Tuniu (TOUR) Q3 2025 earnings call transcript

Thank you and welcome to our 2025 third quarter earnings conference call. Joining me on the call today are Donald Yu, Junior's founder, chairman and chief executive officer and Anqiang Chen, Junior's financial controller. For today's agenda, management will discuss business updates, operation highlights and financial performance for the third quarter of 2025. Before we continue, I refer you to our safe harbor statement in the earnings press release which applies to this call, as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our founder, Chairman and Chief Executive Officer Donald Yu.

Thank you Mary. Good day everyone. Welcome to our third quarter 2025 earnings conference call. In the third quarter, with the peak travel season approaching, demand for travel accelerated and the tourism industry demonstrated thriving growth. Tuneo also recorded year-over-year growth in both transaction volume and the number of trips booked. From a destination perspective, both domestic and outbound travel achieved year-over-year growth in transaction volume and the number of trips booked. In the third quarter net revenues increased by 9% year-over-year with revenues from our core package tool products growing by 12%. Since the beginning of this year quarterly revenues from our packaged tools have consistently achieved double-digit year-over-year growth. We also continued to deliver quarterly profitability on both a GAAP and a non-GAAP basis.

As customer needs continue to evolve this quarter, we tapped into our core capabilities across products, supply chain, and sales channels to better tailor our portfolio to market demand. In addition, we further enhanced our operational efficiency by leveraging technology tools.

Next, I will elaborate in detail on some of our key initiatives. In terms of products, we continue to focus on customer needs and enhance our offerings to meet their evolving expectations. For experienced travelers and repeat customers who tend to prioritize the travel experience and really have more time and budget.

We leverage the company's strength in outbound tourism to introduce a wider range of niche destination products. For example, in October our new tour launched its first organized tour to South America. Our new tour series now spans all major regions across Asia, Europe, Africa, the Americas, and the Oceania. In addition to meet the surge in leisure travel demand during the summer, we expanded our long-haul island offerings, including destinations such as Seychelles and Mauritius. In the third quarter, transaction volume for this long-haul island products grow by several times year over year.

We fully leveraged our supply chain advantages to continuously expand destinations for our new select products and attract customers with compelling high-value offerings. For key domestic destinations such as Huizhou, we adopted on live streaming to offer customers a more immersive experience In the outbound travel market we expanded our destination coverage and offered more price competitive options, helping value consumers reach their preferred destination on a smaller budget. In the third quarter transaction volume for our new select outbound travel products increased by more than 100% year-over-year. In response to the growing number of self-guided travelers in China, we continue to leverage to new advantages in dynamic packaging technology to expand our Hotel Plus X products offerings. Our self-drive tool products now cover all provinces in Chinese mainland.

During the national holiday this year, transaction volume for our self-drive tool products increased by five times year-over-year. For our sales channels live streaming is playing an increasingly important role for ourselves. In the third quarter both payment and the verification volume through our live streaming channels continue to record double digit year-over-year growth while maintaining single quarter profitability. On the product size, we fully leveraged our supply chain strength during the peak season to maintain a wide, reliable product range and deliver price-competitive offerings.

In terms of format, we expanded our outdoor live streaming activities, including inviting live streamers to broadcast live from destination sites. We formed a professional verification team and specialized systems board, which together have improved efficiency across the entire process from product supply to verification. In terms of external partnerships, we collaborate with top-tier live streamers to create synergies. And we work closely with mid and long-tail creators, providing them with support and resources so we can grow together. We are pleased to see that more and more external live streamers are choosing partners with Tuneo, without even becoming our exclusive live streamers focusing solely on selling our products. Offline stores remain an essential part of our overall sales and service network.

Their personalized face-to-face service makes them particularly popular among senior travelers and community-based customers who are also key customer segments for our organized tour products. In the third quarter, we continued to expand our offline store footprint, adding locations in major cities at popular tourist destinations and key transportation hubs. In September, we opened the two flagship stores in Xi'an on same day to better serve customers, preparing for national holiday travel. In the third quarter, transaction volume from offline stores increased by nearly 20% year-over-year. The summer season is the peak period for leisure travel and while serving individual travelers we also continued to provide high quality services to corporate clients. In addition to business travel booking, we leverage our extensive experience and skills in the leisure travel sector to offer tailored vacation products to corporate clients.

We provide customized mind trips for some corporate clients and further extended our products and services to offer their employees with a range of personal and family vocation options. In the third quarter, transaction volume from corporate customers also recorded double-digit year-over-year growth. In terms of technology, various technology tools and the methodologies have been embedded across all aspects of our operations and management including product development and marketing supply chain management and the financial management This has strengthened communication and collaboration between internal and external teams and further improved our operational efficiency. We will continue to explore advanced technologies such as dynamic packaging and AI applications and apply them across more scenarios to further enhance our operational efficiency and profitability.

We were pleased to see the robust travel demand during this year's national holiday, supported by favorable factors such as the extended holiday period. Although the industry typically enters a low season in the fourth quarter, we continue to see active demand for off-peak travel, ice and snow trips and other niche segments. We will continue to see these market opportunities by strengthening product development and adjusting our marketing efforts for seasonal needs.

With a richer, more distinctive and more value for many product portfolios, we aim to attract both new and existing customers while also preparing fully for the peak travel period during the Chinese New Year holiday.

I will now turn the call over to Anqiang, our financial controller, for the financial highlights.

Thank you, Donald. Hello everyone. Now I will walk you through our third quarter of 2025 financial results in greater detail. Please note that ornament-free amounts are in RMB unless otherwise stated. You can find the US dollar equivalents of the numbers in our earnings release.

For the third quarter of 2025, net revenues were $202.1 million, representing a year-over-year increase of 9% from the corresponding period in 2024. Revenues from package stores were up 12% year-over-year to $179 million and accounted for 89% of our total net revenues for the quarter. The increase was primarily due to the growth of offline tours and self-drive tours.

Other revenues were down 14% year-over-year to $23 million and accounted for 11% of our total net revenues. The decrease was primarily due to the decrease in the commission fees received from other travel related products. Cost profit for the third quarter of 2025 was $109.6 million, down 10% year-over-year. Operating expenses for the third quarter of 2025 were $95.8 million up 3% year-over-year. Research and product development expenses for the third quarter of 2025 were 15.7 million up 15% year-over-year. The increase was primarily due to the increase in research and product development personnel related expenses. Sales and marketing expenses for the third quarter of 2025 were $61.5 million, up 2% year-over-year. The increase was primarily due to the increase in sales and marketing percentile related expenses.

General and administrative expenses for the third quarter of 2025 were 18.5 million which was almost in line with general and administrative expenses in the third quarter of 2024. Net income attributable to ordinary shareholders of two new corporations was 19.8 million in the third quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of two new corporations, which included share-based compensation expenses and amortization of acquired intangible assets, was 21.8 million in the third quarter of 2025. As of September 30, 2025, the company had cash and cash equivalents, restricted cash, short-term investments, and long-term deposits of 1.1 billion. expenditures for the third quarter of 2025 were $2.1 million. For the fourth quarter of 2025, the company is better to generate $111 million to $106.1 million of net revenues, which represents an 8 to 13 increase year Please note that this forecast reflects a new current and preliminary view on the industry and its operations which is subject to change Thank you for listening.

We are now ready for your questions.

Thanks for your questions. For your first question, currently domestic tours still dominate. In the third quarter, domestic tours consisted of about two-thirds of our total GMV, and and overseas tours consisted of one-third, which is almost the same as the previous quarter. For the second question, we offer healthy increase in both domestic and outbound travel markets during the national day holiday. Both our GMV and the number of trips recorded during the holiday had double-digit growth compared with the same period last year. This reinforced our confidence in the sustained growth of China's travel market. For domestic market, we saw growing numbers of self-guided tools. In particular, our self-drive tours increased over five times during the holiday. As self-guided tour is prevailing in the domestic market, we leveraged our dynamic packaging technology to enrich the supply of Hotel Plus X products.

used to focus our self-guided tour products on popular regions such as Yangtze River Delta and hot scenic sports such as Cham Lung, Seraphi Park. This year we extended our product offerings to all provinces throughout out Chinese mainland, penetrating to lower tier cities. We will continue to adopt this strategy as we see great potential in lower tier cities. For outbound travel market, we recorded double-digit growth during the holiday. we saw nearly 50% increase in GMOE from IPEC regions. Popular destinations included Singapore, Malaysia, and certain islands such as Mildews and Bali. For long-haul destinations, the Americans ranked number one in terms of growth rate. Niche destinations are gaining appeal, especially for sophisticated travelers by their natural beauty and the unique local experiences.

For the fourth quarter, we expect an 8 to 13 percent year-over-year increase in our net revenues, and the package tools may grow faster. We will also try our best to achieve non-GAAP break-even or profitability for the quarter. Thank you.

Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months.