Tuniu Corp (NASDAQ: TOUR) reported its third-quarter 2024 financial results, showcasing a solid performance with a net income of RMB 44.4 million and a year-over-year revenue increase of 4%, reaching RMB 186 million. Despite this positive news, the stock experienced a slight pre-market decline of 0.88%, reflecting mixed investor sentiment.
Key Takeaways
- Tuniu reported a 4% year-over-year increase in net revenues for Q3 2024.
- The company achieved non-GAAP profitability for the sixth consecutive quarter.
- Tuniu's new tour products received a 98% customer satisfaction rate.
- The stock price decreased by 0.88% in pre-market trading despite positive earnings.
Company Performance
Tuniu continues to demonstrate resilience in the travel sector, achieving a net revenue of RMB 186 million in Q3 2024, marking a 4% increase from the previous year. The company has maintained non-GAAP profitability for six consecutive quarters, underscoring its effective cost management and strategic focus on high-quality, customized tour products. The travel industry is witnessing a resurgence in demand, particularly for outbound travel and diverse destination choices, which Tuniu has capitalized on through product innovation and expanded sales channels.
Financial Highlights
- Revenue: RMB 186 million, up 4% year-over-year
- Packaged Tours Revenue: RMB 159.3 million, up 6% year-over-year
- Gross Profit: RMB 121.8 million, up 6% year-over-year
- Net Income: RMB 44.4 million
- Non-GAAP Net Income: RMB 46.6 million
- Cash and Investments: RMB 1.3 billion
Earnings vs. Forecast
Tuniu's actual earnings per share (EPS) of 0.36 exceeded expectations, contributing to a positive earnings surprise. The company's revenue also surpassed forecasts, reflecting its strong market position and effective business strategies. This performance is consistent with Tuniu's recent trend of exceeding market expectations, further solidifying its reputation in the travel industry.
Market Reaction
Despite the positive earnings results, Tuniu's stock saw a pre-market decline of 0.88%, with the price dropping to $1.12. This movement may be attributed to broader market volatility or investor caution regarding the travel sector's recovery pace. The stock remains within its 52-week range of $0.59 to $1.76, indicating potential room for growth as market conditions stabilize.
Company Outlook
Looking ahead, Tuniu forecasts Q4 2024 revenues between RMB 100 million and RMB 105 million, anticipating a 0-5% year-over-year growth. The company expects continued growth in the tourism industry, driven by new holiday policies and increasing travel enthusiasm. Tuniu plans to focus on efficiency and cost control while expanding its product offerings and sales channels.
Executive Commentary
CEO Donald Yu emphasized the company's commitment to high-quality products and services, stating, "High quality products and services have always been our core competitive advantages." He also highlighted the growing integration of travel into people's lives, noting, "Travel is becoming part of the life of more and more people." These remarks underscore Tuniu's strategic focus on customer satisfaction and product differentiation.
Q&A
During the earnings call, analysts inquired about the impact of seasonality on Q4 revenues and the company's strategies for winter travel trends, including ice and snow tourism and overseas destinations. Tuniu addressed these concerns by highlighting its diversified product offerings and continued demand across various age groups and regions.
Risks and Challenges
- Market volatility: Economic uncertainties could impact travel demand and investor confidence.
- Competitive pressure: The travel industry remains highly competitive, requiring continuous innovation.
- Macroeconomic factors: Exchange rate fluctuations and geopolitical tensions could affect outbound travel.
- Supply chain disruptions: Potential disruptions in partnerships and product availability may pose challenges.
- Regulatory changes: New travel policies or restrictions could influence market dynamics.
Full transcript - Tuniu Corp (TOUR) Q3 2024:
Conference Operator: Hello and thank you for standing by for Churnews' 20 24 Third Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be
Mary, Director of Investor Relations, Tuniu: a question and answer session. Today's
Conference Operator: conference is being recorded.
Mary, Director of Investor Relations, Tuniu: If you have any objections, you may disconnect at this time. I would now like to turn
Conference Operator: the meeting over to your host for today's conference call, Director of Investor Relations, Mary.
Mary, Director of Investor Relations, Tuniu: Thank you, and welcome to our 2024 Q3 earnings conference call. Joining me on the call today are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer and An Sheng Chen, Tuniu's Financial Controller. For today's agenda, management will discuss business updates, operation highlights and financial performance for the Q3 of 2024. 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 Lu.
Donald Yu, Founder, Chairman and Chief Executive Officer, Tuniu: Thank you, Mary. Good day, everyone. Welcome to our Q3 2024 earnings conference call. In the Q3, our revenues and profit continued to grow with GAAP net income reaching a record high since our listing, up to RMB43.9 million and our net income for the 1st 3 quarters of this year exceeded RMB100 1,000,000. On a non GAAP basis, we have achieved profitability for 6 consecutive quarters.
During the seasonally strong Q3, the market demonstrated robust demand with more new products introduced compared to last summer, particularly for outbound travel, our product range was significantly enriched for customers. The transaction volume of our outbound travel products achieved a double digit year over year growth in the quarter. As travel increasingly becomes essential for more people, we have noticed a growing diversification in customer demands ranging from destination choices to products and services. Additionally, as methods and channels for reaching customers to involve more advanced and diverse needs are emerging such as in-depth single destination tours, private tours, live streaming and short videos. Recognizing this trend, we aim to create differentiated products and services to meet the wide demand of customers.
In terms of products, we are further strengthening our in house product development, optimizing our product lines and offering tailored solutions for various customer segments to meet the broad demand for vacation travel. Meanwhile, we continue to collaborate with the 3rd party suppliers to introduce a wider range of diverse products to meet customer demands such as niche products and destinations. During the Q3, we further optimized our in house product line. Our new tour products continue to follow a high quality approach aiming to deliver industry leading travel experiences. In addition to our 0 shopping policy for new tour itineraries, we are offering more small growth and private tours covering a broader range of destinations such as South America and the polar regions, which are often considered once in lifetime destinations.
Our new tour products are customized for travel fans, families and repeat customers who prioritize travel unique experiences and are open to exploring new products and destinations. In the 1st 3 quarters of this year, the transaction volume of new tour products increased over 30% year over year. Additionally, new tour products maintain a remarkable 98% customer satisfaction rate with some newly launched in-depth outbound travel products such as those to Thailand and the Belize achieving a perfect 100 percent satisfaction rate. During the Q3, responding to the surge in travel enthusiasm from customers in lower tier cities and the rise of checklist style travel among young people, we launched our in house news select products representing the core of Tuniu's organized tour product line. News select products include most classic roads at highly competitive prices.
New Select products further diversify the price range of Tuniu's in house offerings and are an excellent choice for those visiting destinations for the first time. For product promotions, we embraced popular live streaming channels to attract more new customers. We are pleased to see the new selected products that we have launched for popular domestic and up on the destinations have received very positive response during the summer vacation. During the quarter, we further explored travel live streaming shows. The total payment volume from our live streaming shows increased by nearly 100% year over year, while verification volume increased by over 100%.
With verification rate further improving. Additionally, we once again achieved profitability through a singles channel. During the summer, our product offerings have become more diverse and better selected. We capitalized on the demand for family tours by increasing sales of theme park related travel products. We also expanded coverage of outbound destinations such as the music and the Europe to meet demand and introduced the cost effective products like New Select for a diverse consumer base.
Additionally, we offered more flexible organized tour options such as one day tours to attract more self guided tour customers. In addition, our team has become more experienced. We strengthened the setup of our in house live streaming studios staffed entirely by our employees who are more familiar with our products and the systems resulting in higher efficiency. Additionally, we have a dedicated verification team to help customers complete verification more quickly. In the Q3, leveraging our deep understanding of packaged tool products and the demand of our target customers, we further enhanced our live streaming models.
Our influencers left their studios and conducted live streaming shows directly from the destinations. Offering customers a more immersive experience. During the in house in studio out streaming show,
An Sheng Chen, Financial Controller, Tuniu: we
Donald Yu, Founder, Chairman and Chief Executive Officer, Tuniu: adopted a cyclopedic approach to introduce destinations, which showcased our professionalism and helped us gain customer trust, leading to a rise in bookings. Furthermore, we remain committed to diversifying into new sales channels that will deliver sustainable growth. In the Q3, we continued to expand the range of products in our offline stores, helping us provide enhanced services to customers during the peak season. Through our partnerships with traffic platforms such as our collaboration with Alipay Transport, we attracted more customers through a streamlined booking process and superior service experience with mostly growth in air ticket bookings during the quarter. Moreover, we collaborated with tourism bureau of several countries including Thailand, Saudi Arabia and Australia, leveraging Tuniu's strength in outbound travel markets to boost their local tour rhythm and enhance travel experiences for Chinese tourists visiting this destination.
In terms of services, during the peak season, in addition to ensuring high quality travel experience for our customers, we also focused on maintaining ongoing customer engagement. We maintained regular customer follow ups, inviting guests to provide feedback on our products, services and tour guides, allowing us to identify and resolve potential issues promptly. We also promoted non volume policy for our flight tickets enhancing the booking experience on Tuniu. Demonstrating our commitment to integrated and transparency. We have constantly displayed our product satisfaction rating on 20 website which currently stands at 94%.
Our repeat customers have constantly contributed over 65% of our transaction volume. In November, a new holiday policy was introduced adding 2 more public holidays starting next year. This is the positive signal for the tourism industry, especially for leisure travel sector, reinforcing our confidence in the long term development of the sector. The upcoming spring festival holiday will be extended to 8 days, which will further boost the public enthusiasm for travel. We look forward to broadening and enhancing our products and services to meet the needs of our customers.
High quality products and services have always been our core competitive advantages and are an inevitable trend for industry development. Tuniu remains committed to achieving high quality development while upholding our service quality, closely monitoring the ever changing needs of our customers to ensure that our product services and the promotion channels remain at the forefront of the industry. At the same time, we continue to prioritize efficiency improvements, strict cost control and optimizing the performance of our sales channels to support the company's long term healthy growth and profitability. I will now turn the call over to Anqian, our Financial Controller for the financial highlights.
An Sheng Chen, Financial Controller, Tuniu: Thank you, Daniel. Hello, everyone. Now I will walk you through our Q3 of 2024 financial results in greater detail. Please note that all amounts are in RMB unless otherwise stated. You can find the US dollar equivalents of the numbers in our earnings release.
For the Q3 of 2024, net revenues were 186,000,000 representing a year over year increase of 4% from the corresponding period in 2023. Revenues from packaged tours were up 6% year over year to 159,300,000 and accounted for 86% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours. Other revenues were down 5% year over year to 26,700,000 and accounted for 14% of our total net revenues. The decrease was primarily due to the decrease in the fees for advertising services provided to toys and balls and bureaus.
Gross profit for the Q3 of 2024 was 121,800,000, up 6% year over year. Operating expenses for the Q3 of 2024 were 92,600,000, up 11% year over year. Research and product development expenses for the Q3 of 2024 were 13,600,000 down 26% year over year. The decrease was primarily due to the decrease in research and product development personnel related expenses. Sales and marketing expenses for the Q3 of 2024 were RMB60,600,000 UP 53 percent year over year.
The increase was primarily due to the increase in promotion expenses. General and administrative expenses for the Q3 of 2024 were RMB 18,600,000 down 31% year over year. The decrease was primarily due to the reversal of allowance for doubtful accounts. Net income attributable to ordinary shareholders of Tuniu Corporation was 44,400,000 in the Q3 of 2024. Non GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share based compensation expenses and amortization of acquired intangible assets, was 46,600,000 in the Q3 of 2024.
As of September 30, 2024, the company had cash and cash equivalents, restricted cash and short term investments of RMB 1,300,000,000. Cash flow generated from operations for the Q3 of 2024 was $13,000,000 Capital expenditures for the Q3 of 2024 were $1,100,000 For the Q4 of 2024, the company is best to generate RMB 100,000,000 to RMB 105,000,000 of net revenues, which represents a 0% to 5% increase year over year. Please note that this forecast reflects new current and the preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions.
Operator?
Conference Operator: The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. The first question today comes from Judy Wong, a Private Investor. Please go ahead.
Mary, Director of Investor Relations, Tuniu: Thank you, operator. Hi, management. Thank you for taking my questions and congratulations on another positive quarter. My questions are about the outlook for the Q4. Could you please share the reason for the slowdown of revenue growth and any guidance on the bottom line?
Also, can you share some insights on next year's market for both domestic and outbound tours? Thank you.
Donald Yu, Founder, Chairman and Chief Executive Officer, Tuniu: Thank you for the questions. 4th quarter is an off season for tourism. Revenues will drop compared to last quarter due to seasonality. On a year over year basis, we expect low single digit growth for our total revenues. For domestic market, the two main themes for winter travel are ice and snow tourism and heading for the song.
In the North, the ice and snow near tourism was very hot last year and has continued its popularity this year. But for the purpose of avoiding the cold weather, people have more choices this winter. Overseas destinations were fully opened since the Q4 of 2023. And this winter, there are more products launched for popular destinations such as Southeast Asia and Australia. Together we feel more with the policy in some Southeast Asia countries, traveling abroad can be as convenient as domestic tours.
Generally speaking, last year was comparatively high base for both domestic and outbound tours due to the release of pent up demand. For the bottom line, we don't give any specific guidance as revenues declined due to seasonality in the 4th quarter, limitations in scale effects will lead to lower profits for the period. However, since we have already achieved non GAAP profitability for 6 consecutive quarters, we will try our best to keep the momentum. For the next year, the tourism industry will maintain steady growth. Also the launch of new holiday policy in November will further encourage travel, especially theater travel during certain holidays.
From the demand side, we see continued growth after the pandemic. Travel is becoming part of the life of more and more people regardless of their ages and locations. For example, we have many several generation VIP guests. They travel a lot with 2 new and new tours. They have more free time and disposable income to enjoy travel.
Also with the widespread popularity of live streaming shows and short videos, travelers from lower tier cities have increased their bookings through internet. Many of them go abroad for the first time and they are very promising growth for up on the travels. With the emergence of more transportation hubs, we may bring more travelers from lower tier cities to overseas destinations. For domestic market, customer needs become more diversified. We need to provide products where wired in destinations itineraries, activities, group sizes and the prices to catch different customer growth.
This trend may continue in the coming year and we are already we are always prepared to launch new products and services. For outbound travel, it will continue its growth momentum, but the recovery will rise from regions to regions depending on the resuming of airlines and the supply chains. For example, Southeast Asia recovers faster this year, while North America is behind. Therefore, we see chances for growth of long distance outbound travel next year. Thank you.
Conference Operator: We are now approaching the end of the conference call. I will now turn the call back over to Tuniu's Director of Investor Relations, Mary, for closing remarks.
Mary, Director of Investor Relations, Tuniu: 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 speaking with you in the coming months.
Conference Operator: Thank you for your participation in today's conference. This concludes the presentation.
Mary, Director of Investor Relations, Tuniu: You may now disconnect. Good day.
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