Shares of Ctrip.com International (TCOM 4.05%) were sliding today after the Chinese online travel agency offered underwhelming guidance in its third-quarter earnings report. Though the company actually beat expectations on both the top and bottom lines, investors seemed turned off by investment losses and a pair of analyst downgrades, and the stock's slide this year continued. Shares were down 17.2% as of 12:46 p.m. EST.
Revenue in the quarter rose 15% to $1.37 billion, which beat estimates at $1.34 billion. The owner of the Skyscanner fare-aggregator site saw exceptional growth in its international segment, with growth excluding Skyscanner tripling that of the industry, and revenue from Skyscanner's direct booking program surging 250% from a year ago.
However, costs widened as gross margin fell from 84% a year ago to 79%, and operating income fell 6% in constant currency to $215 million. On a GAAP basis, the company posted a loss of $0.30 per American depositary share (ADS), due to losses on equity investments. That may have triggered a pair of downgrades from Credit Suisse and China Renaissance that seemed to be weighing on the stock.
Adjusted earnings in the quarter were better at $0.42 per ADS, down from $0.44, though that was still well ahead of estimates at $0.27.
CEO Jane Sun said:
Ctrip reported solid results in the third quarter of 2018. We are seeing our large, growing, and loyal customer base continue to increase their engagements on Ctrip. We are selling more travel products across our customers' travel itinerary. With our strong foundation in the travel industry, despite the ongoing macro uncertainty, we are confident that we are the best travel company to capture more travel market share going forward.
The company projected full-year revenue growth of 15% to 20%, which compares favorably with the analyst consensus at 15.7%. Though the company's fundamentals remain solid, pressure continues to weigh on Chinese stocks due to trade tensions and a weakening economy, as shares are now down 39% this year. Until those tensions pass or market sentiment improves, Ctrip will likely struggle to recover those losses.