Tuniu Announces Unaudited Third Quarter 2016 Financial Results

NANJING, China, Nov. 30, 2016 /PRNewswire/ --

• Net Revenues in Q3 2016 Increased by 35.7% Year-Over-Year
• Total Travel GMV in Q3 2016 Increased by 56.0% Year-Over-Year

Tuniu Corporation (NASDAQ: TOUR) ("Tuniu" or the "Company"), a leading online leisure travel company in China, today announced its unaudited financial results for the third quarter ended September 30, 2016.

Highlights for the Third Quarter of 2016

• Total travel gross merchandise value ("GMV")^[1], which includes gross booking from packaged tour products and the GMV of travel-related products, increased by 56.0% to RMB7.1 billion (US$1.1 billion^[2]) year-over-year in the third quarter of 2016.
• Packaged tour gross bookings^[3], which include organized tours and self-guided tours, increased by 34.8% to RMB5.3 billion (US$798.8 million) year-over-year in the third quarter of 2016.
• Net revenues in the third quarter of 2016 increased by 35.7% year-over-year to RMB4.0 billion (US$607.0 million).
• Total number of trips from organized tours (excluding local tours) increased by 67.5% year-over-year and the total number of trips from self-guided tours increased by 46.0% year-over-year in the third quarter of 2016.

Mr. Donald Yu, Tuniu's co-founder, Chairman and Chief Executive Officer, said, "We had a solid third quarter performance with total travel GMV and net revenue growing 56.0 percent and 35.7 percent year-over-year, respectively. Through our other travel-related service offerings, we have been able to make notable improvements to our conversion rate and user stickiness as repeat customer contribution reached 45.7 percent of our total travel GMV during the quarter."

Mr. Alex Yan, Tuniu's co-founder, President and Chief Operating Officer, said, "The Tuniu brand has developed into a highly reputable icon in China over the years. We believe we can utilize our brand assets to efficiently expand both horizontally and vertically in the travel industry. During the third quarter, GMV of transportation ticketing and accommodation reservation both grew rapidly. We continue to make significant strides in expanding our coverage of leisure travel resources, particularly in terms of flight routes and hotels. Since Tuniu's coverage of leisure travel resources is one of the most comprehensive in China, we expect this to evolve into a core competitive advantage and differentiate Tuniu from its industry peers."

Mr. Conor Yang, Tuniu's Chief Financial Officer, said, "In the third quarter, we started to rescale our marketing expenses to focus on channels with higher ROI. As a result, our sales and marketing expenses declined in the third quarter on a quarter-over-quarter basis. We will prioritize the improvement of our internal operational efficiency and leverage our existing brand assets to expand both our packaged tour business and our other travel-related services. Combined with our increasing gross margin, we expect to improve our profitability in the near future."

Third Quarter 2016 Results

Net revenues were RMB4.0 billion (US$607.0 million) in the third quarter of 2016, representing a year-over-year increase of 35.7% from the corresponding period in 2015. The number of trips sold increased by 46.5% to 2,444,638 in the third quarter of 2016 from 1,668,325 in the third quarter of 2015.

• Revenues from organized tours, substantially all of which are recognized on a gross basis, were RMB3.9 billion (US$577.4 million) in the third quarter of 2016, representing a year-over-year increase of 33.4% from the corresponding period in 2015. The increase was primarily due to the growth in demand for travel to certain international destinations, such as Japan, South Korea, Middle East, Africa, and North America. In the third quarter of 2016, the number of trips of organized tours (excluding local tours) increased by 67.5% to 1,064,316 from 635,555 in the third quarter of 2015, and the number of trips of local tours increased by 26.8% to 840,450 from 663,051 in the third quarter of 2015.
• Revenues from self-guided tours, which are recognized on a net basis, were RMB67.4 million (US$10.1 million) in the third quarter of 2016, representing a year-over-year increase of 0.6% from the corresponding period in 2015. The increase in revenues was primarily due to the growth in travel to Japan, South Korea, North America, Southeast Asia and domestic destinations. The number of trips of self-guided tours increased by 46.0% year-over-year to 539,872 in the third quarter of 2016 from 369,719 in the third quarter of 2015.
• Other revenues, were RMB130.0 million (US$19.5 million) in the third quarter of 2016, representing a year-over-year increase of 191.6% from the corresponding period in 2015. The increase was primarily due to a rise in service fees received from insurance companies, revenue generated from financial services and commission fees received from other travel-related products, such as transportation ticketing and accommodation reservation.

Cost of revenues was RMB3.8 billion (US$571.7 million) in the third quarter of 2016, representing a year-over-year increase of 35.4% from the corresponding period in 2015. As a percentage of net revenues, cost of revenues was 94.2% in the third quarter of 2016 compared to 94.4% in the corresponding period in 2015.

Gross margin was 5.8% in the third quarter of 2016 compared to 5.6% in the corresponding period in 2015. The increase in gross margin was primarily due to the increased contribution from other revenue as a result of category expansion and the optimization of our supply chain management.

Operating expenses were RMB832.3 million (US$124.8 million) in the third quarter of 2016, representing a year-over-year increase of 58.0% from the corresponding period in 2015. Share-based compensation expenses and amortization of acquired intangible assets, which were allocated to operating expenses, were RMB56.5 million (US$8.5 million) in the third quarter of 2016. Non-GAAP^[4] operating expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets, were RMB775.8 million (US$116.3 million) in the third quarter of 2016, representing a year-over-year increase of 58.3%.

• Research and product development expenses were RMB168.0 million (US$25.2 million) in the third quarter of 2016, representing a year-over-year increase of 92.8%. Non-GAAP research and product development expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB1.8 million (US$0.3 million), were RMB166.2 million (US$24.9 million) in the third quarter of 2016, representing an increase of 93.3% from the corresponding period in 2015. The increase was primarily due to investments for the implementation of additional product categories such as transportation ticketing, hotel booking and financial services, improvement of online technology, and the rise in technology and product development personnel related expenses.
• Sales and marketing expenses were RMB499.9 million (US$75.0 million) in the third quarter of 2016, representing a year-over-year increase of 47.9% and a quarter-over-quarter decrease of 19.8%. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB34.4 million (US$5.2 million), were RMB465.5 million (US$69.8 million) in the third quarter of 2016, representing a year-over-year increase of 45.4% from the corresponding period in 2015 and a quarter-over-quarter decrease of 21.0% from the second quarter of 2016. The year-over-year increase was primarily due to advertisements for our mobile channels, expansion of our VIP customer service team, and amortization of acquired intangible assets from the previously announced transaction with JD.com. The quarter-over-quarter decrease was primarily due to the decline in brand promotions such as advertisements on television and offline advertisement campaigns.
• General and administrative expenses were RMB168.0 million (US$25.2 million) in the third quarter of 2016, representing a year-over-year increase of 61.7%. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB20.3 million (US$3.0 million), were RMB147.7 million (US$22.2 million) for the third quarter of 2016, representing a year-over-year increase of 71.1% from the corresponding period in 2015. The increase was primarily due to an increase in the headcount of our administrative personnel as a result of our business expansion, such as regional service center expansion and product category expansion.

Loss from operations was RMB596.8 million (US$89.5 million) in the third quarter of 2016, compared to a loss from operations of RMB358.7 million in the third quarter of 2015. Non-GAAP loss from operations, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB540.1 million (US$81.0 million) in the third quarter of 2016.

Net loss was RMB571.7 million (US$85.7 million) in the third quarter of 2016, compared to a net loss of RMB433.7 million in the third quarter of 2015. Non-GAAP net loss, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB515.0 million (US$77.2 million) in the third quarter of 2016.

Net loss attributable to ordinary shareholders was RMB568.5 million (US$85.2 million) in the third quarter of 2016, compared to a net loss attributable to ordinary shareholders of RMB433.3 million in the third quarter of 2015. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB511.8 million (US$76.7 million) in the third quarter of 2016.

As of September 30, 2016, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB5.5 billion (US$826.2 million).

Business Outlook

For the fourth quarter of 2016, Tuniu expects to generate RMB2,084.7 million to RMB2,179.5 million of net revenues, which represents 10% to 15% growth year-over-year, and RMB147.4 million to RMB155.3 million of gross profit, which represents 85% to 95% growth year-over-year. This forecast reflects Tuniu's current and preliminary view on the industry and its operations, which is subject to change.

Conference Call Information

Tuniu's management will hold an earnings conference call at 8:00 am U.S. Eastern Time, on November 30, 2016, (9:00 pm, Beijing/Hong Kong Time, on November 30, 2016) to discuss the third quarter 2016 financial results.

To participate in the conference call, please dial the following numbers:

Conference ID: Tuniu Corporation 3Q 2016 Earnings Call

A telephone replay will be available one hour after the end of the conference through December 7, 2016. The dial-in details are as follows:

Replay Access Code: 10097134

Additionally, a live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.tuniu.com.

About Tuniu

Tuniu (Nasdaq: TOUR) is a leading online leisure travel company in China that offers a large selection of packaged tours, including organized and self-guided tours, as well as travel-related services for leisure travelers through its website tuniu.com and mobile platform. Tuniu has over 1,700,000 stock keeping units (SKUs) of packaged tours, covering over 140 countries worldwide and all the popular tourist attractions in China. Tuniu provides one-stop leisure travel solutions and a compelling customer experience through its online platform and offline service network. For more information, please visit http://ir.tuniu.com.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Tuniu may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Tuniu's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but are not limited to the following: Tuniu's goals and strategies; the growth of the online leisure travel market in China; the demand for Tuniu's products and services; its relationships with customers and travel suppliers; the Company's ability to offer competitive travel products and services; Tuniu's future business development, results of operations and financial condition; competition in the online travel industry in China; relevant government policies and regulations relating to the Company's structure, business and industry; and the general economic and business condition in China and elsewhere. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Tuniu does not undertake any obligation to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company has provided non-GAAP information related to cost of revenues, research and product development expenses, sales and marketing expenses, general and administrative expenses, operating expenses, loss from operations, net loss, net loss attributable to ordinary shareholders, net loss per ordinary share attributable to ordinary shareholders-basic and diluted and net loss per ADS, which excludes share-based compensation expenses and amortization of acquired intangible assets. We believe that the non-GAAP financial measures used in this press release are useful for understanding and assessing underlying business performance and operating trends, and management and investors benefit from referring to these non-GAAP financial measures in assessing our financial performance and when planning and forecasting future periods. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP Results" set forth at the end of this press release.

A limitation of using non-GAAP financial measures excluding share-based compensation expenses and amortization of acquired intangible assets is that share-based compensation expenses and amortization of acquired intangible assets have been - and will continue to be - significant recurring expenses in the Company's business. You should not view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

For investor and media inquiries, please contact:

China

Maria Xin
Investor Relations and Strategic Investment General Manager
Tuniu Corporation
Phone: +86-25-8685-3178
E-mail: ir@tuniu.com

(Financial Tables Follow)

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