Operator: Next, we have Parash Jain from HSBC. Please go ahead.
Parash Jain: If I may shift your focus more towards capital return policy, and it’s a very, very welcome move. Just wanted to understand how shall we think about your balance sheet, let’s say, in two years’ time or in the medium to longer term. Would you still want to carry a net cash balance sheet? Or given steady state of your business, given the yield difference between the China market and the rest of the world, do you think that you probably will be slightly more aggressive in terms of share buyback and return policy? And secondly, for your international-international business, how do you see the M&A market? And do you see any opportunity for Trip.com or Skyscanner to jump frog in terms of overall relevance for the group through M&A? Thank you.
Cindy Wang: Sure. Thank you. For the first question, our Board of Director has approved a multiple share buyback plan several years ago and with no expiration date. As previously discussed, there was approximately US$505 million of the quote still unused before our current repurchase. And in the last quarter, the rapid business growth in this year has significantly improved our cash flow. Additionally, we have increased our overseas cash reserves, ensuring we have sufficient funds for the buyback without affecting our regular operations. And the recent share price volatility due to purely external factors has resulted in a generally low valuation, making it a suitable time for us to make this buyback. And going forward, we plan to proceed with the buyback without a specific time line or price target as long as our overseas cash reserves remain sufficient for operational needs as well as the short-term debt obligations.
And with regard to the M&A strategy for the international market, we are quite confident that we already have the — almost the best asset in the international market to fuel our growth — future growth. So, we will pretty much focus to grow our market outside of China from the organic growth and, most importantly, to achieve the — maximize synergies among different brands within the group. Thank you.
Operator: Next, we have Thomas Chong from Jefferies. Please go ahead.
Thomas Chong: Congratulations on a solid set of results. My question is about the trend in operating expenses. Given that we have seen product development expenses increase significantly quarter-on-quarter and versus 2019, what factors actually contribute to this growth? And how should investors project this pattern going forward? Thank you.
Cindy Wang: Thank you, Thomas. The product development expense is primarily comprised of personnel-related costs, especially the engineering team. In Q3, the total number of employees in product development remained significantly lower than the levels in 2019. And the increase in expenses was mainly due to the performance-related — performance-based bonus in recognition of the outstanding achievement during the quarter. And we anticipate that the absolute dollar amount of the product development expenses will decrease sequentially in the Q4 just because of the seasonality. And as Jane explained, we are targeting to grow our business in the long run. So going forward, we are continuously to balance our growth — healthy growth as well as to control our total cost at a reasonable level that we achieved in the past few quarters. Thank you.
Operator: Next, we have Ellie Jiang from Macquarie. Please go ahead.
Ellie Jiang: I just would like to understand a bit more about our overseas product, Trip.com. Could you comment on Trip.com’s current profitability? And how will it look like in the next three to five years or in the longer run?
Cindy Wang: Sure. Taking into account all the markets that Trip.com is currently operating in, Trip.com has already achieved breakeven on a contribution margin basis, excluding fixed costs and the shared cost on the group level. Moreover, our business contribution continuously — with our business continues to scale up, the profitability will consistently improve across markets. With regard to the margin of different markets, in Asia Pacific regions, Trip.com is projected to be breakeven within the next two to three years on a net profit level. While in the rest of the world, our current primary focus is still to increase Trip.com’s incremental contribution to the group, which has been showing consistent improvement in the past few years. Thank you.
Operator: Next, we have Tian Hou from T.H. Capital. Please go ahead.
Tian Hou: Yes. Management, congratulations on a good quarter. This is Tian. So I have two questions. One is related to the profit level. So, you mean the profit level can maintain the current and continue to improve? So I just want to understand, what part of your P&L can drive up the improvement? How the revenue and cost and expense structure will be to lead that improvement? That is the first question. The second question is related to your AI. So, my understanding is the AI at this point is much more a cost center and is much more like a revenue or profit center. So can management elaborate a little bit about your AI? In which part of your AI practice is a profit center or revenue center? Thank you.
Jane Sun: Sure. Our CFO, Cindy, will take the first question, and I will take the second question. Thank you.
Cindy Wang: In terms of the long-term profitability of the business, we expect to overcome our current short-term high base and to drive the long-term margin expansion, mainly through operational scalability as well as the favorable revenue mix. For example, in the long run, we think AI probably is one of the key drivers for us to help us to continuously to improve our operational efficiency in the service center. And we are — in the long run, we are confident of achieving a margin that is comparable to our international global peers. Jane?
