Tuniu Announces Unaudited Second Quarter 2020 Financial Results

Rhea-AI Summary

Tuniu Corporation (NASDAQ: TOUR) reported its unaudited financial results for Q2 2020, revealing net revenues of RMB34.0 million (US$4.8 million), a staggering 93.5% drop year-over-year, largely due to COVID-19 impacts. Packaged tour revenues fell by 97.1%, while other revenues declined by 76.4%. Despite this, the company noted a sequential decrease in operating expenses by 63.4% to RMB158.1 million (US$22.4 million). Tuniu anticipates net revenues between RMB85.3 million and RMB170.5 million for Q3 2020, reflecting an expected 80-90% year-over-year decline but a significant quarter-over-quarter improvement.

Positive

• Sequential decrease in operating expenses by 63.4%, showcasing effective cost control measures.
• Anticipated quarter-over-quarter revenue growth of 151% to 401% for Q3 2020, indicating a potential recovery.

Negative

• Net revenues dropped 93.5% year-over-year, indicative of severe impact from COVID-19.
• Packaged tour revenues fell by 97.1%, reflecting significant operational challenges.

NANJING, China, Aug. 28, 2020 /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 second quarter ended June 30, 2020.

"After nearly six months of downturn caused by the COVID-19 outbreak, we are encouraged to see that China's domestic travel market is finally showing signs of recovery. We will continue to uphold our 'Customer First' principle in order to provide the best possible products and services to satisfy pent-up customer demand. Furthermore, we have adjusted our product strategy to focus on innovative and premium products in order to meet customers' more exacting standards in the post COVID-19 era. In cooperation with our industry partners, we are committed to providing our customers with superior travel experiences." Mr. Donald Dunde Yu, Tuniu's founder, Chairman and Chief Executive Officer, said, "In the second quarter our operating expenses continued to decline on a sequential basis. In the second half of the year, we expect to see the gradual recovery of revenues alongside the increasingly positive impact of our cost control measures."

Second Quarter 2020 Results

Net revenues were RMB34.0 million (US$4.8 million^[1]) in the second quarter of 2020, representing a year-over-year decrease of 93.5% from the corresponding period in 2019. The decrease was primarily due to the negative impact brought by the outbreak and spread of COVID-19.

• Revenues from packaged tours were RMB12.6 million (US$1.8 million) in the second quarter of 2020, representing a year-over-year decrease of 97.1% from the corresponding period in 2019. The decrease was primarily due to the suspension of sale of packaged tours impacted by the outbreak and spread of COVID-19^[2].
• Other revenues were RMB21.5 million (US$3.0 million) in the second quarter of 2020, representing a year-over-year decrease of 76.4% from the corresponding period in 2019. The decrease was primarily due to the declines in service fees received from insurance companies and commissions received from other travel-related products impacted by the outbreak and spread of COVID-19.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB7.0651 on June 30, 2020 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.

[2] On January 24, 2020, the Ministry of Culture and Tourism of the People's Republic of China issued a notice requiring travel agencies, including online travel agencies throughout the country to suspend the operation of organized tours and the provision of a combination of flight and hotel bookings.

Cost of revenues was RMB26.3 million (US$3.7 million) in the second quarter of 2020, representing a year-over-year decrease of 90.8% from the corresponding period in 2019. As a percentage of net revenues, cost of revenues was 77.3% in the second quarter of 2020, compared to 55.2% in the corresponding period in 2019.

Gross margin was 22.7% in the second quarter of 2020, compared to a gross margin of 44.8% in the second quarter of 2019. The decrease was primarily due to the decline in net revenues impacted by the outbreak and spread of COVID-19.

Operating expenses were RMB158.1 million (US$22.4 million) in the second quarter of 2020, representing a year-over-year decrease of 63.4% from the corresponding period in 2019. Share-based compensation expenses and amortization of acquired intangible assets, which were allocated to operating expenses, were RMB19.1 million (US$2.7 million) in the second quarter of 2020. Non-GAAP^[3] operating expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets, were RMB138.9 million (US$19.7 million) in the second quarter of 2020, representing a year-over-year decrease of 63.7%.

• Research and product development expenses were RMB20.6 million (US$2.9 million) in the second quarter of 2020, representing a year-over-year decrease of 74.3%. Non-GAAP research and product development expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB1.6 million (US$0.2 million), were RMB19.0 million (US$2.7 million) in the second quarter of 2020, representing a year-over-year decrease of 74.8% from the corresponding period in 2019. The decrease was primarily due to the decrease in research and product development personnel related expenses.
• Sales and marketing expenses were RMB84.3 million (US$11.9 million) in the second quarter of 2020, representing a year-over-year decrease of 62.5%. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB15.1 million (US$2.1 million), were RMB69.2 million (US$9.8 million) in the second quarter of 2020, representing a year-over-year decrease of 63.4% from the corresponding period in 2019. The decrease was primarily due to the decrease in promotion expenses and sales and marketing personnel related expenses.
• General and administrative expenses were RMB61.0 million (US$8.6 million) in the second quarter of 2020, representing a year-over-year decrease of 54.6%. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB2.5 million (US$0.3 million), were RMB58.5 million (US$8.3 million) in the second quarter of 2020, representing a year-over-year decrease of 53.2% from the corresponding period in 2019. The decrease was primarily due to the decrease in general and administrative personnel related expenses.

[3] 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.

Loss from operations was RMB150.3 million (US$21.3 million) in the second quarter of 2020, compared to a loss from operations of RMB199.2 million in the second quarter of 2019. Non-GAAP loss from operations, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB131.0 million (US$18.5 million) in the second quarter of 2020.

Net loss was RMB154.6 million (US$21.9 million) in the second quarter of 2020, compared to a net loss of RMB167.2 million in the second quarter of 2019. Non-GAAP net loss, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB135.3 million (US$19.1 million) in the second quarter of 2020.

Net loss attributable to ordinary shareholders was RMB147.6 million (US$20.9 million) in the second quarter of 2020, compared to a net loss attributable to ordinary shareholders of RMB168.0 million in the second quarter of 2019. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB128.3 million (US$18.2 million) in the second quarter of 2020.

As of June 30, 2020, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB1.6 billion (US$225.2 million). The COVID-19 pandemic has negatively impacted our business operation and cash flows for the second quarter of 2020, which could continue to impact on subsequent periods. Based on our liquidity assessment and management actions, we believe that our available cash, cash equivalents and maturity of investments will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next twelve months.

Business Outlook

Tuniu's business has been significantly and negatively impacted by the outbreak and spread of COVID-19 since January 2020. As a result of the continued influence by COVID-19, for the third quarter of 2020, the Company expects to generate RMB85.3 million to RMB170.5 million of net revenues, which represents 80% to 90% decrease year-over-year, and 151% to 401% increase quarter-over-quarter. 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 August 28, 2020, (8:00 pm, Beijing/Hong Kong Time, on August 28, 2020) to discuss the second quarter 2020 financial results.

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

US:	+1-888-346-8982
Hong Kong:	+852-301-84992
Mainland China:	4001-201203
International:	+1-412-902-4272
Conference ID:	Tuniu 2Q 2020 Earnings Call

A telephone replay will be available one hour after the end of the conference through September 3, 2020. The dial-in details are as follows:

US:	+1-877-344-7529
International:	+1-412-317-0088
Replay Access Code:	10147497

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 covers 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, including a dedicated team of professional customer service representatives, 24/7 call centers, extensive networks of offline retail stores and self-operated local tour operators. 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; the impact of the COVID-19 on Tuniu's business operations, the travel industry and the economy of China and elsewhere generally; 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, other operating income, total 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-basic and diluted, which excludes share-based compensation expenses, amortization of acquired intangible assets and impairment 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, amortization of acquired intangible assets and impairment of acquired intangible assets is that share-based compensation expenses, amortization of acquired intangible assets and impairment 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.

(Financial Tables Follow)

Tuniu Corporation
Unaudited Condensed Consolidated Balance Sheets
(All amounts in thousands, except per share information)
	December 31, 2019		June 30, 2020		June 30, 2020
	RMB		RMB		US$
ASSETS
Current assets
Cash and cash equivalents	295,463		527,934		74,724
Restricted cash	327,052		85,904		12,159
Short-term investments	1,305,386		976,996		138,285
Accounts receivable, net	529,983		364,146		51,542
Amounts due from related parties	65,108		50,998		7,218
Prepayments and other current assets	1,300,284		899,562		127,324
Total current assets	3,823,276		2,905,540		411,252
Non-current assets
Long-term investments	1,305,612		557,446		78,901
Property and equipment, net	223,340		197,230		27,916
Intangible assets, net	166,267		112,602		15,938
Land use right, net	98,774		97,744		13,835
Operating lease right-of-use assets, net	105,839		54,945		7,777
Goodwill	232,007		232,007		32,838
Other non-current assets	83,923		60,147		8,514
Long-term amounts due from related parties	557,582		552,328		78,177
Total non-current assets	2,773,344		1,864,449		263,896
Total assets	6,596,620		4,769,989		675,148
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings	203,845		50,602		7,162
Accounts and notes payable	1,311,963		998,689		141,355
Amounts due to related parties	29,755		27,913		3,951
Salary and welfare payable	112,511		52,836		7,478
Taxes payable	12,207		2,255		319
Advances from customers	1,113,879		229,856		32,534
Operating lease liabilities, current	57,490		35,451		5,018
Accrued expenses and other current liabilities	907,119		897,505		127,034
Total current liabilities	3,748,769		2,295,107		324,851
Non-current liabilities
Operating lease liabilities, non-current	54,718		37,551		5,315
Deferred tax liabilities	23,658		22,029		3,118
Long-term borrowings	9,689		19,403		2,746
Other non-current liabilities	10,947		10,947		1,550
Total non-current liabilities	99,012		89,930		12,729
Total liabilities	3,847,781		2,385,037		337,580
Mezzanine equity
Redeemable noncontrolling interests	37,200		37,261		5,274
Shareholders' equity
Ordinary shares	249		249		35
Less: Treasury stock	(310,942)		(308,146)		(43,615)
Additional paid-in capital	9,113,512		9,118,231		1,290,602
Accumulated other comprehensive income	293,784		301,604		42,689
Accumulated deficit*	(6,385,974)		(6,754,555)		(956,045)
Total Tuniu's shareholders' equity	2,710,629		2,357,383		333,666
Noncontrolling interests	1,010		(9,692)		(1,372)
Total Shareholders' equity	2,711,639		2,347,691		332,294
Total liabilities and shareholders' equity	6,596,620		4,769,989		675,148
*On 1 January 2020, the Company adopted ASU No. 2016-13 (ASU 2016-13), "Financial Instruments – Credit Losses", and recognized a cumulative-effect adjustment to the opening retained earnings at the adoption date.

 

Tuniu Corporation
Unaudited Condensed Consolidated Statements of Comprehensive Loss
(All amounts in thousands, except per share information)
	Quarter Ended		Quarter Ended		Quarter Ended		Quarter Ended
	June 30, 2019		March 31, 2020		June 30, 2020		June 30, 2020
	RMB		RMB		RMB		US$
Revenues
Packaged tours	429,482		120,240		12,563		1,778
Others	90,848		53,741		21,461		3,038
Net revenues	520,330		173,981		34,024		4,816
Cost of revenues	(287,330)		(81,460)		(26,292)		(3,721)
Gross profit	233,000		92,521		7,732		1,095
Operating expenses
Research and product development	(80,197)		(51,026)		(20,647)		(2,922)
Sales and marketing	(224,582)		(124,698)		(84,255)		(11,926)
General and administrative	(134,389)		(133,860)		(60,952)		(8,627)
Other operating income	6,925		1,574		7,774		1,100
Total operating expenses	(432,243)		(308,010)		(158,080)		(22,375)
Loss from operations	(199,243)		(215,489)		(150,348)		(21,280)
Other income/(expenses)
Interest and investment income, net	36,645		21,852		7,061		999
Interest expense	(6,970)		(10,499)		(9,627)		(1,363)
Foreign exchange gains/(losses), net	1,090		(877)		(4,184)		(592)
Other income/(loss), net	586		(1,718)		1,323		187
Loss before income tax expense	(167,892)		(206,731)		(155,775)		(22,049)
Income tax benefit	738		817		934		132
Equity in income of affiliates	-		744		215		30
Net loss	(167,154)		(205,170)		(154,626)		(21,887)
Net loss attributable to noncontrolling interests	(444)		(3,629)		(7,073)		(1,001)
Net income/(loss) attributable to redeemable noncontrolling interests	245		(81)		142		20
Net loss attributable to Tuniu Corporation	(166,955)		(201,460)		(147,695)		(20,906)
(Accretion on)/Reversal of redeemable noncontrolling interests	(1,033)		(81)		81		11
Net loss attributable to ordinary shareholders	(167,988)		(201,541)		(147,614)		(20,895)
Net loss	(167,154)		(205,170)		(154,626)		(21,887)
Other comprehensive income/(loss):
Foreign currency translation adjustment, net of nil tax	7,110		8,091		(271)		(38)
Comprehensive loss	(160,044)		(197,079)		(154,897)		(21,925)
Loss per share
Net loss per ordinary share attributable to ordinary shareholders - basic and diluted	(0.45)		(0.54)		(0.40)		(0.06)
Net loss per ADS - basic and diluted*	(1.35)		(1.62)		(1.20)		(0.18)
Weighted average number of ordinary shares used in computing basic and diluted loss per share	369,343,738		370,055,731		370,145,186		370,145,186
Share-based compensation expenses included are as follows:
Cost of revenues	1,827		207		189		27
Research and product development	4,112		2,136		832		118
Sales and marketing	1,519		205		147		21
General and administrative	8,723		2,025		1,759		249
Total	16,181		4,573		2,927		415
*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 June 30, 2020
	GAAP		Share-based		Amortization of acquired		Impairment of acquired		Non-GAAP
	Result		Compensation		intangible assets		intangible assets		Result
Cost of revenues	(26,292)		189		-		-		(26,103)
Research and product development	(20,647)		832		782				(19,033)
Sales and marketing	(84,255)		147		14,915		-		(69,193)
General and administrative	(60,952)		1,759		709				(58,484)
Other operating income	7,774		-		-				7,774
Total operating expenses	(158,080)		2,738		16,406		-		(138,936)
Loss from operations	(150,348)		2,927		16,406		-		(131,015)
Net loss	(154,626)		2,927		16,406		-		(135,293)
Net loss attributable to ordinary shareholders	(147,614)		2,927		16,406		-		(128,281)
Net loss per ordinary share attributable to ordinary shareholders - basic and diluted	(0.40)								(0.35)
Net loss per ADS - basic and diluted	(1.20)								(1.05)
Weighted average number of ordinary shares used in computing basic and diluted loss per share	370,145,186								370,145,186
	Quarter Ended March 31, 2020
	GAAP		Share-based		Amortization of acquired		Impairment of acquired		Non-GAAP
	Result		Compensation		intangible assets		intangible assets		Result
Cost of revenues	(81,460)		207		-		-		(81,253)
Research and product development	(51,026)		2,136		933				(47,957)
Sales and marketing	(124,698)		205		22,050		9,554		(92,889)
General and administrative	(133,860)		2,025		709				(131,126)
Other operating income	1,574		-		-				1,574
Total operating expenses	(308,010)		4,366		23,692		9,554		(270,398)
Loss from operations	(215,489)		4,573		23,692		9,554		(177,670)
Net Loss	(205,170)		4,573		23,692		9,554		(167,351)
Net loss attributable to ordinary shareholders	(201,541)		4,573		23,692		9,554		(163,722)
Net loss per ordinary share attributable to ordinary shareholders - basic and diluted	(0.54)								(0.44)
Net loss per ADS - basic and diluted	(1.62)								(1.32)
Weighted average number of ordinary shares used in computing basic and diluted loss per share	370,055,731								370,055,731
	Quarter Ended June 30, 2019
	GAAP		Share-based		Amortization of acquired		Impairment of acquired		Non-GAAP
	Result		Compensation		intangible assets		intangible assets		Result
Cost of revenues	(287,330)		1,827		-		-		(285,503)
Research and product development	(80,197)		4,112		513		-		(75,572)
Sales and marketing	(224,582)		1,519		34,163		-		(188,900)
General and administrative	(134,389)		8,723		704		-		(124,962)
Other operating income	6,925		-		-		-		6,925
Total operating expenses	(432,243)		14,354		35,380		-		(382,509)
Loss from operations	(199,243)		16,181		35,380		-		(147,682)
Net loss	(167,154)		16,181		35,380		-		(115,593)
Net loss attributable to ordinary shareholders	(167,988)		16,181		35,380		-		(116,427)
Net loss per ordinary share attributable to ordinary shareholders - basic and diluted	(0.45)								(0.32)
Net loss per ADS - basic and diluted	(1.35)								(0.96)
Weighted average number of ordinary shares used in computing basic and diluted loss per share	369,343,738								369,343,738
*Basic net loss per ordinary share attributable to ordinary shareholders is calculated by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the periods. Diluted net loss per ordinary share attributable to ordinary shareholders is calculated by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the periods, including the dilutive effect of share-based awards as determined under the treasury stock method.

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SOURCE Tuniu

FAQ

What were Tuniu Corporation's Q2 2020 revenues?

Tuniu reported Q2 2020 net revenues of RMB34.0 million (US$4.8 million).

How did COVID-19 impact Tuniu's revenues?

COVID-19 resulted in a 93.5% year-over-year decrease in Tuniu's net revenues.

What is Tuniu's financial outlook for Q3 2020?

Tuniu expects net revenues between RMB85.3 million and RMB170.5 million for Q3 2020.

What were Tuniu’s operating expenses in Q2 2020?

Operating expenses were RMB158.1 million (US$22.4 million), down 63.4% year-over-year.

What was Tuniu’s net loss for Q2 2020?

Tuniu reported a net loss of RMB154.6 million (US$21.9 million) in Q2 2020.