Tuniu Corporation’s (NASDAQ:TOUR) ADSs closed lower after the company reported its second-quarter results. Net revenue increased 3.0% year over year to RMB138.9 million, while packaged-tour revenue rose 6.8% to RMB121.1 million as organized tours continued to grow.
However, cost of revenue increased 27.9% to RMB62.5 million, substantially outpacing the top line. Gross profit declined 11.1% to RMB76.4 million, and gross margin contracted to 55.0% from 63.8%. Tuniu consequently swung to a RMB6.1 million operating loss from RMB7.1 million of operating income a year earlier.
Bull Case
Packaged-tour growth indicates that demand for Tuniu’s core travel products remains intact. The company has been expanding small-group, private and customized tour offerings in response to demand for more personalized and flexible travel options.
Tuniu also remained marginally profitable below the operating line. GAAP net income attributable to ordinary shareholders was RMB0.7 million. Company-defined non-GAAP net income attributable to ordinary shareholders was RMB2.2 million after excluding share-based compensation and amortization of acquired intangible assets.
Liquidity provides additional room to absorb uneven travel demand. Tuniu ended June with approximately RMB1.0 billion in cash and cash equivalents, restricted cash, short-term investments, and long-term deposits. Management said during the earnings call that Tuniu generated RMB46.9 million of operating cash flow while recording RMB1.4 million of capital expenditures.
Bear Case
The revenue mix explains much of the margin pressure. Management said outbound tours represented approximately 30% of gross merchandise value, down from more than one-third a year earlier, as transaction volume in the Middle East and Africa fell more than 20%.
Management also cited suspended promotional activities in certain destinations and lower advertising-service fees from tourism boards and bureaus. Other revenue declined 16.9% to RMB17.8 million, limiting the benefit from packaged-tour growth.
Within domestic travel, faster growth in self-guided “Hotel Plus X” products created another margin headwind because those products are generally less profitable than organized tours.
Spending also moved in the wrong direction. Sales and marketing expense increased 21.5% to RMB54.7 million, or 39.4% of revenue, reflecting higher promotional expense. That increase more than offset reductions in research and development and general and administrative expenses.
Third-quarter guidance calls for RMB202.1 million to RMB212.2 million of revenue, representing growth of 0% to 5%. That outlook provides limited evidence that near-term revenue growth will restore operating leverage.
Hedge Fund Sentiment
The filings available so far reflect positions held before Tuniu Corporation (NASDAQ:TOUR) reported its second-quarter results. Insider Monkey’s database showed 2 hedge funds holding TOUR at the end of 2Q2026.
Conclusion
Tuniu’s organized-tour growth is encouraging, but the quarter demonstrates that revenue growth is not translating into stronger operating economics. Interest and investment income, foreign-exchange gains and income from affiliates kept GAAP net income positive despite the operating loss.
The key question is whether outbound travel can recover and whether promotional spending can produce higher-margin bookings. Until gross profit begins growing alongside packaged-tour revenue, Tuniu Corporation (NASDAQ:TOUR) remains a cautious margin-recovery story rather than a straightforward travel-growth investment.
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Disclosure: None. This article is originally published at Insider Monkey.
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