Thank you for standing by, welcome to the Trip.com Group Limited Q3 2019 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Ms. Michelle Qi, Senior IR Director. Please go ahead.
Thank you, Ashley. Thank you all. Good morning, and welcome to Trip.com Group's 2019 third quarter earnings conference call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board, Ms. Jane Sun, Chief Executive Officer, and Mr. Cindy Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act in 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statement except as required under applicable law.
James, Jane, and Cindy will share our strategy and business updates, updating highlights the financial performance for the third quarter of 2019, as well as the outlook for the fourth quarter of 2019. After the prepared remarks, we will have a question and answer session. With that, I will turn the call over to James. James, please.
Thank you, Michelle. Thank you everyone for joining us on the call today. Let's begin with a quick update on business growth and performance. We continue to deliver solid results for the third quarter of 2019. Net revenue grew 12% year-over-year, reaching RMB 10.5 billion. Ctrip continued to gain market share among Chinese consumers in both the domestic and outbound markets. In the international markets, the Skyscanner and Trip.com brand also saw strong growth among overseas travelers. We continue to achieve operating leverage across all expense lines. In the third quarter, operating profits increased by 50% year-over-year. On October 29th, we celebrated the company's 20th anniversary with our global strategic partners and launched the new brand identity for Trip.com Group Limited.
By continuing to expand our share in the China domestic travel market, we aim to become the leading international travel brand in Asia, ex-mainland China, and travel destination over the next few years. To realize this goal, we will fully leverage the advantages that we have built over time, which are our large-scale advanced mobile technology, multi-product offering, and open platform capabilities. Moving forward, our operation will focus on great quality and globalization. Great quality improves our extensive travel products, friendly user interface, reliable services, and advanced mobile technologies. Globalization requires us to think global and act local. Product logistics, supply chain, and service standards and technologies are generally universal across geographies, local marketing and operations will always adhere to the regulations and user habits in each respective market.
We are pleased to see our efforts have already borne fruit in our outbound and overseas business, led by continued success of Trip.com brand, as well as the increasing synergies with the Skyscanner. We are excited to see the Trip.com brand's international air ticket volume growing at triple digits year-over-year for the 12 quarters in a row, and steady increase in direct booking ratio of Skyscanner. As our new name indicates, we hope to become the most reliable travel companion for our customers and make every trip a perfect trip. To realize this mission, like the way we have always been doing, our team will continue to execute relentlessly and always strive to provide the best travel experience for our customers worldwide. With that, I will turn the call to Jane for our third quarter highlights.
Thank you, James. Good morning, everyone. We are pleased to report that Trip.com's solid results in terms of market share gain and increase of profitability, despite the challenges from macro perspective globally. In China, we continue to acquire high-quality users with travel demand through effective marketing channels. In the competitive cities, we again deployed aggressive, yet disciplined pricing strategies for low-end hotel products, capturing an important and growing user base. In addition, our net promoter scores increased nicely across all business lines, which again demonstrated our improved service quality. Our revenue growth came under pressure due to recent macro and industry headwinds, especially in destinations such as Hong Kong. However, as we have always been in the past environment, Trip.com Group will continue to be laser focused on our business fundamentals and take advantage of the market condition to further enhance our leadership.
Next, I would like to share some of the recent highlights in product expansion, supply empowerment, and international business growth. Firstly, the expansion of our product and service. In the third quarter, our product coverage continued to expand in both and depth. In recent years, we have seen a steady increase in customer vacation activities. To take advantage of this, we have further expanded our product range both in China and abroad. Ctrip recently became the first OTA in China to launch a voice guide on our platform. By integrating multiple voice guide suppliers, the service now covers around 8,000 attraction sites in over 800 cities around the globe. In addition, to better serve Chinese outbound tourists and overseas travelers, we recently deepened our partnership with Triip Group by launching their Europe in-destination activities products on Ctrip platform, of which more than half has been designed exclusively for our customers.
Going forward, Triip Group will continue to expand their range of the products on Ctrip and will launch their products on Trip.com brand in the first half of 2020. Our empowerment of supply network. On October 29th, we held the second Global Strategic Partner Summit in Shanghai. At the summit, all the major business units shared their vision with respective industry partners. Our team continued to bring our 300 million users to our business partners around the world through open platform. The hotels participating in our TripClub program have seen 30% incremental growth in traffic. As financing has become a bottleneck for numerous suppliers on our platform, we have recently introduced a new online financing product tailored for small and micro package tour suppliers. Together with financing service, we have empowered our partners with urgent financing needs by leveraging our ability for data analysis.
Going forward, we will continue to utilize Trip.com Group's resource in site traffic, platform data, operating training, and backend tools to empower our partners the world. Thirdly, on the progress of our international business. In the third quarter of 2019, excluding certain area in the Greater China destination, our revenue growth for overseas hotels accelerated to 50% year-over-year in the third quarter. We are confident to reach that 40% and 50% of international business will contribute to the total revenue within three to four years target. With our large customer base, the comprehensive product offering, and extensive market expertise, we have demonstrated our ability to send incremental travelers to global travel destinations. To date, we have signed strategic partnerships with over 50 travel destinations. In the third quarter, the Trip.com brand at the air traffic volume delivered triple digits year-over-year growth for the 12th consecutive quarters.
With its hotel bookings will continue to accelerate. In October, Trip.com was awarded a Google Material Design Award tailored to global users. This recognition is reflective of the increased recognition of the core market brand. Our journey in the overseas market has just begun. Currently, only a portion of the functionality on Ctrip's Chinese app are available for global users through Trip.com, and we will work hard to increase the functionality and make Trip.com app as comprehensive as the Chinese version. Last week, we announced a strategic partnership with TripAdvisor to extend our global cooperation consisting of a joint venture at TripAdvisor China global content collaboration and a government agreement, which we have previously disclosed. Through this partnership, we will gain access to TripAdvisor's hundreds of millions of online reviews and pictures for accommodations and activities worldwide.
Equipped with the helpful information generated by global travelers, our customers will have great confidence in what they are going to book through our platform and have a more comprehensive idea of what to expect upon their arrival, and will enhance their user's experience. Just 2 weeks ago, we celebrated our 20th anniversary. We peaked at our past achievements. We are even more excited about what we will accomplish in the future. In order to create value for our customers, our partners, and for the industry, we are working hard to provide the most innovative and reliable services for our customers, both in China and abroad. With that, I will now turn the call over to Cindy.
Thank you, Jane.
You're welcome.
For the third quarter of 2019, Trip.com Group reported net revenue of RMB 10.5 billion, representing a 12% increase from the same period in 2018. Net revenue for the third quarter of 2019 increased by 21% from the previous quarter. Revenue growth decelerated from the previous quarter, mainly due to recent macro and industry happenings. Accommodation reservation revenue for the third quarter of 2019 was RMB 4.1 billion, representing a 14% increase from the same period in 2018. During the third quarter, low-star hotels sustained strong unit night growth for futures, despite reflecting a low comparison base. This continued to reflect the effectiveness of our aggressive pricing strategy, and we will continue to proactively acquire targeted users in this segment. In the domestic mid to high-end hotel, we also maintained healthy growth momentum from previous quarters.
It is worth mentioning that the total number of high-end hotels joining our TripPLUS program has exceeded 10,000, bringing more booking discounts and a wide range of hotel benefits to our members. The recent macro and industry happenings in destinations such as Hong Kong have put pressure on related travel demand and hotel prices. Excluding Greater China destinations, our revenue growth for overseas hotels accelerated to 50% year-over-year in the third quarter. Transportation ticketing revenue for the third quarter of 2019 was RMB 3.7 billion, representing a 3% increase from the same period in 2018. A lower year-over-year revenue growth compared to Q2 was mainly due to the weak outbound travel demand in certain destinations and a decrease of international air ticket price. Our international air ticketing business achieved a higher multiple against industry growth during a slow quarter.
The Trip.com brand air ticketing volume recorded triple-digit growth for the 12th consecutive quarter. Packaged tour revenue for the third quarter of 2019 was RMB 1.6 billion, representing a 19% increase from the same period in 2018. In the third quarter, GMV from our offline stores continued to see strong growth. In August, we announced that the total GMV of all offline stores reached RMB 10 billion year to date, having reached the milestone four months earlier than the previous year. Corporate travel revenue for the third quarter of 2019 was RMB 335 million, representing a 26% from the same period in 2018. This was primarily driven by expansion in corporate customer base and optimized product mix trends. Revenues for other businesses increased by 37% year-over-year in the third quarter of 2019, reaching RMB 688 million.
This was primarily driven by strong growth in our advertisement and financial service business. Gross margin was 79% for the third quarter of 2019, which is consistent with that in the same period of last year and in previous quarters. Excluding share-based compensation charges, total non-GAAP operating expenses grew 4% year-over-year and 10% quarter-over-quarter in the third quarter of 2019. Total headcount in IT, supplier management, and administration was largely consistent with the previous quarter. Marketing efficiency continued to improve. This was primarily due to our ROI-driven marketing strategy and continued efforts in customer services, product cross-selling, and content building. Average new customer acquisition costs continued to decrease in the third quarter while conversion and cross-sell ratios continued to improve due to the enhanced competitiveness of products and services.
Non-GAAP operating profit in the quarter was RMB 2.6 billion, growing 40% year-over-year and 53% quarter-over-quarter. Non-GAAP operating margin for the third quarter was 25%, increasing from 12% in the same period of 2018 and the previous quarter. The increase is mainly due to improvement in operational efficiency. Diluted earnings per ADS were RMB 1.35 or US$0.19 for the third quarter of 2019. Excluding share-based compensation charges and fair value changes of equity security investments, non-GAAP diluted earnings per ADS were RMB 3.7 or US$0.52 for the third quarter of 2019. As of September 30, 2019, the balance of cash and cash equivalents, restricted cash, short-term investments, and held-to-maturity deposits and financial products was RMB 61 billion or US$8.5 billion. On September 16th, the company announced the completion of its previously announced put right offer relating to its 1.25% convertible senior notes due 2022.
Approximately $924 million aggregate principal amount of the notes were validly surrendered and not withdrawn prior to the expiration of the put right offer. Following the settlement of repurchase of these notes, the total number of ordinary shares of the company on a fully diluted base was reduced by 1.8 million shares. On August 26th, the company's shareholders approved the proposal to change the name of the company from Ctrip.com International to Trip.com Group Limited. The American Depository Shares of the company have started to trade under the new company name since November 5th, 2019, and the company ticker has been changed to TCOM. On November 6th, Trip.com Group announced a strategic partnership with TripAdvisor, including operational cooperation and a planned investment. This investment will be financed through cash on hand and will be classified as long-term investment on the balance sheet.
We are happy with the potential shareholding and the cooperation and the related global partnership and have no intention to further increase our stake beyond our contractual obligations. Turning to the future outlook. For the fourth quarter of 2019, the company expects net revenue growth to continue at a year-over-year rate of approximately 8% to 13%. This forecast reflects a 600 to 700 basis points impact related to recent macro and industry headwinds, in particular related to events in Hong Kong. Excluding share-based compensations, the company expects non-GAAP operating income will be in the range of RMB 800 million-RMB 1 billion. This forecast reflects Trip.com Group's current and preliminary view, which is subject to change. With that, operator, please open the line for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.
Thank you. Thank you, James, Cindy, and Michelle. Congratulations on the very strong margin performance. My question would be on the revenue guidance and sort of what's your view on the normalized growth rate. On the fourth quarter, you just mentioned there will be an impact around six to eight percentage points. This is more than the 4 to 5 percentage points that you mentioned in the second quarter results. As we head into the fourth quarter, it seems like the impact from the macro in Hong Kong has increased. Can you just, if you can, separate out what's the impact from Hong Kong given the current situation in Hong Kong? Is that the main delta to that bigger impact into the fourth quarter? If you can then provide the revenue growth by segment that constitutes to the fourth quarter revenue guidance.
Once we lapse this Hong Kong impact, what do you see the business could grow on a normalized growth rate? Let's say from the second half of next year to beyond, where do we see the business growing in terms of, is it low teens, mid-teens, or high teens once we lapse these impacts? Thank you.
Your question probably can be separated in two parts. Our Chairman, James Liang, will address the macro forecast and our view on it, and he will address the detailed questions about our guidance. James?
Thank you. Yeah. Certainly, the recent events in Hong Kong really certainly have a negative impact on our outbound business, not just to Hong Kong, Macau, also Taiwan, Greater China regions, they're all negatively impacted. Not just from China, inbound to Hong Kong is almost completely gone. I think in the long run, as people readjust their travel plans in like three to six months horizon, the effect will be limited. As people readjust their travel plan and instead they may travel to destinations like Japan. We will see a pickup in other destinations. I think in the long run, over a six-month period, three to six-month period, this effect will be much more limited.
Thanks.
Regarding the guidance, compare with Q3, the guidance for the Q4 reflected additional 2% to 3% impact on the growth rate related to macro and regional headwinds due to the assumption of the full quarter impact in Q4 based on the latest status. Because if you recall, in the Q3, actually, the impact was starting from August, which is not the beginning of the third quarter. In the Q4, we assume there will be a full quarter impact. Therefore, we included the additional 2% to 3% impact on the growth rate. Thank you.
Your next question comes from Gregory Zhao with Barclays. Please go ahead.
Hi, Management. Thanks for taking my question. First, considering your future expansion to bring more international tourists to China, what's your plan to attract those overseas user traffic to Trip.com? As we see Google still at the top of the user traffic funnel in the overseas market, will you do more marketing on search engine or more promotion inside App Store for your Trip.com app? A quick follow-up on your 2020 margin outlook. If we see that the Hong Kong issue keeps extending into 2020, do you still maintain the above 20% operating margin target? Thank you.
Okay. Let me first address the question of the inbound market. I think inbound market has a lot of potential, but still there's quite a few bottlenecks. From the China side, the visa, the online payments, and the hotel restrictions for foreigners, and also the internet access, all these are bottlenecks. We are working very closely with the Chinese government. Our Chinese government is quite proactive in solving these issues. From the source market, we are actually working with many governments to promote China, for example, Japan cross-country tourism. Both from Japan to China and China to Japan. Working with the major destination markets in China, like Xi'an government. We're working closely with the Chinese government and other governments, other countries to promote tourism. Our Trip.com has actually increasingly become the venue for people to book international travel in Asia.
That's really, we have the ability to promote actually major destination, not just China, and the major destinations in Asia. That's really our overall strategy. On one hand, to promote our brand, but also we need to work with other governments to invest in resources, in branding and other facilities to promote cross-country travel.
Yeah. I'll address the margin question. At Trip.com Group, we have a very scalable business model, and with our business size continuing to increase, we can achieve higher efficiencies across all expenses items, which was already reflected in this quarter's financial statements. Given the huge growth opportunity ahead of us, it's probably not the optimal strategy for us to maximize margin at this moment. In the future, we will continuously make investments in our products and services, especially in the international markets. Our marketing spending will continuously be purely ROI-driven. Thanks to our dominance in the mid to high-end markets, especially in China, even with our continuous investments in the future, our group can still achieve a healthy margin. I think next year, 20% margin is the target we will do our best to try to achieve. Thank you.
Your next question comes from Binnie Wong with HSBC. Please go ahead.
Hi. Good morning, management. Thank you for taking my question. With the update in terms of the strategy we have in the overseas market, and also, we are seeing a step up actually in the cross-selling ratio, right? From air ticketing to hotels and to the other products. With the large volume we have from the Skyscanner. How do we see the international growth trend and also in terms of any uptick in terms of cross-selling? I think, recall in the investor day we had earlier, that has already been improving quite significantly from 20% last year to around 30% on the cross-selling ratio. I think that's very encouraging. Can you update us in terms of the international growth, how you see it?
When will you see a turnaround in terms of the situations that potentially the shift away, the impact from Hong Kong will be going into tourists maybe going into the other markets. Where are we seeing that we are adjusting impact and how we are overcoming it?
Sure. Thanks, Binnie. I think for future, our strength is really the one-stop shopping model and our ability to cross-sell between different views. Since our international air tickets normally is the first product our customers select, once they make the reservation, we will immediately know where the customers are going. Using that knowledge, we will be able to target these customers by providing the relevant hotels and in-destination tour tickets, transportation, et cetera, to them to increase the cross-sell and the conversion rate. That effort is day in and day out. We run different tests to make sure we provide the right product based on customers' preference and make sure our accuracy for the reference is improving every day. That effort is very much underway, and it's very concerted effort by all the business units.
As we are expanding globally, we are only in selected destinations right now. As our air ticketing business is moving further into the global spaces, the opportunity for us to do cross-selling will be enhanced. We also look at different indexes, such as traffic volumes from China to different destinations and to enhance our pricing offerings and product comprehensiveness. All that is a very comprehensive strategy to make sure whatever customers need, if they're looking for our product, will be suitable for our customers abroad. I think that the cross-sell will enhance throughout the year in the future.
Thank you.
Your next question comes from Jed Kelly with Oppenheimer. Please go ahead.
Great. Thanks for taking my question. Congratulations on the 20th anniversary. It was nice to see all your suppliers at the event, generally happy for your success. Well done. My question is just on the accommodation. It did decelerate. How much of that is a mix between lower volumes versus lower commissions or lower ADRs? Can you touch on that? On your sales and marketing, it actually was down again, I think 8%. Given your ambitions for Trip.com
Are you waiting to build up the product to a certain amount of international supply before you accelerate marketing that brand? Just how should we think about your marketing strategy, both domestically and internationally? Thank you.
Yes. For the slower revenue growth than expected, which is mainly due to the slower-than-expected travel demand due to the macro headwinds, especially in certain regions like Hong Kong, Taiwan, the Greater China region. For example, during the October holiday, and the weakened regional travel momentum, the travel demand year-on-year change during the October holiday was the lowest level for both domestic and outbound in the past eight years, especially for outbound travel industry, which was decreased by 15% year-on-year. Outbound traffic to Hong Kong declined by more than 50% in recent months, which also resulted in a steep decline in the accommodation and air ticket prices. Overall, the outbound travel volume growth rate decreased from 13%-14% year-on-year in the first half of this year to just 1% year-on-year in the third quarter. However, as always, we will continuously to outpace the industry growth.
For example, in the accommodations, which revenue from the overseas hotel, excluding Greater China destinations, our overseas hotel grew about 50% year-on-year. The Ctrip brand's low-end hotel delivered close to 40% volume growth, and revenue from our domestic high-end hotel maintained a very strong growth momentum. Similar to our accommodation business, our international air tickets business achieved an even higher multiple against the industry growth during a slow quarter. The Trip.com air tickets volume continuously to deliver triple-digit growth. Regarding the sales marketing strategy, as I said, we will continuously to have a truly ROI-driven marketing strategy, both domestically and internationally. We will continuously to be more focused to our strength, more advanced in mobile or app-based products. We will continuously to promote more in the mobile marketing channels. Thank you.
Your next question comes from James Lee with Mizuho Securities. Please go ahead.
Yeah, thanks for taking my questions. James, I was wondering then if you can comment on the competitor situation. We recently heard that one of your key competitors recently stepped up on their discounting, maybe especially in the low-tier hotels, low-star hotels. Just wondering if you can talk about that a little bit, how you guys responding, and do you expect the competition to stabilize and/or sort of expect that to continue going to 4Q? Cindy, I'm not quite sure if you provided operating margin guidance for 4Q, and also if you can break down the segmentation guidance for 4Q as well, that'll be helpful. Thank you.
We have been always pursuing a quite aggressive pricing strategy at the low end of market. I think in the high end of markets, our customers are generally not that price sensitive, and they generally value quality of the service and the brand. On the low end, our customers are quite price sensitive, and we've been quite aggressive in pursuing our pricing strategy to gain market share, and that's going to be our long-term strategy, so we intend to maintain the strategy.
Regarding the guidance for the margins, excluding share-based compensation charges, the company expects non-GAAP excluding income in the fourth quarter will be in the range of RMB 800 million to RMB 1 billion . On the top line guidance, in the accommodation reservations business, in the fourth quarter, we estimate that it will continue to have a healthy growth rate at about 10%-15%. For transportation ticketing business, the Q4 guidance will be in the range of 0%-5% year-on-year growth. The package tour revenue will continue to have a 15%-20% growth rate, and corporate travel will have a 20%-25%. In total, our net revenue will grow in the range of 8%-13%. Thank you.
Your next question comes from Natalie Wu with China International Capital Corporation. Please go ahead.
Hi. Good morning. Thanks for taking my question. Just curious, can you help us understand what kind of synergy should we expect from your TripAdvisor JV? Secondly, it has been almost one year since you upgraded your open platform strategy and launched the 3.0 version system. Just wondering, would you mind sharing with us more details on the progress regarding that initiatives in the past 11 months, especially with respect to those ones contributed to your financials the most? Thank you.
Sure. First of all, on TripAdvisor, we are very excited about the partnership because our users will be able to access millions of the reviews and pictures generated by global users. When they make the reservation, they will already see what they are going to see in the destination. That will enhance our user's experience. We are very excited to collaborate with TripAdvisor team, to make sure our user's experience is enhanced. Secondly, on open platform, it's a very innovative strategy. Ctrip was the first one to do that. By leveraging the open platform, it enables us to have the coverage we want to have across the world and timelines of the product that is offered to our customers, and also have the best pricing structures that is available for our platform.
Far I think that our platform has offered anywhere, depending on the different product line, it can be anywhere between 20% to 35% of the volume are coming from the open platform. The challenge for us is to make sure the quality is very well controlled. Ctrip will be behind the scenes, making sure all the service level is met by all the suppliers on the open platform. Every day we run different projects to make sure not only we get the best price, coverage, and products, but also we offer the best services to guarantee the user's experience for our customers when they go abroad. Thank you.
Your next question comes from Chen Hu with PH Capital. Please go ahead.
Morning, management. I have two questions, two quick ones. One is, last year, we actually mentioned a lot about going down to the lower tier cities. To look at what we actually did this year, a lot of them is rather going abroad. I wonder, have we changed our strategy or is this going downstairs, going down to the lower tier cities has already finished? What's the future strategy in terms of expansion? That's number one. Number two, there is a theory that if someone wants to go abroad to travel, if Hong Kong has something, they can actually alter their destination to other places. I wonder how to reconcile the impact we're experiencing and to the theory I just mentioned. Thank you. That's the two questions.
Sure. For Ctrip, we are based in China, so further penetrate into the lower tier cities has always been our strategy and will be in the future. However, we have seen a great potential abroad as well. The two campaigns and two fields are moving simultaneously. Our domestic team is moving very aggressive by opening up offline stores, and they are making very good progress for the penetrating into the 3rd tier, 4th tier cities. Our pricing structure supports our strategy and has seen very positive growth in the lower tier cities. Our international team, on the other hand, also moves very rapidly to make sure we capitalize on the opportunity for outbound travel as well as the other opportunities globally. These two strategies coincide with each other and moving simultaneously, very rapidly into both lower tier cities as well as abroad.
Your second question is the replacement of Hong Kong. People will gradually look for alternatives. Now Hong Kong is not a valid place to go. However, it takes time. What's going on in Hong Kong is not only impacting Hong Kong, also it make people to pause and think. It has peripheral impact in general market. Again, Ctrip, because we are so diversified, we will work very hard to make sure, gradually, we're able to divert certain traffics to other alternatives. It takes time.
Yeah, as a service provider, we have the most comprehensive products to capture any travel demand from the users. In terms of the targets we set, we give to the team, we always ask them to outpace the industry growth. Even this last slow, our growth rate slowed down. Compare with the industry growth rate, we are still outpace the industry growth in a much faster way during the slow time.
Thank you.
There are no further questions at this time. I'll now hand back to Ms. Qi for closing remarks.
Thank you, Ashley. Thank you to everyone for joining us today. You can find the transcript and the webcast of today's call on investor.ctrip.com. We look forward to speaking with you on our fourth quarter 2019 earnings call. Thank you, and have a nice day.
Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.