Tongcheng-Elong Holdings, a Chinese online travel firm co-invested by Trip.com Group and Tencent, today announced the audited consolidated results for the year ended December 31, 2019, together with comparative figures for the year ended December 31, 2018.
Key Highlights
For the three months ended December 31, 2019:
• Revenue increased by 24.4% year-to-year to RMB1,956.5 million from RMB1,572.4 million in the same period of 2018.
• Adjusted EBITDA increased by 47.7% year-to-year to RMB415.1 million from RMB281.0 million in the same period of 2018. Adjusted EBITDA margin increased from 17.9% in the same period of 2018 to 21.2%.
• Adjusted profit for the period increased by 67.7% year-to-year to RMB331.1 million from RMB197.4 million in the same period of 2018. Adjusted net margin increased from 12.6% in the same period of 2018 to 16.9%.
• Average MAUs increased by 18.5% year-to-year from 173.7 million in the same period of 2018 to 205.9 million.
• Average MPUs increased by 21.5% year-to-year from 22.3 million in the same period of 2018 to 27.1 million.
For the year ended December 31, 2019:
On the Group’s standalone basis
• Revenue increased by 40.7% year-to-year to RMB7,392.9 million from RMB5,255.6 million in 2018.
• Adjusted EBITDA increased by 75.2% year-to-year to RMB2,018.5 million from RMB1,152.1 million in 2018. Adjusted EBITDA margin increased from 21.9% in 2018 to 27.3% in 2019.
• Adjusted profit for the year increased by 68.6% year-to-year to RMB1,544.3 million from RMB915.9 million in 2018. Adjusted net margin increased from 17.4% in 2018 to 20.9% in 2019.
On a combined basis
• Revenue increased by 21.4% year-to-year to RMB7,392.9 million from RMB6,090.8 million in 2018.
• Adjusted EBITDA increased by 36.2% year-to-year to RMB2,018.5 million from RMB1,481.7 million in 2018. Adjusted EBITDA margin increased from 24.3% in 2018 to 27.3% in 2019.
• Adjusted profit for the year increased by 35.4% year-to-year to RMB1,544.3 million from RMB1,140.7 million in 2018. Adjusted net margin increased from 18.7% in 2018 to 20.9% in 2019.
• Average MAUs increased by 17.1% year-to-year from 175.2 million in 2018 to 205.2 million in 2019.
• Average MPUs increased by 34.5% year-to-year from 20.0 million in 2018 to 26.9 million in 2019.
Business Review
The solid growth of the user base and user retention rate has brought Tongcheng-Elong continuous growth in business volume. The GMV for the three months and year ended December 31, 2019 reached RMB41.3 billion and RMB166.1 billion, representing a year-to-year increase of 19.7% and 26.3%, respectively.
As of December 31, 2019, approximately 85.6% of registered users resided in non-first-tier cities in China. For the year ended December 31, 2019, approximately 62.4% of newly acquired paying users in Weixin were from tier-3 or below cities in China, which increased from 61.1% over the same period of 2018. In addition, the average MAUs in the native APPs recorded a faster growth than that in Weixin channel in the second half of the year 2019, mainly due to the expanding investments in marketing and R&D resources.
Tongcheng-Elong provides comprehensive products and services covering nearly all travel needs, including accommodation reservation, transportation ticketing, attractions ticketing and various ancillary value-added products and services to meet user’s needs during the trip. As of December 31, 2019, the company's online platforms offered over 6,800 domestic routes and around 1.4 million international routes operated by more than 400 domestic and international airlines, over 2.0 million hotels selections and alternative accommodation options, approximately 346,000 bus routes, over 500 ferry routes, and approximately 8,000 domestic tourist attractions ticketing services.
Business Outlook and Strategies
The outbreak of COVID-19 at the end of January 2020 has greatly impacted the travel industry and other industries. As a major player in the travel industry, the company is inevitably affected as it presents short-term challenges to the development of the business. Based on the currently available information, for the first quarter of 2020, it expects net revenue to decrease by approximately 42% to 47% year over year, and the adjusted profit to be positive as a result of adoption of effective cost-saving measures. The above are preliminary estimates which have not been reviewed by the Company’s auditors and the Audit Committee, and are therefore remain subject to change.
As one of the market leaders, it also sees opportunities created by the force of changes. In face of challenges posed by the COVID-19, it will focus on the core strategy, operate on cost-saving mode, act on the uncertainties and hunger for opportunities.
Immediately upon the outbreak of COVID-19, the company has launched a dynamic set of initiatives to fulfill the responsibilities and obligations towards the community, to protect the users and employees, as well as to help the suppliers.
On the user front, it launched policies of refund and changes without penalties, echoing the government’s precaution measures and suppliers’ policies. It has opened up a self-service online cancellation function to fast-track refund and changes as well as joining hands with the business partners to set up an emergency fund to guarantee timely refund. The company has also provided users with COVID-19 related insurance free of charge. As a socially responsible and accountable enterprise, it worked with an online medical platform to provide online medical consultation for free. The company also rolled out an inquiry service with the advanced technology, allowing users to check whether there are any COVID-19 diagnosed patients in the train or plane he/she took. To pay tribute to the medical workers, it gave out one-year “Black Whale” paid membership to all the medical workers across Mainland China free of charge. To facilitate the resumption of work across China, it initiated a Return to Work Platform to provide customized bus transport services for enterprises with a high concentration of returning workforce. On the supplier front, it established an Ark Alliance (方舟聯盟), an initiative for us to promote tourist spots through online marketing for allies free of charge. The company launched a “Safe Room” initiative to ensure the safety of hotel guests.
For the employees, Tongcheng-Elong started an online safety reporting system to collect health data of the employees to understand their health conditions and evaluate the situation of the Company. Although it instantly extended holidays and launched a work from home policy once the COVID-19 outbreak occurred, many of the staff, especially the customer service team and the product development team, actually worked days and nights to provide the best services to the users and to upgrade the products and services during this difficult period, so as to prepare for the recovery in the future.
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