Ctrip.Com International Ltd (NASDAQ:CTRP) Q2 2019 Earnings Conference Call Transcript

Sep 09, 2019 • 08:00 pm ET

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Ctrip.Com International Ltd (NASDAQ:CTRP) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
Cindy Xiaofan Wang

to improve, this was due to our ROI driven marketing strategy and continued efforts in customer services, product cross selling and content building. Despite the sequential decrease of marketing investment, we were able to maintain stable growth in both MAU traffic and in the acquisition of new transacting customers. We also saw steady improvement in the cross-sell ratio between product lines.

Non-GAAP operating profit in the quarter was RMB1.7 billion, grew 43% year-on-year and 26% quarter-over-quarter. Non-GAAP operating margin for the second quarter was 20% increasing from 16% in the same period of 2018 and 17% in the previous quarter. This increase was mainly due to improvements in operational efficiency. Diluted loss per ADS was RMB0.73 or USD0.11 for the second quarter of 2019. The net loss was primarily due to the loss recorded for fair value changes of equity securities investment. Excluding share-based compensation charges and fair value change of equity security investment, non-GAAP diluted earnings per ADS were RMB2.25 or USD0.33 for the second quarter of 2019.

As of June 30, 2019, the balance of cash and cash equivalents, restricted cash and short-term investment held to maturity, deposit and financial product was RMB67.8 billion or USD9.9 billion. In July, the company announced a transferable term loan facility of up to USD2 billion equivalent with a greenshoe option of up to USD500 million. In August, the company repaid USD500 million of convertible notes of maturity, which reduced the potential dilution of approximately 1.5 million ordinary shares. We also announced a Put Right Notification for 1.25% convertible senior notes due 2022. If all our outstanding notes are surrendered for repurchase through the exercise of Put Right, the aggregate purchase price will be USD975 million, which will further reduce potential dilution of approximately 1.9 million ordinary shares. On August 30, the company completed a share exchange transaction with Naspers Limited. Following the transfer, Ctrip owned ordinary shares and Class B shares representing approximately 49% of MakeMyTrip's outstanding voting security. Ctrip will apply for the equity method of accounting to pick up the gain and loss of MakeMyTrip through from August 30 on a one quarter lag basis.

Now turning to the future outlook. For the third quarter of 2019, the company expects net revenue growth to continue at a year-over-year rate of approximately 10% to 15%. This forecast reflects potential impact of about about 400 to 500 basis points on the growth rate due to short-term macro and industry headwinds. Excluding share-based compensation, the company expects non-GAAP operating income will be in the range of RMB2.3 billion to RMB2.6 billion. For the rest of the year, the company expects to outperform the market, while delivering continuous operating leverage compared with the previous year. This forecast reflect Ctrip's current and preliminary view, which is subject to change.

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