Tongcheng-Elong Holdings, a Chinese online travel firm co-invested by Trip.com Group and Tencent, announced the unaudited consolidated results of the Group for the three months ended September 30, 2020.
Key highlights
The Company’s operation and performance were inevitably disrupted by the COVID-19 outbreak since January 2020.
However, attributable to the restoration of economic activities and living orders in China since the outbreak of the COVID-19 being contained, Tongcheng-Elong saw a continuing robust recovery trend in the third quarter of 2020 since the last quarter for some key metrics.
For the three months ended September 30, 2020:
• Revenue decreased by 7.2% year-to-year to RMB1,914.5 million (USD 291.6 million) from RMB2,062.1 million in the same period of 2019. Such decrease was narrowed down compared with 24.6% decline in the second quarter of 2020. Further, on a quarter-to-quarter basis, the revenue in the third quarter of 2020 increased by 59.5%.
• Adjusted EBITDA dropped from RMB547.3 million in the third quarter of 2019 to RMB499.3 million in the same period of 2020. The year-to-year decrease of adjusted EBITDA as narrowed down to 8.8% in the third quarter of 2020 from 39.3% in the second quarter of 2020.
• Adjusted profit for the period dropped from RMB419.2 million in the third quarter of 2019 to RMB372.5 million in the same period of 2020. The year-to-year decrease of adjusted profit was narrowed down to 11.2% in the third quarter of 2020 from 43.2% in the previous quarter.
• Average MAUs increased by 5.0% year-to-year from 234.0 million in the same period of 2019 and increased by 40.0% quarter-to-quarter from 175.6 million in the second quarter of 2020 to 245.8 million.
• Average MPUs was flatten year-to-year at 29.8 million in the same period of 2019 and increased by 60.2% quarter-to-quarter from 18.6 million in the second quarter of 2020 to 29.8 million.
Revenue
Revenue decreased by 7.2% from RMB2,062.1 million for the three months ended September 30, 2019 to RMB1,914.5 million for the three months ended September 30, 2020. The decrease was narrowed down compared with 24.6% in the second quarter of 2020.
Thanks to a robust recovery trend of demand of accommodation in China and further increased cross-selling from transportation business to accommodation business, revenue from accommodation reservation services was almost flatten at RMB684.6 million for the three months ended September 30, 2020, compared with RMB693.7 million in the same period of 2019.
Attributable to the accelerating recovery of domestic travelling, revenue from transportation ticketing services rebounded from RMB725.8 million in the second quarter of 2020 to RMB1,055.1 million in the third quarter of 2020, but representing a year-to-year drop of 7.4%.
Selling and marketing expenses
Selling and marketing expenses increased by 15.5% from RMB627.6 million for the three months ended September 30, 2019 to RMB724.9 million for the three months ended September 30, 2020, which was mainly due to the increased investment in marketing activities to strengthen and broaden the traffic channels.
Business Review
Tencent-based platforms continued to be the company’s most cost-effective and stable traffic sources. In the third quarter of 2020, approximately 80.6% of its average MAUs was contributed from Tencent-based platforms with majority of the traffic came from Weixin Payment portal and the drop-down list of users’ favorite or most frequently used mini programs.
Tongcheng-Elong deepened cooperation with Weixin and further explored the potential of the “Search+Travel” ecosystem which allows users to have quick access to transportation ticketing services by conducting keywords search on Weixin platforms.
As of September 30, 2020, the company’s registered users residing in non-first-tier cities in China accounted for approximately 86.1% of the total registered users. For the three months ended September 30, 2020, approximately 67.2% of its new paying users on Weixin platform were from tier-3 or below cities in China, which increased from 63.3% over the same period of 2019.
For the third quarter of 2020, Tongcheng-Elong have registered nearly 30% year-to-year growth in room nights sold in lower tier cities, over 80% year-to-year growth in bus ticketing volume and over 20% year-to-year growth in domestic air ticketing volume.
Business Outlook and Strategies
Based on the currently available information, for the fourth quarter of 2020, the company expects its revenue to decrease by approximately 5% to 0% year-to-year, and adjusted profit for the period to be in the range of RMB300 million to RMB350 million.
Tongcheng-Elong will further penetrate the travel market in China by leveraging on its cost-effective traffic sources, especially in lower-tier cities.
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