Tuniu Corporation (TOUR) Q4 FY2025 Earnings Call Transcript & Summary

Hello, and thank you for standing by for Tuniu's 2025 Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary.

Thank you, Betsy, and welcome to our 2025 Fourth Quarter and Full Year Earnings Conference Call. Joining me on the call today are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer; and Anqiang Chen, Tuniu's Financial Controller. For today's agenda, management will discuss business updates, operation highlights and financial performance for the fourth quarter and fiscal year 2025. Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Yu.

Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and full year 2025 earnings conference call. In the fourth quarter, our business continued to maintain solid growth momentum. Net revenues increased by 20% year-over-year, exceeding our previous guidance. While revenues from our core packaged tour products grew at an even faster pace, rising 35% year-over-year. At the same time, we achieved profitability for both the quarter and the year. This also marks the third consecutive year following the pandemic in which we have delivered full year non-GAAP profitability. We have announced a long-term shareholder return plan totaling up to USD 50 million to be carried out during the 3-year period from March 2026 with cash dividends and share repurchase. This plan reflects both our commitment to provide shareholders with sustainable returns and our confidence in the long-term outlook of the travel industry. The travel market continued to grow in a healthy manner in the past year. The extension of national holidays and other favorable policies further stimulated domestic travel demand, while the increasing number of visa-free destinations made it easier for Chinese travelers to explore more destinations overseas. In 2025, we adopted a more proactive product strategy by differentiating our products and products line. We targeted distinct customer segments and offered a richer, more tailored portfolio based on customer needs. Meanwhile, we leveraged our supply chain strength to enhance price competitiveness and attract more customers. During the year, we continued to pursue an open and collaborative approach, attracting high-quality partners to expand new channels and enhance service quality for our customers. Contributions from channels such as live streaming, offline stores and corporate clients continued to increase as the share of Tuniu's transaction volume. In addition, we actively embraced new technologies, leveraging innovation tools to further enhance our product and service and improve operational efficiency. Now I will walk you through our key achievements in more detail. First, our strong supply chain remains the foundation for delivering high-quality and price competitive products. In 2025, we further enhanced our direct and centralized procurement strategy in order to lower purchasing costs. Moreover, based on customer needs and pain points, we consolidated flight resources and introduced several connecting flights for Select long-haul travel products to niche destinations. This approach further expanded our departure city coverage, making it more convenient for travelers from lower-tier cities to travel abroad. It also enabled us to take advantage of airline discounts available in those hubs, allowing us to offer even more competitive pricing to our customers and further boosted demand for related destinations. Many hub cities such as Chengdu and Wuxi are popular tourist destinations themselves, allowing travelers to combine stopovers with their visits. As a result, these products gained strong traction upon launch. For example, our Caucasus series using connecting flights recorded over 500% year-over-year growth in transaction volume in 2025. We will continue to expand these offerings by adding more departure points and destinations. In terms of products, we continued to adopt a differentiated strategy to better serve distinct customer segments. As the core customers of our new tour products, experienced travelers and repeat customers tend to prioritize the travel experience and typically have greater flexibility in both time and budget. In 2025, Niu Tour introduced a wider range of niche destination products, including the organized tours products to the Caucasus region in April and to South America in October. At the same time, we further enhanced the travel experience of Niu Tour products by implementing a zero shopping policy throughout the trip and some including curated experiences such as Michelin-star dining and helicopter tours. In the second half of 2024, we launched our Niu Select series, offering a wider range of cost-effective products and further expanding to Tuniu's price tiers. In 2025, we expanded our Niu Select offerings to cover a broader array of international destinations. With more competitive pricing, the Niu Select products have attract a wider customer base, enabling travelers to either reduce their travel budgets or explore additional destinations within the same budget, an option that strongly appeals to travel fans, particularly younger ones. The Niu Select Singapore-Malaysia tour series launched in June last year, recorded over 10,000 paid bookings during the summer holiday period. We also observed a continued rise in demand for self-guided tours, particularly in the domestic travel market. Last year, we expanded the supply of our Hotel + X products with hotels at the core and supported by dynamic packaging technology. We broadened the coverage to all provinces in China, Chinese Mainland and further penetrated the lower-tier markets. During the 2025 Labor Day and National Day holidays, transaction volume for our self-drive tour products recorded a triple-digit year-over-year growth. Going forward, we will continue this strategy by expanding the supply and destination coverage of our self-guided tour products. In addition, in 2025, we continued to explore and expand diversified channels. Live streaming is playing an increasingly important role for our sales. In 2025, both payment and verification volume through our live streaming channel continued to record double-digit year-over-year growth while achieving profitability through a single channel. Live streaming channel contributed over 15% to our total transaction volume in 2025 compared to approximately 10% in 2024. On the product side, first, we expanded the range of live streaming offerings beyond the traditional hotel plus scenic spot packages. We added personalized service products such as travel photography as well as more high-ticket items like long-haul outbound travel products, enriching customers' choices. Second, we fully leveraged our supply chain advantages to ensure competitive pricing. For example, our Niu Select products are highly popular with live stream audiences due to their good value for money. In terms of format, we increased the number of our outdoor live streaming shows, including inviting live streamers to broadcast live from destination sites. In March last year, Tuniu partnered with multiple live streamers to conduct a 21-day on-site live streaming campaign across 10 islands in the Maldives, generating cumulative sales of over RMB 100 million. On the service side, with more than a decade of experience in the travel industry, we provide professional tour guidance and comprehensive travel-related services. In addition, we have a dedicated verification team and specialized system support in place to deliver a smoother redemption experience for customers. Off-line stores remain an essential part of our overall sales and service network. As of the end of 2025, we operated more than 400 stores nationwide. We expanded our store presence in key cities, including major popular tourist destinations and transportation hubs such as Chengdu and Xi'an, building scale in local markets to enhance operational efficiency and reduce costs. In 2025, transaction volume from offline stores increased by nearly 20% year-over-year. We also continued to develop channels such as traffic platforms and corporate clients, tailoring our product offerings to the specific needs of each channel. On traffic platforms, sales of stand-alone products such as air tickets and hotel bookings grew rapidly. For corporate clients, in addition to providing business travel booking service, we leveraged our extensive experience in the leisure segment to offer customized group travel solutions as well as personal and family vacation products for employees. In the fourth quarter of 2025, transaction value from corporate clients increased by more than 20% year-over-year. In terms of technology, we are exploring the application of AI agents across various business scenarios. Last April, Tuniu officially launched our self-developed travel agent -- travel AI agent, AI assistant, Xiao Niu. The assistant integrates vertical travel application scenarios with large language models to provide customers with one-stop services, including smart search, automated price comparisons, personalized recommendations and dynamic packaging. At the same time, we continued to integrate technological tools into our daily operations. These initiatives have improved efficiency and helped control operating costs. We are encouraged by the growing adoption of our AI tools among both customers and employees. In addition, we have adopted an open collaboration approach by gradually providing external AI agents such as OpenClaw with the same comprehensive travel booking capabilities available in our app via MCP interface, enabling them to search and place bookings directly. We will continue to embrace new technology to support high-quality growth. Over the past year, we made steady progress while managing a range of challenges. Overall, the company continues to move forward on a sustainable development path. In the year ahead, we will remain focused on customer needs, continue refining our products and services and expand our reach through diversified channels to support stable and sustainable growth. I will now turn the call over to Anqiang, our Financial Controller, for the financial highlights.

Thank you, Donald. Hello, everyone. Now I'll walk you through our fourth quarter and fiscal year 2025 financial results in greater detail. Please note that all monetary amounts are in RMB, unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. For the fourth quarter of 2025, net revenues were CNY 123.5 million, representing a year-over-year increase of 20% from the corresponding period in 2024. Revenues from packaged tours were up 35% year-over-year to CNY 102.1 million and accounted for 83% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours and self-guide tours. Other revenues were down 21% year-over-year to CNY 21.5 million and accounted for 17% of our total net revenues. The decrease was primarily due to the decrease of merchandise sales. Gross profit for the fourth quarter of 2025 was CNY 70 million, which was almost in line with gross profit in the fourth quarter of 2024. Operating expenses for the fourth quarter of 2025 were CNY 69 million, down 16% year-over-year. Research and product development expenses for the fourth quarter of 2025 were CNY 12.3 million, down 8% year-over-year. The decrease was primarily due to the decrease in research and product development personnel-related expenses. Sales and marketing expenses for the fourth quarter of 2025 were CNY 44.1 million, up 3% year-over-year. The increase was primarily due to the increase in promotion expenses. General and administrative expenses for the fourth quarter of 2025 were CNY 12.8 million, down 52% year-over-year. The decrease was primarily due to the impairment of property and equipment net recorded in the fourth quarter of 2024. Net income attributable to ordinary shareholders of Tuniu Corporation was CNY 1.5 million in the fourth quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses and amortization of acquired intangible assets was CNY 3.5 million in the fourth quarter of 2025. As of December 31, 2025, the company had cash and cash equivalents, restricted cash, short-term investments and long-term deposits of CNY 1.1 billion. Cash flow generated from operations for the fourth quarter of 2025 was CNY 68.8 million. Capital expenditures for the fourth quarter of 2025 was CNY 0.5 million. Now moving to full year 2025 results. In 2025, net revenues were CNY 578 million, representing a 13% year-over-year increase. Revenues from packaged tours were up 21% year-over-year to CNY 493.5 million and accounted for 85% of our total net revenues in 2025. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 20% year-over-year to CNY 84.5 million and accounted for 15% of our total net revenues in 2025. The decrease was primarily due to the decrease in the commission fees received from other travel-related products. Gross profit was CNY 335 million in 2025, down 6% year-over-year. Operating expenses were CNY 323.7 million in 2025, up 10% year-over-year. Research and product development expenses were CNY 59 million in 2025, up 12% year-over-year. The increase was primarily due to the increase in research and product development personnel-related expenses. Sales and marketing expenses were CNY 193.9 million in 2025, up 8% year-over-year. The increase was primarily due to the increase in promotion expenses. General and administrative expenses were CNY 71.8 million in 2025, down 18% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel-related expenses and impairment of property and equipment net. Net income attributable to ordinary shareholders of Tuniu Corporation was CNY 31.1 million in 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses, amortization of acquired intangible assets and impairment of property and equipment net was CNY 42.6 million in 2025. Capital expenditures were CNY 4.4 million in 2025. For the first quarter of 2026, the company expects to generate CNY 125.7 million to CNY 131.6 million of net revenues, which represents a 7% to 12% increase year-over-year. Please note that this forecast reflects new current and preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions. Operator?

[Operator Instructions] There are no questions at this time. I will now turn the call over to Tuniu's Director of Investor Relations, Mary.

Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.