Summary of Trip.com Group Ltd (TCOM.O) Conference Call Company Overview - **Company**: Trip.com Group Ltd (TCOM) - **Industry**: Online Travel Agency (OTA) in China - **Founded**: 1999, listed on NASDAQ in 2003 Key Financial Results - **2Q25 Performance**: Revenue increased by 16% year-over-year (YoY) to RMB 14.8 billion, exceeding expectations - **Segment Breakdown**: - Accommodation revenue: RMB 6.2 billion (+21% YoY) - Transportation ticketing: RMB 5.4 billion (+11% YoY) - Packaged tours: RMB 1.1 billion (+5% YoY) - Corporate travel: RMB 692 million (+9% YoY) - Other revenues: RMB 1.47 billion (+31% YoY) [11][12] Revenue Growth Projections - **Domestic Revenue Growth**: Projected at 9% YoY in 2H25, driven by hotel room nights growth despite softening transportation ticketing volume [2] - **Outbound Growth**: Expected to slow to low teens in 2H25 but still outperform the industry [2] Margin Insights - **Operating Margin**: Adjusted Operating Profit Margin (OPM) expected to improve to 32% in 3Q25, with a drop anticipated in 4Q25 due to seasonal factors [3] - **Marketing Efficiency**: Improved marketing optimization has positively impacted margins [3] Shareholder Return Strategy - **Share Repurchase Program**: Announced a USD 5 billion share repurchase program to offset dilution from Employee Stock Ownership Plans (ESOP) and support share price during volatility [4][12] Earnings Estimates - **Revised Earnings Estimates**: Increased by 2% for 2025, 2% for 2026, and 3% for 2027 [1] - **Target Price**: Raised to USD 85 from USD 78, reflecting a 30.2% expected share price return [6][10] Financial Metrics - **2023A Net Profit**: RMB 13,071 million - **2024A Net Profit**: RMB 18,041 million - **2025E Net Profit**: RMB 18,698 million - **2026E Net Profit**: RMB 21,231 million - **2027E Net Profit**: RMB 23,287 million [5] Risks and Challenges - **Downside Risks**: Include potential softening of the China macro environment, slower-than-expected recovery in travel demand, worsening spending and margins, intensified domestic competition, and new outbreaks of COVID-19 or other epidemics [26] Conclusion - **Investment Recommendation**: The stock is rated as a Buy due to resilient domestic performance, strong growth prospects, and a focus on shareholder returns [24][25]

Financial Data and Key Metrics Changes - For Q1 2025, Trip.com Group reported net revenue of RMB 13.8 billion, a 16% increase year over year and a 9% increase quarter over quarter, driven by strong travel consumption and resilient demand across segments [24][29] - Adjusted EBITDA for Q1 was RMB 4.2 billion, compared to RMB 4 billion in the same period last year and RMB 3 billion in the previous quarter, indicating continued operational efficiency improvement [27][29] - Diluted earnings per ordinary share were RMB 6.09 (US$0.84), while non-GAAP diluted earnings per share were RMB 5.90 (US$0.82) for Q1 2025 [28] Business Line Data and Key Metrics Changes - Accommodation reservation revenue for Q1 was RMB 5.5 billion, representing a 23% increase year over year and a 7% increase quarter over quarter [24] - Transportation ticketing revenue for Q1 was RMB 5.4 billion, reflecting an 8% increase year over year and a 13% increase quarter over quarter [25] - Packaged tour revenue for Q1 was RMB 947 million, a 7% increase year over year and a 9% increase quarter over quarter [25] Market Data and Key Metrics Changes - Inbound travel bookings surged by approximately 100% year over year, with hotel bookings from key visa-free countries in APAC increasing by over 240% [15][16] - Outbound hotel and air bookings returned to more than 120% of 2019 levels, outperforming the market by 30-40% [17] - Domestic hotel bookings continued to see double-digit growth year over year, indicating strong consumer appetite for local exploration [18] Company Strategy and Development Direction - The company is focusing on enhancing its AI capabilities to improve user experience and streamline the travel booking process, with AI tools like TripGenie seeing a 50% increase in average user session duration [9][11] - Trip.com aims to capture the growing inbound travel market by enriching its offerings and improving service capabilities, including multilingual support and personalized itineraries [8][15] - The company is committed to sustainable travel and rural revitalization, having built 34 country retreats to stimulate local economies [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of travel demand, supported by strong consumer confidence and favorable policies [29] - The company anticipates continued growth in both inbound and outbound travel, with a focus on capturing opportunities in emerging markets [7][24] - Management noted that leisure travel demand remains strong, with corporate users expecting their travel budgets to grow or remain unchanged by 2025 [50] Other Important Information - The company has repurchased approximately US$84 million of its shares, demonstrating a commitment to delivering value to shareholders [28][82] - The balance of cash and cash equivalents as of March 31, 2025, was RMB 92.9 billion (US$12.8 billion) [28] Q&A Session Summary Question: Insights on AI in the travel industry - Management discussed the strengths of vertical AI agents in providing real-time travel data and enhancing user experience, while general AI agents offer broader information [31][33] Question: Performance during Labor Day holiday - Domestic hotel bookings increased by over 20% year over year, with inbound bookings surging by approximately 150% [37] Question: Outbound travel trends and expectations - Outbound bookings have consistently outperformed the industry, with expectations for double-digit annual growth [40] Question: Hotel industry performance and pricing outlook - Hotel ADR decreased by high single digits in Q1, but prices stabilized moving into Q2, with expectations for stabilization due to increasing travel demand [44] Question: Consumer sentiment amid macro environments - Travel demand remains resilient, with leisure travel demand strong and business travel showing stable demand [50] Question: Domestic competitive landscape - Competition in the domestic market is rationalized, with a strong focus on loyalty programs and customer retention [54] Question: Insights into first quarter performance - Overall bookings increased by more than 60% year over year, with APAC as a top priority for growth [57] Question: International business marketing strategies - The company is intensifying marketing efforts in Asia, with a focus on direct app user acquisition proving most effective [61] Question: Inbound business developments - Inbound travel has seen strong momentum due to favorable policies, with significant growth in bookings [72] Question: Sales and marketing expenses outlook - Marketing expenses may fluctuate due to seasonality, but the company aims to improve efficiencies through increased direct mobile traffic [78] Question: Capital return program - The company plans to continue share buybacks and has already returned US$200 million in cash dividends to shareholders [82]