TCOM – 2022 Q4 Transcript
Operator: Good day and thank you for standing by. Welcome to Trip.com Group 2022 Q4 Earnings Conference Call. Please be advised that todayâs conference is being recorded. Iâd now like to hand the call over to your first speaker today, Ms. Michelle Qi, Senior IR Director. Thank you. Please go ahead. Michelle Qi: Thank you. Good morning and welcome to Trip.com Groupâs fourth quarter of 2022 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 Groupâs 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 financial performance for the fourth quarter of 2022 as well as the outlook of the first quarter of 2023. After the prepared remarks, we will have a Q&A session. With that, I will turn the call over to James. James, please. James Liang: Thank you, Michelle. Thank you everyone for joining us on the call today. This 2022 market aimed to 3-year cost utilities rate of COVID-19 pandemic Trip.com Group has once again successfully overcome the difficulties and China crisis into opportunity, just like what we did 20 years ago with SARS. In the fourth quarter, while Chinaâs domestic travel market was still overshadowed by pandemic resurgence in the fourth quarter, I am delighted to see steady improvements in overseas markets. Overall, hotel bookings on our global platform, has outperformed the pre-pandemic level for four consecutive quarters. On a constant currency basis, overall air ticketing revenue for our global platforms in Q4 has also fully recovered to the pre-pandemic level. Demand for Chinaâs outbound travel surged in Q4. Searches for outbound flights departing from Mainland China hit a 3-year peak following the downgrade of COVID-19 to a Class B infectious disease and Chinaâs reopening in December. Such encouraging data reveals increasing consumer confidence in the travel industry globally. Again, since the announcement of Chinaâs reopening, we have seen strong travel demands across our various business lines. Our domestic hotel bookings and air bookings have already surpassed the 2019 level. Outbound travel bookings have recovered to more than 40% of pre-pandemic levels despite capacity limitation. While airlines now running international flights at a pre-pandemic level could be a short-term bottleneck, we believe Chinaâs outbound travel will start to pickup in Q2 when flight capacity gradually recovers. Europe and the U.S. have already been making good progress towards post-pandemic recovery of global travel. This year, when China fully reopens and the whole Asia-Pacific region catching up rapidly, 2023 is projected to be an exciting year of recovery and growth. The future is bright. We are well prepared and remain committed to helping travelers explore even the furthest corners of the planet so to bring the world closer together. With that, I will turn the call over to Jane for the operational highlights. Jane Sun: Thank you, James. Good morning, everyone. As a quick overview, in Q4, despite the outbreak of the pandemic, our total net revenue grew by 7% year-over-year. We saw steady improvement in our overseas business, which have outgrown the pre-pandemic level. For the full year of 2022, our total net revenue remained stable year-over-year. Our adjusted EBITDA stayed positive for the past 3 years despite pandemic challenges. Thanks to our teamâs efforts and our effective cost control and efficiency improvements. Now, I would like to share what we have seen in each region. First, in the China market â for China market, the fourth quarter of 2022 was the darkness before dawn. While domestic travel performance was soft in October and November due to viral resurgence and a strict pandemic controlling measures the announcement of dropping quarantine requirement and the reopening of countryâs border in December was the key turning point in Chinaâs travel recovery. Overall, despite China domestic travel market being largely impacted by pandemic, we continue to adapt our strategy to outperform the market. Our same-city staycation hotel bookings in this quarter, grew by 10% above 2019 pre-COVID level and was 40% higher than the pre-pandemic level for the full year of 2022. Our domestic air ticketing booking was also recovering faster than the market. Quarter-to-date, we are glad to see that the long-haul travel bookings have strongly recovered and have already surpassed 2019 pre-COVID level and the short-haul travel growth remained robust and has nearly doubled its 2019 pre-COVID level. With both long-haul and short-haul travel demands coming back, we anticipate our domestic business to remain on the strong growth trajectory for the rest of 2023. Second, outbound, China outbound travel has seen the demand has been robust, especially after the announcement of the border opening in December. In Q4, outbound air ticket bookings on Trip.com Group platform increased by over 200% year-over-year, and outbound hotel bookings increased by 140% year-over-year. Demand for outbound travel continued to surge in the first two quarters â 2 months of 2023, with outbound travel bookings increased by more than 300% compared to the same period in 2022. Back in 2019, Mainland China was the largest outbound travel market in the world, with Chinese travelers taking over more than 150 million trips overseas. We are pleased to see them gaining confidence in traveling and are eager to explore the world again after 3 years. Right now, the bottleneck lies in outbound flight capacity, which is currently only at 15% to 20% of pre-COVID level and is largely limiting the overall recovery pace of Chinaâs outbound travel. We anticipate that the aviation industry will set in motion plans to restore flight capacity and that outbound travel will pickup the pace in the coming quarters. Third, global markets. On the international front, the Europe and American markets continue to show steady improvements, while the opening up of the Asia region further accelerated the recovery in APAC market. For flight performance, the overall air ticket booking on our global platforms have achieved over 80% year-over-year growth. Air ticket bookings in EMEA and American market continued to show strong growth. The APAC region was also picking up the pace and growing at over 300% year-over-year. Over on the consistent currency basis, overall air ticket revenue from the global platform, have already fully recovered to the pre-pandemic level. For hotel business, overall hotel bookings on our global platform hit a record high, and it was above pre COVID level for four consecutive quarters with domestic hotel bookings in non-China market increased by 140% versus 2019. Now, I would like to give strategic highlights on the following items. First, accommodation, over the past 3 years, we have viewed a strong use case in China on short-haul and continue to remain at our advantage in long-haul travel. In order to serve our evolving needs for the customers and create value for our partners. We continue to press ahead with improvements in product coverage, innovation, inspiration, and the recommendation in the past quarter. With the hotel market, we have seen hotel evolving into destination in themselves, with travelers emphasizing the quality of their accommodation. Package deals cover 70% more properties than 2021 in the more than 7,000 high end properties joining hands with us to help our customers to get the best value for money. Over 240,000 hotels also join our TripPLUS program to gain access and provide extra benefits to high-quality loyal customers. In Q4, over 50% of our TripPLUS reservation, come from high end hotels. In the low tier city, we continue to leverage our gateway products to acquire new customers. As we continue to strengthen our dynamic pricing strategy. Co-branded membership program also help expanded our reach to over 30 million joint members, which is 6x the number in 2019 pre COVID level. Second, global business. We remain confident in our China customers desire to venture overseas, especially with COVID fading away and the world embracing normalcy. We stayed focus on tightening connections with our international partners and a strengthening engagement with our Chinese customers. As one of the very few companies invested heavily in global suppliers relationship even during the pandemic period. We are well positioned to capture the strong pent-up demand for outbound travel. In addition to the resumption of China outbound travel, yet another great opportunity lies in the acceleration of travel recovery in APAC region. Strong propensity to travel is in the region provide a good opportunity for us to capture more bookings. While we conclude our year with the strong growth, International hotel and air ticket to business, our overseas activity business has also delivered great performance with GMV increased by over 130% year-over-year, we will continue to source for unique offerings and localize our campaigns to gain trajectory for local demands, while improving our competitiveness and a service capability to win over the local mindset. Third, content platform. Following the report of the global travel activities demand for inspirational destination continue to increase we are seeing customers coming to our platform not only to book air tickets or hotel room, but also to get inspired for their next trip. In the fourth quarter, our content generation pipeline and the usersâ engagement capabilities continued to improve, the number of KOLs increased by 47% year-over-year. In 2022, user generated content also increased by 33% compared to the previous year. Average number of the content viewed per user also continued to increase. In line with our commitment to innovation, we have also launched our experimental AI chatbot TripGen, on our Trip.com platform. TripGen is a generative AI chatbot integrated with our open AI API and is designed to provide travelers with live assistance and provide the most relevant and authentic travel recommendations to our customers. First, corporate responsibility. While strengthening our capabilities to inspire and serve customers to explore the world, we remain committed to pushing forward with our corporate responsibility. First, common prosperity, regarding our rural revitalization initiatives, our plan is to roll out 10 high-quality country retreats to empower 100 rural destinations and nurture 10,000 rural tourism talents within 5 years. Over the past year, 30 new Trip.com country retreats were built, making a total of 21 country retreats currently in operation. Right now, 80% of the staffs come from the local and their average income was increased by around RMB7,000 per year. We are delighted to be able to empower the locals and help pursue the common prosperity. Second, on sustainability. We announced our long-term green tourism goals, which include launching over 10,000 low carbon travel products, promoting sustainable travel and engage 100 million travelers in carbon â low carbon practices, and aiming to further reduce carbon emissions across its operation. To meet increase the demand for sustainable travel options our Trip.com brand launched its carbon offset option for travelers to address their flight emission by supporting a portfolio of trusted high impact climate projects in line with the UN sustainability development goals. In October Trip.com Group has officially joined the Global Sustainable Tourism Council GSTC as a member to promote sustainable tourism standard in the travel and tourism sector. Finally, during the quarter Trip.com was named Contact Center Of The Year 2022 at the International Customer Relationship Excellence Awards, and a Champion For Good in Singapore, demonstrating the recognition of our brand for its service excellence and a focus on local commitment. In conclusion, we are encouraged by our results and the reason to strong recovery in the market. I would like to thank our team for their dedicated efforts in maintaining quality services during the past 3 years. As we look into the future triple count group looks forward to working more closely with our global partners across the global market to shape our products and services around the customer needs and a pursuit for value. Working together, we will be able to deliver memorable trips for travelers wherever they choose to explore and visit in 2023 and beyond. With that, I would now turn the call to Cindy. Cindy Wang: Thanks, Jane. Good morning, everyone. For the first quarter of 2022 Trip.com Group recorded a net revenue of RMB5 billion representing a 7% increase from the same period last year and a 27% decrease from the previous quarter, primarily due to viral resurgence and strict pandemic control in the China domestic market during the first 2 months of the quarter. For the full year of 2022 net revenue was RMB20 billion, which remained stable year-over-year, mainly driven by recovery in the overseas market, and partially offset by a soft performance in the China domestic market. Accommodation reservation revenue for the fourth quarter of 2022 was RMB1.7 billion, representing a 12% decrease year-over-year, and a 42% decrease quarter over quarter recovering to 57% of the 2019 level. For the full year of 2022 accommodation reservation revenue was RMB7.4 billion, representing a 9% decrease from the 2021. In the fourth quarter, the China domestic market was largely impacted by the viral resurgence as strict pandemic control and limiting the hotel businesses performance. On the other hand, hotel booking on our international platforms remain robust and above the pre COVID level. Transportation ticketing revenue for the fourth quarter of 2022 was RMB2.2 billion, representing a 45% increase year-over-year and a 16% decrease quarter-over-quarter recovering to 64% of the 2019 level. For the full year of 2022 transportation ticketing revenue was RMB8.3 billion, representing a 20% increase from 2021. Domestic transportation recovery momentum was disrupted by the resurgence of COVID cases for the fourth quarter, while our international air saw the sequential improvement compared to the previous quarter, mainly driven by the steady improvements in the Europe and U.S. markets and the robust recovery in the Asia-Pacific markets. Packaged tour revenue for the fourth quarter of 2022 was RMB164 million, representing a 7% decrease year-over-year and a 58% decrease quarter-over-quarter recovering to 21% of the 2019 level. For the full year of 2022 packaged tour revenue was RMB797 million, representing a 28% decrease from 2021. Corporate travel revenue for the fourth quarter of 2022 was RMB277 million representing a 25% decrease year-over-year and the 25% decrease quarter-over-quarter recovering to 74% of the 2019 level. For the full year of 2022, corporate travel revenue was RMB1.1 billion, representing a 20% decrease from 2021. Air ticketing bookings on our corporate travel platform was impacted by the pandemic control measures and the limited flight capacity. While accommodation booking continue to gain momentum, despite pandemic challenges and was double the 2019 level. Excluding share-based compensation charges, our total adjusted operating expenses were 15% lower than the previous quarter, and it was a saving of 33% compared with the same period in 2019. For the full year of 2022 total adjusted operating expenses was 34% lower than the 2019 level. This reflects our effective cost control and efficient operating management across business lines. Adjusted product development expenses for the fourth quarter decreased by 16% from the previous quarter and was the saving of 20% compared with the same period in 2019. Adjusted G&A expenses for the fourth quarter remained flattish, compared to the previous quarter and to the same period in 2019. For the full year of 2022, adjusted product development expenses, and adjusted G&A expenses were 20% and 11% lower than the 2019 level respectively. As we continued to run lean and maintain a stable headcount. Adjusted sales and marketing expenses for the fourth quarter decreased by 21% from the previous quarter, and 55% compared with the same period of 2019. For the full year of 2022, adjusted sales and marketing expenses were 55% lower than the 2019 level. As we continue to stick with our stringent cost control protocol. Adjusted EBITDA was RMB286 million for the fourth quarter, compared with RMB64 million in the same period last year, and RMB1.4 billion in the previous quarter. Adjusted EBITDA margin was 6% for the fourth quarter, compared with 1% in the same period last year, and 21% in the previous quarter. Diluted earnings for ordinary shares and for ADS were RMB3.12 or $0.45 for the fourth quarter of 2022 and RMB2.14 or $0.31 for the full year of 2022. Excluding share-based compensation charges and fair value changes of equity securities investment exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB0.76 or $0.11 for the fourth quarter and RMB1.97 or $0.29 for the full year of 2022. As of December 31, 2022, the balance of cash and cash equivalents, restricted cash, short-term investment, held to maturity time deposit and financial products, was RMB60 billion or $8.6 billion. Now turning to the first quarter of 2023, we would like to share some colors of our business. Since the lifting of COVID related travel restrictions, China domestic travel market has seen very strong release of pent-up demand in the first 2 months of 2023, with industry level air passenger volumes recovered to around 80% of 2019 level and hotel RevPAR fully recovered in recent weeks. The international flight capacity also recovered to 15% to 20% of the pre-pandemic level and continues to moving up. Quarter-to-date, we are glad to deliver strong results across our business lines. First, for our domestic hotel and air bookings have already surpassed the 2019 level. Second, our outbound travel bookings have grown by more than 300% compared to the same period last year and our hotel and air ticketing bookings on our global platforms continues to grow by triple-digits year-over-year. To conclude, the lifting of pandemic-related restrictions and reopening of country border have been an important driver to the recovery of global travel and our businesses. We acknowledge the uncertainty regarding potential looming new wave of COVID that may disrupt the recovery trends. However, we are confident in travelersâ strong desire for travel and ability to handle challenges. We will keep the operation lean and continuously to enhance efficiency and invest to seize opportunities in the coming future. With that, operator, please open the line for questions. Operator: Thank you. First questions we have the line from Brian Gong from Citi. Please ask your question. Brian Gong: Good morning, James, Jane, Cindy and Michelle. Thanks for taking my questions. So management just mentioned we have seen decent recovery for the industrial in our business, so just wonder can management share a bit more color and the details on the performance for our domestic outbound and international platforms respectively in recent weeks? Thank you. Jane Sun: Yes, thank you, Brian. Our performance for domestic outbound and also international are very strong. For domestic business, we have already see hotel and air tickets surpassed pre-COVID level. For outbound business, we have seen 300% quarter-to-date growth compared to last year although the air ticket capacity has not fully recovered yet. Certainly, on the platform â for global platform, we have seen three-digits growth in the regions. So we are confident that we can work hard to capitalize the opportunity in 2023. Thank you. Operator: Thank you for the questions. Next question is from the line of Alex Poon from Morgan Stanley. Please go ahead. Alex Poon: Thank you. Congratulation management on extremely strong results and year-to-date performance. Jane Sun: Thank you. Alex Poon: My question is related to our expectation for the rest of the year in 2023, will total revenue fully recovers to the pre-COVID level sometime this year? Thank you very much. Jane Sun: Thank you, Alex. Despite very limited visibility due to comparatively short booking windows compared with pre-COVID period, we expect that the recovery momentum of the China domestic travel will remain robust and that of the outbound travel will continuously to improve with increasing cross-border flight capacity in a healthy macro environment. With regard to our international brands, they are all on the right track to gain market share in respective markets and we expect to maintain the growth momentum in this year. So in summary, we were working very hard to make sure that we are going to continuously to gaining market share both for the China market, including China domestic and China outbound as well as for the international market, which will help us â help our revenue hopefully to go almost back to the normalized level. Thank you. Operator: Thank you for the questions. Our next question comes from Jiong Shao from Barclays. Please ask your question. Jiong Shao: Thank you very much for taking my question and congrats on the very strong result and outlook. My question is around margins. You have sort of optimized your cost structure during the pandemic. Now the demand is recovering. Your pipeline is growing very fast, but you also need to balance keeps kind of cost efficiency while investing enough to capture the growth. So I was wondering how you balance that and I will remember around pre-COVID your op margin was around 20% and sort of how we should think about getting to that level or even exceeding that level by end of the year? I think your longer term guidance on the margins is around 20% to 30% if I am not mistaken. Thank you. Jane Sun: Yes. We actually are very glad to see the efficiency improvement across brands and business segments through the past 3 years. For example, the improvement of our backend operating system allows us to maintain extensive coverage and active product innovations with smaller size of products offering team. And also our content strategy has contributed to higher user engagement and conversion rate, which also helped us to improve the marketing efficiencies. Yes, in the long run, of course we donât take for example margin as a target, but as a natural result of a healthy, more healthy business growth and disciplined cost control. And we believe the majority of our business segments are currently operating at better margin comparing to pre-COVID level on an apple-to-apple basis. And we will benefit from better scalability and synergies between our brands. And we are very confident to achieve a healthy as we guided before 20% to 30% level healthy margins while driving very sustainable business growth in the future. However, in the very short-term, the lack in outbound business recovery, and increase the mix from international OTA business will also to some extent, negatively impact the branded margins. But for this year, our team will work very hard, trying to have a very healthy and faster growth and at the same time to maintain a healthy margin. Thank you. Operator: Thank you for the questions. Next, we have the line from Alex Yao from JPMorgan. Please ask your question. Alex Yao: Thank you management for taking my question and congrats on strong demand recovery. I think itâs reasonable to assume that you guys will go through a period of very strong pent up demand recovery. But how do you guys think about the growth strategy and the growth rate target posts the pent up demand period for example? Whatâs your growth strategy and growth target for 2024 and 2025? Accordingly, how do you plan to allocate the resource during the pent up demand period versus normalized across period? Thank you. James Liang: Thank you, Alex. Across â great talent all the players in travel industry, but we â it also make Trip.com growth a stronger company. In terms of growth drivers for the China domestic market, firstly, we will continuously to expand our customer base, especially in the lower-tier cities, which have a large growth potential for rapid urbanization. And meanwhile, we will focus on higher user engagement and stickiness, which will translate into higher user spending and frequencies. For example, we drove higher cross-selling ratios from transportation to accommodation and other services and expanded the user case to cover more short-haul travel scenario. In addition, our comprehensive content platform does not only provide users with inspiration and planning, but also opens the door to travel advertisement opportunities, which is estimated to be over RMB90 billion in 2019 , 2023. Second, and most importantly is the outbound travel, Trip.com growth is one of the few companies that were able to maintain its engagement with both Chinese customers and international travel suppliers in the past 3 years. Therefore, we are very well positioned to continuously to benefit from the strong pent up demand for the outbound travel. For example, in the recent months, although the industry level, for example, the air capacity is still at around recovered to 15% to 20% level, but our outbound travel business has significantly outpaced the industry growth. So, going back to over 40% compared with the pre-pandemic. Third, for the international brands and international market, we have made significant progress in unifying our backend operating systems, standardizing the international front end products and aligning these services with our domestic standards. All these initiatives will help us to drive long-term synergy among our international brands. And we are also very delighted to see the promotion of inbound travel being inscribed in Chinaâs 14th 5-year plan. With our high quality one-stop travel platform and user bases, we are confident to make great contributions to the countryâs inbound tourism once it starts to gain momentum. So, in summary, with these three drivers, we think even in the long run, we can maintain and continues to have a very healthy growth rate at double digit, at least double digit growth rate in the next couple of years. Thank you. Operator: Thanks for the questions. Next up we have the line from James Lee from Mizuho Group. Please ask your question. James Lee: Great. Thanks for taking my question. Now, given the bottleneck on the flight capacity you guys lay out for outbound travel. How should we think about the shape of that recovery curve? And what are the top destinations you are currently seeing in your search results? Thank you. James Liang: Thanks James. We have been in discussion with the airlines. They are doing their best to reinvent the capacity. Based on our discussion, right now, the capacity is about 15% to 20%. And hopefully, by the end of June, we will see about 50% recovery. By the end of the year, we will see pretty much, itâs recovered to 80% to 90% of the capacity. And our team will be able to outpace the market. As Cindy said, right now, although the outbound capacity is only at 15% to 20%. But our volume already recovered to 40% of pre-COVID level. So, we are continuously working closely with our global partners to make sure we serve our outbound customers with strong product and service. Thank you. Operator: Thank you for the questions. Next up, we have the line from Thomas Chong from Jefferies. Please ask your question. Thomas Chong: Hi. Good morning. Thanks management for taking my question. I have a question regarding the Accommodation segment. Can management comment about the accommodation pricing trend in the domestic market in Q1 and 2023? Are we seeing a similar situation like U.S. and Europe market? Thank you. James Liang: Thank you, Thomas. For the domestic travel average price may go slightly up when demand fully recovers to and surpassed the pre-COVID level, which may also be offset by a potentially higher mix from the lower end â lower tier cities. We donât â therefore, we donât expect a huge surge in pricing China because firstly the hotel and air supplies are still quite stable comparing to pre-COVID level. And overall Price Index in China is still at low level. For the outbound travel business, the average air â yes, the average air price is significantly higher due to flights capacity constraints. And we believe the price will decrease as supplier increases. And the average hotel price for our outbound travelers, however, is still lower than the pre-COVID level due to the imbalance of the recovery that is among destinations of course as you mentioned, for the Western Europe and U.S. markets. The ADR increased quite significantly, while for most of the triple haul groups target customer they are in the Asia-Pacific area where the ADR is still depressed compared with the pre COVID level. Thank you. Operator: Thank you for the questions. Next up, we have the line from Simon Cheung from Goldman Sachs. Please ask your question. Simon Cheung: Hi. Good morning. Thanks for the presentation. I got a quick question just again, related to your comment about competitions. Hearing that you are actually penetrating into the rural area and you have strategy going overseas, and perhaps can you help to quantify it with all those comments with some numbers? And when you look â thinking about the profit margin or the profitability of the respective business, i.e., the rural domestic business, alongside with the outbound international business, how are we â how are they different and also the trend compared to historically? Thank you. Jane Sun: Yes. The margins, and if you look at our margin level in, for example, 2019, the most profitable segment, for sure is the outbound travel business. And the second one is our domestic businesses. And for the international part, for example, our Skyscanner business or the other well established international brands, they also have a very healthy margins. But for the Trip.com business, is still in the investing period, and still have some losses. But our team will work very hard to drive the efficiencies of our growth strategy for the Trip.com business. In terms of the lower-tier cities or lower end of the markets, yes, during the pandemic, we have been very successful in gaining a lot of market share in the lower end of the business. Their total revenue contribution has comparatively increased. However, for the margin profile of our domestic business, I think still the mid to high end of the business or mid to high end of the customer base, contribute most of our modules. And even after the â yes, especially during the pandemic, we have been working very hard to increase the efficiencies across all the business lines. I think after the pandemic, we have the confidence to continuously to maintain these efficiencies, also including the China domestic business. So, we donât think that the margin would be impacted because of the revenue mix between the mid to low end to the high end, because not only from the mid to low end of the business we are gaining market share, we are also further strengthening our market share. Our market share in the mid to high end of the hotel business that is very critical to our overall margin profile in the future. Thank you. Operator: Thank you for the questions. We have another question from the line of Wei Xiong of UBS. Please go ahead. Wei Xiong: Good morning management, congrats on a good quarter and thank you for taking my question. I want to follow-up on competition from a different angle, as well your content strategy. So, given the backdrop of very encouraging travel market recovery this year, I am just wondering if we see any changes in the competitive dynamics from short video platforms, or do we anticipate potentially more competition in the travel market from new entrants? And also related to that, could the management update on the progress of our content strategy just to defend our market position there? Thank you. Jane Sun: Yes. Itâs quite natural because I think travel industry is one of the most attractive industry in the world. Thatâs why, we always can see a lot of players or potential players that are trying to enter into this space. However, yes, we are very â as always, we are very confident in the bright future of this industry. But at the same time, we have seen the content platform pretty much focused on the location based service and pre-sell products, of which the overlap with our core business at this moment is quite limited. And of course, we as always, we will closely monitor the market situation and will keep the investors updated. But most importantly, we still think we will remain very focused on developing our core capabilities, such as our strong product innovation and the service and fulfillment capabilities, so that we will make sure that we provide always the most reliable services and frictionless customer experience to the customer, yes. And we are very fortunate to be in this promising industry. And as always, we will make sure we do the best in the core competence in this industry, because we are the experts. Thank you. Operator: Thank you for the questions. Next up, we have the line from Joyce Ju from Bank of America. Please go ahead. Joyce Ju: Good morning management. Thank you for taking my questions. My question is regarding the international business. Could you actually help, elaborate more about your strategy for Trip.com? When do you expect the business to be profitable? Trip.com is going to take share from which global competitors, what are your key competitive advantages to gain share? Thanks. James Liang: Yes. Trip.com is gaining a lot of momentum. The strength for us is a couple. First of all, we provide one-stop shopping platform. So, when you log on Trip.com, consumers will be able to find everything they need when they travel abroad. Secondly, the users experience on ATT is very smooth. That is also many years of experience starting from Asia market. Certainly, we also focus a lot on customers for this, we offer 24 hours, languages and timely response to our customers. And very lastly, I think utilizing our strengths from outbound we will also be able to negotiate very good deals for customers all over the world. So, these are our strategy, itâs integrated a game plan, starting from Asia to the rest of the world. Thank you. Operator: Thank you for the questions. Next we have the line from Tian Hou from T.H. Capital. One moment please. Tian Hou: Yes. Good morning management. My first question is related to the AI, so we are excited to see that the has already launched a new AI chatbot based on the technology of . So, can you share some information about the current status of your AI chatbot and also the potential applications of such to your business? Whatâs the potential? Thank you. James Liang: Our new AI supply chain is at very early exploring early stage. It mainly have three functions. First of all, it enable our customers to find more relevant information faster and more efficient. Secondly, we are able to link their search results to our existing products more efficiently. And certainly it will also enable our service team to provide better services. We are working very hard. Tried to improve our efficiency by utilizing the new technology as always, but itâs still at early stage. Thank you. Operator: Thank you for the questions. That concludes the Q&A session today. I will now like to hand the call back to Michelle Qi for closing remarks. Michelle Qi: Thank you. Thanks everyone for joining us today. You can find the transcript and a webcast of todayâs call on investors.trip.com. We look forward to speaking with you on our first quarter of 2023 earnings call. Thank you and have a good day. Jane Sun: Thank you very much. Operator: This concludes todayâs conference call. Thank you for your participation. You may now disconnect.