Ctrip announced its unaudited financial results for the second quarter ended June 30, 2018.
Financial results in the second quarter of 2018.
* Net revenue increased by 13% year-on-year to RMB7.3 billion (US$1.1 billion) for the second quarter of 2018.
* Operating margin was 10% for the second quarter of 2018 compared to 9% for the previous quarter. Excluding share-based compensation charges, Non-GAAP operating margin was 16% for the second quarter of 2018, compared to 14% for the previous quarter.
* Net income attributed to Ctrip's shareholders increased by 564% year-on-year to RMB2.4 billion (US$360 million) for the second quarter of 2018, compared to RMB359 million for the same period in 2017.
Great strides in international businesses.
* Excluding Skyscanner, both international hotel and air businesses achieved around 40% volume growth rate in the second quarter of 2018, thanks to the robust growth of our outbound travel business and the popularity of Trip.com.
* Skyscanner's direct booking program continued to gain momentum, delivering revenue growth of approximately 600% year-on-year in the second quarter of 2018.
Further penetrated into lower-tier cities in China.
The user penetration rate of Ctrip brand in the targeted lower-tier cities on average increased by approximately 40% year-on-year in the second quarter of 2018.
Ctrip continued to see the fast development of offline stores. In mid-August of 2018, all the stores together achieved a new industry record of RMB70 million gross merchandise volume in a single day.
Jane Sun, Chief Executive Officer, said: "We have achieved a healthy revenue growth rate and improved operating profit margin quarter-over-quarter thanks to the scalability of our business model. Looking ahead, we are on the right track to accomplish our long-term goals. Our persistence in "customer-centricity," deep involvement in industry value chain, and solid execution in the international business will create enormous growth potentials in the years to come."
James Liang, Executive Chairman, said, "We will continue to make investments in improving customer satisfaction, as we believe this strategy will create more customer life-time value over the long-term. In addition to pursuing the vast addressable market of potential new users, we will remain focused on better serving our large existing base of loyal customers. We will be relentless in extending our leadership in the travel industry, in China and the world."
Second Quarter of 2018 Financial Results and Business Updates
For the second quarter of 2018, Ctrip reported net revenue of RMB7.3 billion (US$1.1 billion), representing a 13% increase from the same period in 2017. Net revenue for the second quarter of 2018 increased by 9% from the previous quarter.
Accommodation reservation revenue for the second quarter of 2018 was RMB2.8 billion (US$425 million), representing a 21% increase from the same period in 2017, primarily driven by an increase in accommodation reservation volume. Accommodation reservation revenue for the second quarter of 2018 increased by 13% from the previous quarter, primarily due to seasonality.
Transportation ticketing revenue for the second quarter of 2018 was RMB3.0 billion (US$457 million), representing a 1% increase from the same period in 2017. Transportation ticketing revenue increased by 5% from the previous quarter, primarily due to seasonality.
Packaged tour revenue for the second quarter of 2018 was RMB839 million (US$127 million), representing a 31% increase from the same period in 2017, primarily driven by an increase in volume growth of organized tours and self-guided tours. Packaged tour revenue for the second quarter of 2018 increased by 1% from the previous quarter.
Corporate travel revenue for the second quarter of 2018 was RMB255 million (US$38 million), representing a 28% increase from the same period in 2017, primarily driven by expansion in travel product coverage. Corporate travel revenue for the second quarter of 2018 increased by 41% from the previous quarter, primarily due to seasonality.
Gross margin was 80% for the second quarter of 2018, compared to 83% for the same period in 2017, and 82% for the previous quarter.
Product development expenses for the second quarter of 2018 increased by 11% to RMB2.3 billion (US$340 million) from the same period in 2017, primarily due to the increase in product development personnel related expenses. Product development expenses for the second quarter of 2018 increased by 4% from the previous quarter. Product development expenses for the second quarter of 2018 accounted for 31% of the net revenue.
Sales and marketing expenses for the second quarter of 2018 increased by 9% to RMB2.2 billion (US$331 million) from the same period in 2017, primarily due to an increase in sales and marketing personnel related expenses. Sales and marketing expenses for the second quarter of 2018 increased by 5% from the previous quarter. Sales and marketing expenses for the second quarter of 2018 accounted for 30% of the net revenue.
Income from operations for the second quarter of 2018 was RMB724 million (US$110 million), compared to RMB687 million for the same period in 2017 and RMB590 million for the previous quarter.
Operating margin was 10% for the second quarter of 2018, compared to 11% for the same period in 2017, and 9% for the previous quarter.
Net income attributable to Ctrip's shareholders for the second quarter of 2018 was RMB2.4 billion (US$360 million), compared to RMB359 million for the same period in 2017 and RMB1.1 billion in the previous quarter, primary due to the gains from the equity securities measured at fair value and investing activities.
As of June 30, 2018, the balance of cash and cash equivalents, restricted cash and short-term investments was RMB57.7 billion (US$8.7 billion).
Business Outlook
For the third quarter of 2018, the Company expects the net revenue growth to continue at a year-on-year rate of approximately 13%-18%, which is calculated on the estimated net revenue of the third quarter of 2018 under the new revenue recognition standard and the net revenue of the third quarter of 2017 retrospectively adjusted.
