Tuniu Announces Unaudited Third Quarter 2018 Financial Results

Non-GAAP[1] Net Income in Q3 2018 Increased by 109.2% Year-Over-Year to RMB83.0 million
Added 251 Offline Retail Stores During 2018[2]

NANJING, China, Nov. 27, 2018 /PRNewswire/ -- Tuniu Corporation (NASDAQ: TOUR) ("Tuniu" or the "Company"), a leading online leisure travel company in China, today announced its unaudited financial results for the third quarter ended September 30, 2018.

Highlights for the Third Quarter of 2018

  • Non-GAAP income from operations was RMB51.4 million (US$7.5 million[3]) in the third quarter of 2018, compared to a Non-GAAP income from operations of RMB0.6 million in the third quarter of 2017.
  • Net income was RMB28.0 million (US$4.1 million) in the third quarter of 2018, compared to a net loss of RMB27.0 million in the third quarter of 2017. Non-GAAP net income was RMB83.0 million (US$12.1 million) in the third quarter of 2018, representing a year-over-year increase of 109.2%.
  • Operating expenses in the third quarter of 2018 decreased by 22.1% year-over-year to RMB395.1 million (US$57.5 million).  
  • As of October 31, 2018, Tuniu had 415 offline retail stores in total, of which 251 were newly added since January 1, 2018.  
  • As of November 27, 2018, Tuniu had 26 local tour operators in total, including 1 newly launched local tour operator overseas[4] since July 31, 2018.

Mr. Donald Dunde Yu, Tuniu's founder, Chairman and Chief Executive Officer, said, "During the third quarter, we have continued to improve our sales and service networks in order to maximize the customer's experience. We have refined our sales network to further simplify our customers' booking experience across each channel and further integrated our service network with our platform to insure our customers are served with higher quality products and services. Our direct procurement as a percentage of packaged tour GMV reached 60% in the third quarter. Going forward, we believe our dedication to improving the user experience will differentiate Tuniu from our peers and will serve as the driver of our growth in the future."

Ms. Maria Yi Xin, Tuniu's Chief Financial Officer, said, "We are excited to announce that Tuniu achieved profitability during the third quarter of 2018 both on a GAAP and non-GAAP basis. Additionally, we were able to generate positive cash flow during the first three quarters this year. We believe our ability to achieve profitability and maintain positive operating cash flow this quarter is a reflection of how our long-term strategies have positively reshaped our company's financials. Our achievement this quarter is a significant step towards unlocking greater long-term value for our shareholders."

[1] The section below entitled "About Non-GAAP Financial Measures" provides information about the use of Non-GAAP financial measures in this press release, and the table captioned "Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release reconciles Non-GAAP financial information with the Company's financial results under GAAP.

[2] The section below entitled "Highlights for the Third Quarter of 2018" provides additional information about some key financial figures and operating data.

[3] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.8680 on September 28, 2018 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/default.htm.

[4] The 1 newly launched local tour operator overseas is located in the Austria.

Third Quarter 2018 Results

Net revenues were RMB763.1 million (US$111.1 million) in the third quarter of 2018, representing a year-over-year decrease of 5.3% from the corresponding period in 2017.

  • Revenues from packaged tours were RMB632.7 million (US$92.1 million) in the third quarter of 2018, representing a year-over-year increase of 4.7% from the corresponding period in 2017. The increase was primarily due to the growth of organized tours.
  • Other revenues were RMB130.4 million (US$19.0 million) in the third quarter of 2018, representing a year-over-year decrease of 35.5% from the corresponding period in 2017. The decrease was primarily due to the decline in revenues generated from financial services and service fees received from insurance companies.

Cost of revenues was RMB371.6 million (US$54.1 million) in the third quarter of 2018, representing a year-over-year increase of 1.8% from the corresponding period in 2017. As a percentage of net revenues, cost of revenues was 48.7% in the third quarter of 2018 compared to 45.3% in the corresponding period in 2017.

Gross profit was RMB391.5 million (US$57.0 million) in the third quarter of 2018, representing a year-over-year decrease of 11.2% from the corresponding period in 2017. The decrease was primarily due to the decrease in other revenues.

Operating expenses were RMB395.1 million (US$57.5 million) in the third quarter of 2018, representing a year-over-year decrease of 22.1% from the corresponding period in 2017. Share-based compensation expenses and amortization of acquired intangible assets, which were allocated to operating expenses, were RMB54.4 million (US$7.9 million) in the third quarter of 2018. Non-GAAP operating expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets, were RMB340.7 million (US$49.6 million) in the third quarter of 2018, representing a year-over-year decrease of 22.7%.

  • Research and product development expenses were RMB78.3 million (US$11.4 million) in the third quarter of 2018, representing a year-over-year decrease of 36.9%. Non-GAAP research and product development expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB4.2 million (US$0.6 million), were RMB74.1 million (US$10.8 million) in the third quarter of 2018, representing a year-over-year decrease of 39.1% from the corresponding period in 2017. Research and product development expenses as a percentage of net revenues were 10.3% in the third quarter of 2018, decreasing from 15.4% in the corresponding period in 2017. The decrease was primarily due to the increase in efficiency resulting from economies of scale and refined management, and optimization of research and product development personnel.
  • Sales and marketing expenses were RMB209.6 million (US$30.5 million) in the third quarter of 2018, representing a year-over-year decrease of 6.8%. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB34.7 million (US$5.1 million), were RMB174.8 million (US$25.5 million) in the third quarter of 2018, representing a year-over-year decrease of 8.0% from the corresponding period in 2017. Sales and marketing expenses as a percentage of net revenues were 27.5% in the third quarter of 2018, decreasing from 27.9% in the corresponding period in 2017. The decrease was primarily due to the optimization of promotional expense structure and preference for marketing channels with higher ROI.
  • General and administrative expenses were RMB122.9 million (US$17.9 million) in the third quarter of 2018, representing a year-over-year decrease of 25.9%. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB15.5 million (US$2.3 million), were RMB107.4 million (US$15.6 million) in the third quarter of 2018, representing a year-over-year decrease of 21.3% from the corresponding period in 2017. General and administrative expenses as a percentage of net revenues were 16.1% in the third quarter of 2018, decreasing from 20.6% in the corresponding period in 2017. The decrease was primarily due to the increase in operating efficiency resulting from economies of scale and refined management.

Loss from operations was RMB3.6 million (US$0.5 million) in the third quarter of 2018, compared to a loss from operations of RMB66.0 million in the third quarter of 2017. Non-GAAP income from operations, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB51.4 million (US$7.5 million) in the third quarter of 2018.

Net income was RMB28.0 million (US$4.1 million) in the third quarter of 2018, compared to a net loss of RMB27.0 million in the third quarter of 2017. Non-GAAP net income, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB83.0 million (US$12.1 million) in the third quarter of 2018.

Net income attributable to ordinary shareholders was RMB31.0 million (US$4.5 million) in the third quarter of 2018, compared to a net loss attributable to ordinary shareholders of RMB29.3 million in the third quarter of 2017. Non-GAAP net income attributable to ordinary shareholders, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB86.1 million (US$12.5 million) in the third quarter of 2018.

As of September 30, 2018, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB1.9 billion (US$271.0 million).

Business Outlook

For the fourth quarter of 2018, Tuniu expects to generate RMB422.9 million to RMB446.4 million of net revenues, which represents 5% to 10% decrease year-over-year. This forecast reflects Tuniu's current and preliminary view on the industry and its operations, which is subject to change.

Conference Call Information

Tuniu's management will hold an earnings conference call at 8:00 am U.S. Eastern Time, on November 27, 2018, (9:00 pm, Beijing/Hong Kong Time, on November 27, 2018) to discuss the third quarter 2018 financial results.

To participate in the conference call, please dial the following numbers:

US: 

+1-888-346-8982

Hong Kong: 

+852-301-84992

China:      

4001-201203

International:

+1-412-902-4272

Conference ID: Tuniu 3Q 2018 Earnings Call

A telephone replay will be available one hour after the end of the conference through December 4, 2018. The dial-in details are as follows:

US:

+1-877-344-7529

International:

+1-412-317-0088

  Replay Access Code: 10126389

Additionally, a live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.tuniu.com.

About Tuniu

Tuniu (Nasdaq:TOUR) is a leading online leisure travel company in China that offers a large selection of packaged tours, including organized and self-guided tours, as well as travel-related services for leisure travelers through its website tuniu.com and mobile platform. Tuniu has over 2,200,000 stock keeping units (SKUs) of packaged tours, covering over 420 departing cities throughout China and all popular destinations worldwide. Tuniu provides one-stop leisure travel solutions and a compelling customer experience through its online platform and offline service network. For more information, please visit http://ir.tuniu.com.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Tuniu may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Tuniu's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but are not limited to the following: Tuniu's goals and strategies; the growth of the online leisure travel market in China; the demand for Tuniu's products and services; its relationships with customers and travel suppliers; the Company's ability to offer competitive travel products and services; Tuniu's future business development, results of operations and financial condition; competition in the online travel industry in China; relevant government policies and regulations relating to the Company's structure, business and industry; and the general economic and business condition in China and elsewhere. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Tuniu does not undertake any obligation to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company has provided non-GAAP information related to cost of revenues, research and product development expenses, sales and marketing expenses, general and administrative expenses, operating expenses, loss from operations, net loss, net loss attributable to ordinary shareholders, net loss per ordinary share attributable to ordinary shareholders-basic and diluted and net loss per ADS, which excludes share-based compensation expenses and amortization of acquired intangible assets. We believe that the non-GAAP financial measures used in this press release are useful for understanding and assessing underlying business performance and operating trends, and management and investors benefit from referring to these non-GAAP financial measures in assessing our financial performance and when planning and forecasting future periods. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP Results" set forth at the end of this press release.

A limitation of using non-GAAP financial measures excluding share-based compensation expenses and amortization of acquired intangible assets is that share-based compensation expenses and amortization of acquired intangible assets have been – and will continue to be – significant recurring expenses in the Company's business. You should not view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

For investor and media inquiries, please contact:

China
Mary Chen
Investor Relations Director
Tuniu Corporation
Phone: +86-25-6960-9988
E-mail: ir@tuniu.com

(Financial Tables Follow)

Tuniu Corporation

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands, except per share information)


 December 31, 2017 


 September 30, 2018 


 September 30, 2018 


 RMB 


 RMB 


 US$ 







ASSETS






Current assets






Cash and cash equivalents

484,101


614,224


89,433

Restricted cash 

91,810


208,365


30,339

Short-term investments

3,084,634


1,038,799


151,252

Accounts receivable, net

286,627


508,841


74,089

Amounts due from related parties

171,331


699,831


101,897

Prepayments and other current assets  

939,463


1,747,378


254,422

Yield enhancement products and accrued interest

31,337


-


-

Total current assets

5,089,303


4,817,438


701,432







Non-current assets






Long term investment

484,991


1,330,386


193,708

Property and equipment, net

148,278


172,767


25,155

Intangible assets,net

460,634


353,982


51,541

Goodwill

147,639


155,680


22,667

Yield enhancement products over one year and
accrued interest

170,505


-


-

Other non-current assets

156,455


173,900


25,321

Total non-current assets

1,568,502


2,186,715


318,392

Total assets

6,657,805


7,004,153


1,019,824







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities






Accounts payable 

852,500


1,630,842


237,455

Amounts due to related parties

86,923


80,749


11,757

Salary and welfare payable

187,561


110,551


16,097

Taxes payable

32,036


15,535


2,262

Advances from customers

1,210,615


1,079,211


157,136

Accrued expenses and other current liabilities

373,690


560,254


81,574

Amounts due to the individual investors of yield
enhancement products

177,971


-


-

Total current liabilities

2,921,296


3,477,142


506,281







Non-current liabilities

42,481


46,796


6,814

Total liabilities

2,963,777


3,523,938


513,095







Mezzanine equity






Redeemable noncontrolling interests

96,719


68,086


9,914







Shareholders' equity






Ordinary shares

248


248


36

Less: Treasury stock

(185,419)


(299,209)


(43,566)

Additional paid-in capital

9,013,793


9,054,015


1,318,290

Accumulated other comprehensive income

272,386


284,078


41,363

Accumulated deficit

(5,505,897)


(5,629,830)


(819,720)

Total Tuniu's shareholders' equity

3,595,111


3,409,302


496,403

Noncontrolling interests

2,198


2,827


412

Total Shareholders' equity

3,597,309


3,412,129


496,815

Total liabilities and shareholders' equity

6,657,805


7,004,153


1,019,824

 

Tuniu Corporation

Unaudited Condensed Consolidated Statements of Comprehensive (Loss)/Income

(All amounts in thousands, except per share information)


 Quarter Ended 


 Quarter Ended 


 Quarter Ended 


 Quarter Ended 


 September 30, 2017 


 June 30, 2018 


 September 30, 2018 


 September 30, 2018 


 RMB 


 RMB 


 RMB 


 US$ 









Revenues








Packaged tours

604,047


437,609


632,723


92,126

Others

202,038


87,641


130,408


18,988

Net revenues

806,085


525,250


763,131


111,114

Cost of revenues

(365,206)


(274,475)


(371,622)


(54,109)

Gross profit

440,879


250,775


391,509


57,005









Operating expenses








Research and product development

(123,974)


(77,044)


(78,270)


(11,396)

Sales and marketing

(224,808)


(173,638)


(209,563)


(30,513)

General and administrative

(165,874)


(129,317)


(122,936)


(17,900)

Other operating income

7,757


8,078


15,656


2,280

Total operating expenses

(506,899)


(371,921)


(395,113)


(57,529)

Loss from operations

(66,020)


(121,146)


(3,604)


(524)

Other income/(expenses)








Interest and investment income, net

39,864


44,592


38,167


5,557

Foreign exchange gains/(losses), net

1,908


(6,633)


(9,030)


(1,315)

Other (loss)/income, net

(174)


(157)


1,293


188

(Loss)/Income before income tax expense

(24,422)


(83,344)


26,826


3,906

Income tax (expense)/benefit

(2,583)


524


1,126


164

Net (loss)/income

(27,005)


(82,820)


27,952


4,070

Net income/(loss) attributable to
noncontrolling interests

609


(1,721)


(4,104)


(598)

Net income attributable to redeemable
noncontrolling interests

514


255


831


121

Net (loss)/income attributable to Tuniu
Corporation

(28,128)


(81,354)


31,225


4,547

(Accretion on)/Reversal of redeemable
noncontrolling interest

(1,177)


1,733


(204)


(30)

Net (loss)/income attributable to ordinary
shareholders

(29,305)


(79,621)


31,021


4,517









Net (loss)/income

(27,005)


(82,820)


27,952


4,070

Other comprehensive (loss)/income:








Foreign currency translation adjustment, net
of nil tax

(36,143)


23,802


16,342


2,379

Comprehensive (loss)/income

(63,148)


(59,018)


44,294


6,449









(Loss)/Income per share








Basic

(0.08)


(0.21)


0.08


0.01

Diluted

(0.08)


(0.21)


0.08


0.01









(Loss)/Income per ADS*








Basic

(0.24)


(0.63)


0.24


0.03

Diluted

(0.24)


(0.63)


0.24


0.03









Weighted average number of ordinary shares
used in computing basic (loss)/income per
share

372,335,675


381,234,313


370,412,795


370,412,795

Weighted average number of ordinary shares
used in computing diluted (loss)/income per
share

372,335,675


381,234,313


379,333,481


379,333,481









Share-based compensation expenses included are as follows








Cost of revenues

228


250


614


89

Research and product development

2,005


1,901


3,790


552

Sales and marketing

545


231


556


81

General and administrative

28,451


22,485


14,731


2,145

Total

31,229


24,867


19,691


2,867









*Each ADS represents three of the Company's ordinary shares.







 

Reconciliations  of GAAP and Non-GAAP Results

(All amounts in thousands, except per share information)










 Quarter Ended September 30, 2018


 GAAP Result 


 Share-based 


Amortization of acquired 


 Non-GAAP 



 Compensation 


  intangible assets 


 Result 









Cost of revenues

(371,622)


614


-


(371,008)









Research and product development

(78,270)


3,790


399


(74,081)

Sales and marketing

(209,563)


556


34,163


(174,844)

General and administrative

(122,936)


14,731


781


(107,424)

Other operating income

15,656


-


-


15,656

Total operating expenses

(395,113)


19,077


35,343


(340,693)









(Loss)/Income from operations

(3,604)


19,691


35,343


51,430









Net income

27,952


19,691


35,343


82,986









Net income attributable to ordinary shareholders

31,021


19,691


35,343


86,055









Net income per ordinary share attributable to
ordinary shareholders(RMB)








-Basic

0.08






0.23

-Diluted

0.08






0.23

Net income per ADS(RMB)








-Basic

0.24






0.69

-Diluted

0.24






0.69

Weighted average number of ordinary shares








-Basic

370,412,795






370,412,795

-Diluted

379,333,481






379,333,481










 Quarter Ended June 30, 2018


 GAAP Result 


 Share-based 


Amortization of acquired 


 Non-GAAP 



 Compensation 


  intangible assets 


 Result 









Cost of revenues

(274,475)


250


-


(274,225)









Research and product development

(77,044)


1,901


399


(74,744)

Sales and marketing

(173,638)


231


34,163


(139,244)

General and administrative

(129,317)


22,485


781


(106,051)

Other operating income

8,078


-


-


8,078

Total operating expenses

(371,921)


24,617


35,343


(311,961)









Loss from operations

(121,146)


24,867


35,343


(60,936)









Net loss

(82,820)


24,867


35,343


(22,610)









Net loss attributable to ordinary shareholders

(79,621)


24,867


35,343


(19,411)









Net loss per ordinary share attributable to
ordinary shareholders - basic and diluted (RMB)

(0.21)






(0.05)

Net loss per ADS - basic and diluted (RMB)

(0.63)






(0.15)

Weighted average number of ordinary shares
used in computing basic and diluted loss per
share

381,234,313






381,234,313










 Quarter Ended September 30, 2017


 GAAP Result 


 Share-based 


Amortization of acquired 


 Non-GAAP 



 Compensation 


  intangible assets 


 Result 









Cost of revenues

(365,206)


228


-


(364,978)









Research and product development

(123,974)


2,005


399


(121,570)

Sales and marketing

(224,808)


545


34,163


(190,100)

General and administrative

(165,874)


28,451


876


(136,547)

Other operating income

7,757


-


-


7,757

Total operating expenses

(506,899)


31,001


35,438


(440,460)









(Loss)/Income from operations

(66,020)


31,229


35,438


647









Net (loss)/income 

(27,005)


31,229


35,438


39,662









Net (loss)/income attributable to ordinary shareholders

(29,305)


31,229


35,438


37,362









Net (loss)/income per ordinary share
attributable to ordinary shareholders(RMB)








-Basic

(0.08)






0.10

-Diluted

(0.08)






0.10

Net (loss)/income per ADS (RMB)








-Basic

(0.24)






0.30

-Diluted

(0.24)






0.30

Weighted average number of ordinary shares








-Basic

372,335,675






372,335,675

-Diluted

372,335,675






380,259,980


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