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Trip.com Group’s third quarter in 2023 showcased a 99% revenue increase and robust recovery in travel bookings, significantly surpassing pre-COVID levels.
SHANGHAI, CHINA – Trip.com Group Limited announced its unaudited financial results for the third quarter of 2023.
Key Highlights for the Third Quarter of 2023
Domestic and international businesses continued to show robust recovery in the third quarter of 2023
- Domestic hotel bookings grew by over 90% year over year and increased by over 70% compared to the pre-COVID level for the same period in 2019.
- Outbound hotel and air reservations recovered to around 80% of the pre-COVID level for the same period in 2019, compared to the industry-wide recovery rate of over 50% in terms of international air passenger volume for the same period.
- Total bookings on the Company’s global OTA platform have increased by over 100% both year over year and compared to the pre-COVID level for the same period in 2019.
The Company delivered strong results in the third quarter of 2023
- Total net revenue for the third quarter grew by 99% year over year.
- Net income for the third quarter was RMB4.6 billion (US$637 million), which improved significantly from RMB245 million for the same period in 2022.
- Adjusted EBITDA for the third quarter was RMB4.6 billion (US$634 million). Adjusted EBITDA margin was 34%, compared to 21% for the same period in 2022 and 33% for the previous quarter.
“Throughout the third quarter of 2023, both domestic and international travel experienced a remarkable rebound, thanks to the robust summer travel demands. This shows just how eager travelers are to explore the world,” said James Liang, Executive Chairman. “Looking ahead, we will continue our efforts in expanding our global presence and cultivating AI-related initiatives, laying the foundation for continued growth of our company.”
“We are pleased to build upon the momentum and deliver solid results in the third quarter,” said Jane Sun, Chief Executive Officer. “To leverage the strong demand for travel and our investment in technology and product, we are committed to enhancing our supply chain capabilities and strengthening brand awareness to solidify our market position.”
Third Quarter of 2023 Financial Results and Business Updates
With the coming of the summer peak season and the strong pent-up travel demand, the Company’s business continued to recover significantly, which led to an increasing volume of travel bookings.
For the third quarter of 2023, Trip.com Group reported net revenue of RMB13.7 billion (US$1.9 billion), representing a 99% increase from the same period in 2022 primarily due to substantial recovery of travel market. Net revenue for the third quarter of 2023 increased by 22% from the previous quarter, primarily due to seasonality.
Accommodation reservation revenue for the third quarter of 2023 was RMB5.6 billion (US$766 million), representing a 92% increase from the same period in 2022 primarily due to substantial recovery of travel market. Accommodation reservation revenue for the third quarter of 2023 increased by 30% from the previous quarter, primarily due to seasonality.
Transportation ticketing revenue for the third quarter of 2023 was RMB5.4 billion (US$736 million), representing a 105% increase from the same period in 2022 primarily due to substantial recovery of travel market. Transportation ticketing revenue for the third quarter of 2023 increased by 11% from the previous quarter, primarily due to seasonality.
Packaged-tour revenue for the third quarter of 2023 was RMB1.3 billion (US$182 million), representing a 243% increase from the same period in 2022 primarily due to substantial recovery of travel market. Packaged-tour revenue for the third quarter of 2023 increased by 84% from the previous quarter, primarily due to seasonality.
Corporate travel revenue for the third quarter of 2023 was RMB591 million (US$81 million), representing a 60% increase from the same period in 2022 and a 1% increase from the previous quarter, primarily due to substantial recovery of travel market.
Cost of revenue for the third quarter of 2023 increased by 94% to RMB2.5 billion (US$338 million) from the same period in 2022 and increased by 23% from the previous quarter, which was in line with the increase in net revenue. Cost of revenue as a percentage of net revenue was 18% for the third quarter of 2023.
Product development expenses for the third quarter of 2023 increased by 44% to RMB3.6 billion (US$490 million) from the same period in 2022 and increased by 21% from the previous quarter, primarily due to an increase in product development personnel-related expenses. Product development expenses as a percentage of net revenue was 26% for the third quarter of 2023.
Sales and marketing expenses for the third quarter of 2023 increased by 93% to RMB2.8 billion (US$378 million) from the same period in 2022 and increased by 17% from the previous quarter, primarily due to an increase in expenses relating to sales and marketing promotion activities. Sales and marketing expenses as a percentage of net revenue was 20% for the third quarter of 2023.
General and administrative expenses for the third quarter of 2023 increased by 22% to RMB1.0 billion (US$141 million) from the same period in 2022 primarily due to an increase in general and administrative personnel-related expenses and increased by 8% from the previous quarter. General and administrative expenses as a percentage of net revenue was 7% for the third quarter of 2023.
Income tax expense for the third quarter of 2023 was RMB448 million (US$61 million), compared to RMB277 million for the same period in 2022 and RMB562 million for the previous quarter. The change in Trip.com Group’s effective tax rate was primarily due to the combined impacts of changes in respective profitability of its subsidiaries with different tax rates, certain non-taxable income or loss resulting from the fair value changes in equity securities investments and exchangeable senior notes, and changes in valuation allowance provided for deferred tax assets.
Net income for the third quarter of 2023 was RMB4.6 billion (US$637 million), compared to RMB245 million for the same period in 2022 and RMB648 million for the previous quarter. Adjusted EBITDA for the third quarter of 2023 was RMB4.6 billion (US$634 million), compared to RMB1.4 billion for the same period in 2022 and RMB3.7 billion for the previous quarter. Adjusted EBITDA margin was 34% for the third quarter of 2023, compared to 21% for the same period in 2022 and 33% for the previous quarter.
Net income attributable to Trip.com Group’s shareholders for the third quarter of 2023 was RMB4.6 billion (US$634 million), compared to RMB266 million for the same period in 2022 and RMB631 million for the previous quarter. Excluding share-based compensation charges, fair value changes of equity securities investments and exchangeable senior notes recorded in other income/(expense), and their tax effects, non-GAAP net income attributable to Trip.com Group’s shareholders for the third quarter of 2023 was RMB4.9 billion (US$673 million), compared to RMB1.0 billion for the same period in 2022 and RMB3.4 billion for the previous quarter.
Diluted earnings per ordinary share and per ADS was RMB6.84 (US$0.94) for the third quarter of 2023. Excluding share-based compensation charges, fair value changes of equity securities investments and exchangeable senior notes, and their tax effects, non-GAAP diluted earnings per ordinary share and per ADS was RMB7.26 (US$1.00) for the third quarter of 2023. Each ADS currently represents one ordinary share of the Company.
As of September 30, 2023, the balance of cash and cash equivalents, restricted cash, short-term investment, and held-to-maturity time deposit and financial products was RMB79.0 billion (US$10.8 billion).
Recent Development
The Company purchased 3.6 million ADSs in aggregate with a total gross consideration of US$120 million pursuant to its existing share repurchase plan.
The board of directors has recently approved a regular capital return policy to benefit the Company’s shareholders and ADS holders in the form of discretionary annual share repurchases, discretionary annual cash dividend declarations, or a combination thereof, commencing from the year of 2024. Under the policy, the board of directors reserves the discretion relating to the determination of the form, timing, and amount of the capital return measures in any particular year, depending on the Company’s financial condition, results of operations, cash flow, capital requirements, and other relevant factors.
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