Quarterly Highlights
* Net revenue increased 42% to RMB7.9 billion.
* Accommodation reservation revenue increased 36%.
* Gross margin was 83% for the quarter, up from 78% for Q3 2016 and 82% for Q2 2017.
* Operating margin was 17%.
* Strengthening position in lower-tier cities
* Ctrip brand's daily active users grew over 60% in second-tier cities.
* Qunar's hotel revenue in third- and fourth-tier cities maintained over 80% growth rates in three consecutive quarters this year.
* Ctrip and Qunar opened 100 offline stores across China and will continue to expand.
* Ctrip's international businesses
* International air ticketing maintained robust volume growth, and the tickets sold by our International Business Unit continued to grow at a triple-digit percentage rate.
CEO Jane Sun said:
"We are pleased to deliver another quarter of solid results. The investments we've made in products, services and technologies cement an unrivaled value proposition for our customers and supply chain partners. Customer-centricity is a core value and we will continue to diligently uphold it."
Executive Chairman James Liang said:
"Ctrip's foundation is based on travel innovation, one-stop experience and best in class 24/7 service. The growth we've delivered through the years has been tremendous yet we're still only touching the tip of the whole travel opportunity. Our successful track record and our ability to stay inquisitive and innovative will further solidify our competitive moat."
Financial Results and Business Updates
For the third quarter of 2017, Ctrip reported net revenue of RMB7.9 billion (USD1.2 billion), representing a 42% increase from the same period of 2016. Net revenue for the third quarter of 2017 increased 23% from the previous quarter.
Accommodation reservation revenue for the third quarter of 2017 was RMB2.8 billion (USD424 million), representing a 36% increase from the same period of 2016, primarily driven by an increase in accommodation reservation volume. Accommodation reservation revenue for the third quarter of 2017 increased 22% from the previous quarter, primarily driven by an increase in accommodation reservation volume and seasonality.
Transportation ticketing revenue for the third quarter of 2017 was RMB3.4 billion (USD515 million), representing a 41% increase from the same period of 2016, primarily driven by an increase in ticketing volume and the consolidation of Skyscanner's financial results since December 31, 2016. Transportation ticketing revenue increased 15% from the previous quarter, primarily due to an increase in ticketing volume and seasonality.
Packaged-tour revenue for the third quarter of 2017 was RMB1.0 billion (USD155 million), representing a 27% increase from the same period of 2016, primarily driven by an increase in volume growth of organized tours and self-guided tours. Packaged-tour revenue for the third quarter of 2017 increased 69% from the previous quarter, primarily due to seasonality.
Corporate travel revenue for the third quarter of 2017 was RMB203 million (USD30 million), representing a 22% increase from the same period of 2016, primarily driven by expansion in travel product coverage. Corporate travel revenue for the third quarter of 2017 increased 2% from the previous quarter.
Gross margin was 83% for the third quarter of 2017, compared to 78% for the same period of 2016, and 82% for the previous quarter.
Sales and marketing expenses for the third quarter of 2017 increased by 58% to RMB2.4 billion (USD357 million) from the same period of 2016, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the third quarter of 2017 increased 19% from the previous quarter. Sales and marketing expenses for the third quarter of 2017 accounted for 30% of the net revenue.
Income from operations for the third quarter of 2017 was RMB1.4 billion (USD204 million), compared to income of RMB447 million for the same period of 2016 and income of RMB645 million for the previous quarter.
Operating margin was 17% for the third quarter of 2017, compared to 8% for the same period of 2016, and 10% for the previous quarter. Excluding share-based compensation charges, Non-GAAP operating margin was 22%, compared to 18% for the same period of 2016 and 18% for the previous quarter.
Net income attributable to Ctrip's shareholders for the third quarter of 2017 was RMB1.2 billion (USD185 million), compared to net income of RMB24 million for the same period of 2016 and net income of RMB327 million for the previous quarter.
Diluted earnings per ADS were RMB2.10 (USD0.32) for the third quarter of 2017. Excluding share-based compensation charges, Non-GAAP diluted earnings per ADS were RMB2.70 (USD0.41) for the third quarter of 2017.
As of September 30, 2017, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB47 billion (USD7 billion).
Business Outlook
For the fourth quarter of 2017, the Company expects the net revenue growth to continue at a year-on-year rate of approximately 25-30%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.
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