---
title: "TCOM: Regulatory Overhang — Opportunity or Risk?\n\n---"
description: "In the early hours on Feb 26 after the US close, $Trip.com(TCOM.US) released Q4 FY2025 results under a regulatory overhang.Overall, the print was solid, with revenue growth beating prior guidance and "
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/38913490.md"
published_at: "2026-02-26T13:51:38.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# TCOM: Regulatory Overhang — Opportunity or Risk?

---

In the U.S. after-hours on Feb 26, $Trip.com(TCOM.US), under a regulatory cloud, reported Q4 FY2025 results. Overall, topline was solid, with revenue growth beating guidance and re-accelerating. However, operating expenses rose faster than revenue, pulling GAAP OP below expectations; details as follows:

**1) Revenue strong and accelerating:** Total net revenue growth for Trip.com Group rose 21% YoY this quarter, a new high for the year, marking a clear acceleration vs. last quarter. All business lines exceeded prior guidance and showed faster growth. At-scale hotel and ticketing revenue was steady and slightly above expectations, while biz travel, packaged tours, and ads & other, the three smaller lines, drove the upside surprise.

Packaged tours and ads grew over 20% and 50% YoY, respectively, materially above guidance. Management cited solid outbound/Intl product sales and incremental ad revenue from overseas expansion.

**2) Overseas growth remains high, now near half of the group:** Trip.com (pure overseas) bookings grew 60% YoY in the quarter, unchanged vs. Q3, maintaining high growth despite entering a high-base period. Intl (overseas + outbound) contributed about 40% of total revenue in 2025, up from 35% in 2024, underscoring rising importance and group-level lift.

Pure overseas revenue was driven by mature markets such as Hong Kong and Singapore, with rapid growth in Korea, Malaysia, and Indonesia.

**3) Domestic demand stabilizing:** Hotel booking revenue grew Approx. 21% YoY, accelerating over 300bps QoQ and beating the upper end of prior guidance. Domestic hotels, the main revenue contributor, posted 10%+ YoY growth in bookings, with ASPs stabilizing and recovering, indicating resilient domestic travel demand.

Ticketing revenue grew 12.3% YoY this quarter, with a slight QoQ pickup. On the one hand, domestic transport ticketing revenue is still down YoY as the platform proactively reduced add-on fees (partly under regulatory pressure). On the other hand, higher per-ticket Intl air growth was the main lift.

**4) GPM contraction narrowed:** GPM was 79% this quarter, down 30bps YoY, still contracting but by the smallest margin in recent quarters. Since prior GPM pressure was primarily due to mix shift toward lower-margin overseas, the improving profitability of overseas should lessen the drag on consolidated GPM.

**5) Expense step-up pressured profit:** Total operating expenses rose 23% YoY, clearly faster than last quarter and outpacing revenue growth. Marketing expense grew over 30% YoY, mainly to support overseas expansion, though rising domestic competition may also be a factor.

R&D and G&A growth also picked up vs. last quarter, reaching roughly 16%–18%. The company appears to be in a broad-based investment phase.

With GPM down slightly and expenses rising faster than revenue, GAAP OPM narrowed 160bps YoY to 16.5%, well below market expectations, leaving GAAP OP up only about 10% YoY. Non-GAAP OP was RMB 3.2bn, up 16% YoY, slightly ahead of estimates, mainly because SBC expense rose YoY to 4.3% of revenue (vs. 3.6% last year). We prefer to focus on GAAP metrics, treating SBC as a real expense.

**6) Board overhaul:** Trip.com announced that co-founders and board members Fan Min and Ji Qi resigned their roles, with two new independent directors added. Both new IDs have finance backgrounds; management said the changes aim to optimize BOD structure with greater diversity and external perspectives.

**Dolphin Research view:**

1) This quarter was mixed: the positive is broad-based revenue beats, resilient domestic hotel demand, and high overseas growth extending the group’s trajectory. In growth terms, Trip.com remains a leading benchmark among large-cap Chinese ADRs. The downside is profit sensitivity to rising spend; while management attributes it to overseas expansion, domestic customer acquisition and promotional needs may be rising as JD, Fliggy, and Douyin eye travel.

Given ongoing regulatory investigation and sensitive market sentiment, a mixed print rather than an across-the-board beat may be insufficient to fully reverse current share weakness.

2) Outlook: per management’s upper-range guide from the small-group meeting, next quarter total revenue growth is guided to 17%, implying some deceleration vs. this quarter (though management may be sandbagging). Core hotel and ticketing growth is guided roughly in line with this quarter. The primary headwind is ads growth normalizing to ~20% from 50%+ due to a high base.

Expenses, especially marketing, are expected to remain elevated, with revenue ratio up Approx. 200bps, driven by overseas investment. Adj. profit growth will likely stay just above 10% YoY.

In sum, similar to this quarter: still decent growth (slower on the high base) but softer profit.

3) Biz trends: a) Domestic hotel/travel demand remains stable, with hotel ASPs starting to recover, supporting steady growth. Ticketing volume growth broadly tracks the market, but domestic pure-ticket monetization is limited, and high-margin add-ons like insurance and assisted booking need to stay low-profile under current public scrutiny, so revenue may remain negative YoY.

b) Overseas: Trip.com is likely to sustain ~60% bookings growth, driving overseas hotel, packaged tour, and air revenue.

Profitability is improving as Trip.com’s loss ratio narrowed to low-double-digit % in H2 2025, and should naturally continue to shrink with scale, with breakeven in sight (no firm timetable).

4) Beyond earnings, the key near-term question is the magnitude of potential regulatory impact. Any ultimate payment-related amounts may not be materially consequential. More importantly, will regulation impair Trip.com’s domestic competitive edge and monetization ceiling. There is no official disclosure on specifics, and management offered no comment during the call.

Per media reports, the investigation focuses on alleged monopoly practices: an ‘auto repricing’ tool pushing hotels to offer the lowest price across platforms, and exclusivity for ‘special label’ hotels (classic ‘pick one’). Dolphin Research believes hotel supply, especially high-end, is more limited and exclusive than general merchandise, raising true barriers. Based on prior antitrust cases at Alibaba and Meituan, regulation alone likely won’t materially hit Trip.com’s share, but could cap its domestic monetization ceiling.

Other risks include potential domestic competition intensification and AI Agents disrupting OTAs, uncertainties that may not materialize but markets dislike. Similar concerns about AI replacing SaaS or autonomous driving replacing ride-hailing haven’t stopped persistent selling of software names and Uber.

5) Valuation: based on current guidance we model GAAP OP growth of 10% in 2026 (conservative). We do not add back SBC, and higher interest income largely offsets tax expense, implying no additional tax hit. After the sharp sell-off, Trip.com trades at ~13x, near trough valuation.

As regulatory, competitive, and AI-related uncertainties start to clear, this remains a name to watch.

Detailed review follows:

**I. Core steady, smaller lines surprise**

Trip.com Group’s total net revenue (ex-business tax) was Approx. RMB 15.4bn, with YoY growth accelerating to 21%, the highest of the year, reflecting strong momentum. Hotel and ticketing revenue, the largest contributors, grew steadily with QoQ acceleration and modest beats vs. guidance. The main upside came from biz travel, packaged tours, and ads & other, the three smaller businesses.

Actual growth far exceeded guidance, with packaged tours and ads rising over 20% and 50% YoY, respectively. Management attributed this to Intl package products and incremental ad revenue from overseas.

**1) Core growth steady with a slight acceleration**

By revenue type, hotel bookings grew Approx. 21% YoY, accelerating over 300bps QoQ and beating the prior 18%–19% upper-end guide. Besides the higher base, falling hotel ASPs domestically and internationally likely weighed on sustained hotel revenue growth.

Ticketing revenue rose 12.3% YoY, with continued modest QoQ acceleration. As the impact of reduced ticket bundling last year fades, ticketing revenue growth is gradually normalizing. Management noted strong growth in higher per-ticket Intl air as another tailwind.

**2) Ads and biz travel beat more**

For the three smaller lines: 1) Biz travel revenue was RMB 810mn, up 15% YoY, in line with last quarter and well above prior guidance that implied only ~4% growth. Management cited higher penetration of corporate travel services.

2) Packaged tours revenue was RMB 1.06bn, up 21% YoY, a big beat and a notable step-up vs. the long-run single-digit trend. Management pointed to outbound Intl vacations and domestic senior travel.

3) Other revenue, mainly ads, surged 54% YoY, materially beating expectations, benefiting from incremental ad revenue tied to outbound and overseas business.

**II. Expenses climbed, profit soft: overseas build-out or competition?**

Profitability: GPM was 79%, down 30bps YoY, still compressing but by the smallest margin in recent quarters. As lower-margin overseas had pressured GPM via mix, improving overseas margins should ease the drag on consolidated GPM.

Expenses: total operating expenses rose 23% YoY, clearly faster QoQ and outpacing revenue growth. Marketing expense growth exceeded 30% YoY. While primarily for overseas expansion, rising domestic pressure from JD, Fliggy, and Douyin cannot be ruled out.

R&D and G&A also picked up vs. last quarter, reaching ~16%–18%, suggesting a broad-based expansion in spending.

On GAAP, with slight GPM compression and clearly higher expenses, GAAP OPM narrowed 160bps YoY to 16.5%, well below the Street, leaving GAAP OP up only about 10% YoY. Non-GAAP OP was RMB 3.2bn, +16% YoY, slightly above estimates, mainly because SBC was higher YoY at 4.3% of revenue vs. 3.6% last year. We anchor on GAAP, viewing SBC as a cost.

<End of text>

**Dolphin Research prior coverage on Trip.com:**

Nov 18, 2025 Trans: [**Trip.com (Trans): Q4 peak-season marketing spend to remain elevated**](https://longbridge.com/zh-CN/topics/36456214)

Nov 18, 2025 ER note: **[Trip.com: Awaiting overseas profit unlock](https://longportapp.cn/zh-CN/topics/36451811)**

Aug 28, 2025 Trans: [**Trip.com (Trans): Announces $5bn open-ended buyback plan**](https://longportapp.cn/zh-CN/topics/33414633)

Aug 28, 2025 ER note: **[Unafraid of JD’s entry, Trip.com remains best-in-class](https://longportapp.cn/zh-CN/topics/33413778)**

May 20, 2025 ER note: **[Trip.com: Revenue up, profit not; best-in-class meets a challenge?](https://longportapp.cn/zh-CN/topics/29828792)**

May 20, 2025 Trans: [Trip.com (Trans): Hotel/travel demand steady; marketing to increase](https://longportapp.cn/zh-CN/topics/29833288)

Feb 25, 2025 ER note: **[Trip.com: Can inbound travel turn the tide with heavy spend?](https://longportapp.cn/zh-CN/topics/27514859)**

Feb 25, 2025 Trans: [Trip.com (Trans): Vast overseas runway; no profit cap in 2025](https://longportapp.cn/zh-CN/topics/27520177)

Nov 19, 2024 ER note: **['Playing' beyond borders, Trip.com still shining](https://longportapp.cn/zh-CN/topics/25585076)**

Nov 19, 2024 call: [**Trip.com: Any surprises in 2025? (3Q24 call)**](https://longportapp.cn/zh-CN/topics/25595960)

Aug 27, 2024 call: [**Trip.com: How did summer domestic and cross-border perform?**](https://longbridgeapp.com/zh-CN/topics/23462703)

Aug 27, 2024 ER note: **[Between underperforming and overexcited, a normal China ADR at last!](https://longbridgeapp.com/zh-CN/topics/23462299?app_id=longbridge)**

**Risk disclosure and statement:** [**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.