omniture

Trip.com Group Reports Unaudited First Quarter of 2020 Financial Results

2020-05-29 06:00 11237

SHANGHAI, May 29, 2020 /PRNewswire/ --Trip.com Group Limited (Nasdaq: TCOM) ("Trip.com Group" or the "Company"), a leading provider of online travel and related services, including accommodation reservation, transportation ticketing, packaged tours and in-destination services, corporate travel management, and other travel-related services, today announced its unaudited financial results for the first quarter ended March 31, 2020.

Key Highlights for the First Quarter of 2020

- The Company's results for the first quarter of 2020 have been significantly and negatively impacted by the COVID-19 pandemic.

  • For the first quarter of 2020, Trip.com Group reported net revenue of RMB4.7 billion (US$669 million), representing a 42% decrease from the same period in 2019. Net revenue for the first quarter of 2020 decreased by 43% from the previous quarter.
  • In response to the pandemic, the Company swiftly adopted cost control measures to reflect a significant slowdown in consumer demand. Total cost and expenses declined by 14% year-over-year in the first quarter of 2020. Excluding bad debt provisions, total cost and expenses declined by 31% year-over-year in the first quarter of 2020.
  • Loss from operations for the first quarter of 2020 was RMB1.5 billion (US$211 million). Excluding share-based compensation charges, non-GAAP loss from operations was RMB1.2 billion (US$163 million), including bad debt provisions of RMB1.2 billion for the increased receivables mainly due to the refunds for reservation cancellations as a result of the COVID-19 pandemic.

"The COVID-19 pandemic has brought significant challenges to the global travel industry. However, it is encouraging that by now, we have seen stabilization or recovery of travel activities in many of the markets where we operate," said James Liang, Executive Chairman. "In China, travel activities hit bottom in February, and have since been consistently on a recovery track. In recent weeks, the recovery in high-end hotel meaningfully outpaced other segments, thanks to our timely product innovation for the COVID-19 new normality. Travel is human nature and we have full confidence that the industry will return and reach new high as the pandemic recedes."

"We are extremely proud of our entire team for their tireless dedication during the peak of the COVID-19 global pandemic in the past few months, "said Jane Sun, Chief Executive Officer. "The Company took immediate actions to ensure that we are protecting customer interest and making appropriate adjustments in response to the pandemic. With a strong cash reserve, we are prepared and are in prime position to take advantage of an industry recovery. We are confident that Trip.com Group will emerge an even stronger Company after the COVID-19 pandemic."

First quarter of 2020 Financial Results and Business Updates

The Company's results for the first quarter of 2020 have been significantly and negatively impacted by the COVID-19 pandemic. The pandemic drove a significant decline in travel demand resulting in reservation cancellations and reduced new orders. In addition, the bad debt provisions and impairments of long-term investments both increased. As the COVID-19 is still evolving, we will continuously review the provisions for losses and make adjustment accordingly.

For the first quarter of 2020, Trip.com Group reported net revenue of RMB4.7 billion (US$669 million), representing a 42% decrease from the same period in 2019. Net revenue for the first quarter of 2020 decreased by 43% from the previous quarter.

Accommodation reservation revenue for the first quarter of 2020 was RMB1.2 billion (US$163 million), representing a 62% decrease from the same period in 2019, and a 61% decrease from the previous quarter.

Transportation ticketing revenue for the first quarter of 2020 was RMB2.4 billion (US$338 million), representing a 29% decrease from the same period in 2019, and a 31% decrease from the previous quarter.

Packaged-tour revenue for the first quarter of 2020 was RMB523 million (US$74 million), representing a 50% decrease from the same period in 2019, and a 35% decrease from the previous quarter.

Corporate travel revenue for the first quarter of 2020 was RMB126 million (US$18 million), representing a 47% decrease from the same period in 2019, and a 66% decrease from the previous quarter.

Gross margin was 74% for the first quarter of 2020, which decreased from 79% for the same period in 2019 and the previous quarter.

Product development expenses for the first quarter of 2020 decreased by 33% to RMB1.7 billion (US$239 million) from the same period in 2019 and decreased by 37% from the previous quarter, primarily due to a decrease in expenses relating to product development personnel. Product development expenses for the first quarter of 2020 accounted for 36% of the net revenue for the same period. Excluding share-based compensation charges, non-GAAP product development expenses for the first quarter of 2020 accounted for 32% of the net revenue for the same period, which increased from 28% in the same period in 2019 and 29% in the previous quarter.

Sales and marketing expenses for the first quarter of 2020 decreased by 38% to RMB1.4 billion (US$195 million) from the same period in 2019 and decreased by 44% from the previous quarter, primarily due to a decrease in expenses relating to sales and marketing activities. Sales and marketing expenses for the first quarter of 2020 accounted for 29% of the net revenue for the same period. Excluding share-based compensation charges, non-GAAP sales and marketing expenses for the first quarter of 2020 accounted for 29% of the net revenue for the same period, which increased from 27% in the same period in 2019 and remained consistent with that in the previous quarter.

General and administrative expenses for the first quarter of 2020 increased by 136% to RMB1.9 billion (US$274 million) from the same period in 2019 and increased by 130% from the previous quarter, primarily driven by bad debt provisions of RMB1.2 billion for the increased receivables mainly due to the refunds for reservation cancellations that we paid on behalf of our travel suppliers and the increased credit risk as a result of the COVID-19 pandemic. Excluding the bad debt provisions, general and administrative expenses for the first quarter of 2020 decreased by 9% from the same period in 2019 and 3% from the previous quarter. General and administrative expenses for the first quarter of 2020 accounted for 41% of the net revenue for the same period. Excluding share-based compensation charges, non-GAAP general and administrative expenses accounted for 38% of the net revenue for the same period, which increased from 8% in same period in 2019 and the previous quarter.

Loss from operations for the first quarter of 2020 was RMB1.5 billion (US$211 million), compared to income of RMB885 million in the same period in 2019 and RMB580 million in the previous quarter. Excluding share-based compensation charges, non-GAAP loss from operations was RMB1.2 billion (US$163 million), compared to income of RMB1.4 billion in the same period in 2019 and RMB1.0 billion in the previous quarter.

Operating margin was -32% for the first quarter of 2020, compared to 11% in the same period in 2019, and 7% in the previous quarter. Excluding share-based compensation charges, non-GAAP operating margin was -25%, compared to 17% in the same period in 2019 and 12% in the previous quarter.

Income tax benefit for the first quarter of 2020 was RMB254 million (US$36 million), compared to expense of RMB677 million in the same period of 2019 and RMB364 million in the previous quarter. The change in our effective tax rate was primarily due to valuation allowances provided against the deferred tax assets associated with the accumulated loss, the non-deductible expenses from the bad debt provisions and impairments of long-term investments, as well as the non-deductible expenses of the fair value changes in equity securities investments.

Net loss attributable to Trip.com Group's shareholders for the first quarter of 2020 was RMB5.4 billion (US$754 million), compared to net income attributable to Trip.com Group's shareholders of RMB4.6 billion in the same period in 2019 and RMB2.0 billion in the previous quarter, primarily due to the operating loss associated with impact of COVID-19, the fair value changes in equity securities investments, impairments of long-term investments and loss from other investing activities. Excluding share-based compensation charges and fair value changes of equity securities investments, non-GAAP net loss attributable to Trip.com Group's shareholders was RMB2.2 billion (US$312 million), compared to net income of RMB1.8 billion in the same period in 2019 and RMB1.2 billion in the previous quarter.

Diluted losses per ADS were RMB8.98 (US$1.27) for the first quarter of 2020. Excluding share-based compensation charges and fair value changes of equity securities investments, non-GAAP diluted losses per ADS were RMB3.73 (US$0.53) for the first quarter of 2020.

As of March 31, 2020, the balance of cash and cash equivalents, restricted cash, short-term investment, held to maturity time deposit and financial products was RMB68.2 billion (US$9.6 billion). The COVID-19 pandemic has negatively impacted on our cash flows during the first quarter of 2020, which could continue to impact on subsequent periods. Based on our review of liquidity and financial positions, we believe our cash reserve, the aggregated cash flow from operations and financing sources will be sufficient to meet our anticipated cash needs, including working capital requirements, capital expenditures and our other payment obligations for the foreseeable future.

Subsequent Events

In April, 2020, the Company, as borrower, entered into a facility agreement with certain financial institutions, in connection with an up to US$1.0 billion transferrable term and revolving loan facility with an incremental facility of up to US$500 million. The company successfully made a US$1.0 billion drawdown in May, 2020.

Business Outlook

As a result of the continued negative impact due to COVID-19 in the second quarter of 2020, the Company expects net revenue to decrease by approximately 67% to 77% year-over-year for the second quarter of 2020. This forecast reflects the current and preliminary view based on best information available at the time, which is subject to change.

Conference Call

Trip.com Group's management team will host a conference call at 8:00PM U.S. Eastern Time on May 28, 2020 (or 8:00AM on May 29, 2020 in the Shanghai/Hong Kong Time) following the announcement.

The conference call will be available on Webcast live and replay at: https://investors.trip.com. The call will be archived for twelve months at this website.

All participants must pre-register to join this conference call using the Participant Registration link below: https://s1.c-conf.com/diamondpass/10007123-invite.html

Upon registration, each participant will receive details for this conference call, including dial-in numbers, passcode and a unique access PIN. To join the conference, please dial the number provided, enter the passcode followed by your PIN, and you will join the conference instantly.

A telephone replay of the call will be available after the conclusion of the conference call until June 2, 2020.

The dial-in details for the replay:

International dial-in number:

+61-7-3107-6325

Passcode:

10007123

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "is/are likely to," "confident" or other similar statements. Among other things, quotations from management and the Business Outlook section in this press release, as well as Trip.com Group's strategic and operational plans, contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, severe or prolonged downturn in the global or Chinese economy, general declines or disruptions in the travel industry, volatility in the trading price of Trip.com Group's ADSs, Trip.com Group's reliance on its relationships and contractual arrangements with travel suppliers and strategic alliances, failure to compete against new and existing competitors, failure to successfully manage current growth and potential future growth, risks associated with any strategic investments or acquisitions, seasonality in the travel industry in the relevant jurisdictions where Trip.com Group operates, failure to successfully develop Trip.com Group's existing or future business lines, damage to or failure of Trip.com Group's infrastructure and technology, loss of services of Trip.com Group's key executives, adverse changes in economic and political policies of the PRC government, inflation in China, risks and uncertainties associated with PRC laws and regulations with respect to the ownership structure of Trip.com Group's affiliated Chinese entities and the contractual arrangements among Trip.com Group, its affiliated Chinese entities and their shareholders, and other risks outlined in Trip.com Group's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the issuance, and Trip.com Group does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Trip.com Group's unaudited condensed consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Trip.com Group uses Non-GAAP financial information related to product development expenses, sales and marketing expenses, general and administrative expenses, income from operations, operating margin, net income attributable to Trip.com Group's shareholders, and diluted earnings per ordinary share and per ADS, each of which (except for net commission earned) is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under ASC 718, "Compensation-Stock Compensation" and its share-based compensation charges are not tax deductible, and fair value changes of equity securities investments, net of tax, recorded under ASU 2016-1. Trip.com Group's management believes the Non-GAAP financial measures facilitate better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods.

Non-GAAP information is not prepared in accordance with GAAP and may be different from Non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using Non-GAAP financial measures is that Non-GAAP measures exclude share-based compensation charges and fair value changes of equity securities investments that have been and will continue to be significant recurring expenses in Trip.com Group's business for the foreseeable future.

Reconciliations of Trip.com Group's Non-GAAP financial data to the most comparable GAAP data included in the consolidated statement of operations are included at the end of this press release.

About Trip.com Group Limited

Trip.com Group Limited (Nasdaq: TCOM) is a leading one-stop travel service provider consisting of Trip.com, Ctrip, Skyscanner, and Qunar. Across its platforms, Trip.com Group enables local partners and travelers around the world to make informed and cost-effective bookings for travel products and services, through aggregation of comprehensive travel-related information and resources, and an advanced transaction platform consisting of mobile apps, Internet websites, and 24/7 customer service centers. Founded in 1999 and listed on Nasdaq in 2003, Trip.com Group has become one of the largest travel companies in the world in terms of gross merchandise value.

 

Trip.com Group Limited

Unaudited Consolidated Balance Sheets

(In millions, except share and per share data)




December 31, 2019


March  31, 2020


March  31, 2020



RMB (million)


RMB (million)


USD (million)










(unaudited)


(unaudited)


(unaudited)








ASSETS







Current assets:







Cash, cash equivalents and restricted cash


21,747


24,093


3,403

Short-term investments


23,058


25,073


3,541

Accounts receivable, net 


7,661


5,098


720

Prepayments and other current assets 


15,489


10,384


1,467








Total current assets


67,955


64,648


9,131








Property, equipment and software


6,135


6,113


863

Intangible assets and land use rights


13,264


13,158


1,859

Right-of-use asset


1,207


1,149


162

Investments (Includes held to maturity time deposit
and financial products of RMB15,056 million and RMB19,038
million as of December 31,2019 and March 31, 2020,
respectively)


51,278


51,353


7,252

Goodwill


58,308


58,308


8,235

Other long-term assets


1,046


655


92

Deferred tax asset


976


1,317


186








Total assets


200,169


196,701


27,780








LIABILITIES







Current liabilities:







Short-term debt and current portion of long-term debt


30,516


40,382


5,703

Accounts payable


12,294


4,929


696

Advances from customers


11,675


10,159


1,435

Other current liabilities


14,697


12,330


1,742

Total current liabilities


69,182


67,800


9,576








Deferred tax liability


3,592


3,528


498

Long-term debt


19,537


23,292


3,289

Long-term lease liability


749


775


109

Other long-term liabilities


264


295


42








Total liabilities


93,324


95,690


13,514








MEZZANINE EQUITY







Redeemable non-controlling interests 


1,142


1,166


165








SHAREHOLDERS' EQUITY














Total Trip.com Group Limited shareholders' equity


103,442


97,617


13,786








Non-controlling interests


2,261


2,228


315








Total shareholders' equity


105,703


99,845


14,101








Total liabilities, mezzanine equity and shareholders' equity


200,169


196,701


27,780

 

Trip.com Group Limited

Unaudited Consolidated Statements of Comprehensive Income

(In millions, except share and per share data)




Quarter Ended


Quarter Ended


Quarter Ended


Quarter Ended



March  31, 2019


December  31, 2019


March  31, 2020


March  31, 2020



RMB (million)


RMB (million)


RMB (million)


USD (million)












(unaudited)


(unaudited)


(unaudited)


(unaudited)










Revenue:









Accommodation reservation 


3,019


2,968


1,155


163

Transportation ticketing 


3,354


3,470


2,393


338

Packaged-tour 


1,045


800


523


74

Corporate travel


238


373


126


18

Others


517


732


538


76










Total revenue


8,173


8,343


4,735


669










Less: Sales tax and surcharges


(9)


(8)


(4)


-










Net revenue


8,164


8,335


4,731


669










Cost of revenue


(1,689)


(1,728)


(1,220)


(172)










Gross profit


6,475


6,607


3,511


497










Operating expenses:









Product development **


(2,544)


(2,694)


(1,696)


(239)

Sales and marketing **


(2,222)


(2,487)


(1,382)


(195)

General and administrative **


(824)


(846)


(1,942)


(274)










Total operating expenses


(5,590)


(6,027)


(5,020)


(708)










Income/(loss) from operations


885


580


(1,509)


(211)










Interest income 


487


536


513


72

Interest expense


(441)


(387)


(448)


(63)

Other income/(expense) *


4,616


1,775


(3,827)


(541)










Income/(loss) before income tax expense, equity
in income of affiliates and non-controlling
interests


5,547


2,504


(5,271)


(743)










Income tax (expense)/benefit  *


(677)


(364)


254


36

Equity in loss of affiliates


(283)


(147)


(321)


(45)










Net income/(loss)


4,587


1,993


(5,338)


(752)










Net loss attributable to non-controlling interests


30


38


9


1

Accretion to redemption value of redeemable non-
controlling interests


(4)


(23)


(24)


(3)










Net income/(loss) attributable to Trip.com Group
Limited


4,613


2,008


(5,353)


(754)










Comprehensive income/(loss) attributable to
Trip.com Group Limited *


4,631


2,188


(5,924)


(837)










Earnings/(losses) per ordinary share









- Basic


66.54


27.03


(71.86)


(10.15)

- Diluted


59.59


25.82


(71.86)


(10.15)










Earnings/(losses) per ADS 









- Basic


8.32


3.38


(8.98)


(1.27)

- Diluted


7.45


3.23


(8.98)


(1.27)










Weighted average ordinary shares outstanding









- Basic


69,345,914


74,261,842


74,494,148


74,494,148

- Diluted


79,218,054


80,426,008


74,494,148


74,494,148

- Diluted-non GAAP


79,218,054


77,664,621


74,494,148


74,494,148










** Share-based compensation included in Operating expenses above is as follows:

  Product development 


251


240


180


25

  Sales and marketing 


38


38


30


4

  General and administrative 


196


165


133


19










* Fair value changes of equity securities investments included in Net income/(loss) is as follow:

Fair value (income)/loss of equity securities
investments, net of tax


(3,348)


(1,265)


2,790


394

 

Trip.com Group Limited

Reconciliation of  GAAP and Non-GAAP Results

(In millions, except % and per share data)



Quarter Ended March 31, 2020


GAAP  Result

% of Net
Revenue


Non-GAAP
Adjustment

% of Net
Revenue


Non-GAAP
Result

% of Net
Revenue










Share-based compensation included in Operating expense is as follows:








Product development 

(1,696)

-36%


180

4%


(1,516)

-32%

Sales and marketing 

(1,382)

-29%


30

1%


(1,352)

-29%

General and administrative 

(1,942)

-41%


133

3%


(1,809)

-38%

Total operating expenses

(5,020)

-106%


343

7%


(4,677)

-99%










Loss from operations

(1,509)

-32%


343

7%


(1,166)

-25%










Fair value changes of equity securities investments, net of tax
benefit of RMB209 million

(2,790)

-59%


2,790

59%


-

0%










Net loss attributable to Trip.com Group's shareholders

(5,353)

-113%


3,133

66%


(2,220)

-47%










Diluted losses per ordinary share (RMB)

(71.86)



42.05



(29.81)











Diluted losses per ADS (RMB)

(8.98)



5.25



(3.73)











Diluted losses per ADS (USD)

(1.27)



0.74



(0.53)












Quarter Ended December 31, 2019


GAAP  Result

% of Net
Revenue


Non-GAAP
Adjustment

% of Net
Revenue


Non-GAAP
Result

% of Net
Revenue










Share-based compensation included in Operating expense is as follows:








Product development 

(2,694)

-32%


240

3%


(2,454)

-29%

Sales and marketing 

(2,487)

-30%


38

0%


(2,449)

-29%

General and administrative 

(846)

-10%


165

2%


(681)

-8%

Total operating expenses

(6,027)

-72%


443

5%


(5,584)

-67%










Income from operations

580

7%


443

5%


1,023

12%










Fair value changes of equity securities investments, net of tax
expense of RMB62 million

1,265

15%


(1,265)

-15%


-

0%










Net income attributable to Trip.com Group's shareholders

2,008

24%


(822)

-10%


1,186

14%










Diluted earnings per ordinary share (RMB)

25.82



(10.31)



15.51











Diluted earnings per ADS (RMB)

3.23



(1.29)



1.94











Diluted earnings per ADS (USD)

0.46



(0.19)



0.28












Quarter Ended March 31, 2019


GAAP  Result

% of Net
Revenue


Non-GAAP
Adjustment

% of Net
Revenue


Non-GAAP
Result

% of Net
Revenue










Share-based compensation included in Operating expense is as follows:








Product development 

(2,544)

-31%


251

3%


(2,293)

-28%

Sales and marketing 

(2,222)

-27%


38

0%


(2,184)

-27%

General and administrative 

(824)

-10%


196

2%


(628)

-8%

Total operating expenses

(5,590)

-68%


485

6%


(5,105)

-63%










Income from operations

885

11%


485

6%


1,370

17%










Fair value changes of equity securities investments, net of tax
expense of RMB255 million

3,348

41%


(3,348)

-41%


-

0%










Net income attributable to Trip.com Group's shareholders

4,613

57%


(2,863)

-35%


1,750

21%










Diluted earnings per ordinary share (RMB)

59.59



(36.15)



23.44











Diluted earnings per ADS (RMB)

7.45



(4.52)



2.93











Diluted earnings per ADS (USD)

1.11



(0.67)



0.44











Notes for all the condensed consolidated financial schedules presented:


Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the certified exchange rate of USD1.00=RMB7.0808 on March 31, 2020 published
by the Federal Reserve Board.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/tripcom-group-reports-unaudited-first-quarter-of-2020-financial-results-301067004.html

Source: Trip.com Group Limited
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