Produced by Radar Finance and Economics Lei Zhu Bar |Lin Yicai, edDeep sea
On February 21, Trip.com Group (NASDAQ: TCOM; HKEX: 9961) announced its unaudited financial results for the fourth quarter and full year 2023.
Domestic and international business continued to show a strong recovery in the fourth quarter of 2023, with domestic hotel bookings growing by more than 130% year-on-year. Outbound hotel and air ticket bookings have recovered to more than 80% of pre-pandemic levels in 2019, compared to 60% of passenger traffic in the international aviation industry. Total bookings on the company's international OTA platform increased by more than 70% year-on-year. The company delivered strong financial results in the fourth quarter of 2023, with fourth-quarter net operating income increasing more than 105% year-over-year. Net profit for the fourth quarter was RMB1.3 billion (US$189 million). Adjusted EBITDA for the fourth quarter was RMB2.9 billion (US$401 million), with an adjusted EBITDA margin of 28%, compared to 6% for the same period in 2022.
Fourth Quarter and Full Year 2023 Financial Results and Business DevelopmentWith strong growth in travel demand, the company's business has recovered significantly, and travel bookings have increased significantly compared to the same period last year. In the fourth quarter of 2023, Trip.com Group's net operating income was RMB10.3 billion (US$1.5 billion), up 105% year-on-year, mainly due to the significant recovery in the travel market. Net operating income decreased 25% sequentially, primarily due to seasonal impacts. For the full year 2023, net operating income was RMB44.5 billion (US$6.3 billion), up 122% year-on-year.
Accommodation booking revenue for the fourth quarter of 2023 was RMB3.9 billion (US$550 million), up 131% year-on-year, mainly due to the significant recovery in the travel market. Accommodation booking revenue decreased 30% sequentially, primarily due to seasonal impacts. For the full year of 2023, revenue from accommodation bookings was RMB17.3 billion (US$2.4 billion), up 133% year-on-year. Accommodation reservation revenue accounted for 39% of the total operating revenue in 2023 and 37% of the total operating revenue in 2022. Transportation ticketing revenue for the fourth quarter of 2023 was RMB4.1 billion (US$578 million), up 86% year-on-year, mainly due to the significant recovery of the travel market. Transportation ticketing revenue in the fourth quarter decreased 23% sequentially, primarily due to seasonal impacts.
For the full year of 2023, transportation ticketing revenue was RMB18.4 billion (US$2.6 billion), up 123% year-on-year. In 2023 and 2022, the operating income of transportation ticketing accounted for 41% of the total operating income of the corresponding year. Revenue from the tourism and vacation business in the fourth quarter of 2023 was RMB704 million (US$99 million), up 329% year-on-year, mainly due to the significant recovery of the travel market. Travel & Vacation revenue decreased 47% sequentially, primarily due to seasonal impacts.
For the full year of 2023, the revenue of the tourism and vacation business was RMB3.1 billion (US$442 million), up 294% year-on-year. The operating income of the tourism and vacation business accounted for 7% of the total operating income in 2023 and 4% of the total operating income in 2022. Business travel management revenue for the fourth quarter of 2023 was RMB634 million (US$89 million), up 129% year-on-year and 7% sequentially, mainly due to the significant recovery in the travel market.
For the full year of 2023, business travel management revenue was RMB2.3 billion (US$317 million), up 109% year-on-year. In 2023 and 2022, the operating income of the business travel management business accounted for 5% of the total operating income of the corresponding years. Operating costs for the fourth quarter of 2023 were RMB2.0 billion (US$283 million), up 68% year-on-year and down 19% sequentially, in line with the growth trend in net revenue. Operating costs accounted for 19% of net operating income for the fourth quarter of 2023. For the full year 2023, operating costs were RMB8.1 billion (US$1.1 billion), up 80% year-on-year and accounting for 18% of net revenue.
Product R&D expenses for the fourth quarter of 2023 were RMB2.9 billion (US$411 million), up 39% year-over-year and down 18% sequentially, mainly due to fluctuations in product R&D-related expenses. Product R&D expenses accounted for 28% of net operating income in the fourth quarter of 2023. For the full year of 2023, product R&D expenses were RMB12.1 billion (US$1.7 billion), up 45% year-on-year and accounting for 27% of net revenue.
Sales and marketing expenses for the fourth quarter of 2023 were RMB2.3 billion (US$329 million), up 103% year-over-year and down 15% sequentially, primarily due to fluctuations in related sales and marketing expenses. Sales and marketing expenses for the fourth quarter of 2023 accounted for 23% of net revenue. For the full year 2023, sales and marketing expenses were RMB9.2 billion (US$1.3 billion), up 117% year-on-year and accounting for 21% of net revenue.
General and administrative expenses for the fourth quarter of 2023 were RMB869 million (US$122 million), an increase of 6% year-on-year. General and administrative expenses decreased 15% sequentially in the fourth quarter of 2023, primarily due to lower general and administrative related expenses. General and administrative expenses accounted for 8% of net operating income for the fourth quarter of 2023. For the full year 2023, general and administrative expenses were RMB3.7 billion (US$527 million), up 31% year-on-year and accounting for 8% of net operating income.
Corporate income tax expense for the fourth quarter of 2023 was RMB399 million (US$56 million), compared to RMB246 million for the same period in 2022 and RMB448 million for the prior quarter.
The change in Trip.com Group's effective income tax rate was mainly due to the combined effect of changes in the profitability of subsidiaries at different tax rates, changes in deferred tax liabilities related to withholding tax, changes in some non-taxable investments and exchangeable bonds at fair value included in other income (expense) through profit or loss, and changes in the valuation provision for deferred tax assets.
For the full year of 2023, corporate income tax expense was RMB1.8 billion (US$246 million), compared to RMB682 million in 2022.
Net profit for the fourth quarter of 2023 was RMB1.3 billion (US$189 million), compared to RMB2.1 billion for the same period in 2022 and RMB4.6 billion for the previous quarter. Adjusted EBITDA for the fourth quarter of 2023 was RMB2.9 billion (US$401 million), compared to RMB286 million for the same period in 2022 and RMB4.6 billion in the previous quarter.
Adjusted EBITDA margin was 28% for the fourth quarter of 2023, compared to 6% for the same period in 2022 and 34% for the prior quarter. For the full year 2023, net profit was RMB10 billion (US$1.4 billion), compared to RMB1.4 billion in 2022. Net profit attributable to Trip.com shareholders for the fourth quarter of 2023 was RMB1.3 billion (US$183 million), compared to RMB2.1 billion for the same period in 2022 and RMB4.6 billion in the previous quarter. Net profit attributable to shareholders of Trip.com Group was RMB2.7 billion (US$376 million) in the fourth quarter of 2023, compared to RMB498 million for the same period in 2022 and RMB4.9 billion in the prior quarter, excluding share-based compensation expense and fair value gains and losses on investments and exchangeable bonds included in other income (expense) through profit or loss.
For the full year 2023, net profit attributable to Trip.com Group shareholders was RMB9.9 billion (US$1.4 billion), compared to RMB1.4 billion in 2022. Net profit attributable to shareholders of Trip.com Group in 2023 was RMB13.1 billion (US$1.8 billion), compared to RMB1.3 billion in 2022, excluding share-based compensation expense and fair value gains and losses on investments and exchangeable bonds included in other income (expense) through profit or loss, as well as gains and losses on fair value changes in exchangeable bonds through profit or loss, and their impact on income tax expense.
Diluted earnings per ordinary share and per depositary receipt for the fourth quarter of 2023 were 194 RMB (0.)$27). Excluding share-based compensation expense and the inclusion of other income (expense) in investments and exchangeable bonds at fair value gains and losses through profit or loss and their impact on income tax expense, diluted earnings per ordinary share and per depositary receipt for the fourth quarter of 2023 were 400 RMB (0.)$56). Each ADS represents one ordinary share. For the full year 2023, diluted earnings per ordinary share and per depositary receipt were 1478 RMB (2.)08 USD). Excluding share-based compensation expense and other income (expense) included in other income (expense), gains or losses on fair value changes in investments and exchangeable bonds through profit or loss and their impact on income tax expense were 1948 RMB (2.)$74).
As of December 31, 2023, the balance of cash and cash equivalents, restricted cash, short-term investments and held-to-maturity time deposits and wealth management products was RMB77.3 billion (US$10.9 billion).
As of the date of this announcement, the Company has purchased approximately 6.8 million American Depositary Shares (ADSs) for a total consideration of approximately US$224 million under its existing ** repurchase program. In accordance with the regular capital return policy authorized by the Board of Directors in November 2023, in February 2024, the Board approved and authorized the Company to implement from time to time a strategic capital return plan in an aggregate amount not exceeding US$300 million (the "2024 Capital Return Plan"), which may include an annual** buyback, an annual cash dividend declaration or a combination of both.