For the third quarter of 2017, Ctrip reported net revenue of RMB7.9 billion (US$1.2 billion), representing a 42% increase from the same period of 2016.
SHANGHAI – Ctrip.com International, Ltd., a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours and corporate travel management in China (“Ctrip” or the “Company”), today announced its unaudited financial results for the third quarter ended September 30, 2017.
Key Highlights
- Ctrip reported strong financial results in the third quarter of 2017.
- Net revenue increased 42% year-on-year to RMB7.9 billion in the third quarter of 2017.
- Accommodation reservation revenue for the third quarter of 2017 increased 36% year-on-year, primarily driven by an increase in the accommodation reservation volume.
- Gross margin was 83% for the third quarter of 2017, improving from 78% for the same period of 2016 and 82% for the second quarter of 2017, due to further efficiency gain.
- Operating margin for the third quarter of 2017 was 17%. Excluding share-based compensation charges, Non-GAAP operating margin for the third quarter of 2017 was 22%, improving from 18% for the same period of 2016, primarily driven by improvements in overall operating efficiency and synergies from the invested companies.
- The Company has continued to strengthen its leading position in lower-tier cities.
- In the third quarter of 2017, Ctrip brand’s average DAU grew over 60% year-over-year in second-tier cities.
- Qunar’s hotel revenue in the third- and fourth-tier cities has maintained over 80% growth rates in three consecutive quarters this year.
- In the third quarter of 2017, Ctrip and Qunar opened 100 offline stores across China and we will continue to expand our store network going forward.
- Ctrip’s international businesses have sustained robust growth momentum.
- International air ticketing maintained robust volume growth in the third quarter of 2017, and the tickets sold by our International Business Unit continued to grow impressively at a triple-digit percentage rate.
“We are pleased to deliver another quarter of solid results.” said Jane Sun, Chief Executive Officer. “The investments we’ve made in products, services and technologies cement an unrivaled value proposition for our customers and supply chain partners. Customer-centricity is a core value and we will continue to diligently uphold it.”
“Ctrip’s foundation is based on travel innovation, one-stop experience and best in class 24/7 service,” said James Liang, Executive Chairman. “The growth we’ve delivered through the years has been tremendous yet we’re still only touching the tip of the whole travel opportunity. Our successful track record and our ability to stay inquisitive and innovative will further solidify our competitive moat.”
Third Quarter of 2017 Financial Results and Business Updates
For the third quarter of 2017, Ctrip reported net revenue of RMB7.9 billion (US$1.2 billion), representing a 42% increase from the same period of 2016. Net revenue for the third quarter of 2017 increased 23% from the previous quarter.
Accommodation reservation revenue for the third quarter of 2017 was RMB2.8 billion (US$424 million), representing a 36% increase from the same period of 2016, primarily driven by an increase in accommodation reservation volume. Accommodation reservation revenue for the third quarter of 2017 increased 22% from the previous quarter, primarily driven by an increase in accommodation reservation volume and seasonality.
Transportation ticketing revenue for the third quarter of 2017 was RMB3.4 billion (US$515 million), representing a 41% increase from the same period of 2016, primarily driven by an increase in ticketing volume and the consolidation of Skyscanner’s financial results since December 31, 2016. Transportation ticketing revenue increased 15% from the previous quarter, primarily due to an increase in ticketing volume and seasonality.
Packaged-tour revenue for the third quarter of 2017 was RMB1.0 billion (US$155 million), representing a 27% increase from the same period of 2016, primarily driven by an increase in volume growth of organized tours and self-guided tours. Packaged-tour revenue for the third quarter of 2017 increased 69% from the previous quarter, primarily due to seasonality.
Corporate travel revenue for the third quarter of 2017 was RMB203 million (US$30 million), representing a 22% increase from the same period of 2016, primarily driven by expansion in travel product coverage. Corporate travel revenue for the third quarter of 2017 increased 2% from the previous quarter.
Gross margin was 83% for the third quarter of 2017, compared to 78% for the same period of 2016, and 82% for the previous quarter.
Product development expenses for the third quarter of 2017 increased by 18% to RMB2.2 billion (US$328 million) from the same period of 2016, primarily due to an increase in product development personnel related expenses. Product development expenses for the third quarter of 2017 increased 7% from the previous quarter. Product development expenses for the third quarter of 2017 accounted for 28% of the net revenue. Excluding share-based compensation charges, Non-GAAP product development expenses for the third quarter of 2017 accounted for 25% of the net revenue, which decreased from 27% for the same period of 2016 and the previous quarter.
Sales and marketing expenses for the third quarter of 2017 increased by 58% to RMB2.4 billion (US$357 million) from the same period of 2016, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the third quarter of 2017 increased 19% from the previous quarter. Sales and marketing expenses for the third quarter of 2017 accounted for 30% of the net revenue. Excluding share-based compensation charges, Non-GAAP sales and marketing expenses for the third quarter of 2017 accounted for 30% of the net revenue, which increased from 26% for the same period of 2016 and remained consistent with the previous quarter.
General and administrative expenses for the third quarter of 2017 increased by 25% to RMB674 million (US$101 million) from the same period of 2016, primarily due to an increase in general and administrative personnel related expenses and consulting expenses. General and administrative expenses for the third quarter of 2017 increased 11% from the previous quarter. General and administrative expenses for the third quarter of 2017 accounted for 9% of the net revenue. Excluding share-based compensation charges, Non-GAAP general and administrative expenses accounted for 7% of the net revenue, which remained consistent with the same period of 2016 and the previous quarter.
Income from operations for the third quarter of 2017 was RMB1.4 billion (US$204 million), compared to income of RMB447 million for the same period of 2016 and income of RMB645 million for the previous quarter. Excluding share-based compensation charges, Non-GAAP income from operations was RMB1.7 billion (US$262 million), compared to RMB1.0 billion for the same period of 2016 and RMB1.2 billion for the previous quarter.
Operating margin was 17% for the third quarter of 2017, compared to 8% for the same period of 2016, and 10% for the previous quarter. Excluding share-based compensation charges, Non-GAAP operating margin was 22%, compared to 18% for the same period of 2016 and 18% for the previous quarter.
Income tax expense for the third quarter of 2017 was RMB313 million (US$47 million), compared to RMB221 million for the same period of 2016 and RMB529 million for the previous quarter. The change in the Group’s effective tax rates is primarily due to the change in profitability in the subsidiaries with different tax rates and certain non-tax deductible losses including the share based compensation.
Net income attributable to Ctrip’s shareholders for the third quarter of 2017 was RMB1.2 billion (US$185 million), compared to net income of RMB24 million for the same period of 2016 and net income of RMB327 million for the previous quarter.
Diluted earnings per ADS were RMB2.10 (US$0.32) for the third quarter of 2017. Excluding share-based compensation charges, Non-GAAP diluted earnings per ADS were RMB2.70 (US$0.41) for the third quarter of 2017.
As of September 30, 2017, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB47 billion (US$7 billion).
Business Outlook
For the fourth quarter of 2017, the Company expects the net revenue growth to continue at a year-on-year rate of approximately 25-30%. This forecast reflects Ctrip’s current and preliminary view, which is subject to change.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
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