Tongcheng Travel (780) Q1 2025 earnings summary

Executive summary

• Achieved strong revenue and profit growth in Q1 2025, driven by robust domestic and outbound travel demand, strategic expansion in hotel management, and effective user acquisition strategies.

• Reached record highs in key user metrics, including average monthly paying users (MPUs) up 9.2% to 46.5 million, annual paying users up 7.8% to 247.3 million, and accumulated travelers served up 7.3% to 1,959.5 million.

• Continued to deepen presence in the domestic market and accelerate outbound travel services, leveraging technology and AI, including proprietary LLM and DeepTrip agent, to enhance user experience and operational efficiency.

• Announced acquisition of Wanda Hotel Management Company to strengthen position in the hotel management sector, adding 204 hotels and over 40,000 rooms.

• Advanced ESG leadership, included in S&P Global Sustainability Yearbook China and maintained "AA" MSCI ESG Rating for the third consecutive year.

Financial highlights

• Net revenue reached RMB 4.4 billion, up 13.2% year-over-year, with core OTA business revenue growing 18.4% to RMB 3.8 billion.

• Adjusted net profit was RMB 788.2 million, a 41.1% increase year-over-year, with adjusted net margin rising to 18% from 14.4%.

• Adjusted EBITDA increased 41.3% year-over-year to RMB 1,159.4 million, with margin improving to 29.2%.

• Transportation ticketing revenue was RMB 2.0 billion, up 15.2% year-over-year; accommodation reservation revenue reached RMB 1.2 billion, up 23.3% year-over-year.

• Cash, cash equivalents, and short-term investments totaled RMB 11 billion as of March 31, 2025.

Outlook and guidance

• Maintains a positive outlook for China's travel industry, expecting continued growth in both domestic and outbound segments, supported by government policies and surging travel demand.

• Expects sales and marketing expenses as a percentage of revenue to decrease year-over-year in coming quarters, supporting margin improvement.

• Anticipates outbound business to become a key growth driver with higher margins over the next two to three years.

• Plans to expand outbound travel, strengthen hotel management, and pursue strategic investments to fuel future growth.

• Focus on enhancing user value, product offerings, and global footprint while maintaining ESG leadership.