Key Takeaway
Chinese online travel company Tuniu reported a return to GAAP profitability in the third quarter of 2022, breaking a streak of losses that had persisted since the beginning of the COVID-19 pandemic. However, the company’s overall financial performance remained mixed, with revenue declining year-over-year and adjusted EBITDA falling short of expectations.
Financial Breakdown
* **Revenue:** Tuniu’s total revenue for the third quarter was RMB 1.1 billion (US$154 million), down 10.4% year-over-year. The decline was primarily attributed to a decrease in travel bookings due to ongoing travel restrictions in China.
* **Gross profit:** Despite the revenue decline, Tuniu’s gross profit increased by 13.2% to RMB 352 million (US$49 million). This improvement was driven by cost-cutting measures and a shift towards higher-margin products.
* **Net income:** Tuniu reported a net income of RMB 16 million (US$2.2 million) in the third quarter, compared to a net loss of RMB 17 million (US$2.4 million) in the same period last year. This marked the company’s first GAAP-compliant profit since the fourth quarter of 2019.
* **Adjusted EBITDA:** Tuniu’s adjusted EBITDA, a measure of profitability excluding certain non-cash expenses, fell by 11.6% to RMB 30 million (US$4.2 million). This was below analysts’ expectations.
Outlook
Tuniu’s management expressed optimism about the company’s future, citing signs of recovery in the Chinese travel market. The company expects revenue to continue to grow in the coming quarters as travel restrictions ease and consumer confidence improves.
However, the company also acknowledged that it faces challenges, including ongoing macroeconomic uncertainty and competition from larger rivals. Tuniu plans to focus on cost control, product innovation, and strategic partnerships to navigate these challenges.
Conclusion
Tuniu’s return to GAAP profitability is a positive sign for the company, but its overall financial performance remains mixed. The company faces both opportunities and challenges in the coming quarters, and its ability to execute its strategy will be crucial to its long-term success.
Kind regards S. Sing.
