Chinese online travel giant Trip.com continued to grapple in the second quarter from effects from the pandemic, and said Thursday that it expects the fallout to extend into the third quarter.
Why it matters: Trip.com’s business has not recovered from travel suspensions resulting from Covid-19. The company’s domestic travel segment saw “strong momentum of recovery,” but a “steep decline” in international travel weighed. The firm expects that the pandemic’s negative impact will linger.
- The upcoming Golden Week holiday which runs from Oct. 1 to 8 is expected (in Chinese) to boost the Chinese online travel market, especially at a time when restrictions on cross-border travel remain tight.
- Trip.com’s international travel segment made up 35% of its total revenue in the first quarter of 2019 and may continue to weigh on the company’s performance in the long run.
Details: Trip.com reported net revenue of RMB 3.2 billion ($448 million) in the quarter ended June 30, falling 64% year on year, according to the company’s filing after market close in the US on Thursday. Its revenue beat the high end of estimates compiled by Yahoo Finance at $379.5 million.
- The company forecasted net revenue to decrease by approximately 47% to 52% year over year for the third quarter of 2020.
- Net loss attributable to shareholders in Q2 increased to RMB 476 million from RMB 403 million in the same period in 2019 but narrowed considerably compared with the RMB 5.4 billion seen in the previous quarter.
- Four major business lines including accommodation, air ticketing, and various in-destination services are recovering, CEO Jane Sun said during the earnings conference call. “On the whole, pricing remains significantly reduced on a year over year basis, but the gap has been narrowed month by month,” she said.
- The company’s shares traded slightly higher to close at $27.75 each on Thursday. Trip.com shares have been on a steady growth trajectory since March as life in China returns to normal, although it still nearly 40% lower than its peak price in January.
Context: Trip.com is reportedly mulling delisting from Nasdaq amid intensifying tensions between the US and China.