Chinese online travel agency Tuniu Corp. (TOUR) reported Wednesday a net loss of 201.5 million yuan ($29.5 million) on revenue of 174 million yuan, a year-on-year decrease of 61.9%, in Q1 2020.
As the pandemic devastated the global travel market, Tuniu saw the adverse impact on its business operations and cash flow in the first quarter. Its tour group business declined 67.1% in Q1 from previous year. The decline in service fees from insurance companies also contributes greatly to the total loss, the company said.
Tuniu’s poor financials have pushed it to the edge of being delisted from Nasdaq. As of May 18, Tuniu’s closing bid for American Depositary Shares (ADSs) was less than $1 for 30 consecutive trading days, which did not meet the minimum Nasdaq listing requirements. However, according to Nasdaq’s new rules against Covid-19, if the company can secure at least $1 closing price for 10 consecutive trading days before December 28, 2020, it is qualified to be listed. As of Thursday, Tuniu’s share price closed above $1 for six days. As of June 10 local time in the US, Tuniu’s shares closed at $1.08, up 6.09%.
Though Tuniu predicts an even worse financial performance in the future and significantly lowered its revenue guidance for Q2, which expects 20.8 million yuan ($3 million) to 72.8 million yuan ($10.4 million) in revenue, down between 86% and 96%, the company has pinned hopes on the domestic market.
“Although the travel restrictions imposed during the Covid-19 are still in effect, we are optimistic about the long-term development because the demand for tourism has been growing strongly,”said Yu Dunde, founder, chairman and CEO of Tuniu, adding that the company will shift its focus to the domestic market and high-quality travel products to meet the challenges. “We are still committed to minimizing expenses and optimizing cash flow to prepare for the overall recovery of China’s travel market.”
A recent survey shows 60% of Chinese plan to travel this year, and more than 45% look for overseas trips. Japan ranked top as the destination, followed by Thailand, Europe, the Maldives, and Singapore.
Founded in 2006, Tuniu offers organized and self-guided tours, as well as other travel services through its website and mobile app.