7] - **52-Week Price Range**: HK$24.90 - HK$17.02 [7] This summary encapsulates the key points from the earnings call, highlighting the company's performance, strategic initiatives, and market outlook.

Financial Data and Key Metrics Changes - In Q3 2025, the company reported a net revenue of RMB 5.5 billion, reflecting a year-over-year increase of 10.4% [18] - Adjusted net profit reached RMB 1,060 million, marking a 16.5% year-over-year growth, with an adjusted net margin expanding to 19.2% from 18.2% [19][22] - Gross profit increased by 14.4% year-over-year to RMB 3.6 billion, with a gross margin of 65.7% [22] - Annual paying users reached a historic high of 253 million, representing a year-over-year growth of 8.8% [11] Business Line Data and Key Metrics Changes - The accommodation reservation business achieved RMB 1.6 billion in revenue for Q3 2025, a 14.7% increase from the same period in 2024, driven by increased hotel room nights sold [19] - Transportation ticketing revenue reached RMB 2.2 billion, marking a 9.0% year-over-year increase [20] - Other business segments, including hotel management, saw revenue grow to RMB 821 million, a 34.9% year-over-year increase [21] Market Data and Key Metrics Changes - The international air ticketing business accounted for around 6% of total transportation ticketing revenue, up about two percentage points year-over-year [21] - The company noted a significant increase in the proportion of higher-quality accommodation bookings, with over 20% growth in room nights sold [38] Company Strategy and Development Direction - The company aims to enhance user value and operational efficiency in its domestic business while expanding its outbound business and strengthening its global market presence [24][25] - Following the acquisition of Wanda Hotel Management, the company plans to integrate its operations to accelerate growth in the hotel management segment [6][32] - The focus remains on technological innovation to drive product and service upgrades, ensuring high-quality travel experiences for users [5] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience and growth potential of China's travel industry, driven by changing consumer behaviors and preferences [3][5] - The company anticipates continued growth in the outbound travel segment, targeting a revenue contribution of 10%-15% in the coming years [30] - Management remains committed to balancing market expansion with profitability, aiming for robust growth in both top line and bottom line [24][25] Other Important Information - The company has achieved an MSCI ESG rating of AAA, placing it among the top 5% of companies globally in its industry [15] - The standalone app has seen strong growth, with daily active users hitting nearly 5 million before the National Day holidays [12] Q&A Session Summary Question: Future growth engines regarding international business and hotel management - Management highlighted that the outbound business is a key growth driver, with expectations for rapid growth and profitability in the coming years [29][30] - The hotel management business is expected to expand significantly, with a focus on integrating the Wanda brand and enhancing operational efficiency [32][33] Question: Future hotel ADR trends and competition in the domestic market - Management noted that domestic ADR has stabilized and is expected to improve, driven by a shift towards higher-quality accommodations [38] - The company believes its established supply chain and user understanding provide a strong competitive advantage against new entrants [42][43] Question: Margin trends and AI technology impact - Management indicated that margin expansion remains a priority, supported by improved operational efficiency and AI integration [55][58] - AI technology is seen as beneficial for enhancing operational efficiency and user experience, with ongoing investments planned [59][60] Question: Impact of recent events in Japan on business performance - Management does not expect a material impact on overall performance but will monitor developments closely and adjust strategies as needed [64]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported a net revenue of CNY 5.5 billion, reflecting a year-over-year increase of 10.4% from Q3 2024 [17] - Adjusted net profit reached RMB 1,060 million, representing a 16.5% year-over-year growth, with an adjusted net margin expanding to 19.2% compared to 18.2% in the same period last year [18] - Gross profit increased by 14.4% year-over-year to RMB 3.6 billion, with a gross margin of 65.7% [22] Business Line Data and Key Metrics Changes - The core OTA business revenue grew by 14.9% year-over-year to RMB 4.6 billion, driven by accommodation reservations, transportation ticketing, and other segments [18] - Accommodation reservation revenue reached RMB 1.6 billion, a 14.7% increase from Q3 2024, attributed to higher hotel room nights sold and a slight increase in ADR [18] - Transportation ticketing revenue was RMB 2.2 billion, marking a 9.0% year-over-year increase [20] - Other business segments saw revenue of RMB 821 million, a growth of 34.9% year-over-year, primarily due to the hotel management business [21] Market Data and Key Metrics Changes - The annual paying users reached a historic high of 253 million, representing a year-over-year growth of 8.8% [11] - The cumulative number of passengers served on the platform exceeded 2 billion, indicating a stable annual purchase frequency of 8 times per user [11] - The international air ticketing business accounted for around 6% of total transportation ticketing revenue, up about 2 percentage points year-over-year [30] Company Strategy and Development Direction - The company aims to maintain its focus on the mass market while expanding its outbound business and exploring new growth drivers across the travel industry [5] - The acquisition of Wanda Hotel Management is expected to accelerate the growth of the hotel management business and strengthen the company's competitive positioning [11] - The company is committed to integrating AI technologies to enhance operational efficiency and user experience [5][15] Management Comments on Operating Environment and Future Outlook - Management noted that the travel market in China is showing robust growth, driven by rising demand for immersive experiences and innovative service models [3] - The company plans to capitalize on market opportunities while managing risks with discipline and prudence, aiming for robust growth in both top line and bottom line [24] - Management expressed confidence in achieving long-term sustainable growth and delivering value to stakeholders through a clear strategic roadmap [5][34] Other Important Information - The company has achieved an MSCI ESG rating of AAA, placing it among the top 5% of companies globally in its industry [15] - The standalone app has seen strong growth, with daily active users hitting nearly 5 million before the National Day holidays [12] Q&A Session Summary Question: Future growth engines regarding international business and hotel management - Management highlighted that the outbound business is a key growth driver, with expectations for rapid growth and profitability in the coming years [30][31] - The hotel management business is expected to expand significantly, with a focus on integrating Wanda Hotel Management to enhance offerings and profitability [32][34] Question: Future hotel ADR trends and competition in the domestic market - Management noted that domestic ADR has stabilized and is expected to improve, driven by a shift towards higher-quality accommodations [39][40] - The company believes it has strong defensive moats against competition due to its established supply chain and user understanding [42][43] Question: Margin trends and AI technology impact - Management indicated that margin expansion remains a priority, supported by improved operational efficiency and AI integration [55][57] - AI technology is expected to enhance operational efficiency and user experience, contributing positively to the company's performance [58][60] Question: Impact of recent incidents in Japan on business performance - Management does not expect a material impact on full-year performance but will monitor developments closely and adjust strategies as needed [63]

Financial Data and Key Metrics Changes - The adjusted operating profit for Q2 was $44.2 million, reflecting an 18% year-on-year growth [5][32] - The company reported a loss of $5.7 million for the quarter compared to a profit of $17.9 million in the same quarter last year, primarily due to interest and foreign exchange costs [31][32] - The adjusted margin growth for models and packages accelerated from 16.3% in Q1 to 21.6% in Q2 [29] Business Line Data and Key Metrics Changes - The international air ticketing revenue grew by over 29.6% year-on-year in constant currency terms, significantly outpacing industry growth [6] - The accommodation business, including hotels and holiday packages, delivered an 18% volume growth year-on-year [15] - The bus ticketing business saw strong growth, with all regions growing over 20% year-on-year [22] Market Data and Key Metrics Changes - The international business now contributes 28% to overall revenue, up from 25% during the same period last year [7] - Analysts estimate that recent fiscal and monetary measures could unlock an additional consumer spending of $3 billion to $3.5 billion [7] - The domestic air market experienced a decline of 3% year-on-year due to supply constraints [28] Company Strategy and Development Direction - The company is focused on enhancing customer experience through AI, launching an AI-powered travel assistant, Myra, to improve user engagement [8][10] - The strategy includes expanding the international air segment, which is seen as a significant growth opportunity [6] - The company aims to leverage its diversified product portfolio to drive growth across various travel segments [5][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of travel demand, particularly in the international air segment and domestic tourism [5][6] - The company anticipates that the reduction in GST rates and increased disposable income will boost travel demand [7][37] - Despite short-term challenges in the domestic air market, the long-term outlook for the Indian aviation sector remains robust [14] Other Important Information - The company has recently appointed Deepak Bora as the new Group CFO [26] - The company completed the repurchase and cancellation of 34.4 million Class B shares as part of its capital management strategy [30] Q&A Session Summary Question: Air capacity issue and demand outlook for December - Management indicated that domestic air market daily departures are expected to return to about 3,200, similar to the same period last year, with constraints still remaining [41][43] Question: Impact of GST benefits on December bookings - Management noted that while early signs are positive, travel demand typically picks up after Diwali, and they remain optimistic about the impact of GST reductions on consumer spending [45][46] Question: Increase in marketing expenses - Management clarified that the increase in marketing expenses is aligned with improved segment margins and is not solely due to competitive intensity [49][50] Question: Buyback program status - Management confirmed that no buybacks occurred in the current quarter but outlined changes to the buyback program, extending it and increasing the budget [53][54] Question: Growth outlook despite strong base in March - Management remains optimistic about achieving growth in the twenties for the full fiscal year, despite challenges in the first half [64][66] Question: Competitive landscape and new entrants - Management welcomed increased investment interest in the travel industry and expressed confidence in maintaining market leadership despite competition [68][70] Question: Clarification on growth guidance - Management clarified that the 20% growth guidance refers to adjusted margin growth across segments, not gross bookings [80][82] Question: Observations on hotel bookings and revenue - Management highlighted that adjusted margin growth in the standalone hotel business was strong at 23.1%, despite foreign currency impacts [83]

Summary of Earnings Preview for 3Q25 Industry Overview - The report focuses on the **China Internet and Other Services** sector, particularly the **online entertainment** and **OTA (Online Travel Agency)** segments, indicating an overall solid set of results expected for 3Q25 amid trade tensions [1][2]. Key Companies and Forecasts NetEase (OW) - Forecasted **15% growth** in game revenue and **26% growth** in Non-GAAP profit [3]. - Strong performance of FWJ's free-to-play version noted, though difficult to quantify due to its PC game nature [3]. - Limited upward revision in 2025 revenue consensus post-2Q earnings suggests potential upside risk [3]. Tencent Music Entertainment Group (TME) (OW) - 3Q forecast aligns with guidance, with upside risk for other music revenue due to concert seasonality [4]. - Key focus for 3Q25 earnings will be 2026 profit guidance, with a consensus of **Rmb11.2 billion** [4]. - Absolute profit is prioritized over margin due to uncertainty in concert contributions [4]. Trip.com Group Ltd (TCOM) (OW) - Bottom-line forecast is at the higher end of guidance range, with expected minimal YoY OPM contraction (~1ppt) in 3Q [5]. - Slight OPM expansion anticipated in 4Q from a low base, critical for evaluating 2026 consensus forecast [5]. - Competition from Fliggy highlighted as a key focus [5]. Tongcheng Travel Holdings (OW) - Expected **13% core OTA revenue growth** and **14% profit growth** [6]. - Management's comments on synergy from the Wanda Hotel Management acquisition are anticipated at the full-year result rather than in 3Q [6]. Kuaishou (EW) - 3Q guidance is in line, with expectations to raise full-year profit guidance by **3-5%** [7]. - Kling's performance remains a market debate, with increasing competition noted [7]. - Traffic and monetization changes under the new OneRec AI recommendation model are deemed crucial [7]. Bilibili (EW) - Forecasting **20% growth** in ads and a **16% decline** in game revenue [8]. - Expected **8% non-GAAP net margin** (Rmb613 million profit), with upside risk due to a relatively low base [8]. Important Focus Areas for 3Q Earnings - **NetEase**: Revenue and grossing to gauge FWJ's new run rate [12]. - **TCOM**: 4Q margin guidance as a checkpoint for potential normalization of overseas marketing intensity [12]. - **TME**: Detailed 2026 outlook expected due to good visibility [12]. - **Kuaishou**: Traffic and monetization growth to evaluate the new AI recommendation system [12]. Financial Highlights - **Kuaishou**: Expected total revenue of **Rmb35.391 billion**, with a **14% YoY growth** [16]. - **TCOM**: Anticipated net revenue of **Rmb18.193 billion**, reflecting a **15% YoY growth** [20]. - **TME**: Projected total revenue of **Rmb8.230 billion**, with a **17% YoY growth** [18]. Conclusion The earnings preview indicates a generally positive outlook for the online entertainment and OTA sectors in China, with several companies expected to outperform amid competitive pressures and market dynamics. Key financial metrics and growth forecasts suggest potential investment opportunities, particularly in companies like NetEase, TME, and TCOM.

Summary of Trip.com Group Ltd Conference Call Company and Industry Overview - **Company**: Trip.com Group Ltd (TCOM.O) - **Industry**: China Internet and Other Services, specifically focusing on the travel industry in the Asia Pacific region Key Points and Arguments 1. **Upcoming Catalyst**: The travel industry data release around the National Day and Mid-Autumn Festival is expected to be a significant catalyst for share prices [1][2] 2. **Holiday Data Expectations**: Strong travel data is anticipated due to the overlap of the two holidays, which is not the case in 2024, where a 6.3% year-over-year (YoY) growth was recorded [2] 3. **Impact on Earnings**: The holiday data will be crucial for TCOM's 4Q25 earnings, with the Ministry of Cultural and Tourism expected to report tourist receipts data on October 9 [2] 4. **Potential Outcomes**: - Scenario 1: Tourist receipts up 7% YoY (40% probability) - Scenario 2: Tourist receipts up 8% YoY or above (40% probability) - Scenario 3: Tourist receipts up 6% YoY or below (20% probability) [3] 5. **Stock Price Implications**: - Scenario 1: Share price remains flat (US$77) - Scenario 2: Share price increases by 5%+ (US$81) - Scenario 3: Share price decreases by 5% (US$73) [4][5] Financial Metrics and Projections 1. **Current Stock Rating**: Overweight with a price target of US$83.00, indicating an 8% upside from the current price of US$76.79 [6] 2. **Market Capitalization**: Approximately US$52.886 billion [6] 3. **Earnings Projections**: - EPS (Rmb): 26.20 for FY 2024, increasing to 33.50 by FY 2027 - Revenue (Rmb million): Expected to grow from 53,294 in FY 2024 to 76,381 in FY 2027 [6] 4. **Valuation Ratios**: - P/E Ratio: Expected to range from 20.4 in FY 2024 to 16.6 in FY 2027 - ROE: Projected to be around 13.8% in FY 2024, stabilizing around 12.1% by FY 2027 [6] Risks and Considerations 1. **Upside Risks**: - Strong pent-up demand in the travel sector - Reduced competition in lower-tier cities leading to improved margins [12] 2. **Downside Risks**: - Softer macroeconomic growth in China affecting price-sensitive consumers - Increased competition from domestic players like Tongcheng Travel and Meituan [13] Additional Insights - The upcoming holiday data is viewed as a critical indicator for both Trip.com and its competitor Tongcheng Travel, suggesting a broader impact on the online travel agency (OTA) sector [2][4] - The analysis indicates a cautious optimism regarding the travel industry's recovery, contingent on macroeconomic conditions and competitive dynamics [12][13]

Financial Data and Key Metrics Changes - The company reported a net revenue of RMB4.7 billion, marking a 10% year-over-year increase from the same period in 2024 [26] - Adjusted net profit rose to RMB775 million, reflecting an 18% year-over-year growth, with adjusted net margin expanding to 16.6% compared to 15.5% in the same period last year [26] - Gross profit increased by 10.6% year-over-year to RMB3.0 billion, with gross margin rising slightly to 65% [29] - Adjusted EBITDA increased by 29.7% to RMB1.2 billion, with a 25.4% margin compared to a 21.5% margin in the same period last year [30] Business Line Data and Key Metrics Changes - The accommodation reservation business achieved RMB1.4 billion, representing a 15.2% increase from the same period in 2024 [27] - Transportation ticketing revenue reached RMB1.9 billion, marking a 7.9% year-over-year increase [28] - The hotel management business sustained healthy expansion, with over 2,700 hotels in operation and nearly 1,500 in the pipeline [16] Market Data and Key Metrics Changes - The international air ticketing volume reached a historical high, delivering nearly 30% year-over-year growth [14] - The cumulative number of passengers served on the platform reached 2 billion, suggesting a stable user purchase frequency of 8 times per year [20] - The twelve-month annual paying users climbed to over 250 million, representing a 10% year-over-year increase [20] Company Strategy and Development Direction - The company is focused on expanding its core OTA business while enhancing its brand awareness and market share [34] - There is a commitment to leveraging technology, including AI, to drive growth and improve user experience [21][23] - The company aims to deepen its presence in the hotel management sector, targeting over 3,000 hotels in operation by the end of 2025 [73] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the Chinese travel market, anticipating steady year-over-year growth in both top line and bottom line [33] - The shift in consumer preferences towards experiential travel is seen as a significant opportunity for growth [56] - The company plans to maintain a disciplined approach to sales and marketing spending to ensure optimal returns [56] Other Important Information - The company announced the acquisition of a 100% stake in Wanda Hotel Management, which is expected to diversify brand metrics and strengthen market presence [17] - The balance of cash, cash equivalents, restricted cash, and short-term investments was RMB13.5 billion as of June 30, 2025 [32] Q&A Session Summary Question: Can management provide more color regarding the volume growth, ADR, and take rate in the accommodation business? - Management noted that the domestic ADR has stabilized year-over-year and is expected to continue growing, driven by a shift in user behavior towards higher quality products [41][43] Question: How does the company balance strategic resource allocation between core OTA and pursuing a diverse business portfolio? - Management emphasized that the OTA business remains the foundation and strategic focus, while also pursuing organic growth opportunities and selective M&A [46][48] Question: What are the reasons for the low growth in domestic airline ticketing volume? - Management indicated that the industry has returned to a normalized growth trajectory after two exceptional years, but expects the OTA business to outpace overall market growth [52][54] Question: Can management share more details on outbound travel performance? - Management reported significant growth in international air ticketing and accommodation volumes, with a focus on improving marketing efficiency and ROI [58][59] Question: How does management view the impact of JV and BaBa's investments in the OTA market? - Management believes that the competitive landscape remains stable, as new entrants face challenges in replicating established relationships and operational efficiencies [64][66] Question: What is the expected margin outlook for the OTA business? - Management expects steady year-over-year improvement in margins, driven by reduced sales and marketing expenses and improved operational efficiency [69][70] Question: What is the latest development plan for the hotel management business? - Management aims to operate over 3,000 hotels by the end of 2025, with a focus on enhancing quality and brand recognition [73][74] Question: Can management comment on the standalone app's user base and revenue contribution? - Management reported that the app accounted for over 8% of core OTA revenue in Q2, with ongoing efforts to grow the user base and engagement [82] Question: How is AI evolving within the company? - Management highlighted the integration of AI into the travel planning process, improving operational efficiency and user experience [85][86]

Core Insights - ly.com demonstrated significant growth in Q1 2025, with revenue reaching RMB 4.377 billion, a 13.2% year-over-year increase, and adjusted net profit of RMB 788 million, up 41.1% YoY, indicating strong demand in the mass-market tourism sector [1][2][4] Operational Performance - Revenue from the online travel platform segment grew by 18.4% YoY to RMB 3.792 billion, accounting for approximately 86.6% of total revenue, driven by accommodation booking services and transportation ticketing [4][5] - Adjusted EBITDA reached RMB 1.159 billion, reflecting a robust business mix and multi-dimensional expansion [2][4] Business Developments - ly.com is focusing on mass-market tourism, targeting consumers in non-first-tier cities, which represent a significant growth opportunity, with 87% of registered users from these areas [9][11] - The company has integrated AI capabilities to enhance operational efficiency, reducing labor costs by 20% and improving user experience through personalized travel planning [16][17] Strategic Insights - The mass-market tourism sector is experiencing segmentation and diversification, with a growing demand for differentiated travel experiences among various consumer groups [20][21] - Outbound tourism is expected to drive future growth, particularly from non-first-tier cities, as ly.com enhances its international offerings and partnerships [7][23]

Financial Data and Key Metrics Changes - The company reported a net revenue of RMB4.4 billion, representing a 13.2% year-over-year increase from the same period in 2024 [26] - Adjusted net profit reached RMB788 million, reflecting a 41.1% year-over-year growth, with an adjusted net margin of 18% compared to 14.4% in the same period of 2024 [26] - The core OTA business revenue grew by 18.4% year-over-year, totaling RMB3.8 billion, driven by growth in accommodation reservation and transportation ticketing [26] Business Line Data and Key Metrics Changes - Transportation ticketing revenue was RMB2.0 billion, a 15.2% increase year-over-year [26] - Accommodation reservation business achieved RMB1.2 billion, representing a 23.3% increase from the same period in 2024 [27] - International accommodation business saw over 50% growth year-over-year in room nights sold [17] Market Data and Key Metrics Changes - The outbound travel segment accounted for more than 5% of total transportation ticketing revenues, marking a year-over-year increase of three percentage points [27] - The number of hotels in operation totaled over 2,500, with more than 1,400 in the pipeline [18] - The annual paying user count reached a historical high of 247 million, with cumulative travelers served achieving 1,496 million [21] Company Strategy and Development Direction - The company aims to deepen its domestic market presence while accelerating the expansion of its outbound travel business [7] - Plans to acquire Wanda Hotel Management Company were announced, which is expected to enhance the company's influence within the hotel management sector [11] - The company is committed to technological advancements, integrating AI into business operations to improve service quality and efficiency [8] Management Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term prospects of China's travel industry, supported by government initiatives and changing consumer preferences [11][30] - The company is focused on enhancing user value and driving technological iteration to improve service efficiency [10] - Management expects continued growth in the travel industry, with a focus on diverse travel preferences and experiences [30] Other Important Information - The company has been recognized for its ESG performance, being included in the S&P Global Sustainability Yearbook China for the third consecutive year [24] - The standalone app has shown strong growth, with daily active users increasing by nearly 60% year-over-year [19] Q&A Session All Questions and Answers Question: Growth pattern of core OTA business in upcoming quarters - Management highlighted the resilience of the Chinese travel market and expects steady growth with healthy profitability, focusing on enhancing ARPU and optimizing marketing investments [35][37] Question: Forecast for outbound business growth and its contribution to total revenue - The outbound travel segment has shown remarkable growth, with international room night sales and air ticketing volumes increasing by over 50% year-over-year, expected to be a key growth driver [45][48] Question: Impact of AI agent DeepTrip on user engagement and future features - DeepTrip is still in early adoption stages, with innovative features being integrated to enhance user experience and engagement, expected to grow organically over time [49][51] Question: Update on standalone app performance and its contribution to revenue - The standalone app has seen significant user growth and is expected to continue contributing to overall revenue, with a focus on enhancing user engagement and ARPU [55][58] Question: Macro uncertainties and their impact on travel demand - Despite macro uncertainties, management remains optimistic about the travel industry's growth, citing strong consumer demand and positive trends in pricing [64][66] Question: Rationale behind the acquisition of Wanda Hotel Management - The acquisition is seen as a strategic move to enhance the company's hotel management capabilities and market presence in the luxury segment, leveraging existing user insights and technology [68][70]