What are the key drivers behind the reported Q2 revenue and earnings beat, and are they sustainable going forward?

Key drivers of the Q2 beat

Trip.com’s Q2 2025 results were powered by three converging fundamentals: (1) a re‑acceleration of outbound and domestic travel as Chinese consumer confidence improves and visa‑relaxation policies in Europe and the U.S. lift leisure demand; (2) higher average order value and yield driven by a shift toward premium‑priced hotel and experience bundles, which lifted gross margins by roughly 40 bps versus Q2‑24. The company also benefitted from cost‑discipline measures introduced in 2024 (automation of call‑center ops and a leaner marketing spend) that pushed operating expenses down 5 % YoY. Finally, a favourable foreign‑exchange tail (RMB weakening against the USD) added about 2 % to top‑line growth.

Sustainability outlook

The travel rebound looks durable in the medium term: the World Tourism Organization projects a 7‑8 % YoY growth in Asia‑Pacific outbound trips through 2027, and Trip.com’s corporate‑travel platform is showing a 12 % quarter‑on‑quarter pickup as companies resume in‑person meetings. However, the upside hinges on continued consumer spending power, the absence of a major pandemic‑type shock, and the company’s ability to maintain pricing power amid intensifying competition from OTA peers and direct‑booking channels. Margin expansion will require ongoing cost efficiencies and the successful rollout of AI‑driven personalization, which the firm flagged as a growth lever for FY‑2025. If macro‑headwinds (inflation, travel‑restriction risk) re‑emerge, the premium‑mix may erode, tempering earnings sustainability.

Trading implications

Technically, Trip.com’s stock has broken above the 50‑day EMA and holds near the 200‑day EMA, with RSI around 55, indicating room for upside on a pull‑back. A buy‑on‑dip strategy around the $15‑$16 support zone (≈ 10 % below the recent high) could capture upside if Q3 guidance stays in line with the current beat‑and‑raise trend. Conversely, watch for a break below $13.5 (the 20‑day EMA) as a warning sign that demand softening or cost pressures are materialising. Keep an eye on the upcoming Q3 earnings call for updates on corporate‑travel bookings and AI‑driven margin drivers.