Brian Gong

Brian Gong, an Equity Research Analyst at Citigroup Inc., inquired about the observed intensity of competition in the domestic travel market and how Trip.com Group maintains its competitive edge in such an environment.

Answer

CEO Jane Sun acknowledged the dynamic domestic competition as a healthy sign and attributed Trip.com's competitive edge to its high level of 24/7 customer service, comprehensive product offerings (flights, hotels, packages, etc.), and strong global coverage, ensuring support for travelers both domestically and internationally.

Brian Gong asked about intensifying competition in the domestic travel market and how Trip.com Group maintains its competitive edge in this environment.

Answer

CEO Jane Sun acknowledged the dynamic domestic travel market as a healthy sign of growth potential. She highlighted Trip.com Group's competitive edge, anchored in high-level 24/7 customer service, comprehensive product offerings (flights, hotels, packages, rental cars), and extensive global coverage, ensuring peace of mind for travelers both domestically and internationally.

Brian Gong from Citi asked for updates on Trip.com Group's inbound business and key catalysts for its future growth.

Answer

CEO Jane Sun shared positive inbound customer feedback regarding safety, hospitality, food, history, infrastructure, and affordable luxury. She cited free visa policies for over 60 countries and extended in-transit travel (3 to 10 days) as major catalysts. She highlighted Trip.com's comprehensive China inventory, multi-language 24-hour call center with a 30-second response time, and its role in driving job opportunities and revenue for partners.

Brian Gong asked for updates on Trip.com Group's inbound business, which was identified as the fastest-growing segment, and key catalysts for its future growth.

Answer

Jane Sun, Chief Executive Officer, shared positive feedback from inbound customers regarding safety, hospitality, food, history, infrastructure, and affordable luxury. She cited free visa policies for over 60 countries and extended in-transit travel as key catalysts. Trip.com Group's comprehensive China inventory, multi-language support, and 24-hour call center (30-second answer time) strongly drive inbound volume, creating job opportunities and revenue for partners.

Brian Gong from Citigroup asked for management's insights on recent consumer sentiment trends, particularly in light of ongoing macroeconomic uncertainties.

Answer

CFO Cindy Wang observed that the market has shown resilience in travel volume. She highlighted that consumers, especially younger and retired demographics, are focusing more on experiential products like concerts and themed tours. While this drives strong volume growth across all segments, it is partially offset by a slight decrease in average daily rates (ADR).

Brian Gong from Citi asked about hotel ADR (Average Daily Rate) performance in the first four months of the year, recent pricing trends, and the outlook for the full year.

Answer

CFO Xiaofan Wang acknowledged a high-single-digit YoY decrease in hotel ADR in Q1 but noted the decline narrowed in Q2, with prices dropping only by a low-single-digit during the Labor Day holiday. She mentioned that a high-single-digit increase in hotel supply was met with strong demand for mid-to-upper range hotels, and expects prices to stabilize as demand grows.

Brian Gong of Citigroup Inc. inquired about management's perspective on how recent advancements in AI, such as AI agents and large language models, could impact the OTA industry and Trip.com's business.

Answer

Executive Chairman James Liang responded that AI agents will complement, not replace, OTAs by becoming new traffic entry points. He emphasized Trip.com's value in providing extensive real-time proprietary data and an end-to-end service model, which AI alone cannot replicate. He confirmed continued investment in generative AI to introduce more user-friendly features.

Brian Gong of Citi requested more details on the recovery pace of outbound travel during the summer, the outlook for the second half of the year, and current pricing trends for outbound travel.

Answer

CFO Xiaofan Wang reported that total outbound flight capacity recovered to nearly 80% of 2019 levels during the summer and is expected to remain stable. She noted that average outbound airfares are currently 5-10% above pre-COVID levels and have increased slightly quarter-over-quarter.

Brian Gong of Citigroup inquired about Trip.com's future growth drivers and new initiatives now that the initial wave of pent-up travel demand is normalizing across its domestic, outbound, and international business lines.

Answer

Executive Chairman James Liang stated that future growth will be driven by expanding into China's lower-tier cities, capitalizing on the sustained recovery of outbound travel, and growing the Trip.com platform in Asia. Key new initiatives include developing China's inbound travel market, creating products for the 'silver generation,' and offering entertainment-plus-travel packages for younger demographics, all supported by investments in content and AI.

Brian Gong asked for an update on the key developments and improvements within Full Truck Alliance's trucker ecosystem, specifically regarding trucker members, during Q3 2025.

Answer

Simon Chai, Chief Financing and Investment Officer, reported that active trucker members grew to almost 1 million, with approximately 30% of long-haul trucker MAUs being members and contributing over 40% of long-haul order volume. He detailed upgrades to the membership tiering system focusing on cost reduction, fulfillment enhancement, and risk protection, which have become key drivers for securing high-quality capacity.

Brian Gong from Citi requested an update on key developments regarding trucker members and overall ecosystem improvements on the trucker side during Q3 2025.

Answer

Simon Chai, Chief Financing and Investment Officer, reported that active trucker members reached almost 1 million, with approximately 30% of long-haul trucker MAUs being subscribers, contributing over 40% of long-haul order volume. He highlighted upgrades to the membership tiering system focusing on cost reduction, fulfillment enhancement (e.g., premium cargo bidding cards), and risk protection (e.g., relaunched freight payment protection program).

Brian Gong from Citigroup Inc. inquired about the activity level of truckers in Q1, whether their order acceptance frequency has increased, and if a mixed job market has led to a supply-demand imbalance.

Answer

Chief Financing and Investment Officer Chong Cai stated that monthly active truckers grew at a high single-digit rate, with engagement and transaction frequency improving. This was driven by higher order volume, better matching algorithms reducing idle time, and the success of the trucker membership program. He noted the trucker supply has been structurally stable, preventing a significant imbalance.

Brian Gong asked for the key drivers behind the significant improvement in the fulfillment rate, which reached a record 37.5% in Q4, and inquired about the company's expectations for this metric in 2025.

Answer

CFO Chong Cai explained that the record-high fulfillment rate was driven by an improved user mix, with direct shippers now accounting for 50% of orders, alongside precision operational strategies that reduced fulfillment times. He also noted that better supply-demand dynamics contributed. Mr. Cai anticipates the fulfillment rate will continue its steady upward trajectory in the coming year.

Brian Gong of Citi questioned management on the competitive landscape for the second half of the year following government intervention in price wars, and asked for a timeline on the potential recovery of the used car industry.

Answer

Management explained that government policies are aimed at curbing the price war caused by overcapacity, leading to a market shift towards top-tier and self-owned brands. For the used car market, recovery is linked to car ownership and age, but consumer hesitancy persists due to a lack of transparency. Autohome is addressing this by launching a certified used car flagship store and developing AI tools to improve transparency and trust, noting that a stable new car market would benefit used car demand.

Brian Gong asked for an update on the status of the Haier acquisition and future strategies, as well as management's view on when OEM pricing might stabilize and the emerging impact of dealer closures on the lead generation business.

Answer

CEO Song Yang explained that the Haier acquisition is still pending regulatory approval and she could only share public information, reiterating a commitment to the O2O new retail model and partnership with Ping An. Regarding the market, she expects the price war to continue in the short term but believes room for further declines is limited. She acknowledged that dealers face significant challenges and need to transform, but stated that the overall dealer base remains stable and should recover after a period of adjustment.

Brian Gong of Citigroup Inc. inquired about the contract renewal situation for the lead generation business and its potential growth areas. He also asked for the 2025 outlook for the used car market and its expected recovery timeline.

Answer

CEO Song Yang reported a strong dealer contract renewal rate exceeding 85%, attributing the success to AI-driven product upgrades and brand strength. He identified future growth potential in deeper digitalization, expansion into lower-tier cities, and post-sales services. For the used car market, Mr. Yang noted that 2024 saw higher sales volume but lower profits due to new car price wars. He expects sales to continue growing in 2025, with price volatility lessening. Autohome aims to address market pain points by enhancing transparency and promoting certified vehicles to improve dealer profitability.

Brian Gong from Citi inquired about the outlook for OEM advertising spending in Q4 and the following year amidst the ongoing auto industry price war. He also asked for an update on the progress of contract renewals with dealers.

Answer

CEO Tao Wu stated that OEM advertising spending in Q4 is cautious, with some OEMs shifting budgets to consumer subsidies while others are cutting back. He anticipates a more balanced approach next year but acknowledges uncertainty remains. For dealer contract renewals, which begin at year-end, Mr. Wu expressed confidence in stability, citing dealers' reliance on Autohome's services. He added that Autohome will continue to enhance its offerings with big data and Ping An collaborations to help dealers navigate market challenges.

Brian Gong of Citi inquired about the reasons for weaker-than-expected growth in both public and enterprise cloud segments, the outlook for full-year growth, and the nature of demand from Xiaomi following its recent large language model release.

Answer

CEO Zhou Tao, via a translator, explained that the enterprise cloud slowdown was due to seasonality, including the Chinese New Year and customer budgeting cycles. The public cloud's growth appeared muted because a large cluster for Xiaomi was delivered late in Q1, with revenue recognition expected in Q2. He confirmed that Xiaomi's new model was trained on Kingsoft Cloud's infrastructure and that long-term inference demand from Xiaomi represents significant potential, though its timing depends on Xiaomi's own rollout pace.

Brian Gong from Citi asked for the outlook on 2025 revenue growth, including the key drivers like AI and the Xiaomi/Kingsoft ecosystem, and sought insights into the company's long-term profitability trend following strong Q4 margin performance.

Answer

CFO Haijian He stated that the key theme for 2025 revenue is 'acceleration' on an annual basis, driven by AI and other healthy verticals. Regarding profitability, He noted that positive operating cash flow for three consecutive quarters is a strong leading indicator. He expects EBITDA and operating profit margins to expand at a faster pace than gross margin, with the company aiming for steady improvement across all key margin metrics.

Brian Gong from Citigroup inquired about the medium- to long-term differentiation of Youdao's large language model (LLM) strategy in educational scenarios, particularly its use of both proprietary and open-source models.

Answer

CEO Feng Zhou explained that Youdao's dual approach, combining its proprietary Confucius model with open-source models like DeepSeek, enhances user experience by offering both speed and comprehensive answers. He stated this strategy accelerates innovation and allows the Confucius model to excel in specific areas like translation and K-12 Q&A, where it now achieves over 92% accuracy. Dr. Zhou also noted that self-hosting models improves stability and reduces costs.

Brian Gong of Citigroup inquired about Youdao's overall strategic outlook for 2025, including expectations for its different business lines.

Answer

CEO Dr. Feng Zhou outlined a dual focus on AI-driven education and marketing technologies, leveraging reasoning models like DeepSeek. He anticipates modest revenue growth with a strong emphasis on profitability. For Learning Services, the focus is on high-demand products with integrated AI tutoring. Smart Devices will see continued innovation in the dictionary pen category. Online Marketing will deepen its collaboration with NetEase and expand globally. VP of Finance Wayne Li added that the company aims for breakeven annual operating cash flow in 2025, building on the significant profitability and cash flow improvements seen in 2024.

Brian Gong inquired about Youdao's strategy for its learning services business, particularly regarding investment levels, in light of competitors increasing their spending in the sector.

Answer

VP of Strategy and Capital Markets Peng Su stated that Youdao is prioritizing healthy, sustainable development and focusing on high-demand services like Youdao Lingshi, scaling back on low-ROI customer acquisition. He highlighted that strong retention rates, now hitting 70%, are key. CEO Feng Zhou added that while summer customer acquisition had challenges, the focus on customer satisfaction and retention provides a solid foundation for future growth.