Trip.com Group Ltd - ADR Stock

Welcome to Trip.com Group Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please go ahead.

Thank you. Good morning, and good evening. Welcome to Trip.com Group's Second Quarter of 2026 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

James, Jen and Cindy will share our strategy and business updates, operating highlights and financial performance for the second quarter of 2026 as well as some outlook for the third quarter of 2026. After the prepared remarks, we will have the Q&A session.

With that, I will turn the call over to James. James, please.

Thank you, Michelle, and thanks, everyone, for joining us today. the global travel industry faced a more challenging operating environment this quarter. Macroeconomic and geopolitical uncertainties continue to create volatility across markets. elevated fuel prices and airfares increased the cost of travel and weighed more heavily on longer haul demand. Despite these pressures, travelers' appetite for exploration remained resilient, with demand shifting towards shorter haul destination.

We believe these near-term dynamics do not change the long-term trajectory of global travel. Travel remains a fundamental consumer need, and global connectivity continues to expand as travelers seek higher quality, more personalized experiences. Against this backdrop, our strategic priorities remain clear: Globalization and great quality continue to anchor our long-term growth. Globalization represents a significant structural opportunity. We are particularly bullish on the long-term potential of inbound travel.

China offers an unparalleled breadth of destinations, culture and experiences. We believe inbound travel remains well below its full potential and is entering an important phase of structural growth. To capture this opportunity, we have committed to accelerating the development of inbound travel. We will invest to build a stronger inbound travel ecosystem, empower local partners and make the country more accessible to travelers around the world.

Capturing this opportunity requires more than expanding our global reach. It also requires us to compete on the quality of the products and experiences we deliver. This is the second pillar of our G2 strategy, great quality. We believe travel growth will increasingly be defined by differentiated products, superior service and compelling value for travelers and partners. These are capabilities we have built over many years, and they will become increasingly important as consumer expectations continue to evolve. We believe the industry is moving in the same direction with competition increasingly centered on quality, value and experience. This evolution is closely aligned with the direction of our G2 strategy.

Technology is also reshaping the travel experience with AI rapidly transforming how consumers discover, plan and experience travel. We are advancing our proprietary AI capabilities across the travel journey, making travel more personalized, seamless and valuable. We are seeing growing evidence that AI is becoming an integral part of the travel journey. AI-assisted orders through TripGenie on Trip.com increased by approximately 400% year-over-year and nearly 60% of TripGenie interactions are now booking related, spanning hotels, flights and attraction. These trends demonstrate that travelers are increasingly relying on AI, not only for inspiration, but also to make and fulfill travel decisions.

Importantly, we believe AI will make the underlying infrastructure of travel even more valuable. AI may transform how travel is discovered, but it does not eliminate the complexity of delivering travel. Every trip still depends on high-quality supply, trusted information, real-time availability and pricing, transaction infrastructure fulfillment and reliable service. These capabilities are built on deep industry relationships, technology and operational expertise and are difficult to replicate.

Our long-standing investments in these capabilities position us well for this next phase. We will continue to combine the power of AI with our global travel infrastructure, making travel easier and better for consumers and creating greater value for our partners. Looking ahead, our confidence in the long-term opportunity has never been stronger. We are excited about this next chapter and remain firmly focused on building a stronger more innovative and more valuable global travel platform for travelers and partners around the world.

With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. For the second quarter of 2026, our group net revenue totaled RMB 15.7 billion. Despite a more complex operating environment, Trip.com Group continued to demonstrate resilience in the second quarter. Our international businesses continue to grow strongly with inbound and wall-to-wall travel increasingly contributing to our overall momentum.

Inbound travel continue to be one of our fastest-growing businesses in the second quarter, with revenue increasing high double digit year-over-year. APAC remains our core source market, supported by frequent travelers from markets such as Korea and Southeast Asia. At the same time, we are seeing particularly strong seasonal growth from Europe and the Americas during key holiday period. Travel behavior is also evolving. They are venturing beyond traditional Eastern coastal destinations and increasingly exploring central and western part of the country. they are also shifting from traditional siting and landmark visits towards more immersive cultural experiences centered around local rising, traditional culture and intangible cultural heritage.

We are also seeing growing demand for family travel from key source markets, particularly during holidays and school breaks. At the same time, international events are creating additional opportunities to drive inbound travel, events such as the Canton Fair in Guangzhou and our Envision Global Partner Conference provide natural opportunities for international visitors to extend business trips into leisure travel.

To capture these opportunities, we are working closely with local partners and destinations to improve international visibility, strengthen multilingual services and better serve overseas travelers. We are committed to supporting the development of inbound travel with an ambition to serve 200 million inbound travelers over the next 5 years. Our goal is to bring more destinations, experiences and local businesses into the global tourism ecosystem and capture the next phase of inbound travel growth.

On the international front, global travel is increasingly becoming a structural growth engine our platform, powered by expanding international supply and growing demand from travelers around the world. During the quarter, revenue on our international OTA platform increased over 50% year-over-year. supported by higher transaction value and the favorable mix despite elevated fuel prices and the airfares weighing on travel demand. Importantly, this growth is increasingly driven by higher quality and more personalized travel demand.

In the first half of 2026, first and business class flight bookings on Trip.com increased more than 70% year-over-year. Customized tour bookings, where travelers can work directly travel expert to design a trip around their specific needs increased 600%. These trends point to growing demand for premium travel options, greater personalization and unique experiences. We are continuing to strengthen our presence across key international markets and expanding our supply, localized products and the service capabilities globally.

More importantly, the composition of this growth reflects the increasing diversity of our platform. We are increasingly enabling travelers from around the world to discover destinations globally. This creates a significantly larger addressable market and provides a strong foundation for the next phase of our global growth.

Turning to outbound travel. Demand remained resilient the second quarter, although travelers continued to be selective amid a more complex macro environment. Travel intent remained healthy with holidays and major events, including sporting events, and entertainment, continuing to drive meaningful travel demand. At the same time, higher fuel prices and airfares weighed on overall outbound growth. We are seeing travelers adjust their destination preferences in response to higher travel costs with short-haul and visa-free destinations, capturing a larger portion of outbound demand.

Travelers also been responsive to changes in airfare, adjusting their destinations and travel plans as prices fluctuate. We view these dynamics as primarily cyclical rather than structural as these temporary cost pressures in we believe outbound demand has the potential to return toward its underlying growth trajectory.

Turning to domestic travel. Demand remained robust in the second quarter, supported by a series of holidays and the continued rollout of spring break programs. The Qi Ming, May Day and Dragon Boat Festival holidays, each generated strong travel demand and spring break is creating additional travel occasions for families. In the spring break pilot cities, family travel bookings and spending, both increasing more than 30% of year-over-year, approximately 5x the growth rate of nonfamily travelers. Overall, bookings in these cities increased nearly 150%, with spending up nearly 200%.

We are also seeing a shift in where and how people travel. Less traditional lower-density destinations are growing faster than major tourist attractions. Short-haul trips city breaks, rural leisure and educational experiences are becoming increasingly popular. Travelers are also moving beyond single attraction sizing toward more immersive experiences that combine tourism with dining, accommodation transportation, culture and other local offerings. These trends are broadening the addressable opportunity for our platform and creating more ways for travelers to discover and engage with local destinations and businesses.

Entertainment is increasingly becoming a driver of travel demand. In the second quarter, gross bookings for our Entertainment business increased over 80% year-on-year. concerts sporting events and other live entertainment are becoming important reasons to travel in the first half of 2026, 7 out of 10 event tickets booked on our platform were associated with cross-city travel. More than 1/3 of travelers stayed an additional night for an event. -- and hotel bookings in destination cities increased multiple times during major events. The impact extends beyond the event itself, driving demand across accommodation, transportation, dining and other local consumption.

Entertainment is also helping cities strengthen their appeal as content destinations, unlike traditional sizing resources. Concerts, sporting events and other live experiences have defined dates and strong fan appeal, making them powerful catalysts for cross-city travel and local consumption. In the first half of 2020, entertainment-related spending in cities such as Suzhou, Chengdu and Zhengzhou increased over 200% year-over-year.

Finally, we are continuing to evolve our partnership model to support healthier competition and sustainable growth across the travel industry. In July, we received the administrative decision issued by the State Administration for Market Regulation of the People's Republic of China. We accept the decision and are moving forward with the implementation of the requirements set forth by the regulator. We appreciate the guidance provided by the SAMR and are using this process to further strengthen our operating model and support the long-term development of the travel industry.

As part of our rectification measures, we are discontinuing our Tier 1 distribution program and transitioning partners to a new multitiered framework, giving them more choices in how they work with us and creating opportunities for shared growth. At the same time, we are refining our pricing ecosystem by discontinuing the Tier 2 distribution program and giving partners greater autonomy in their commercial decisions. These changes allow competition to focus more on service quality, product differentiation, customer experience and overall performance.

Beyond these changes, we are strengthening partner enablement. We are simplifying platform rules and promotional processes reduce operational complexity and investing in data, technology and the international marketing to help partners improve service quality and reach new customers. We have also updated our hotel ranking algorithms to place greater weight on genuine service and the lasting guest satisfaction. We also remain committed to enhancing consumer protection. We continue to strengthen data security and personal information protection and ensure that our technology and algorithms are developed and applied responsibly.

We are committed to providing transparent trustworthy services and continuously improving the user experience based on consumer feedback. Together, these efforts will help create a healthier competitive environment, where partners can compete on quality and differentiation. Consumers enjoy better experiences and the industry develops on a more sustainable foundation. Looking ahead, we will stay focused on execution, build a stronger global capabilities and continue investing for the next phase of sustainable growth.

With that, I will now turn the call over to Cindy.

Thanks, Jane. Good morning, everyone. For the second quarter of 2026, Trip.com Group reported total net revenues of RMB 15.7 billion, representing a 6% increase from the same period last year. This was primarily driven by resilient global travel demand during the quarter. Accommodation reservation revenue for the second quarter was RMB 6.6 billion, representing a 6% increase year-over-year. This was mainly driven by solid growth in international hotel bookings, partially offset by the impact of a contra revenue item related to the administrative penalty imposed by the State Administration for Market Regulation. Excluding this item, revenue would have increased by 8%.

Transportation ticketing revenue for the quarter was RMB 5.4 billion, representing a 1% decrease year-over-year. The decline was primarily driven by softer demand across markets, elevated fuel prices and geopolitical tensions as well as operations adjustments related to industry standards and compliance. These factors were partially offset by strong performance from our international OTA platform.

Packaged tour revenue for the second quarter was RMB 1.2 billion, et an 8% increase year-over-year. This was mainly supported by strong growth on our international OTA platform and continued momentum in customized tours across markets as travelers increasingly sought more personalized experience.

Corporate travel revenue for the second quarter was RMB 771 million, representing an 11% increase year-over-year. This reflected continued penetration of our managed corporate travel services among corporate clients. Excluding share-based compensation charges, adjusted product development expenses for the second quarter increased by 7% year-over-year.

Adjusted G&A expenses, also excluding the one-off anti-monopoly penalty imposed by the SAMR increased by 8% year-over-year. increases were primarily driven by higher personnel-related expenses. Adjusted sales and marketing expenses for the second quarter increased by 15% year-over-year. The increase was mainly driven by heightened marketing efforts in support of our global business expansion. Excluding share-based compensation charges and the antimonopoly penalty imposed by the SAMR, adjusted EBITDA was RMB 4.6 billion for the second quarter compared was RMB 4.9 billion in the same period last year.

Excluding share-based compensation charges, the anti-monopoly penalties imposed by the SAMR, fair value changes of equity securities investments and exchangeable senior notes recorded in other income and their tax effects, non-GAAP diluted earnings per ordinary share and per ADS were RMB 7.27 or USD 1.07 for the second quarter of 2026, compared with RMB 7.0 for the same period in 2025. As of June 30, 2026, the balance of cash and cash equivalents, restricted cash, short-term investments to maturity time deposits and financial products was RMB 100.5 billion or USD 14.8 billion.

Looking ahead, we will stay focused on disciplined execution and strategic investments, strengthening our business today and positioning us for sustainable growth over the long term. With that, operator, please open the line for questions.

[Operator Instructions] First question comes from the line of Simon Cheung from Goldman Sachs.

I have one small question. Just after the conclusions of the antitrust investigations, how should we think about the implications to your strategic priorities?

Thank you. We fully accepted the regulator's decision and review -- we view the conclusion as a good opportunity to reinforce our core strategic path. Our ratification measures are consistent with our long-standing G2 strategy, which is great quality and globalization. On the great quality, we want to make sure we reinforce the value we deliver to both of our partners and our users. We focus on improving overall value we deliver to hotel partners which we believe will support a deeper and more sustainable partnership.

At the same time, we continue to invest in technology and merchant tools to improve transparency operational efficiency, customer service and overall users' experience. This allows us to compete on broader value rather than primarily on price. AI is increasingly becoming an important part of our business, helping us enhance product capabilities and improve efficiency across all the business lines.

On globalization, we continue to strengthen our long-term growth engine through globalization strategy. Inbound travel become a very important engine which will create value and job opportunity for the country. International expansion also enable us to serve more in global customers. And our global supply and technology integration will enable us to grow our network and application capability to leverage our scale and strength.

Moving forward, we'll continue to embed to make sure we are in compliance with the regulation. And and cooperate with the regulatory to make sure that our daily operation and to strengthen our governance framework. We believe a more open and transparent domestic ecosystem will provide a stronger foundation for us to execute G2 with great speed, discipline and long-term value creation.

Next, we have Brian Gong from Citi.

I would like to ask a little bit more details on hotel side. So could you elaborate on your new collaboration framework with local partners? And how will these rectification measures will impact the market competitiveness?

Thank you for your question. Our updated collaboration framework is designed to foster a more open, transparent and mutually beneficial partnership model with greater emphasis on value creation and sustainable growth. Under the new framework, our hotel recommendation and ranking mechanism are designed to better match travelers' demand with hotel offerings. The new framework has a couple of dimensions. For example, customers' feedback service quality, information level, product competitiveness and historical conversion rate, et cetera.

By dynamically weighting these factors, we aim to improve matching between the diverse customers need with relevant, high-quality hotel supply while providing hotel with a more flexible and market-oriented partnership environment.

Next, we have Joyce Ju from Bank of America.

Could you help us size the financial impact of the penalty and talk through how you change affect your operations and financials over the near term in the longer term?

From an accounting perspective, we recognized expenses of RMB 5.28 billion and contra-revenue of RMB 122 million in the second quarter. These are onetime items and do not reflect the underlying performance of our business in the second quarter. In the near term, on our business operations side, as partners transition to the new upgrading model and market practices adjust, we expect some volatilities on our domestic performance However, over the longer-term period, we expect our growth trajectory to be driven by the underlying strength of our business and our G2 strategy. particularly the expansion of our global footprint. We expect our international business to contribute an increasing share of group revenue and incremental growth.

Next, we have Yang Liu from Morgan Stanley.

My question is for the AI strategy. We see more platforms start agent search and booking on travel. How do you view this trend? And how does .com adapt to it? .

We believe AI will meaningfully reshape how travelers discover, search for and ultimately, book travel. It changes the user interface but does not eliminate the underlying need for high-quality travel supply real-time availability, transactions and fulfillment. Looking at the traveler journey, we broadly see 4 stages: inspiration, search, transaction, fulfillment. First, inspiration. Travelers often start with broad or unstructured needs. Historically, broad search, social media, travel content platforms and off-line interactions have played important roles at this stage.

We expect AI agents to become an increasingly important discovery and inspiration channel as they get better at understanding preferences and generating personalized recommendations. We are, therefore, expanding partnerships with leading AI platforms and exploring emerging AI discovery channels to capture incremental demand and stay close to evolving user behavior. At the same time, we are using AI to improve the efficiency and scalability of travel content generation and enrichment.

Second, search. Once travelers have clearer intent, the key becomes timely, complete and accurate information and actionable recommendations. This is where our proprietary travel data and supply capabilities becomes increasingly valuable. Our data covers not only hotel and flight information, but also inventory, pricing, availability, policies and other attributes needed to make and fulfill a booking. We are adapting on both the distribution and technology side. Externally, we are leveraging GEO and AEO and exploring agent-to-agent collaboration to capture emerging AI-driven traffic and demand. Trip.com has established an early position in AI-powered travel with partnerships with leading AI platforms.

Internally, we are building differentiated travel-specific AI capabilities by combining large models with our proprietary travel data and deep domain knowledge. In the second quarter, we rolled out our fully AI-powered search, enabling better understanding of user intent and more relevant matching and filtering. Early evidence demonstrated that our AI capabilities are improving the user experience and driving higher platform engagement.

Third, transaction. Discovery only creates value when it converts into a completed booking. Our focus is a seamless closed loop connecting real-time inventory, pricing, payment and confirmation in a single flow with minimal friction.

Finally, fulfillment. Travel does not end at booking, changes, cancellations, rebooking, disruptions and on the ground support all require reliable execution. We are using AI to improve service where it adds value while keeping human support and operational execution at the center.

Ultimately, we see AI as an evolution of the travel user interface rather than simply a new traffic channel, our goal is to remain relevant wherever travelers discover and search for travel while leveraging our differentiated supply data, transaction and fulfillment capabilities when intent converts into a booking.

Next, we have Thomas Chong from Jefferies.

Could you walk us through the financial implication of your ongoing AI investment? Should investors expect meaningful incremental CapEx driven by AI initiatives? .

Sure. Our AI investment have different financial implications across time horizon with near-term investment supporting longer-term efficiency and growth. In the near term, we expect some increase in AI-related CapEx as we expand computing infrastructure and AI capabilities. However, most of our work is application-oriented development and post-trading refinement rather than building large-scale foundational models from scratch. As a result, we expect the incremental investment to remain disciplined and manageable.

Over the longer-term period, our goal is to translate these investments into improvements across the group. As AI scales across the core user journey, we expect greater automation and personalization to improve operational efficiency, while better match and targeting can drive higher conversion and stronger returns on the marketing spend. Over time, these efficiency and revenue benefits should help us to offset the incremental AI cost and improve the overall economics of our business.

Next, we have Wei Xiong from UBS.

I'm wondering, could you please provide some updates on the recent trends in the travel market across different segments? Have you observed any changes in the user behaviors? And how is our company responding to these changes?

Sure. Let me walk you through the short-term visibility versus the long-term trend. In the short term, we have seen there are a couple of elements impacting the travel volume. First of all, the war in the Middle East has some impact because airlines are reducing long tail flights. Secondly, the energy price also made travel a little bit expensive. And thirdly, during the summer, there were a lot of storms and rains which also put up some pressure on the transportation.

However, for the long term, we have seen very good resilience from our customers. The new trend, we call it 3 Ps. The first P is a premium service. We saw the high-end customers become very resilient. They are traveling all over the world and the growth is very strong. And that fits our strength in providing great quality of the services for these premium customers. The second P is purposeful travel, for example, education, travel, cultural, history, et cetera. And we have put increased resources to make sure these kind of tools are elevated to new heights.

The third P is pro leisure or what we call the bleisure. What we find is for business travelers, there is a state phenomenon where customers travel for business from Monday to Thursday and Friday plus 2 weekends they will use the opportunity to visit nearby attractions. So we provide excellent services to both business travelers as well as leisure travelers where we can offer very good service and products when customers combine business and leisure. So with the new trend, we are organizing our team and make sure our product offerings and services is needing and exceed our customers' expectation.

Next, we have Wei Fang from Mizuho Securities.

I have one related to your international business. Glad to see that Trip.com delivered another quarter of strong growth. I'm wondering if you could share some more operational highlights? And also, what areas should we expect you to focus more on the Trip.com business in the coming quarters?

Sure. In the second quarter, Trip.com's revenue continued to grow by more than 50% year-over-year, with growth order based across products and markets. First, on our product offerings. The slight demand faced some pressure due to tightened capacity and higher prices. Higher average booking value helped mitigate part of this impact. while accommodation continued to deliver strong growth. In addition, attractions and packaged products has maintained superior growth since the launch of last year. This reflects healthy demand for our short-haul offerings and continued progress in cross-selling across the platform.

Second, geographic expansion. Asia Pacific remains to be our largest growth contributor, while Europe and the Americas delivered faster growth from a spot smaller base. This gives us increasing diversification as we expand beyond our co APAC markets. Third, on distribution, mobile bookings continued to gain share. reached a new high at over 70% of our total bookings, supported by a smoother booking experience and stronger organic traffic. We also saw strong growth in traffic from GEO and AI agent channels, although these channels remain comparatively small today.

More importantly, the Trip.com brand delivered meaningful margin improvement in the second quarter, driven by better marketing efficiencies economics of scale and improved right economics. Looking ahead, our focus remains on scaling across APAC and other international markets. by expanding local supplier and building brand awareness while maintaining disciplined ROI-driven marketing. This approach allowed us to pursue strong growth while continuing to improve the quality and economics of the business going forward.

Thank you for all the questions. I will now hand back to Michelle for closing remarks. Please go ahead.

Thank you. Thanks for everyone for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our third quarter earnings call. Thank you, and have a good day.

Thank you very much.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Trip.com Group Special Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your first speaker today, Michelle Qi, IR Director. Please go ahead.

Thank you. Good morning, and good evening, everyone. Thank you for joining us on such short notice. We appreciate your participation today. The purpose of today's conference call is to discuss administrative penalty decision issued by the State Administration for Market Regulation of the People's Republic of China in connection with its antitrust investigation of Trip.com Group and to provide additional context regarding the company's response and next steps. Before we begin, please note that today's discussion may contain forward-looking statements including statements regarding the regulatory actions and the potential impact on Trip.com Group's future business development and financial performance. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from those expressed or implied in these statements. A number of potential risks and uncertainties are described in Trip.com Group's public filings with the U.S. Securities and Exchange Commission. Trip.com undertakes no obligation to update any forward-looking statements, except as required by applicable law.

Joining me today on the call are Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer. Jane will provide a brief opening statement followed by a Q&A session.

With that, I will turn the call over to Jane. Jane, please.

Thank you, Michelle. Hello, everyone. Thank you all for joining us today. As you are aware, over the weekend, Trip.com Group received the administrative decision issued by the State Administration for Market Regulation of the People's Republic of China. We sincerely accept the decision and will fully comply with the requirements set forth by the regulator. We appreciate the guidance provided throughout this process and remain committed to conducting our business in a manner that supports the healthy, orderly and sustainable development of China's travel industry.

We view this moment not as a disruption, but as an opportunity to further strengthen our business. It marks an important milestone as we continue to refine our operating model and ensure it remains aligned with China's evolving regulatory and industry environment. More importantly, it reinforces our long-term focus on sustainable and high-quality growth. Over the past several months, we have already been upgrading our operational practices to better align with the evolving industry standards and proactively shifting our focus toward sustainable value-driven competition.

We believe long-term success depends on creating value for merchants, consumers and the broader travel industry. With this long-term perspective, we're implementing several strategic initiatives to further strengthen our platform, enhance partner collaboration and create a more sustainable value for all stakeholders.

First, we're evolving our partnership model toward a more transparent, balanced and sustainable partnership structure that better supports the long-term interests of our partners and our broader travel ecosystem. We are creating our Tier 1 delegated -- we are ceasing our Tier 1 delegated distribution program. Our related partner will transition to a new multi-tier partnership framework designed to promote greater flexibility, transparency and shared growth.

Second, we're refining our pricing ecosystem. We're discontinuing Tier 2 delegated distribution program and continuing to enhance our platform mechanism. Earlier in March this year, we voluntarily decommissioned our automated pricing tool and strengthened our pricing management processes as part of our efforts to foster a healthier competitive environment. By encouraging healthy competition across a broader range of factors, including service quality, product differentiation, customer experience and overall partner performance, we aim to support more sustainable industry development and create greater long-term value for consumers and partners.

Third, we're further strengthening our partner ecosystem. We are optimizing platform rules to improve transparency and ensure partners have clearer visibility into relevant policies and options. We're also streamlining promotional activities to reduce operational complexity for our partners. At the same time, we'll continue investing in data capabilities, technology services and international marketing to support and help our partners improve service, quality and capture new growth opportunities.

Fourth, we remain committed to enhancing consumer protection. We continue to strengthen our data security and personal information protection practices, while ensuring that our technology and algorithms are developed and applied responsibly. We are committed to providing consumers with transparent, trustworthy services and continuously improving users' experience based on consumer feedback.

Finally, we're enhancing our antitrust compliance management system, including strengthening the role of our compliance committee, establishing a normalized antitrust self-assessment mechanism, enhancing company-wide training and embedding compliance consideration into every stage of product development and daily operations. We remain firmly committed to operating in accordance with applicable laws and regulations while supporting the long-term development of China's travel industry. We believe that a healthy, open and high-quality ecosystem will create lasting value for our travelers, partners, shareholders and society. Again, thank you for your continued trust and support.

With that, we will now open the floor for your questions.

[Operator Instructions] And our first question comes from the line of Yang Liu from Morgan Stanley.

My question is with the SAMR decision now delivered, can we consider regulatory risk for Trip.com Group fully behind us? Or are there remaining areas of concern?

Thank you for your question. The decision represents the conclusion of the SAMR investigation, and it is an important milestone for our China domestic business practices. The SAMR provided guidance on the required operational adjustments, and we sincerely accept the decision and are fully committed to implementing the rectification measures in a timely and comprehensive manner. We view this as an opportunity to further strengthen our governance framework and support long-term development of our business.

We remain committed to creating long-term value for partners and users by fostering competition based on service quality and user experience and contributing to a healthier and more sustainable travel ecosystem. Like other leading technology and platform companies around the world, compliance will remain an important part of our day-to-day operations, and we'll continue to work constructively with regulators while delivering value to our shareholders, the industry and the society at large. Thank you.

We will now move to the next question. And our next question comes from the line of Alex Yao of JPMorgan.

So what will replace the former Tier 1 and Tier 2 delegated distribution programs? And with the new arrangements, what prevents hotels from shifting their inventory or lower prices onto competing platforms? And lastly, how should the investors think about the impact on your hotel ADR and take rate?

Thank you, Alex, for your question. Firstly, we believe the decision aims to promote a healthy and more sustainable competitive environment across the industry. And we will continue to work with all hotel partners under a new multi-tiered partnership framework that promotes greater flexibility, transparency and shared growth. Under our G2 strategy, which focus on first, globalization; second, great quality. We will strive to build long-term value to our hotel partners by helping them reach a broad base of high-quality leisure and business travelers and driving incremental demand across multiple travel scenarios, such as inbound travel, the silver generation travel as well as event-driven travel.

For travelers, we remain focused on delivering the best overall value through our comprehensive one-stop travel ecosystem and trusted services. Our average daily rate or the ADR will continue to be driven primarily by market supply and demand, and we do not expect these changes to fundamentally alter the dynamic. Similarly, our take rate reflects the overall value we created for travelers and hotel partners with normal fluctuations driven primarily by product mix, promotional activities and partner incentive programs. Thank you.

We will now move to the next question. And our next question comes from the line of Simon Cheung of Goldman Sachs.

I just have one quick question. In your public announcement, you mentioned that some of the operational adjustments are already in place, while others will be implemented gradually. Which adjustments do you think were already reflected in your second quarter guidance? And what additional financial impact that investors should expect in the coming quarters?

Thank you, Simon. As we disclosed in the public announcement, we have discontinued our price tracking and automated price matching tools starting in March. Based on what we know today, we believe the impact of those changes has been reflected in our Q2 outlook. Following the administrative decision we are ceasing our Tier 1 and Tier 2 delegated distribution programs and taking other measures designed to strengthen our support for hotel partners and maintain high-quality services for our travelers. As this transition progresses, we may see some fluctuations in our financial performance.

Moreover, given the continued macro uncertainty, such as fuel price volatility, visibility remains limited. And at this moment, we are not in a position to provide specific guidance for the second half. However, over the longer-term period, we strongly believe that our growth will continue to be driven by expanding our global footprint, continuously enhancing the quality of our products and services and creating incremental demand through innovation. Thank you.

We will now proceed to our next question. And our next question comes from Joyce Ju of Bank of America.

Could you please help us understand what is the financial impact of the penalty? And will it affect your operations and capital allocations?

Sure. From an accounting perspective, we will recognize an expense of RMB 5.179 billion, and a contra revenue of RMB 122 million in the second quarter. Our capital allocation priorities remain consistent, and our operations remain focused on executing our G2 strategy to bring the long-term value to all our stakeholders. Thank you.

We have now reached the end of the Q&A session, and thank you all very much for your questions. I'd now like to turn the conference back to Michelle for her closing comments.

Thank you. Thanks, everyone, for joining us today. If you have further questions, please feel free to reach out to the IR team of Trip.com Group. Thank you, and have a good day.

Thank you.

Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to Trip.com Group 2026 Quarter 1 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the call over to your first speaker today, Ms. Michelle Qi, Senior IR Director. Thank you. Please go ahead.

Thank you. Thank you, everyone, for standing by. Good morning, and welcome to Trip.com Group's First Quarter of 2026 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements except as required under applicable law. James, Jane and Cindy will share our strategy and business updates, operating highlights and our financial performance for the first quarter of 2026 as well as outlook for the second quarter of 2026. After the prepared remarks, we will have a Q&A session.

With that, I will turn the call over to James. James, please.

Thank you, Michelle, and thanks, everyone, for joining us today. We started the year with strong momentum. Travel continues to drive consumption, create jobs and support broader industry growth. In this context, we are focused on unlocking the full potential of inbound travel as a key engine for local economies. At the core of our approach is a simple idea, turning inbound travel into real on-the-ground opportunities for local partners. We have set an ambitious goal to serve 200 million inbound travelers over the next 5 years. This reflects both the scale of the opportunity and the potential to connect local destinations with global demand. As policies become more favorable, the inbound travel market is opening like never before.

Last year, Trip.com welcomed 20 million inbound travelers. In Q1 2026 alone, we have already served approximately 7 million travelers laying a strong foundation for long-term growth. Our role is to connect the ecosystem. We help partners understand international traveler expectations and translate that knowledge into products and services that capture incremental demand. We are raising awareness and positioning China as an accessible and attractive destination through targeted marketing initiatives. These include offline promotions in key global transit hubs, joint campaigns with airline partners and collaborations with international content creators. In parallel, we are working closely with hotels, attractions and travel agencies to enhance their readiness for inbound demand.

During the quarter, we engaged over 110,000 local partners in inbound related services. For many, this was their first opportunity to connect with international travelers, expanding their reach and enabling more effective participation in the inbound market. Beyond generating demand, we are going deeper into key inbound destinations, supporting product development and long-term operations. We collaborate with local partners across 29 high-potential destinations to design and deliver integrated travel experience. By connecting attractions, accommodations and local services into seamless itineraries, we help create more cohesive and experience-driven offerings.

Initiatives such as Taste of China showcase how curated products can bring local culture to life for global travelers. To scale these efforts and help partners connect with international travelers more effectively, technology and AI, in particular, is becoming an increasingly important enabler across the travel ecosystem. We are building and deploying our own suite of AI agents to support both travelers and supply partners. These capabilities already help suppliers overcome language barriers, enhance content quality and improve service responsiveness. Automated content tools enable suppliers to generate richer materials, including video, helping them showcase their offerings to a global audience.

In customer service, AI-driven systems deliver faster, more consistent responses, improving service quality while reducing operational burden. More broadly, AI is transforming how travel products are discovered, evaluated and purchased. We are actively opening our platform to third-party AI agents through skills, MCP interfaces and other AI native integrations. In recent months, we expanded our presence across leading AI ecosystems. Our goal is not only to be the go-to app for travelers, but also the trusted infrastructure for AI agents. Central to this strategy is the modularization of our proprietary travel capabilities. We are packaging our travel data, verified inventory, real-time pricing and reliable transaction infrastructure into AI-ready services that can be integrated directly into agent workflows. This enables users to move seamlessly from trip planning and product discovery to booking and fulfillment, reducing friction, shortening decision cycles and improving conversion.

We believe AI agents will emerge as a complementary gateway to travel demand. Our objective is simple, whenever a traveler turns to an AI assistant for help, our data, inventory, transaction capabilities and service infrastructure are ready to power and complete the journey. At our core, we believe our long-term success is closely tied to the health of the travel ecosystem. As travel evolves, we remain focused on improving accessibility, connectivity and service capabilities. Helping destinations, partners and travelers fully benefit from the opportunities ahead.

With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. For the first quarter of 2026, our core OTA business recorded gross bookings of approximately RMB 300 billion. Group net revenue totaled RMB 16.2 billion. Inbound travel continued to grow strongly during the quarter, with gross bookings increasing by approximately 90% year-on-year. Asia remained our largest source of inbound travelers. Visitors from Europe and U.S. also grew rapidly and now account for roughly 25% of total inbound traffic. This momentum reflects China's rich cultural and natural resources together with increasingly open inbound policy.

As accessibility continues to improve, we believe China has tremendous potential to become one of the world's leading travel destination. Since the start of the year, inbound visitors have stayed an average of 5.1 days, up 11% year-on-year, reflecting deeper engagement and a growing preference for more immersive travel experiences. Importantly, inbound travel is evolving beyond standardized sightseeing towards more content-rich and culture-focused experience. To support this shift, we help destinations present their products in over 20 languages making them easier for international travelers to discover, trust and enjoy.

During the quarter, around 14,000 partners received their first ever overseas orders through the Trip.com platform. This highlights our role in helping more local businesses participate in the global travel economy and capture incremental international demand. Ultimately, our goal is to help visitors experience China with both comfort and confidence while discovering the country's rich diversity and cultural depth. On the international front, global travel demand remained resilient particularly across the APAC region, where cross-border travel activity continued to grow steadily. During the quarter, gross bookings on our international OTA platform increased by approximately 65% year-over-year, reflecting the continued expansion of global travel demand and the growing strength of our international platform capabilities.

As traveler behavior evolved, demand is increasingly extending beyond flights and hotels toward more integrated mobility experiences. To capture this opportunity, we continue to leverage our transportation expertise to broaden our offerings across airport express, airport transfers, bus services and other connected mobility solutions. At the same time, we are strengthening our digital infrastructure for all key markets helping create a more seamless booking and travel experience for users. This not only reflects vibrant growth in travel demand, but also highlights the growing importance of connected and flexible transportation experiences across global markets.

Outbound travel remained resilient during the quarter with travelers continuing to demonstrate a high degree of flexibility in their destination choices. Although regional geopolitical development created some fluctuations across certain travel corridors, the overall business impact remained limited as travelers actively adjusted their itineraries and shifted demand toward alternative destinations. During the quarter, we observed outbound demand increasingly redirecting toward neighboring destinations such as Southeast Asia, reflecting travelers' continued preference for convenient and experience-rich journey. APAC remain among the most popular destination regions overall, supported by strong demand for more diverse and experience-driven travel experiences.

Domestically, travel continued to benefit from strong seasonal demand during the quarter particularly around the Spring Festival holiday period, which created meaningful opportunities for family travel and multigenerational travel experiences. Local cultural and tourism vouchers also continue to support consumption across multiple regions. Short distance travel maintained strong momentum, reflecting growing demand for high-quality and easily accessible experiences closer to home. To capture these trends, we continue to strengthen our product offerings and service capabilities, helping travelers discover the right experiences more efficiently and enabling merchants and destinations to connect with demand more effectively.

Our silver generation initiatives are also gaining traction during the quarter. This was particularly reflected in accommodation demand from senior travelers. In Q1, hotel gross bookings for Old Friends Club increased by over 100% year-over-year, reflecting growing demand for more personalized and experience-oriented travel offering. To better serve this segment, we are combining both offline and digital capabilities. In addition to providing dedicated travel services through our offline flagship stores, we are also leveraging AI-powered conversational tools to lower the barriers to travel planning and make the overall booking experience more accessible and user friendly for senior travelers.

At the same time, we continue to encourage off-season travel among silver generation users, which helps improve capacity utilization and create incremental off-season revenue opportunities for hotels, travel agencies and other partners across the ecosystem. By emphasizing comfort, social interaction and culturally immersive experiences we are tapping into a growing segment with significant long-term potential. More importantly, this is not just about travel, it is about creating connections, memories and meaningful experiences while bringing more inclusive and sustainable growth opportunities to the broader travel industry.

Entertainment-driven travel is rapidly emerging as one of the most dynamic growth opportunities in the travel industry. In Q1 2026, gross bookings increased by 74% year-on-year. Global events, including sports, concerts and cultural festivals are proving to be powerful catalysts for travel activity. Sporting events such as the Shanghai F1 not only stimulate the local economy but also attract inbound visitors from across the world. Music concerts similarly draw cross-regional travelers, creating vibrant demand across multiple cities.

Travel is a highly interconnected ecosystem. Destinations, hotels, attractions and service providers all depend on efficient demand connectivity, high service standards and innovative products to grow sustainably. As global travel becomes increasingly international digital and experience led, many travel companies face growing challenges in distribution, service standardization and technology adoption. We believe platforms like Trip.com can play an important role in helping the broader travel ecosystem modernize and participate more effectively in global travel demand. At Trip.com, our mission extends beyond facilitating travel transactions. We are committed to empowering partners, strengthening industry capabilities and helping build a more connected, efficient and globally accessible travel ecosystem.

Our efforts this quarter focused on 3 key areas. First, we continue to strengthen global demand connectivity across the travel value chain. Today, our trip community connects more than 500,000 travel brands and suppliers with over 10,000 qualified creators, enabling the creation of localized user-driven content that resonates with travelers around the world. Our global KOL China exploration program has brought together creators from Argentina, South Korea, Japan, Thailand, Singapore, Kazakhstan and many other markets helping showcase China through diverse local perspective. In addition, our annual Envision Global Partner Summit further deepened collaboration by bringing international partners to experience China firsthand and fostering broader cooperation across the inbound travel ecosystem.

Second, we continue to upgrade travel infrastructure and service capabilities across the full traveler journey. From pre-trip planning to in-destination support and post-trip engagement, we are working to improve accessibility and service consistency for international travelers. Today, our globally accessible product offerings cover approximately 450,000 hotels and 180,000 local attraction products. In parallel, smart ticketing system and enhanced international service support are enabling smoother operations, improving coordination across destinations and enhancing the overall visitor experience. AI plays an increasingly important role in accelerating these efforts. Our AI capability now supports personalized itinerary recommendation, real-time translation, product video generation and multi-language customer service. By lowering operational and content barriers, these tools help domestic travel products reach international audiences more efficiently while enabling more suppliers to participate in global travel demand.

Third, as travel demand continues to evolve towards more immersive and experience-driven journey, we are seeing a clear shift towards higher quality and more personalized consumption. Against this backdrop, we are driving continued product innovation to better match these evolving traveler expectations. By transforming traditional large group tours into smaller, more customized offerings, we are helping unlock new economic activity and supporting 50,000 travel-related jobs with additional employment opportunities created indirectly across the broader travel ecosystem.

As a result, domestic small group travel orders on our platform have increased by 27% year-on-year with 55% higher per capita spending and 11% longer stays compared to large group tours. This evolution is enabled by the broader infrastructure and ecosystem upgrades we discussed earlier, which allow us to better connect supply and demand and help partners participate in higher-value travel consumption. Beyond product level innovation, we also support broader consumption and cultural development initiatives that strengthen the overall travel ecosystem. Through the coordinated deployment of government cultural and travel subsidies, we help stimulate local consumption.

In addition, initiatives such as Trip Music Award, integrate culture, performance and travel experiences, we also support intangible cultural heritage tourism, immersive cultural programs and world travel initiatives, helping create more meaningful journeys and contribute to local economic development. We believe our long-term value creation is closely tied to the long-term health of the industry. By improving accessibility, connectivity and service capabilities across the travel journey, our goal is to help make China one of the world's most welcoming destination for global travelers and to support sustainable growth across the ecosystem.

With that, I will now turn the call over to Cindy.

Thanks, Jane. Good morning, everyone. For the first quarter of 2026, Trip.com Group reported total net revenues of RMB 16.2 billion, representing a 17% increase from the same period last year. This was primarily due to solid travel consumption and resilient travel demand across segments during the quarter. Accommodation reservation revenue for the first quarter was RMB 6.5 billion, representing a 17% increase year-over-year. This was mainly attributable to the steady momentum in international hotel bookings.

Transportation ticketing revenue for the first quarter was RMB 6.1 billion, representing a 12% increase year-over-year. The growth was supported by our global expansion and strong demand for international air and ground transportation solutions. Packaged tour revenue for the first quarter was RMB 1.1 billion, representing a 19% increase year-over-year. This was mainly driven by the expansion of our international offerings and strong demand for small and customized tours, fueled by shifting traveler preferences towards more personalized experiences.

Corporate travel revenue for the first quarter was RMB 690 million, representing a 20% increase year-over-year. This reflected continued penetration of our managed Corporate travel services among corporate clients. Excluding share-based compensation charges, adjusted product development expenses for the first quarter increased by 12% year-over-year. Adjusted G&A expenses for the first quarter increased by 5% year-over-year. These were mainly due to increase in personnel-related expenses.

Adjusted sales and marketing expenses for the first quarter increased by 24% from the same period last year. The year-over-year increase was mainly driven by heightened marketing efforts aligned with our business expansion. Adjusted EBITDA was RMB 4.8 billion for the first quarter compared with RMB 4.2 billion in the same period last year. Diluted earnings per ordinary share and per ADS were RMB 3.67 or USD 0.53 for the first quarter of 2026. Excluding share-based compensation charges, fair value changes of equity securities investments and exchangeable senior notes recorded in other income and their tax effect. Non-GAAP diluted earnings per ordinary share and per ADS were RMB 5.73 or USD 0.83 for the first quarter.

As of March 31, 2026, the balance of cash and cash equivalents restricted cash, short-term investment, held-to-maturity time deposits and financial products was RMB 104.0 billion or USD 15.1 billion. Looking into the second quarter, we expect net revenue growth of approximately 3% to 8% year-over-year compared with the exceptionally strong growth environment in Q1. Growth trends have moderated during the quarter.

Our outlook reflects 2 primary factors: First, rising energy prices and recent geopolitical tensions have led to higher airfares, tighter airline capacity and disruptions on certain international routes, particularly long-haul travel, contributing to a moderation in air travel demand and changes in booking patterns. Second, our guidance incorporates the near-term impact of upgrading our operational practices to align with updated industry standards and compliance framework.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from Simon Cheung of Goldman Sachs.

I think at the beginning of the presentation, you touched on a bit on your AI strategies. Could you perhaps share a bit more on your long-term positioning and investment plan on this AI ecosystem that you're building on? And also as the AI agent increasing, share how customers discover on the travel booking brand, how will Trip.com leverage on your vertical strength to stay competitive?

Thank you for the question. We believe AI will significantly improve how travelers discover, plan and book travel but it will not replace specialized travel platforms. Travel is a high consequence category where value lies not just in recommendations, but in reliable execution. This requires real-time inventory, deep supply connectivity and a robust global service infrastructure, capabilities we have built over decades. As travel AI shifts from information to fulfillment, it increasingly highlights our competitive advantages.

Against this backdrop, our strategy has 2 pillars: First, we are strengthening our own AI capabilities. We recently integrated our core search function with our AI assistant, enabling seamless natural language and voice-based search. Travelers can now submit highly complex requests involving multiple variables such as dates, budgets, locations and accommodation preferences and receive instantly filtered bookable results. This helps simplify decision-making and reduces friction across the customer journey. Beyond user experience, we are leveraging AI across the company to drive efficiency from improving productivity and corporate functions to expanding automation and customer service and lowering operating costs.

Second, we are connecting into broader AI ecosystems through APIs, MCPs and agent frameworks. We are exploring collaborations with leading platforms globally to enable integrated travel planning and fulfillment within next-generation AI experiences. By embedding our robust supply into the world's leading AI platforms we can tap into emerging AI-driven demand channels, expand our global footprint and capture new overseas demand more efficiently. Our goal is simple wherever travel planning starts, Trip.com should be well positioned to participate and deliver trusted execution. AI may evolve the entry point into travel, but the long-term winners will be those who reliably turn complexity into confidence. With our deep supply network, operational capabilities and service infrastructure, we believe we are well positioned to do so.

Our next question comes from the line of Yang Liu from Morgan Stanley.

My question is related to the inbound travel. Trip.com aims to attract 200 million inbound travelers over the next 5 years. What are the key initiatives to drive this high growth? And what do they support international expansion?

Thank you. Thank you for your question. Our nation's policy for inbound has opened up very favorably. As of now, more than 80 countries have received visa-free treatment. And on top of it, we also allow free in-transit treatment for people who have not got the free Visa treatment by staying within the country for 10 days. And also payments such as Alipay and WeChat Pay has enabled foreign credit card to be used in China, which is a major improvement. So with that background, our team has also worked very hard to welcome people from all over the world.

First of all, we invited more than 1,000 KOLs to come and see the country, shoot videos and post their videos on social media to tell a true story of what they have experienced within China. Secondly, travelers when are interested in coming and visit us when they call Trip.com call center, we offer more than 30 languages, 24x7 to support them, which will enable them to understand the details for travel within China. Thirdly, we also connected with more than 110,000 suppliers. And among these suppliers, 14,000 were the first time suppliers, which receive inbound customers. With that, we are able to increase the demand for hotels, for attractions and improve their service level to welcome global customers.

Lastly, we also offer one-stop shopping platform by offering hotels, flights, attractions, transportations to our global travelers, which make it very easy for them, particularly for the newcomers who have never been to this country before. So as a result, we hosted about 20 million visitors last year. And going forward, we will work hard to host and invite and host 200 million customers in the next 5 years.

The next question will come from the line of Thomas Chong of Jefferies.

How would you characterize the recent competitive landscape in the China OTA market including the impact of regulatory developments as well as the emerging AI-driven platforms?

Thank you for your question. Yes, in China market, we are seeing evolving competitive landscape shaped by both compliance framework development and the emergence of AI native interfaces. So first, on the competition, the domestic OTA market remains structurally rational. Competition continues to center on quality of the service, supply coverage and user experience rather than aggressive price war. Second, on compliance enhancements, we see a clear and a consistent focus on platform, governance, transparent pricing and fair competition. We fully support this direction and have proactively strengthened our compliance and operational discipline. While this has caused some short-term pressure on our matrics, we see this purely as an ordinary normalization in the long term.

Lastly, for AI, AI platforms are reshaping how users discover and plan trips. Instead of clicking through traditional search results, users are increasingly turning to use conversational tools to brainstorm and plan their trips. We also embrace these new interactions. However, travel remains to be a very complex and service-intensive transactions where supply integration, fulfillment reliability and after-sales service are critical. Those remain the core strength for our platform. So overall, we are responding through disciplined execution, strengthening compliance, embedding AI into our products and improving efficiency and service quality. We believe these dynamics ultimately reinforce the importance of trusted large-scale OTAs whose value lies in broad supplies, reliable fulfillment and excellent end-to-end service.

Our next question will come from the line of Wei Fang from Mizuho.

James, Jane, Cindy and Michelle, congrats on the very strong results. I have a question regarding the ongoing regulatory review. Could you provide some updates that from your perspective right now, like, how are you addressing the potential impact on both of your near-term performance and mid- to longer-term operating outlook?

Sure, we are fully cooperating with the relevant authorities and maintaining very constructive communication throughout the process. As the matter remains ongoing, it will be premature for us to speculate on the potential time line or outcome at this stage. That said, over the past several months, we have proactively reviewed and refined certain business practices to further strengthen our internal compliance and governance framework. We remain committed to continuously enhancing our operational capabilities to align with evolving industry standards and compliance frameworks. These adjustments may introduce the near-term impact on our business and financial performance. But we believe we are -- but we believe they are constructive for the longer-term period, healthy development of both of our business and the broader travel industry.

More broadly, we recognize that regulatory frameworks for large platform companies continue to evolve globally. We believe a transparent, fair and well-regulated market environment will ultimately benefit consumers support healthy competition and enhance longer-term industry sustainability. From an operational perspective, we remain focused on serving our travelers as well as our partners, executing our strategic priorities and creating sustainable long-term value for all our stakeholders.

Our next question comes from the line of Joyce Ju of Bank of America.

I noticed that the recent regulatory announcement regarding the train ticketing practice. Just given the value-added services are closely linked to the monetization of rail ticketing, how should we understand the potential financial impact on this regulatory guidance?

Thank you, Joyce, for the question. We fully support the latest regulatory guidance about train ticketing practices and are working closely with the relevant authorities. Consumer trust and user experience remains central to our platform, and we will continue ensuring our products and operations are aligned with evolving requirements. From a strategic perspective, train ticketing remain an important user acquisition and engagement channel. Our focus is not only kit fulfillment but enabling users to complete the full travel journal, including transportation, accommodation and destination services.

From a financial standpoint, our business has become increasingly diversified over time with continued growth across accommodation, international travel and other segments. Consequently, domestic train ticketing's direct contribution to overall revenue and earnings has meaningfully declined over the years. As the industry adjusts to the new requirement optimization of certain rail-related products and value-added services may create some near-term headwinds. These impacts are already reflected in our current expectation and are partially incorporated into our Q2 outlook. More broadly, we remain confident in the resilience of our business. We continue to leverage AI and automation to improve operational efficiency and reducing servicing costs across our platform.

Over the longer-term period, our diversified business mix, robust cross-selling capabilities, ongoing efficiency gains and disciplined cost management will support sustainable growth and a resilient profitability profile.

Your next question comes from the line of Wei Xiong of UBS.

Could you please provide an update on the recent booking trends and elaborate on the second quarter guidance. And also what are we seeing for the summer travel season? And how should we think about the demand trends into the second half of this year?

Sure. Thank you for the question. With regard to the Q2 guidance, in general, the travel demand got off to a solid start in 2026, and we delivered very strong performance across our business segments. For the second quarter, we expect net revenue growth of approximately 3% to 8% year-over-year. Growth has moderated from the exceptional strong Q1 environment, reflecting a combination of macro and operational factors. For our Chinese base -- China business, air travel demand has softened versus the Q1 as higher airfares are influencing travel behaviors. Consumers are increasingly optimizing destinations, trip plans, and transportation choices.

Domestic hotel ADR has also turned modestly positive year-over-year, reflecting resilient lodging demand and a more balanced supply-demand environment. Additionally, our Q2 guidance also includes the near-term impact of our proactive product and compliance-related adjustments across certain business lines in response to evolving compliance frameworks. These introduced some sequential normalization to our financials, but we view them as constructive steps that strengthen our long-term platform quality, user experience as well as the sustainable growth.

With regard to our international business, higher airfare has reduced the demand for certain long-haul routes. However, part of the volume impact is offset by higher ticketing price. On the hotel side, international accommodation demand remained healthy, support in part by local demand and short-haul travel flows. Inbound travel continued to be one of our strongest segment, driven by Asia source markets, favorable visa policy, improving -- improved the connectivity and growing recognition of China as destinations.

Looking forward, for the second half of this year, visibility remains very limited given the short booking window. We maintain a prudent outlook expecting many current dynamics to persist with periodic fluctuations across specific markets and travel segments. To navigate this uneven landscape, we stay focused on disciplined execution, cost control and continued investment in longer-term growth drivers, including our Trip.com expansion, inbound travel as well as the AI capabilities. We are balancing near-term operational discipline with multiyear strategic investment to stay resilient today and stronger tomorrow.

Our next question comes from the line of Brian Gong of Citi.

I would like to know more details about our international business. So Trip.com delivered another strong quarter of growth, could you share the key operational highlights of your international business and how you are thinking about the outlook for overseas markets in 2026?

Sure. Our international business continued to deliver very strong growth in the first quarter. Gross bookings of our international OTA platform increased by approximately 65% year-over-year, with inbound travel remaining a key driver, growing approximately 90% year-over-year. This growth was underpinned by robust broad-based demand across key source markets in APAC, Europe, and U.S.

From an operational perspective, we continue to make steady progress across key areas. Mobile bookings through our app reached a new record high, reflecting success in strengthening direct traffic and user engagement. At the same time, we improved product capabilities, localized offerings and enhanced service quality across key markets to deepen user trust and drive repeat usage. APAC remains the cornerstone for our international business and continue to offer significant longer-term growth opportunities.

Despite periods of macroeconomic volatility in certain markets, we remain focused on providing timely assistance and emergency support to travelers during disruptions, strengthening local operations and investing in long-term capability for sustainable growth. As our business scale, these achievements are translating into strong operational efficiencies. Year-to-date, Trip.com has significantly improved its margin profile. The compounding effect of expanding direct traffic, rising global brand awareness and ongoing product innovations collectively support a structurally stronger profitability profile for our international segment.

Looking ahead through the rest of the year, we remain optimistic about the longer-term opportunity in the global travel space. In 2026, our focus to further expand across APAC, enhance user experience through AI and product innovation and continue strengthening our service infrastructure. At the same time, we will maintain a disciplined ROI-driven approach in other international markets. While macroeconomics and geopolitical conditions may create periodic fluctuations in global travel demand, our focus remain unchanged. We will continue to deliver a reliable travel experience, strengthen our market position and build a sustainable and profitable international business over the longer-term period.

That concludes the Q&A session today. I would now like to hand the call back to Michelle for closing remarks.

Thank you. Thanks, everyone, for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our second quarter of 2026 earnings call. Thank you, and have a good day.

Thank you.

Thank you.

Thank you. Bye-bye.

Good day, and thank you for standing by, and welcome to Trip.com Group Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please go ahead.

Thank you, Ana. Thank you, everyone. Good morning, and welcome to Trip.com Group's Fourth Quarter of 2025 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. .

A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under the applicable law. James, Jane and Cindy will share our strategy and business updates, operating highlights and the financial performance for the fourth quarter and full year 2025, as well as outlook for the first quarter of 2026. After the prepared remarks, we will have a Q&A session. With that, I will turn the call over to James. James, please.

Thank you, Michelle, and thanks, everyone, for joining us on this call today. Travel continues to be a vital pillar of the global economy, supporting consumption, employment and cross-border connectivity. In 2025, global travel demand remained resilient, driven by leisure travel and a continued desire for meaningful experience-led journeys. At the same time, travelers became more discerning with greater emphasis on value, flexibility and service reliability. These evolving preferences reinforce the importance of platforms that can deliver trusted services at scale while contributing positively to the broader travel ecosystem.

Going forward, we will focus our investment priorities on three key areas: inbound tourism, social responsibility initiatives and AI innovation. We see inbound travel as a structurally important growth driver, both for our platform and for destination economies. In 2025, we served approximately 20 million inbound travelers supporting demand across transportation, accommodation and local experiences. Beyond volume, we focus on enabling local partners to better accommodate international visitors needs and helping travelers move through their journeys with greater ease and confidence.

To support this growth, we have built integrated inbound travel support capabilities across both our online platform, and dedicated offline inbound service counters. These services reduce complexity for international visitors across travel information, connectivity solutions and itinerary bookings by improving demand readiness and visibility on our platform. We can more effectively match inbound demand with local supply and channel incremental traffic towards small businesses, cultural venues and regional destinations to support local economic vitality.

We believe long-term value creation requires sustained reinvestment into the communities, partners and people that underpin the travel ecosystem. Our sustainability initiatives integrate community empowerment, innovation workforce support and social responsibility into a unified long-term approach. We launched a USD 100 million tourism innovation fund to support commercial innovation across the travel ecosystem and establish the Tourism Innovation Award to recognize outstanding ideas that advance service quality, efficiency and sustainability. These initiatives are designed to encourage practical innovation and help new solutions scale within the industry.

In rural revitalization, our efforts focus on four dimensions: business enablement, operational improvement, marketing support and industry development, helping generate sustainable economic value for local communities. Through destination development and long-term operations we aim to create employment, stimulate local consumption and support resilient tourism models. We also placed a strong emphasis on responsible employment practices and social inclusion. We promote a family-friendly workplace through policies such as childbirth subsidies and flexible work arrangements, supporting long-term workforce stability and employee well-being. In addition, we continue to support charitable initiatives focused on education, community welfare and inclusive development, reflecting our commitment to responsible corporate citizenship.

Building on our social responsibility initiatives. Technology serves as a critical force multiplier, enabling us to scale impact efficiently and sustainably. Within this framework, AI and vertical large models will become a core pillar of our long-term technology strategy. We will continue to scale investment and accelerate the development of proprietary travel-focused large models tailored to the industry's operational complexity. By embedding domain-specific intelligence across search, recommendation, supply operations and service fulfillment, we aim to fundamentally enhance efficiency, deepen partner enablement and deliver more personalized user experiences.

Our objective is not simply to adopt AI tools, but to build intelligent infrastructure that strengthens our long-term competitive advantage. Through AI-powered communication systems, we help partners overcome language barriers when serving international visitors. Our AI-driven content solutions also allow them to better showcase their inventories to global audiences. These capabilities open new business opportunities for airlines, hotels, destinations and small merchants and strengthen their participation in the inbound travel market. For users, we continue to invest in our AI ecosystem to deliver highly personalized data-driven recommendations that not only improve content quality but also continuously enhance the overall user experience. At our core, we believe travel goes beyond economic activity. It reflects a fundamental human desire to explore, connect and experience the world. That demand is enduring and its potential remains significant. Our ambition is to grow alongside the market contributing to a healthy, balanced and inclusive travel industry over the long term. With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. For the full year 2025, our core OTA business recorded gross bookings of approximately RMB 1.1 trillion with accommodation and air ticketing contributing around RMB 280 billion and RMB 550 billion, respectively. Group net revenue totaled RMB 62.4 billion, of which accommodation reservation and related revenue and air ticket reservation and related revenue accounted for RMB 26.1 billion and RMB 14.3 billion, respectively.

Inbound travel is a core pillar of our long-term strategy, reflecting our role in supporting the broader travel industry and empowering local partners such as local hotels, tour operators and airlines. In 2025, inbound demand maintained solid momentum throughout the year, which continued strength in the fourth quarter. APAC remained the largest source of inbound travelers and demand from Western markets continued to expand, reflecting rising international interest in China as a travel destination. At the execution level, we serve approximately 20 million inbound travelers over the year, connecting inbound demand to about 150,000 hotels across our platform. Importantly, over 63,000 of these hotels began serving inbound travelers for the first time this year through our platform. We also rolled out customized inbound tours with over 90% classified as high quality, enhancing the overall traveler experience.

Inbound demand benefited more than 6,000 attractions with over 40% newly opened to inbound travelers. Together, these efforts expanded supply side participation and strengthened the industry's inbound service capacity. We continue to improve the underground experience for international travelers by addressing key pain points and enhancing travel accessibility. During the year, we launched a one-stop inbound service counter at a major airport in cities such as Beijing, Shanghai and Hong Kong and introduced complementary layover tour program. in Beijing, Shanghai, Hong Kong and Shenzhen to encourage repeat visits. We also launched Taste of China, an immersive dining experience that invites international visitors to explore Chinese culture through its diverse culinary traditions. In parallel, we expanded multilingual self-service facility across 241 attractions nationwide supporting 16 languages and reducing access barriers for foreign visitors. Inbound shopping represents another lever to stimulate on-the-ground consumption and shape travel decision. We enhanced access to tax refund services through our global Tax Reform Act, which now covers more than 3,400 tax refund enabled local merchants, supporting a more seamless shopping experience and stronger merchant engagement.

In 2025, we invested over RMB 1 billion in driving growth for the inbound travel sector, including strengthening platform tools, collaborating with global influencers to showcase China as a destination and providing free layover tours for international travelers and other initiatives. These efforts connect international demand with local supply and provide a strong foundation for our continued progress in cross-border and world tour travel.

On the international front, we continue to deliver solid performance across global markets. Our presence in APAC strengthened further, supported by consistent service standards, one-stop platform capabilities and ongoing technology innovation. This strength helped us attract new users and deepen engagement with existing customers. During the year, gross bookings on our international OTA platform increased by approximately 60% year-over-year. Our progress in international markets also received broad industry recognition. During 2025, we were named Best Online Travel Agent in Asia at the Travel Weekly Asia Readers' Choice Awards, and received the Brand of the Year award in Korea. These awards reflect continued market validation of our focus on service quality, localized execution and customer-centric innovation.

Turning to outbound travel, demand remains robust and continue to grow steadily. Despite volatility in certain market, travelers showed flexibility by shifting to alternative destinations, supporting overall demand resilience. As outbound travel patterns evolved and travel radius expanded, we strengthened engagement with overseas destination and tourism authorities to improve coordination and service readiness for travelers. These efforts focus on enhancing destination information aligning service standards and improving on-the-ground support.

Domestic travel demand remained steady in 2025, reflecting resilient consumer needs and a strong preference for service quality and reliability. We responded by strengthening our one-stop platform capabilities and continuously enhancing service standards. For example, travelers increasingly favored flexible private tours over standardized packaged products. Our private tours business grew by over 20% in 2025. On the partner side, approximately 3,500 small and medium-sized travel agencies leveraged our platform to offer customized private tours generating an incremental RMB 11 billion in transaction value for the industry. By connecting these agencies with new demand and streamlining access to high-quality content and service tools, we supported the creation of over 30,000 travel-related jobs and further expanded participation across the local travel ecosystem. Corporate travel also remains an important pillar of our domestic business with overseas corporate travel emerging as a new growth opportunity. In 2025, we served over 28,000 Chinese enterprises for their overseas travel needs, including about 25,000 small- and medium-sized enterprises participated in cross-border business activity. Through our integrated platform solutions spanning bookings, expense management and risk control, we supported over 440,000 globally mobile Chinese professionals enabling them to travel to 206 countries and more than 13,000 cities while helping enterprises optimize costs, strengthen compliance and enhance traveler safety. This allowed enterprises to operate more efficiently and securely in global markets, reinforcing our role in supporting broader economic globalization.

Building on evolving domestic travel demand, we continue to deepen our understanding of the silver generation in line with the broader development of the silver economy. This segment represents a growing and resilient source of demand with distinct expectations around service quality, accessibility and travel experience. Based on these insights, we further evolved our senior travel offerings toward more experience-oriented and service-led products. During the year, we introduced a range of themed travel products designed around culture, leisure and wellness. We also broadened service touch points through the launch of our first off-line flagship store in Shanghai, complementing our online platform with face-to-face consultation and support.

On the technology front, we continue to lower barriers to travel planning for senior users. By combining traditional search with AI-powered conversational tools, silver travelers can now plan complex itineraries using natural language making the planning process more intuitive and accessible. Collectively, these initiatives aim to encourage greater travel participation from the silver generation, particularly during off-peak periods. By bringing incremental business partners such as hotels during their slow season will help increase their earnings and improve capacity utilization. By expanding travel occasions and smoothing seasonal demand, we seek to broaden the overall travel market and support more balanced industry growth. In Q4, our old Friends Club membership and total GMV increased by over 100% year-over-year.

As experience-driven consumption continues to shape travel behavior, cultural performances have emerged as a key catalyst for domestic travel. In response, we continue to advance our entertainment plus travel strategy, elevating entertainment from a supplementary experience into a core driver of travel decision-making and value creation. Importantly, a majority of performance-related travels now take place across cities with user decision-making, shifting from watching a show during a trip to planning a trip around the show, we've pioneered integrated offerings that combine ticket, accommodation, transportation and local attraction into one-stop packages, enabling a closed-loop consumption model. In 2025, entertainment plus travel delivered triple-digit growth, reinforcing travel demand by expanding travel occasions, extending length of stay and creating incremental opportunities for partners across lodging, transportation and destination services. Over the year, we sold tickets for 1,540 shows globally, demonstrating the scale and reach of our entertainment offering.

Beyond driving our own growth, we continue to invest in strengthening the broader travel ecosystem. As a platform business, our long-term performance depends on the health of destinations, partners, employees and communities. Our social responsibility efforts focus on four areas: where we believe ecosystem investment most directly supports sustainable growth.

At the destination level, we worked closely with Tourism Board and local partners to support differentiated and inclusive development. Through our tourism innovation contribution awards, we recognize the standout destination projects such as Zhangjiajie 72 Wonder Towers, demonstrating how culture, technology and creative design can help destinations build distinctive attractions and support local employment. We also continued to expand our country retreat program, which channels tourism demand to lesser-known rural destination. The program provides practical reference models for local merchants help stimulate incremental business activity and supports local employment and income growth. In parallel, we enhanced service quality across customized and experiential travel. For private car tours and tailor-made itineraries, we scaled our tour guide and driver platform standardized onboarding, training and certification. Today, more than 110,000 tour guides and drivers are supported through this platform, improving service consistency across local communities. As part of our holistic commitment to sustainable growth, we also focused on building trust and reliability for our users. In 2025, we invested approximately RMB 2.9 billion to enhance the overall travel experience for users. This included customer protection and a variety of service enhancement designed to safeguard reliability and service quality across the travel journey. These investments are not seen as one-off costs, but as part of our long-term commitment to prioritizing customer interests, strengthening user loyalty, reinforcing platform credibility and ensuring a foundation for consistent sustainable growth.

Sustainability is embedded into how we design and scale our ecosystem initiatives. We continue to expand sustainable travel options across hotels, transportation and corporate travel products that meet higher environmental standards, helping users make informed choices and supporting suppliers in their sustainability transition. Many of our country retreats also adopt renewable energy solutions and serve as practical reference models for local partner communities.

We believe a supportive workplace is fundamental to long-term organizational resilience. More than 50% of our employees are female, and we continue to strengthen policies that support families and work-life balance, including childbirth subsidies of RMB 50,000 per child, additional childcare leaves and flexible work arrangements. We have adopted a hybrid work model across many functions. For call center teams, work from home arrangements during Chinese New Year help employees better balance personal and professional responsibilities. Reflecting these efforts, the top employers institute recognized us as a top employer in China for 2 consecutive years.

We remain focused on empowering partners across the travel value chain through our influencer for business hub, we connect travel brands and suppliers with content creators to generate authentic user-driven storytelling. The platform now serves over 500,000 partners with commercial collaborations growing by nearly 80% month-on-month, improving access to demand for destinations and merchants. At the same time, AI-enabled tours support small- and medium-sized partners through multilingual content generation, intelligent customer service and smarter distribution, helping them improve service quality and better serve inbound travelers. Overall, we view ecosystem investment not as a cost, but as a long-term growth engine. By empowering merchants, destinations and communities, we are building a more resilient and dynamic travel ecosystem that creates shared value over time.

In January, we received a notice from the state administration for market regulation regarding the initiation of a regulatory investigation. We are cooperating fully with the relevant authorities. Regulatory compliance remains a core priority for the company. The company remains focused on serving our users and partners with consistency and professionalism while continuing to execute on our long-term strategy. Looking ahead, we remain focused on serving travelers, partners and destinations over the long term and are well positioned to support healthy industry growth. We will continue to engage constructively with stakeholders as we contribute to a more balanced, inclusive and orderly travel market. With that, I will now turn the call over to Cindy.

Thanks, Jane. Good morning, everyone. For the fourth quarter of 2025, Trip.com Group reported a net revenue of RMB 15.4 billion, representing a 21% increase from the same period last year. This was primarily due to robust travel demand throughout the winter holiday. For the full year of 2025, our core OTA business achieved gross bookings of RMB 1.1 trillion. Net revenue was RMB 62.4 billion, representing a 17% increase year-over-year. Income from operations was RMB 15.8 billion, representing an 11% increase year-over-year. Excluding gains from investments, net income attributable to Trip.com Group Limited was RMB 13.4 billion. Accommodation reservation revenue for the fourth quarter was RMB 6.3 billion, representing a 21% increase year-over-year. This was primarily driven by solid demand for outbound travel and international hotel bookings.

For the full year of 2025, accommodation reservation revenue was RMB 26.1 billion, representing a 21% increase year-over-year. Transportation ticketing revenue for the fourth quarter was RMB 5.4 billion, representing a 12% increase year-over-year. International air bookings showed robust growth. For the full year of 2025, transportation ticketing revenue was RMB 22.5 billion, representing an 11% increase year-over-year. Packaged tour revenue for the fourth quarter was RMB 1.1 billion, representing a 21% increase year-over-year, primarily driven by the expansion of our international offerings.

For the full year of 2025, packaged tour revenue was RMB 4.7 billion, representing an 8% increase year-over-year. Corporate travel revenue for the fourth quarter was RMB 808 million, representing a 15% increase year-over-year. This was driven by more companies adopting our managed corporate travel services.

For the full year of 2025, corporate travel revenue was RMB 2.8 billion, representing a 13% increase year-over-year. Excluding share-based compensation charges, adjusted product development expenses for the fourth quarter increased by 17% year-over-year. Adjusted G&A expenses for the fourth quarter increased by 9% year-over-year. These were mainly due to increase in personnel-related expenses. For the full year of 2025, the combined total of adjusted product development expenses and adjusted G&A expenses increased by 14% year-over-year. Adjusted sales and marketing expenses for the fourth quarter increased by 5% from the previous quarter and increased by 30% from the same period last year. For the full year of 2025, adjusted sales and marketing expenses as a percentage of net revenue was 24% compared to 22% last year. The sequential increase was primarily driven by broader marketing investments with incremental spend allocated to our international expansion. Adjusted EBITDA was RMB 3.4 billion for the fourth quarter compared with RMB 3.0 billion in the same period last year. For the full year of 2025, adjusted EBITDA was RMB 18.9 billion, representing a growth of 11% year-over-year. Diluted earnings per ordinary share and per ADS were RMB 6.11 or USD 0.87 for the fourth quarter of 2025. Excluding share-based compensation charges, fair value changes of equity securities investments and exchangeable senior notes recorded in other expense or income, and their tax effects, non-GAAP diluted earnings per ordinary share and per ADS were RMB 4.97 or USD 0.71 for the fourth quarter. For the full year of 2025, diluted earnings per ordinary share and per ADS were RMB 47.67 or USD 6.82. Excluding share-based compensation charges, fair value changes of equity securities investments and exchangeable senior notes recorded in other expense or income and their tax effects non-GAAP diluted earnings per ordinary share and per ADS were RMB 45.59 or USD 6.52.

As of December 31, 2025, the balance of cash and cash equivalents, restricted cash, short-term investment, held-to-maturity time deposits and financial products was RMB 105.8 billion or USD 15.1 billion. We remain committed to delivering long-term value to our shareholders through sustainable business growth. This is further supported by our ongoing shareholder return program, which includes share repurchases when market conditions align with our capital allocation strategy.

Looking ahead, we are confident in our business, and we'll continue to take a disciplined approach to investment and execution that drive sustainable value creation. With that, operator, please open the line for questions.

[Operator Instructions] We will now take our first question from the line of Yang Liu of Morgan Stanley.

I have one question. Could the management share any update regarding the recent SAMR investigation? How do you assess the potential impact on your business in 2026 and longer term?

Sure. Trip.com Group is actively cooperating with the state administration for market regulation of the China throughout its review process, and we continue to engage constructively and transparently and will provide further updates as appropriate in accordance with applicable laws and regulations. In alignment with relevant policies, we remain committed to fostering a transparent and sustainable environment for all the stakeholders. And looking ahead, we will continue to focus our investments on three core priorities: first, driving inbound tourism. This creates new growth opportunity for our domestic partners and foster a more open globally connected market opportunity. And second, deepening social responsibility initiative. We reinvested in community, communities empower our partners and support local economies, all while encouraging innovation that drives sustainable growth. Third, accelerating our innovations. We are building a scalable AI infrastructure to enhance partner efficiency, improve visibility and break down barriers, enabling the industry to deliver better content and reach more customers. And we believe that a collaborative and fair ecosystem is critical to the long-term development of the travel industry. With over 26 years of industry expertise, a broad global network and advanced technology capabilities, we remain focused on serving our users and partners and creating long-term sustainable value for our shareholders. Thank you.

We will now take our next question from the line of Alex Yao of JPMorgan.

I have a question about AI intermediation. As AI agents, like Gemini and the Queen show strong capabilities in personalized recommendations and the closing of the transaction loop. How do you evaluate the impact on your OTA business model? And what is your strategy to sustain your value proposition in the travel industry?

Thank you for the question. We view the rapid advancement of generative AI as a catalyst that validates and accelerates our long-term strategy. The rise of AI agent marks one of the most significant technological shifts in years, and we are actively shaping their role in travel, not just adapting to them. The OTA model is built on three pillars: inspiration, transaction and service. While AI agents excel at inspiring travel, they also reinforce the critical importance of our transactional and service layers which are central to our business. A true closed loop in travel requires more than just itinerary generation. It demands deep integration with a complex global supply chain, airlines, hotels, local activity providers, along with live rates, secure payments and guaranteed fulfillment. This is where our operational expertise and service capabilities excel. We view general AI agents as the next generation of user entry points set to capture share from traditional search and social media. Externally, we are moving beyond simple collaboration to build direct agent-to-agent transactional capabilities with leading AI partners across the globe. Internally, we are investing to advance our native AI agent to deliver sophisticated Agentic search and booking to handle complex multistep travel planning and booking for our users. We are confident in our ability to lead in this new environment by focusing on the following areas that are difficult for general AI models to replicate. First, proprietary data and vertical AI, the rise of powerful open source model accelerates our strategy. We leverage the best available AI technology as a foundation, but our true advantage is the ability to fine tune these models into vertical travel experts using our decades of proprietary data, real booking data, user preferences and millions of verified reviews. Our AI tours like TripGenie and Trip.Planner not only offer personalized recommendations, but also real-time bookable results grounded in live inventory and pricing. Second, strong supply chain. We have deep, long-standing relationships with hundreds of thousands of partners worldwide, giving us access to comprehensive inventory, live rates and direct technical integrations. While AI agent may suggest options, we confirm bookings instantly at reliable and real-time rates for our users. This last mile guarantee is a core part of our business. Third, end-to-end service and trust. Travel is a high stake emotional purchase. When issues arise, travelers need reliable support, not just an algorithm. Our holistic journey management, backed by one-stop platform and 24/7 global support provides the trust and security that stand-alone AI agents cannot match. We are not just a booking tour. We are a true travel partner. In summary, we are embracing AI to enhance our platform while reinforcing the core strengths. Our proprietary data, global supply chain and service guarantee that define our value. We are well positioned not just to compete but to shape the evolution of how the world travels in the age of AI. .

We will now take our next question from Simon Cheung of Goldman Sachs.

In the opening remark in the presentation, you mentioned that inbound tourist has been one of the core pillars on your future growth in the futures, and we have seen a lot of excitement around that area. Can you perhaps help us to kind of maybe in some guidance in terms of how we think about the future growth trajectory for these markets into 2026 and beyond.

Sure. Thanks, Simon. We believe that inbound traveled to China is at the start of a significant and sustainable growth cycle. Currently, inbound tourism only accounts for about 0.5% of China's GDP compared to the highest contribution country, which is Thailand, more than 10% of the GDP are from inbound travel. And in Europe, such as France, Italy and Spain, about 5% to 6% of the GDP are from inbound travel. So we see at least 5 to 10x growth for inbound travel. And when we look at our strength, we believe Trip.com Group is unique, very uniquely positioned to capture the opportunity. Our strength lies in synergy between our deep local expertise and our growing global presence. For local expertise, we have decades of experiences which enable us to build an unparalleled ecosystem of products and service that are deeply attuned to the needs of the Chinese market. For global reach, our growing international presence provides direct access to a brand based on overseas travelers. We connect the rich travel within the country to the global requirement through the multilingual products, localized insights and integrated cross-border marketing. So we have put great efforts to drive this growth. Firstly, we promote super destination. We run an integrated marketing campaigns online, off-line to reach out to the global audience. Secondly, we also empower our local partners for global readiness. We invest heavily in technology to build a robust multilingual infrastructure, support partners with technology integration and training, help them serve international visitors effectively and create local employment opportunities. For example, our private tour business has supported a creation of more than 30,000 travel agent jobs and more than 20,000 private driver guides. Thirdly, we enhanced our travelers experience. We'll focus on optimizing end-to-end experience for travelers unfamiliar with the local market, offering 24/7 global customer service, local guides through transportation hubs, simplify payments and expand access to services such as tax refunds. So we are very glad to see as a result in 2025, those efforts have already produced significant results. We first -- we served more than 20 million inbound travelers. And that number is growing rapidly close to 100% year-over-year growth. Secondly, more than 40 cities on our platform has seen very high inbound travel contribution and consumption is also enhanced through these inbound troubles. We aim to double that number in 2026. Moreover, more than 63,000 hotels, more than 25,000 attractions and more than 600 travel agencies received their first inbound bookings through our platform, which is an uplift for their service capability. We are very excited to see these efforts have generated great results. Looking forward, we remain dedicated to fostering a transparent, seamless and sustainable travel ecosystem, connecting global travelers with the richness of the country and creating long-term value for our users, our local partners and our shareholders. Thank you very much for your question.

We will take the next question from Thomas Chong of Jefferies. .

Could you share some color about the booking trend during the Chinese New Year? How have consumer sentiments been trending recently? Can you also break down your business by geographic contribution?

Sure. The 2026 Chinese New Year marks the longest New Year holiday in recent years, extended by 1 additional day compared with last year. This incremental holiday time meaningfully stimulated travel demand and supported strong overall performance. Our domestic hotel business recorded robust double-digit growth while ADR increasing modestly year-over-year, reflecting healthy demand dynamics. We achieved a double-digit growth in our outbound business with notable momentum in long-haul destinations, especially across Europe. With regard to the international market, our globalization strategy continues to yield strong results with our international OTA platform, delivering solid growth. Quarter-to-date, our international OTA platform has achieved year-over-year growth of approximately 60%. As we continue our expansion into key APAC market this year, we remain committed to investing strategically to enhance our brand presence, localize our products and drive sustainable growth.

With regard to the travel sentiment, with people's growing desire to explore, travel sentiment remains strong worldwide. Leisure travel continues to be the primary driver of the market growth. In 2025, average spending per user remained stable compared to last year, reflecting sustainable and healthy consumer demand for travel experiences. While business travel also remained robust over the past year, we are strategically positioned to capture this demand, particularly by supporting the global expansion of Chinese enterprises through our comprehensive corporate travel solutions.

Our international business contributed about 40% of total revenue and bookings in 2025, up from around 35% in 2024. We expect this momentum to continue, mainly fueled by the rapid growth of our Trip.com brand. Thank you.

We will now take our next question from Brian Gong of Citi Bank.

My question is about competition. So have you observed intensifying competition in domestic travel market? And how do you maintain your competitive adds in this environment?

Sure. Thanks for your question. Competition in the domestic travel market has always remained dynamic, which reflects the segment's strong growth potential and continued vitality. We view this as a healthy sign for the industry. Our competitive edge is anchored in a couple of fronts. First of all, we have always focused on high level of the services. We offer 24 hours times 7 excellent customer service. When you call our call center globally, we offer 24 hours times 7 service and any agent will be able to address any questions with you very effectively. Secondly, we offer very comprehensive products. So when you travel with us, we offer flight, hotel, vacation package, rental car, anything that you need during your trip, which is also very convenient for our customers. In the unexpected events, such an earthquake or complex regional conflict due to wars, we reach out to our customers within 2 minutes to make sure they are moved to the safe area. Our comprehensive product enable them to be rescued to their home country on a timely basis. The third one is our global coverage. Not only we have a very good service and product domestically, we also developed a very strong service capability and inventory coverage globally. So customers, when they travel with us, not only they can have peace in mind within the country, when they travel around the world, we are also behind them to support them. So all these trends give us the competitive advantage, and we will continuously focus on our customers, making sure we offer the best product and best service to them. Thank you very much.

We will now take our next question from Joyce Ju of Bank of America

James, Jane, and Michelle congrats on concluding 2025 with a very strong set of results. With Trip.com achieving another strong quarter of growth overseas, could you share some operational highlights and outlook for the 2026.

Sure. In 2025, gross booking for our international OTA platform increased by around 60% year-over-year. APAC remains the primary region of our international expansion, while booking trends from the Middle East and other regions also demonstrated very strong growth potential -- is the key contributor to our international business growth. In 2025, we served approximately 20 million inbound travelers driven by rapid growth in visa free regions. We remain focused on growing our APAC business in the coming 2026 and continue to explore opportunities in other regions on a disciplined approach. With ongoing improvements in business scale, product innovation and brand penetration, we expect to improve profitability trajectory of our international OTA business particularly in the APAC region. Given the strong growth potential of international travel market, we will continue investing for sustainable growth. Our mobile first strategy supported by intuitive front-end design and reliable back-end services and product capabilities will help us enhance our global brand recognition and drive steady international expansion. Thank you.

We will now take our next question from Parash Jain of HSBC.

Sure. Thank you management for the update. If you can share some color on your international business, particularly in the Asia Pacific region in light of evolving competition especially from players like Agoda?

Thanks for your question. In 2025, we remained focused on expanding our presence in APAC market. Our continued execution across the key markets contributed to the rising brand recognition among local customers. As we localize our efforts is deepening, we are deploying market-specific strategies to better align products and services with local travel needs. Supported by improvements in product competitiveness and mobile booking experiences, active users growth is significant in major APAC markets. In Q4 2025, our international bookings reached a record high. The growth and the strong results reflect the effectiveness of our globalization strategy built through long-term experiences and supported by disciplined marketing investments. Going forward, we will continue to prioritize APAC region with online penetration and travel sentiment continue to improve. We remain focused in our execution for strategies to develop the comprehensive products, localized service, localized marketing strategy and excellent product offerings. So we intend to further penetrate in the Asia Pacific region and provide excellent services to more and more customers in that region. Thank you. .

Our last question for today comes from Wei Xiong of UBS.

Just a quick one. Could you please provide an update on your shareholder return program.

In 2025, we fully utilized the authorized share repurchase quarter under the 2025 repurchase plan and completed additional reps in the fourth quarter. Going forward, we remain committed to delivering long-term shareholder value through sustainable business growth as well as disciplined execution of our capital return program. Thank you.

We have come to the end of the question-and-answer session. Thank you all very much for your questions. I'd now like to turn the conference back to Michelle for closing comments.

Thank you. Thanks, everyone, for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our first quarter of 2026 earnings call. Thank you, and have a good day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to Trip.com Group Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please go ahead.

Thank you. Thank you, all. Good morning, and welcome to Trip.com Group's Third Quarter of 2025 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's product filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the third quarter of 2020 as well as outlook for the rest of the year. After the prepared remarks, we will have a Q&A session.

With that, I will turn the call over to James. James, please.

Thank you, Michelle, and thanks, everyone, for joining us on this call today. Travel is thriving and the travel spirit shows no signs of slowing down. In the third quarter, travel demand surged across markets, led by vibrant domestic travel in China and a steady rise in outbound journey. Travelers are exploring with confidence seeking authentic experiences in new horizons, a reflection of their enduring passion for discovery. This growing enthusiasm is mirrored in the performance of our AI-powered tools such as Trip Planners, whose recent upgrade has fueled a 180% year-over-year surge in unique visits.

Inbound travel continues to play a vital role in fostering international exchange, trade and innovation, generating meaningful economic and cultural benefits. Expanded visa-free entry policies and broader coverage of the 240-hour transit visa exemption have made it easier than ever to visit, bringing the goal of raising inbound travel revenue to 1% to 2% of GDP increasingly within reach.

As part of our inbound initiative, Trip.com Group launched Taste of China, an immersive dining experience that allows international visitors to explore Chinese culture through its rich culinary traditions. We remain optimistic about the future of travel by leveraging AI innovation and delivering world-class service. We continue to make travel easier, more personalized and more enjoyable for every traveler.

With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. As a quick overview, our net revenue in Q3 increased by 16% year-over-year, reflecting strong demand across segments during peak travel season. travel consumption remained robust throughout the summer and the National Day holiday with both domestic and international travel markets showing healthy momentum. This performance underscores travelers' growing desire for diverse, immersive and high-quality experiences.

Outbound travel continued to post solid growth in Q3 with our outbound hotel and air bookings growing by close to 20% from last year and reaching about 140% of 2019 volumes. Japan, South Korea, Southeast Asian destinations remains the most popular choices, supported by their proximity and visa convenience. At the same time, travelers radius of exploration continues to expand as more people to new adventures and richer cultural experience. This trend was particularly evident during the Golden Week, which was 1 day longer than last year stronger demand for long-haul trades. During the holiday, outbound hotel and air bookings surged by around 30% and year-over-year, reflecting sustained travel enthusiasts.

Europe stood out as a key growth region driven by increased flight capacity and travelers' appetite for in-depth experience. Bookings to Iceland and Norway more than doubled year-over-year, Spain, Italy and Germany also grew by approximately 70%. These trends show that travelers are increasingly willing to invest in high-quality travel experiences, highlighting strong consumption power and continued confidence in outbound travel.

Domestic travel also remained vibrant, fueled by travelers' passion for new and immersive experiences. From cultural discovery to outdoor exploration, the growing diversity of travel demand continues to drive solid market growth. Major cities such as Beijing, Shanghai, Chengdu and [ GN ] remain the top choices for their accessibility and offerings. Remote regions, including or [indiscernible] and Lata also grew by nearly 30% as more travelers ventured West to discover unveiled landscapes and rich heritage. At the same time, smaller cities are emerging as new favorites for urban residents seeking peace and renewal. Their local charms and slower pace offer refreshing escape from everyday life.

Inbound travel continues to connect the world, bringing travelers from across the globe to experience oriental culture, spark innovation and drive trade. The Asia Pacific region remains the largest source of inbound travelers, with Europe and the U.S. also seeing strong growth. In Q3, inbound travel bookings on our platform grew by over 100%, reflecting robust international demand.

Building on the success of relay over tours in Beijing and Shanghai. We recently launched a free layover experience for travelers at Hong Kong International Airport. Transit travelers with 7 hours or more can book in advance on the Trip.com app or website or on-site at the airport to explore Hong Kong's highlights. For those seeking a deeper adventure, premium tours provide access to landmarks, such as Lantau Island and Victoria Peak. We are making it easier than ever for international visitors to plan, book and enjoy these experiences, aiming to become the go-to platform and trusted hub for travelers from around the world.

On the international front, Trip.com Group continued to deliver strong performance. International bookings on our platform grew by around 60% year-over-year. The Asia Pacific region remains the largest contributor, rising over 50% in Q3. Across all regions, Mobile continues to be a key growth driver, now accounting for over 70% of total bookings. Travelers increasingly rely on our app for 1 stop on the go experience managing flights, hotels and tours seamlessly combined with high service standards and hassle-free bookings. We offer users great convenience and excellent value, fueling continued growth across markets.

As travel demand expands across borders, it is also diversified across generation. With spending power 3x that of younger travelers affluent and active seniors are eager to explore and spend on quality travel, reshaping the market from price competition towards a true value creation. In Q3, the number of our old friend club members and their total GMV rising over 70%. Trip.com Group is tailoring more products and services for this growing segment. We launched our first old brands Club flagship store in Shanghai to connect with senior travelers face-to-face and introduced themed trips designed around their interest. We also formed a dedicated service team of [indiscernible] officers friendly Travel bodies who travel alongside the seniors, offering support and thoughtful care for their needs.

Younger travelers are also shaping new trends in travel, seeking experiences that go beyond the ordinary. In Q3, Revenue from this segment grew by triple digits, propelled by the rising case for concerts and live experiences. To meet the growing demand, Trip.com Group announced multiyear strategic partnerships with the world's leading live entertainment company. The collaboration allows fans to plan entertainment trips seamlessly combining exclusive presale access to shows with flights, hotels and curated local experiences to our platform, as entertainment becomes an increasingly powerful driver of travel, these partnerships help and follow the August they love while supporting regional tourism and enhancing destination appeal across Asia.

We are also strengthening event booking capabilities our partnership with Cityline Group, covering Hong Kong and Macau users can now oodles collect tickets via Cityline expensive self-service kiosk network by connecting online bookings with offline ticketing, the partnership delivers a smooth pace III experience for travelers enjoying large-scale events Trip.com Group remains deeply committed to nurturing the broader travel ecosystem and supporting local economic development by promoting travel products around concerts, festivals, and major sports events.

We inspire more travelers to explore these destinations, driving overnight stays and spending and turning seasonal excitement into lasting economic impact for local communities. At the same time, we continue to tailor products and services to meet diverse traveler men. For example, offering mostly friendly options, highlighting smart toilets for Japanese users and providing foreign currency exchange for inbound visitors.

To further empower partners and elevate service standards across the industry, Trip.com Group is harnessing technology and AI to help the entire travel ecosystem move forward. Hotels can now overcome language barriers with our AI communication tools that respond to guest inquiries in real time. Our AI content generator and training tools also empower hoteliers to produce engaging content and sharpen their digital skills, helping them connect with test and with our updated hotel scoring and page ranking algorithms, we encourage hotels to focus on what truly matters, genuine service and lasting guest satisfaction instead of chasing ratings or ranking.

Together, these efforts help partners stay competitive fast-changing landscape and create richer, smoother and more seamless travel experiences for travelers around the world. Travel is a fundamental part of the human experience, and we remain confident in the industry's long-term growth. We will continue to enhance our services and empower the broader ecosystem, driving sustainable growth across the travel industry and the wider economy.

With that, I will now turn the call over to Cindy.

Thanks, Jane. Good morning, everyone. For the third quarter of 2025, Trip.com Group reported a net revenue of RMB 18.3 billion, representing a 16% increase from the same period last year and a 24% increase from the previous quarter, reflecting robust travel demand throughout the summer and the Golden Week holiday. Accommodation reservation revenue for the third quarter was RMB 8.0 billion representing an 18% increase year-over-year and a 29% increase quarter-over-quarter. This was mainly driven by strong momentum in outbound and international hotel bookings along with sustained in domestic demand.

Transportation ticketing revenue for the third quarter was RMB 6.3 billion, representing a 12% increase year-over-year and a 17% increase quarter-over-quarter. International air bookings showed robust growth with outbound air bookings continuing to outpace the market.

Packaged tour revenue for the third quarter was RMB 1.6 billion, representing a 3% increase year-over-year and a 49% increase quarter-over-quarter primarily driven by the expansion of our international offerings, our destination services delivered strong growth with international markets continuing to drive overall expansion. Corporate travel revenue for the third quarter was RMB 756 representing a 15% increase year-over-year and a 9% increase quarter-over-quarter. This was driven by more companies adopting our managed corporate travel services. Excluding share-based compensation charges, adjusted product development expenses for the third quarter increased by 12% year-over-year.

Adjusted G&A expenses for the third quarter increased by 6% year-over-year. These were mainly due to increase in personnel-related expenses. Adjusted sales and marketing expenses for the third quarter increased by 26% from the previous quarter and increased by 23% from the same period last year. The sequential increase was primarily driven by broader marketing investments with incremental spend allocated to our international expansion.

Adjusted EBITDA was RMB 6.3 billion for the third quarter compared with RMB 5.7 billion in period last year and RMB 4.9 billion in the previous quarter. Diluted earnings per ordinary share and per ADS were RMB 28.6 4.2 for the third quarter of 2025. Excluding share-based compensation charges, and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 27.56 or USD 3.87 for the third quarter. Diluted earnings per ordinary share and per ADS for the quarter were elevated primarily due to a onetime gain from the divestment of one of our overseas investments.

As of September 30, 2025, the balance of cash and cash equivalents, restricted cash short-term investment, held-to-maturity time deposits and financial products was and RMB 107.7 billion or USD 15.1 billion. Looking ahead, we are confident in the continued strength of our business and future opportunities. Our disciplined approach to investment and execution will remain central as we focus on sustainable growth and long-term value creation.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Joyce Ju from Bank of America.

James, Jane, Cindy and Michelle, congratulations on another strong quarter. AI is clearly top of the mind for the market and a key pillar of Trip.com's strategy. Can management please elaborate on where you see AI heading on your platforms, specifically, how do you view the trajectory for AI agents? Do you see them going mainstream?

Thank you for the question. AI is a central pillar of Trip.com's strategy, and we are committed to unlocking its full potential for the travel industry. We believe we are at the forefront of this transformation. On the user side, we are shifting more touch points to AI-driven tools continuously iterating our AI content ecosystem. Our AI agent, TripGenie, is now used in over 200 countries and regions, with users growing over 200% year-over-year in the first half of 2025. We are also refining the balance between advanced AI search and conventional search to better serve user intent.

For hotels, search results now evolve from standardized information to real-time recommendations tailored to individual preferences. On the operational side AI helps detect issues and provide intelligent solutions for complex cases. This enhances employee productivity, improves customer service efficiency, increases satisfaction and conversion rates and can help reduce cancellations through smarter, more responsive service.

Looking ahead, we see AI as a tremendous opportunity to make travel more accessible, reliable and enjoyable. Trip.com is committed to investing in AI to enhance every step of the traveler's journey. By combining cutting-edge technology with 26 years of travel expertise, we ensure seamless experiences that go beyond AI alone. We will continue to explore how AI can make every step of the traveler's journey better and enrich the travel experience. Ultimately, travel is of exploration and experience, and we are focused on delivering the best for our customers today and in the future.

We will now take our next question from Alex Yao from JPMorgan. .

I would like to ask some of the near-term consumer behavior and also travel trends during national holiday and also mid-autumn festival. In addition, I think when the current geopolitical tension between Japan and China, can you talk about Japan's revenue contribution to our company and also the financial impact that you could expect over the next, let's say, couple of quarters?

Sure. I'd be happy to take this question, Alex. So first of all, for the national holiday, combined with midterm holiday, we have seen very strong trend. The trend we call is 3Ls, which is long stay, long distance and long tail. Because it's a longer holiday, most people go long haul, which is the strength for Trip.com. And also because people are going so far away, we are able to promote many long-tail travel destinations for sophisticated travelers, and the stay is longer.

So if you look at the industry, the domestic market posted a very healthy single-digit growth. Cross-border, it was even stronger. The international capacity recovered even further compared to previous quarter. at around 88% pre-COVID level. If you look at our platform, our long stay drives strong growth, both domestically and internationally. For outbound hotel and air bookings, it jumped to more than 30% year-over-year growth. And also for inbound travel, we searched by more than 100% year-over-year for Golden Week holidays. So we are very positive for these holiday seasons.

Regarding Japan, I think as long as consumers have the buying power, they will travel to different travel destinations. We have seen a couple of factors impacting traveler's behavior. First of all, the travel destination needs to be safe and welcoming Secondly, the visa application needs to be eased. Thirdly, the direct flight also is a very important consideration for travelers. So over the years, we have seen -- if certain destination is impacted travelers as long as they have time, they have money, they can choose different travel destinations to go to. So overall, on our platform, we haven't seen major impact so far, yes.

We will now take our next question from Thomas Chong from Jefferies.

And congratulations on a strong set of results. My question is about how have hotel at price trend recently? And what's the outlook for next year?

In Q3, the year-on-year decline in hotel and air ticket prices narrowed to the low single digits. During the Golden week, both domestic hotel and airfares trended higher, reflecting strong travel demand before easing sequentially after the holiday on the supply side, domestic hotel capacity continues to expand at a mid- to high single-digit pace year-over-year, which is likely to keep some pressure on room prices going forward. Internationally, flight capacity has now recovered to about 88% of 2019 levels. As a result, cross-border air ticket prices have softened compared with last year but remain above pre-pandemic levels while hotel prices have stayed largely stable.

We will now take our next question from Yang Liu from Morgan Stanley.

Congratulations on the solid results first. I have 1 question that yes, could you please hear me? .

Yes, we can. .

My question is that could management share some insight on the recent consumer sentiment and more importantly, your early thoughts for the coming year?

So we have seen the travel industry remain very strong. People's desire to world continues to grow across culture, reflecting travelers design for good products. In terms of the leisure travel, it has stayed robust supported by extra holidays this year. Our platform, long-haul trips show strong momentum. Outbound hotels and flights rose over 30%, with Europe emerging as a key driving force.

Domestically, travelers are also seeking deeper and more immersive experiences and explore less known destinations. Year-to-date, per capital spending on our platform remains in line with last year. For business travelers, it has remained stable. We continue to attract new corporate clients with average business travel spending on our platform has increased year-over-year, supported by Chinese companies expanding its global footprint.

Looking forward in 2026 at Trip.com Group review challenges as opportunities, strengthen our foundation. Our focus remains on enhancing our product service and to better meet the evolving needs of our global travelers. For international business, our strategy at Trip.com has proven to be very effective driving rapid market share gain outside of domestic market in recent quarters. We will also continue to invest globally, particularly across Asia Pacific to accelerate our growth and expand our presence.

Domestically, we are focusing on capturing more demand and providing excellent services to our customers. In particular, we tap into the great opportunity for inbound travel and silver generation and young travelers. We aim to deep the collaboration with our partners when we bring inbound customers to domestic market, it drives huge job opportunities. and also drives huge incremental opportunities for our hotel partners, flight partners, destination partners, rental cars, et cetera. So we are very positive for the growth in 2026.

Our next question comes from John Choi from Daiwa.

Congratulations on another great quarter. Just quickly, with new strategies from your industry peers in the China market, what kind of impact could this have on your business going forward?

Sure. First of all, I think the travel market brings joy and happiness to people. Secondly, we invest heavily in our technology and AI try to improve the efficiency for the whole industry, that will benefit all the players in the market. And thirdly, as you can see, we have a couple of offerings, which is very much liked by the consumers. First of all, we provide one-stop total solution. So when you make a reservation for flight customers automatically will book a nice hotel with us, and we offer airport transfer.

We also have a trusted list for destinations for attractions. And when you are traveling, if you run into any issues, for example, if a certain area has a tsunami or earthquake or if there is a war happened during a trip within 2 minutes, our team will reach out to the customers in the destination, making sure they moved to the safe area. The very next day, if our customers choose to fly back to their home countries, we will make prioritized arrangement for our customers.

So that capacity and ability to help the customers in destination, pre-trip, post-trip give the confidence for our consumers that when they cover with Trip.com, they have peace in mind. So we continuously improve our customer service level to make sure we offer the best product, best technology and service to our customers. and we'll continuously to do that. I think as long as we make the right investment in this area, our customers will trust our team for our service and products will continue to grow.

Our next question comes from Wei Xiong from UBS.

Sure. Congrats on a solid quarter. On the international side, it's encouraging to see Trip.com continue to maintain strong growth in the third quarter. So could management maybe share more on our international performance and any regional operational highlights?

Sure. In Q3, booking on Trip.com increased by around 60% year-over-year, with APAC growing more than 50%, demonstrating robust growth despite macroeconomic uncertainties. In particular, Asia Pacific remains our operational focus and the largest contributor for our international business growth. Through localizing our products and tailor our marketing strategy, our brand recognition and market presence continue to strengthen across key markets.

Trip.com was named as the best online travel agency, Asia at 2025, Travel Weekly Asia Readers Choice Award. We are now a leading OTA in several key markets. reflecting our growing and solid footprint. For the new markets, emerging markets such as Middle East and Europe also show encouraging momentum signaling expanding global opportunities.

For inbound booking, we surged more than 100% year-over-year in Q3 by continuously innovating our offerings such as half-day tour at [ The bond ] or at the Great Wall and Taste of China immersive dining experiences we reinforced our position as the pioneer in inbound travel market. So our international business will continue to grow, and we will make strong investment in this field.

We will now take our next question from Brian Gong from Citi.

James, Jane, Cindy and Michelle, congratulations on a solid quarter. My question is regarding the inbound travel you just mentioned, which is the hottest growing segment for Trip.com. Could you provide updates on your inbound business and the key catalysts for the growth ahead?

Sure. When we surveyed the inbound customers, we got very positive feedback. People told us the country is very safe, particularly for women travelers. They can run, they can jog in the middle of the night, where they cannot do even in some major cities in their home countries. People are very friendly, very hospitable the food is delicious, the history is very rich and the infrastructure is very new and effective. And on top of it, they find affordable luxury in inbound travel. By paying USD 100, USD 200, they can stay in a very nice 5-star hotel with excellent services. So that gives a very good foundation for us to build upon these preconditions.

And also the free visa gave more than 60 countries, convenience for these people to come for inbound travel. And also the extension for in transit travel from 3 days to 10 days also make it easier for business travelers to come. So we see great opportunity to capitalize on these opportunities. And from our end, because our inventory in China is the most comprehensive one. And our service is also very good. And we offer multi-language services when custom we offer 24-hour service. if you call our call center within 30 seconds, a live person will answer the call to help them to solve the issues on the ground. And we remain very alert when they enter into the country.

So all that combined together, which enable us to drive the volume for inbound travel very strongly, and we will continuously to do so. By winning these inbound customers into the country. We also offer very good job opportunities for young people. We also bring new revenue opportunities for our hotel partners for our airline partners for the local tour operators for major travel destination partners and also for famous landmarks attractions. So overall, I think we bring happiness for the consumers who are traveling inbound. We also bring great job opportunities for young people as well as great opportunities for our partners for inbound travelers. So a very positive move in this field.

[Operator Instructions] Our next question comes from Wei Fang from Mizuho.

James, Jane, Cindy and Michelle, congrats on the good numbers. I think I heard there were additional marketing spend allocated to the international business, right, in the quarter? I was wondering, can management give us some more updates on your Trip.com marketing progress in the quarter? And what's your plan for the next quarter and beyond like 2026?

Sure. Our marketing strategy on Trip.com delivered solid results in Q3. The scalable nature of our business is not directly improving marketing efficiency in our key targeted markets. In Q3, our mega sale in major markets, such as Korea, Thailand, Malaysia reached historical highs for the quarter. Internally, we also empower our execution team to set ROI targets aligned with long-term growth objectives. This approach drives motivation and ensure disciplined control over the key levels of marketing efficiency.

Looking ahead, upcoming global holidays will continue to execute our signature campaigns using a proven play book while staying agile to capitalize on the emerging market trends by combining these opportunities with our long-term strategy, we aim to accelerate revenue growth and strengthen our market position, including expanding our organic mobile use base.

Our next question comes from Parash Jain from HSBC.

I have a question more on the recent dynamics in the global market and how they will impact your business. And the dynamics on 2 fronts. Firstly, on probably with your deeper penetration in the region, as you rightly mentioned, are you seeing intensifying competition with the global OTAs like Agoda? And my second question is, I mean, another trend we have noticed is where Google is pushing the paid search instead of SEOs, and does it impact your metasearch platform?

Sure. Thanks for your question. Asia Pacific market offers huge potential representing around 60% of world's total population and benefiting from a strong economic growth rate. The middle income population is rising very fast and the GDP growth in this region is the fastest compared to the rest of the world. The region combined reached very rich cave resources from majestic nature to vibrant cities with a fragmented market and relatively low online penetration, highlighting opportunities for consolidation and digital expansion.

So we invest heavily to expand into this market. These market dynamics create a very favorable environment for online travel companies. We focus on delivering one-stop total solution for our customers, with localized product and exceptional customer service for APAC travelers worldwide. Our globalization strategy involves the insights from each market, driving significant growth in our presence by taking the dynamic and market-specific approach we are confident in our continuous growth trajectory. Thank you.

Our next question comes from Simon Cheung from Goldman Sachs.

James, Jane, Cindy and Michelle, I just have 1 quick question. So I think you touched on when you discuss about your package dual business. One of the segments that I mean, just destination service business and the so-called experience markets. Wondering whether you can share some thoughts about your long-term positioning and the opportunity over there. especially given reported there's some IPO going on in that segment?

Sure. Destination service business is quite small compared to the overall pie we expect our group to deliver around $5 billion in GMV for destination service which represents only 2% to 3% of our total GMV. We drive our volume and the growth is more than 130% Trip.com growth year-to-date, and the rising demand from the APAC is strong. We cover about 300,000 offering worldwide, and we continuously cover more and more products in our platform. For us, our strength is on stop travel platform covering activity, attraction, transportation to better match users' demand and enhance overall travel experience.

Leverage our large APAC user base, along with the loyalty program and AI tool, we're deepening engagement and driving repeated booking. Over the next 3 to 5 years, our focus is broadening product covering and market share. So for us, the traffic for destination service is free because our customers already make the air, air flight and hotel bookings. So we don't need to spend money to acquire these customers. So the acquisition of these customers free. And on top of it, we don't intend to make any money for deflation marketing because it's very small. It's mainly to enhance users experience and making sure our customers love our products, love our platform.

So we intend to expand aggressively in this field aiming to increase the loyalty and customer satisfaction to better serve our customers on the flight hotel. So the one-stop ecosystem gives us the advantage from a traffic acquisition also take away the pressure for making profit for this very small segment.

Our next question comes from Ellie Jiang from Macquarie.

Congrats on the solid print. I have a question on the cost side. The operating expenditure came in at slightly lower end of expectations during the quarter. How should we think about the outlook for the coming quarter, fourth quarter as well as for 2026?

We continue to manage our investments with discipline on sales and marketing side, we adjust spending based on each market's maturity and the characteristics of different channels. As a result, the overall expense mix may in line with business priorities. On the personnel front, as more markets grow rapidly, we are expanding our global presence while maintaining high standards for new hires to ensure strong marginal cost efficiency.

The quarter-over-quarter increase in operating expenses mainly reflected seasonal factors in China with the global holiday season approaching, we plan to step up marketing investments as planned. while the marketing ratio may rise sequentially, it will vary year-over-year depending on regional and channel mix. Over the longer term, we remain focused on improving efficiency by growing direct mobile traffic enhancing cross-selling and strengthening customer loyalty.

We will now take our last question from the line of Qiuting Wang from CICC.

My question is about Trip.com margin as our international business grows rapidly, how should we expand margin out of Trip.com next year and in the longer term?

It is still too early to provide specific commentary on the margin outlook for 2026. In general, we view margin as a natural result of a dynamic business mix. and ongoing improvements in operating efficiency across each business segment. In the long run, we do not see any structural limitations to our profit margins, supported by our innovative strategies global expansion and forward-looking investments, our margins could be comparable to both of our international peers.

We have now come to the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Michelle for closing comments.

Thank you, everyone, for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our fourth quarter of 2025 earnings call. Thank you, and have a good day.

Thank you very much. See you next quarter. .

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to Trip.com Group 2025 Q2 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please go ahead.

Thank you. Thank you all. Good morning, and welcome to Trip.com Group's second quarter of 2025 earnings conference call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

James, Jane and Cindy will share our strategy and business updates, operating highlights and the financial performance for the second quarter of 2025 as well as some outlook for the third quarter of 2025. After the prepared remarks, we will have a Q&A session.

With that, I will turn the call over to James. James, please.

Thank you, Michelle, and thanks, everyone, for joining us on this call today. The travel market continues to demonstrate strong resilience in the second quarter of 2025 with demand holding steady across regions and categories. In particular, China's inbound travel segment has shown outstanding momentum, reflecting growing international interest and confidence in the country as a world-class destination. During the quarter, Trip.com Group's inbound travel bookings increased by over 100% year-over-year, driven primarily by demand from Korea and Southeast Asia, 2 of our most active source markets. This growth underscores the broader potential of China's inbound travel sector, which remains an underdeveloped yet highly promising contributor to the national economy. Today, inbound travel accounts for less than 0.5% of China's GDP, well below the 1% to 2% levels typically seen in developed markets, highlighting

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are uniquely positioned to lead the development of travel-focused AI with access to proprietary user insights, real-time product feeds and verified inventories, OTAs can deliver more accurate, context-aware and trustworthy recommendations than general purpose AI agents. Combined with our strong service capabilities, we are well equipped to provide end-to-end solutions that support travelers from discovery to booking and beyond.

In line with the strategy, we recently upgraded our trip planner, delivering a highly personalized and intelligent planning experience. The journey begins with just 3 simple questions: destination, trip duration and travel style. From there, the AI generates a customized itinerary tailored to the user's preferences. Real-time transportation, accommodation, dining and attraction options are seamlessly integrated into the plan, complete with pricing, availability and detailed descriptions. The trip planner ensures that every recommendation is practical and locally relevant. Suggestions are powered by millions of data points from Trip.Best topics, trip house and trip events feeds, surfacing top-rated and timely experiences trusted by our global user base. Attractions are checked for verified seasonal suitability and ease of access, while itineraries proactively avoid common issues such as long transfers.

After the AI does the groundwork, users can also work directly with real travel consultants on app to fine-tune their plans, providing an extra layer of expert assistance where needed. Users can preview their full journey on an interactive map where they can freely adjust routes, swap attractions or modify their schedule, either on their own or with AI's assistance. This combination of verified insights and flexible planning ensures each itinerary is both reliable and fun to explore. Whether planning for a family vacation, cultural adventure or first-time visit, the AI adapts to each traveler's style and needs, delivering a seamless, enjoyable and efficient planning experience.

Looking ahead, we remain highly optimistic about the long-term prospects of the travel industry. Travel not only drives economic development but also promotes cultural exchange, global understanding and social vitality. We will continue to invest in innovation, support our partners and champion the strategic value of travel as a pillar of national growth and global engagement.

With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. As a quick overview, our net revenue in Q2 increased by 16% year-over-year, reflecting healthy demand across our key markets and business segments. Adjusted EBITDA was also up 10% year-over-year, supported by continued top line growth and operational efficiency. Leisure travel continues to gain momentum as more travelers seek meaningful, flexible and personalized experiences.

Inbound travel continues to gain strong momentum. At the national level, inbound arrivals in the first half of 2025 grew by 30% year-over-year with 71% coming from visa-free regions. On our platform, inbound bookings in the same period increased by over 100%. China remains a highly attractive destination for international travelers, and we are well positioned to meet this growing demand. With our scale, strong local partnerships and extensive product coverage, we offer a seamless, one-stop travel experience in China, delivering compelling value that is hard to find elsewhere.

We also simplified key services to eliminate common pain points and make travel easier for international visitors. For example, travelers can easily book China's high-speed rail directly through our mobile app, skipping the lines at the station. They can also purchase attraction tickets in act and access them on-site simply by scanning their passport with no physical vouchers required. In August, we launched the country's first inbound travel service center at Terminal 3 of Beijing Capital International Airport. Designed as a proactive service hub, the center offers multilingual one-on-one assistance, instant bookings with exclusive benefits and integrated services such as tours, transport, currency exchange and global shopping. By simply scanning a QR code, visitors can instantly receive a personalized itinerary based on their length of stay. This initiative builds on our complementary half-day Beijing Tour, which launched in December 2024 and has served around 5,000 visitors from over 80 countries. Our goal is to turn half-day visits into repeat, in-depth journey and replicate the model at more entry points. Building on these capabilities, aim to welcome a broader base of inbound travelers. As visa policies continue to ease and China's global appeal rises, we expect inbound travel to become a key growth engine for our business.

Following the momentum in inbound travel, our global business continues to deliver strong and sustained growth. International bookings on our platform increased by over 60% year-over-year with strong contributions from the APAC region, where we maintain both strategic focus and operational debt. Mobile remains a key growth driver, now accounting for 70% of total bookings. As travelers increasingly plan and manage their trips on the go, our app has become a vital channel for engagement, conversion and repeat use.

In addition to offering a wide range of travel products, we differentiate ourselves through reliable and high-quality services, especially during critical moments. Our global SOS service has become a cornerstone of trust and loyalty. Alongside 24/7 multilingual customer support, we activate a dedicated emergency response mechanism during major crises, proactively contacting travelers in affected areas to ensure their safety and assist with booking adjustments, all of which are fully covered by our disaster relief fund. Since launching in 2017, the service has successfully resolved over 22,400 cases with a 98% success rate. We also work closely with airports, airlines, hotels and local partners to provide timely updates and coordinated support. This includes assisting with flight rebooking in the event of cancellations and working with hotels to waive charges when prices are delayed.

Additional support includes coordinating medical transfers, replacing lost travel documents, helping with delayed baggage and escorting minors home when needed. By being present, when it matters most, we offer travelers not just service, but real peace of mind.

Outbound travel from China also sustained steady growth during the quarter. In Q2, cross-border flight capacity recovered to 84% of prepandemic levels. Our outbound hotel and air bookings have surpassed 120% of 2019 volumes, outpacing the broader market by 30 to 40 percentage points. Japan remains the top destination for Chinese outbound travelers. Southeast Asia continues to see healthy demand despite short-term shifts in travel patterns. Interest in long-haul destinations is also on the rise with Western markets attracting increasing attention.

To capture growing interest in global travel, we have strengthened partnerships across key regions. In Oceania, we signed strategic cooperation MOUs with Tourism Australia and Tourism New Zealand, aiming to promote the regions as a top destination for travelers from China and across Asia. In the Middle East, we established a global partnership with the Saudi Tourism Authority and signed an MOU with Qatar tourism. We also opened a new regional office in Dubai to enhance our local presence and better serve travelers in the region.

In the domestic market, our goal is to create value for the travel ecosystem and help our partners capture new demand and drive sustainable growth across the industry. To support this, we recently launched IntelliTrip, an integrated initiative that brings together a suite of AI-powered tools to help hotels capture inbound demand, differentiate their offerings and improve efficiency. Through IntelliTrip, our multilingual AI system enables hotels to offer translation and customer service in 26 languages. And tools like the high China tag help them stand out and attract more inbound traveling. We also help hotels generate bookings through product innovation and targeted marketing. For example, our Hotel + X product showcases each property's unique features and can lift average revenue by more than 30%.

By tailoring experiences for different user groups, we help hotels broaden their reach and unlock new opportunities. On the technology front, the IntelliTrip suite includes an AI business adviser that delivers real-time operational insights and an AI content generator that enables hotels to create and distribute video content at minimal cost. Looking ahead, we plan to partner with 200,000 hotels over the next 3 years, targeting 100% growth in inbound bookings, new users and efficiency as we drive stronger industry growth.

As we expand our reach globally, we are also seeing strong growth in the silver generation. This demographic is not only expanding but also becoming more active and influential in shaping travel trends. In Q2, both the number of users in our Old Friends Club and their total GMV grew by over 100% since year-end 2024, reflecting rising engagement and purchasing power among senior travelers.

To meet their evolving preferences, beyond just site seeing, we have developed a range of themed travel products tailored to their interests, including photography tours, live music and folk arts, heritage and cultural immersion, wellness retreat and discovery-oriented itinerary. All trips are designed as small group tours, allowing us to maintain service quality and provide a more comfortable social and personalized experience. Our packages are also transparent and inclusive. Attraction tickets and transportation are fully covered with no hidden fees and no forced shopping during the journey, ensuring peace of mind and trust. We recently launched our first Old Friends Club flagship offline store in Shanghai, aiming to meet seniors' strong preference for face-to-face interaction when making travel decisions. We plan to open more of these offline touch points in the future, particularly in major travel hubs to further expand accessibility and engagement.

At the same time, we are capturing strong momentum among younger travelers through our travel plus entertainment products. In Q2, revenue from this segment grew by over 100% year-over-year, fueled by the rising popularity of concerts and live events. By bundling event tickets with accommodation and transportation, we provide travelers with a seamless, one-stop booking experience. These offerings not only enhance convenience for users but also encourage overnight stay and boost spending, thereby contributing to the growth of local tourism and the broader economy.

We remain equally focused on our responsibility to build a more innovative, sustainable and inclusive future. As part of this commitment, we announced the launch of a USD 100 million tourism innovation fund at our Envision 2025 Global Partner Conference. The fund aims to support commercial innovation and spark the next wave of breakthroughs in travel. We also established the Tourism Innovation Award to recognize and inspire outstanding ideas across areas such as sustainability, technology and cultural heritage.

On the sustainability front, we encouraged more than 100 million travelers to choose eco-conscious travel options over the past year, a 39% year-over-year increase. Since the launch of our low-carbon hotel standard initiative in 2023, participation has doubled to 3,000 partner hotels. In transportation, 92% of flights on our platform now display carbon emission data to support more eco-friendly choices. Rental car users can also select from over 1,000 electric vehicle models with clear carbon footprint disclosure to encourage lower emission travel.

Our rural revitalization strategy has led to the opening of 34 country retreats across 14 provinces creating 40,000 jobs with 80% filled by local hires. These efforts contribute to regional economic development and local talent cultivation and have been recognized by the UN Global Compact as a case study in inclusive growth. Internally, we continue to promote a family-friendly workplace through childcare subsidies, hybrid work arrangements and fertility-related benefits, supporting work-life balance and reinforcing team cohesion and innovation. Looking ahead, we are integrating sustainability into every aspect of our strategy and operations to build an eco-friendly, inclusive and resilient future.

In conclusion, we are seeing strong momentum across multiple segments. With a diversified user base, strong operational capabilities and a commitment to sustainability, we are well positioned to seize future opportunities and help shape a more connected travel ecosystem.

With that, I will now turn the call over to Cindy.

Thanks, Jane. Good morning, everyone. For the second quarter of 2025, Trip.com Group reported a net revenue of RMB 14.8 billion, representing a 16% increase from the same period last year and a 7% increase from the previous quarter, primarily due to strong travel demand across segments. Accommodation reservation revenue for the second quarter was RMB 6.2 billion, representing a 21% increase year-over-year and a 12% increase quarter-over-quarter. Outbound and international hotel bookings remained robust, and domestic bookings continued to demonstrate resilience and outpacing market growth. Transportation ticketing revenue for the second quarter was RMB 5.4 billion, representing an 11% increase year-over-year and remained flattish quarter-over-quarter. Outbound air bookings maintained strong momentum, consistently outpacing overall market growth. Our international air bookings also continued to scale rapidly.

Packaged tour revenue for the second quarter was RMB 1.1 billion, representing a 5% increase year-over-year and a 14% increase quarter-over-quarter, primarily driven by the expansion of our international tour offerings. Corporate travel revenue for the second quarter was RMB 692 million, representing a 9% increase year-over-year and a 21% increase quarter-over-quarter. The sequential increase was consistent with seasonal trends and supported by a growing number of companies adopting managed travel solutions.

Excluding share-based compensation charges, adjusted product development expenses for the second quarter increased by 21% year-over-year. Adjusted G&A expenses for the second quarter increased by 8% year-over-year. These were mainly due to increase in personnel-related expenses. Adjusted sales and marketing expenses for the second quarter increased by 11% from the previous quarter and increased by 18% from the same period last year. The sequential increase was primarily due to elevated marketing and promotional investments, particularly in support of our international business expansion initiatives.

Adjusted [ beta ] was RMB 4.9 billion for the second quarter compared with RMB 4.4 billion in the same period last year and RMB 4.2 billion in the previous quarter. Diluted earnings per ordinary share and per ADS were RMB 6.97 or USD 0.97 for the second quarter of 2025. Excluding share-based compensation charges and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 7.20 or USD 1.01 for the second quarter.

As of June 30, 2025, the balance of cash and cash equivalents, restricted cash, short-term investment, held-to-maturity time deposits and financial products was RMB 94.1 billion or USD 13.1 billion. As of the earnings announcement date, the company has completed share repurchases totaling approximately USD 400 million, fully utilizing the authorized quota for the year.

In August 2025, the Board approved a new share repurchase program, authorizing the company to repurchase up to an aggregate of USD 5 billion of its outstanding shares. This reflects our continued commitment to enhancing shareholder returns and confidence in the company's long-term value. We remain disciplined in evaluating future capital allocation opportunities in line with our strategic priorities.

In conclusion, we are encouraged by the continued strength in travel demand across both domestic and international markets. As we enter the second half of the year, we remain focused on cost discipline and operational efficiency, positioning the company to deliver sustainable growth and long-term value.

With that, operator, please open the line for questions.

[Operator Instructions] First question comes from the line of Alex Yao from JPMorgan.

So AI and content has been highlighted as one of Trip.com's key strategies. Can you elaborate how the strategy will work in the next couple of years? Additionally, can you share more about the recent upgrade to trip planner?

Thank you for your question. The integration of AI and content creates powerful synergies across our platform. On the user side, AI enhances content by delivering personalized intelligent recommendations for travel planning. Internal rich content ecosystem strengthens our AI models. For example, users can now generate content more easily, not only through text input, but even from a single image, allowing us to provide highly practical and reliable suggestions based on browsing behavior, bookings and reviews.

On the back end, we continue to build robust content infrastructure. AI significantly improves data processing efficiency and enhances the quality of automated content generation, which ultimately drives higher customer satisfaction and loyalty.

From a strategic perspective, we are deeply committed to exploring the full potential of AI. Every innovation in this space is valuable and we continuously iterate to optimize how AI can serve travelers. As technologies evolve, our goal remains clear: to be the most efficient and reliable one-stop travel service platform.

As for Trip Planner, our latest major upgrade allows users to initiate trip planning from any idea or inspiration. The tool now includes selectable options to help users better expressing their travel preferences. Powered by large language models and informed by millions of data points from Trip.Best, trip pulse and trip events, trip planner delivers highly personalized, data-driven suggestions that are easily editable. We remain committed to refining its capabilities and delivering even more enhanced experiences in future iterations.

Next, we have Joyce Ju from Bank of America, BofA Securities.

Congrats on another very solid quarter. My question is related to some vacation momentum just passed. Could management kindly share with us your observations on summer booking trends this year? Any colors and insights into cross-border travel trends recently?

Sure. Thanks, Joyce. We have seen resilient demand from the market we are serving. For domestic travel, volume growth is very strong, which partially is offset by the decline of the ADR. But overall, we saw the domestic travel remain very resilient in terms of volume growth. The second piece is outbound travel. On a national level, flight has recovered to about 80% to 90% of pre-COVID level. Our platform, we have already recovered to more than 120% compared to pre-COVID level, which is very resilient as well. The third piece is foreign perforin. We have delivered more than 60% year-over-year growth for the areas outside of Mainland China, and we'll keep up with a strong momentum. And the last piece is from the rest of the world into Mainland China. That number on the national level is about 30% year-over-year growth. Our platform is more than 100% year-over-year growth.

So our focus is to take our service and products at a high quality level to ensure all of our customers are provided with excellent services with high quality. And meanwhile, we will also steadfast in globalizing our business. Thank you.

Next question comes from Thomas Chong from Jefferies.

My question is about how have hotel and air ticket prices trend recently? And what projection do we have for the rest of the year?

Sure. In the second quarter, both the domestic hotel and air ticket prices continued to face pricing pressure despite healthy volume growth supported by resilient demand. On the supplier side, overall, the hotel availability increased by mid- to high single digits year-over-year. And the recent data indicate that the domestic hotel price has been stabilizing with summer holiday declines narrowing to the mid- to low single-digit range. With regard to the outbound travel, air ticket prices continued to be softening year-over-year due to increasing flight capacity recovery but still higher than prepandemic levels, while the hotel prices remain quite stable.

Next, we have Brian Gong from Citi.

Congratulations on solid results. My question is about consumer sentiment. Given ongoing macroeconomic uncertainties in the second quarter, could the management share your insights on recent consumer sentiment trends?

Yes. We have seen the market has shown resilience in terms of the volume growth. Particularly after COVID, people are focusing on more experiential products. We -- the young people are very interested in events such as concerts, music festivals, sports, and retired people are also very active in the travel market. So we saw strong volume growth across -- over the market. However, it's partially offset by slight decrease in ADR. But we have seen that sustainable growth in terms of volume increases in domestic, outbound and inbound travel. Thank you.

Next, we have Yang Liu from Morgan Stanley.

First, congratulations on the solid results. I have one question regarding the airline. Sorry, can you hear me?

Yes.

We saw that [ unitrip ] or in Chinese, [Foreign Language] recently launched a new feature supporting the direct airline sales. What impact could this have on your business?

Yes. I think travel is a very promising and lasting industry. Over the past 25 to 26 years we have been in business, every year, we have seen newcomers coming in. From our experience, the market is very big. As long as we focus on providing the best product and excellent services to the customers, consumers will be willing to travel with us. So we have talked about we established the SOS program around the world. We also make sure our service level globally provides 24x7. 30 seconds, we'll be able to answer any calls from anywhere in the world. All these services give confidence to our consumers when they travel with us. So we are confident to stick with our G2 strategy, which is great services and globalization. I think as long as we focus on these 2 items, we'll be able to provide the best service and excellent products to our consumers. Thank you.

Next, we have Wei Xiong from UBS.

I want to get your latest thoughts on the competition side. So now with [ JD ] trying to enter the market and other OTAs making strategic moves as well, how would you assess the current competition landscape? And what impact do you anticipate for the business?

Yes. I think we, again, focus our strength in what our consumers are looking for. Travel is an industry that really need service provider to provide excellent services on a timely basis. We are not supportive of pure price competition because without high quality, pure price competition doesn't serve our customers when they travel around the world. So our strategy has always been focusing on excellent services, focusing on comprehensive product offerings and win customer hard and give them peace of mind when they travel around the world. That strategy has served us well ever since we established our business for the past 25 years. And we will put all our resources to further expand our leadership in providing high quality of the service and excellent products to our global consumers. Thank you.

Next, we have Parash Jain from HSBC.

My question is more around some of the themes, whether it's Old Friends Club or travel plus entertainment. We have heard from you over the past several calls around exciting opportunities in these areas. Is it possible to quantify how big that market is, let's say, over the next few years? And what kind of share are you expecting from that? And any recent trend in terms of growth as well as the absolute contribution to your top line?

Sure. I think these are the 2 initiatives established by our teams identifying the different segments. First of all, for Old Friends Club, in China, the retirement age is quite young. Between 50 to 55, people can start to get retired. And this group is the first group which makes money at the open door policy in China. So they have saved enough money. And at that age, they're very healthy, very energetic and very curious to explore the world. So our forecast is in the next 3 to 5 years, that market can grow into $1 trillion-plus markets, which is very significant.

In addition, this group is not time-sensitive. They do not have to travel during the school break or national holiday or summer break when families are trying to take the children to travel. So when we work with our destination partners, they really like this group to fill in the gaps during the slow season. And in return, our customers are also going to get very good value for their money. So we forecast that segment is going to grow very significantly.

The second piece is for young people. As you can see, Taylor Swift shows, Olympic games, F1 car races, those tickets are very well demanded and sold instantly on our platform. The demand is very strong. So we feel the demand is exceeding the supply as of now, which is a strong indication it's a robust business. So we will continuously put our investment behind it to put engine in the travel market

Next, we have Jiong Shao from Barclays.

I think James started the call talking about -- highlighting the potential for inbound travel. I think Jane also touched on that as well in her prepared remarks. I was just hoping -- given it seems to be a pretty significant and relatively newer opportunity for you. So could you perhaps share with us a little bit more insights to help us better understand the potential here?

Sure. Thank you, Jiong Shao. When we look at the global markets, developing country as well as developed country can get somewhere between 1% to 5% of the GDP from inbound business. Pre-COVID, the inbound business only accounted for 0.3% for China inbound business. So there is a great potential if we do a very good job to promote that business. And we invited more than 3,000 global partners in May, and the feedback we got from our partners are China has a very good infrastructure, a very rich history, friendly people, very delicious food. And on top of it, you can stay in a 5-star hotel for only USD 100 to USD 200, which offers affordable luxury.

So I think if we put the right efforts in promoting the inbound travel, more and more people will be able to see the real China. And it's very good for international exchange and cultural understanding. So we believe this is a huge opportunity if we put the right emphasis on it. Thank you.

Next, we have Simon Cheung from GS.

I think you touched on a lot about your 4 for the so-called Trip.com international performance, which saw some acceleration this quarter versus last quarter. Wondering whether you can also provide a bit more detail on the operational as well as the financial performance and perhaps how you envision this would contribute to group over the longer run.

Sure. In the second quarter, the bookings on the Trip.com increased by over 60% year-over-year, highlighting strong growth despite macroeconomic headwinds in certain markets. The APAC region remain to be our operational focus and continue to contribute the majority of our international revenue. We are also seeing encouraging momentum in the newer market such as the Middle East, even at an early stage of development. The triple-digit growth in the inbound booking highlights in the vast potential of the inbound travel segment. This business also creates very strong synergies as there is significant overlap between Trip.com's targeted APAC user bases and inbound travelers into China, many of whom also come from the APAC countries.

Our ongoing enhancement to the Trip.com Rewards loyalty program have effectively strengthened user retention and created a flywheel effect that reinforces customer loyalty. With exclusive membership benefits, users are incentivized to upgrade their tier and unlock the potential perks. Thank you.

Next, we have Wei Fang from Mizuho.

Congrats on a solid quarter. My question is a follow-up on the international expansion. More specifically, could you provide an update on your marketing progress for Trip.com in 2Q? And hopefully, if you can also help us with your marketing strategy and plans for the rest of 2025.

Sure. In the second quarter, our rapid growth reflected the effectiveness of our marketing strategy. By maintaining disciplined ROI-driven marketing investment, we continue to focus on acquiring app users who represent our most valuable channel for the long-term growth. In the second quarter, our native mobile app accounted for approximately 70% of our global orders. In several key markets, we are already seeing that the increased scale is improving the efficiency of daily operations with further gains expected as we continue to expand.

Through ongoing experimentation and dynamic budget allocation, we concentrate resources on the high-performing strategies. For less efficient channels, close monitoring enabled us to pivot earlier while also gaining insights into user behavior to inform future campaigns. Looking ahead, with the summer travel season underway and more global holidays approaching, we will continue to run signature campaigns and invest in proven marketing opportunities. At the same time, we will maintain disciplined spending to ensure alignment with our long-term strategic goals. Thank you.

Next, we have John Choi from Daiwa.

Just a quick follow-up here, I think on your international markets, we've noticed that some global players have launched pretty aggressive marketing in certain markets. How would this impact your business, particularly for Trip.com and your marketing spending towards the second half of this year and next year?

The APAC market offers vast potential due to its very fragmented, huge travel resources, low online penetration and resilient user demand. This will certainly attract many of the players. As said, the market's substantial size enables all online players, including Trip.com, to continue growth and capture opportunities even in highly competitive areas. Trip.com leverage our one-stop travel offerings, comprehensive inventory offerings and competitive pricing, mobile-first strategy as well as the excellent customer services to maintain the strong growth across key markets in this region. We are also focused on scaling our business through targeted and localized marketing investment.

By implementing demand-driven strategy tailored to each market, we aim to expand our presence in the APAC region and accelerate our growth. Thank you.

Our last question comes from Qiuting Wang from CICC.

Congratulations on the strong results. I have one question on your shareholder returns. Could you please update on your buyback process on a previous annual capital return program? And could you share more color on your newly announced USD 5 billion capital return program?

Sure. Over the past quarter, we have repurchased around 7 million ADRs from the market, fully utilized the authorized quarter for this year. As of now, our capital yield for this year is around 1.5%. With regard to the new program, this quarter, we announced a new share repurchase program of USD 5 billion, funded by proceeds from the recent deal and our cash position. This will be a multiyear program without a set expiration date where we will strategically purchase shares from the NASDAQ and Hong Kong Exchange from time to time. Our objective is to at least mitigate the potential dilution from our ESOP program and potentially reduce our overall share count. Looking ahead, we remain committed to driving our long-term shareholder value through sustainable business growth and disciplined capital return initiatives. Thank you.

This concludes the Q&A session. I will now hand the call back to Michelle.

Thank you. Thank you everyone, for joining us today. You can find the transcript and the webcast of today's call on investors.trip.com. We look forward to speaking with you on our third quarter of 2025 earnings call. Thank you. Have a good day. Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.