Ctrip Reports First Quarter 2013 Financial Results

May 08, 2013, 18:00 ET from Ctrip.com International, Ltd.

SHANGHAI, May 8, 2013 /PRNewswire/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider of hotel accommodations, airline tickets, packaged tours and corporate travel management in China, today announced its unaudited financial results for the quarter ended March 31, 2013.

Highlights for the First Quarter of 2013

  • Net revenues were RMB1.2 billion (US$187 million) for the first quarter of 2013, up 27% year-on-year, versus our first quarter net revenue guidance of 15-20% increase year-on-year.
  • Gross margin was 74% for the first quarter of 2013, compared to 75% in the same period in 2012.
  • Income from operations was RMB160 million (US$26 million) for the first quarter of 2013, down 9% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB272 million (US$44 million), down 2% year-on-year.
  • Operating margin was 14% for the first quarter of 2013, compared to 19% in the same period in 2012. Excluding share-based compensation charges (non-GAAP), operating margin was 23%, compared to 30% in the same period in 2012.
  • Net income attributable to Ctrip's shareholders was RMB153 million (US$25 million) for the first quarter of 2013, down 26% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB265 million (US$43 million), down 14% year-on-year. 
  • Diluted earnings per ADS were RMB1.10 (US$0.18) for the first quarter of 2013. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.87 (US$0.30) for the first quarter of 2013.
  • Share-based compensation charges were RMB112 million (US$18 million), accounting for 10% of the net revenues, or RMB0.77 (US$0.12) per ADS for the first quarter of 2013.

"We are glad to report strong results in the first quarter of 2013," said James Liang, Chairman of the Board and Chief Executive Officer of Ctrip. "We have made solid progress and gained market shares across major business lines. We will continue to focus on our mobile strategy, improve price competitiveness, strengthen partner relationships, and enhance marketing effectiveness. Our goal is to become the one-stop travel platform with best products, best services, and best prices for our customers. We are excited to capture the opportunities in the travel industry in China and will work hard to elevate our leadership to the next level."

First Quarter 2013 Financial Results

For the first quarter of 2013, Ctrip reported total revenues of RMB1.2 billion (US$198 million), representing a 27% increase from the same period in 2012. Total revenues for the first quarter of 2013 increased by 5% from the previous quarter.

Hotel reservation revenues amounted to RMB451 million (US$73 million) for the first quarter of 2013, representing a 23% increase year-on-year, primarily driven by an increase of 41% in hotel reservation volume and partially offset by a decrease of 13% in commission per room night. The decrease of commission per room night was primarily due to promotional activities. Hotel reservation revenues decreased by 4% quarter-on-quarter.

Air ticket booking revenues for the first quarter of 2013 were RMB457 million (US$74 million), representing a 27% increase year-on-year, primarily driven by an increase in air tickets sales volume. Air ticket booking revenues increased by 2% quarter-on-quarter.

Packaged-tour revenues for the first quarter of 2013 were RMB235 million (US$38 million), representing a 41% increase year-on-year due to the increase of leisure travel volume. Packaged-tour revenues increased by 42% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the first quarter of 2013 were RMB51 million (US$8 million), representing a 31% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenue decreased by 11% quarter-on-quarter, primarily due to seasonality.

For the first quarter of 2013, net revenues were RMB1.2 billion (US$187 million), representing a 27% increase from the same period in 2012. Net revenues for the first quarter of 2013 increased by 5% from the previous quarter.

Gross margin was 74% for the first quarter of 2013, compared to 75% in the same period in 2012 and remained consistent with that in the previous quarter.

Product development expenses for the first quarter of 2013 increased by 36% to RMB268 million (US$43 million) from the same period in 2012, primarily due to an increase in product development personnel related expense and share-based compensation charges. Product development expenses for the first quarter of 2013 increased by 1% from the previous quarter. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 20% of the net revenues, increased from 18% in the same period in 2012 and decreased from 21% in the previous quarter.

Sales and marketing expenses for the first quarter of 2013 increased by 46% to RMB267 million (US$43 million) from the same period in 2012, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the first quarter of 2013 decreased by 5% from the previous quarter, primarily due to a decrease in sales and marketing related activities. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 22% of the net revenues, increased from 19% in the same period in 2012 and decreased from 24% in the previous quarter.

General and administrative expenses for the first quarter of 2013 increased by 25% to RMB161 million (US$26 million) from the same period in 2012, primarily due to an increase in personnel related expenses and share-based compensation charges. General and administrative expenses for the first quarter of 2013 increased by 6% from the previous quarter, primarily due to an increase in personnel related expenses. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, remained consistent with that in the same period in 2012 and in the previous quarter.

Income from operations for the first quarter of 2013 was RMB160 million (US$26 million), representing a decrease of 9% from the same period in 2012 and an increase of 33% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB272 million (US$44 million), representing a decrease of 2% from the same period in 2012 and an increase of 16% from the previous quarter.

Operating margin was 14% for the first quarter of 2013, compared to 19% in the same period in 2012, and 11% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 23%, compared to 30% in the same period in 2012, and 21% in the previous quarter. 

The effective tax rate for the first quarter of 2013 was 32%, increased from 28% in the same period of 2012 and 25% in the previous quarter, primarily due to certain non tax-deductible items in PRC subsidiaries.

Net income attributable to Ctrip's shareholders for the first quarter of 2013 was RMB153 million (US$25 million), representing a decrease of 26% from the same period in 2012 and a decrease of 20% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB265 million (US$43 million), representing a decrease of 14% from the same period in 2012 and a decrease of 13% from the previous quarter.

Diluted earnings per ADS were RMB1.10 (US$0.18) for the first quarter of 2013. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.87 (US$0.30) for the first quarter of 2013.

As of March 31, 2013, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB6.2 billion (US$993 million).

Business Outlook

For the second quarter of 2013, the Company expects to continue the net revenue growth year-on-year at a rate of approximately 15-20%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.

Conference Call

Ctrip's management team will host a conference call at 8:00PM U.S. Eastern Time on May 8, 2013 (or 8:00AM on May 9, 2013 in the Shanghai/HK time zone) following the announcement.

The conference call will be available on Webcast live and replay at: http://ir.ctrip.com. The call will be archived for one month at this website.

The dial-in details for the live conference call: U.S. Toll Free Number +1.800.219.3192, International dial-in number + 1.617.597.5412, Passcode 893 736 31#. For pre-registration, please click:

https://www.theconferencingservice.com/prereg/key.process?key=P4DMDMUTH

A telephone replay of the call will be available after the conclusion of the conference call through May 16, 2013. The dial-in details for the replay: U.S. Toll Free Number +1.888.286.8010, International dial-in number +1.617.801.6888, Passcode 46370952.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "is/are likely to," "confident" or other similar statements. Among other things, quotations from management and the Business Outlook section in this press release, as well as Ctrip's strategic and operational plans, contain forward-looking statements. Ctrip may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Ctrip's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, the slow-down of economic growth in China and the global economic downturn, general declines or disruptions in the travel industry, volatility in the trading price of Ctrip's ADSs, Ctrip's reliance on its relationships and contractual arrangements with travel suppliers and strategic alliances, failure to further increase Ctrip's brand recognition to obtain new business partners and consumers, failure to compete against new and existing competitors, failure to successfully manage current growth and potential future growth, risks associated with any strategic investments or acquisitions, seasonality in the travel industry in mainland China, Hong Kong, Macau or Taiwan, failure to successfully develop Ctrip's corporate travel business, damage to or failure of Ctrip's infrastructure and technology, loss of services of Ctrip's key executives, inflation in China and in other countries, risks and uncertainties associated with PRC laws and regulations with respect to the ownership structure of Ctrip's affiliated Chinese entities and the contractual arrangements among Ctrip, its affiliated Chinese entities and their shareholders, and other risks outlined in Ctrip's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of the date of the issuance, and Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Ctrip's unaudited condensed consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Ctrip uses non-GAAP financial information related to product development expenses, sales and marketing expenses, general and administrative expenses, income from operations, operating margin, net income, and diluted earnings per ordinary share and per ADS, each of which is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under ASC 718, "Compensation-Stock Compensation" for 2013 and 2012. Ctrip's management believes the non-GAAP financial measures facilitate better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods.

Non-GAAP information is not prepared in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Ctrip's business for the foreseeable future.

Reconciliations of Ctrip's non-GAAP financial data to the most comparable GAAP data included in the consolidated statement of operations are included at the end of this press release.

About Ctrip.com International, Ltd.

Ctrip.com International, Ltd. is a leading travel service provider of hotel accommodations, airline tickets, packaged tours, and corporate travel management in China. Ctrip aggregates hotel and flight information to enable business and leisure travelers to make informed and cost-effective bookings. Ctrip also helps customers book vacation packages and guided tours. In addition, Ctrip corporate travel management services help corporate clients effectively manage their travel requirements. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.

For further information, please contact:

Investor Relations Ctrip.com International, Ltd. Tel: +86-21-3406-4880 X12928 Email: iremail@ctrip.com

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Balance Sheets

December 31, 2012

March 31, 2013

March 31, 2013

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

3,421,532,962

3,939,763,848

634,340,801

Restricted cash

768,228,577

737,745,826

118,784,348

Short-term investment 

1,408,664,335

1,487,624,662

239,522,229

Accounts receivable, net

983,804,403

1,254,443,621

201,977,784

Prepayments and other current assets

999,148,710

745,785,290

120,078,781

Deferred tax assets, current

61,840,526

72,365,245

11,651,518

Total current assets

7,643,219,513

8,237,728,492

1,326,355,461

Long-term deposits and prepayments     

210,618,310

191,532,838

30,838,674

Land use rights

110,659,284

109,716,237

17,665,395

Property, equipment and software

1,123,937,191

1,302,525,959

209,719,514

Investment

1,437,247,949

1,413,670,522

227,614,884

Goodwill

822,585,341

828,989,339

133,475,452

Intangible assets

321,483,420

319,630,175

51,463,608

Total assets

11,669,751,008

12,403,793,562

1,997,132,988

LIABILITIES

Current liabilities:

Short-term borrowings

453,478,628

452,201,931

72,808,967

Accounts payable

1,023,672,151

1,472,683,797

237,116,603

Salary and welfare payable

229,969,924

206,125,620

33,188,256

Taxes payable

216,456,010

216,034,596

34,783,699

Advances from customers

1,414,865,769

1,330,890,648

214,286,509

Accrued liability for customer reward program 

217,548,153

228,917,574

36,857,985

Other payables and accruals

354,153,607

375,254,743

60,419,711

Total current liabilities

3,910,144,242

4,282,108,909

689,461,730

Deferred tax liabilities, non-current

53,309,153

53,147,954

8,557,344

Long-term Debt

1,121,418,000

1,117,944,000

180,000,000

Total liabilities

5,084,871,395

5,453,200,863

878,019,074

SHAREHOLDERS' EQUITY

Share capital

2,979,144

2,993,488

481,981

Additional paid-in capital

3,818,256,227

3,945,645,513

635,287,807

Statutory reserves

103,222,512

103,222,514

16,619,842

Accumulated other comprehensive loss

(58,778,675)

(82,154,164)

(13,227,630)

Retained Earnings

4,515,841,767

4,669,313,240

751,805,442

Treasury stock 

(1,891,888,900)

(1,891,888,900)

(304,612,755)

Total Ctrip's shareholders' equity

6,489,632,075

6,747,131,691

1,086,354,687

Noncontrolling interests

95,247,538

203,461,008

32,759,227

Total shareholders' equity

6,584,879,613

6,950,592,699

1,119,113,914

Total liabilities and shareholders' equity

11,669,751,008

12,403,793,562

1,997,132,988

 

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

March 31, 2012

December 31, 2012

March 31, 2013

March 31, 2013

RMB

RMB

RMB

 USD 

(unaudited)

(unaudited)

(unaudited)

 (unaudited) 

Revenues:

Hotel reservation

366,784,363

468,304,604

450,524,886

72,538,946

Air-ticketing

360,463,420

447,186,315

456,502,524

73,501,405

Packaged tour

166,379,981

165,724,297

235,208,743

37,870,925

Corporate travel

38,801,113

57,532,553

50,973,701

8,207,268

Others

31,170,118

28,546,319

35,198,400

5,667,289

Total revenues

963,598,995

1,167,294,088

1,228,408,254

197,785,833

Less: business tax and related surcharges

(52,790,604)

(65,938,822)

(67,900,120)

(10,932,588)

Net revenues

910,808,391

1,101,355,266

1,160,508,134

186,853,245

Cost of revenues

(225,956,740)

(284,704,746)

(304,171,687)

(48,974,639)

Gross profit

684,851,651

816,650,520

856,336,447

137,878,606

Operating expenses:

Product development *

(196,216,150)

(264,099,634)

(267,532,617)

(43,075,388)

Sales and marketing *

(183,405,064)

(280,764,753)

(267,494,323)

(43,069,222)

General and administrative *

(128,674,249)

(151,879,211)

(161,292,761)

(25,969,724)

Total operating expenses

(508,295,463)

(696,743,598)

(696,319,701)

(112,114,334)

Income from operations

176,556,188

119,906,922

160,016,746

25,764,272

Interest income

45,773,353

34,061,163

22,559,420

3,632,289

Other income

9,437,752

58,378,812

7,689,137

1,238,027

Income before income tax expense and equity in income 

231,767,293

212,346,897

190,265,303

30,634,588

Income tax expense

(64,797,513)

(53,776,285)

(61,378,155)

(9,882,488)

Equity in income of affiliates

43,475,409

4,265,040

87,806

14,138

Net income

210,445,189

162,835,652

128,974,954

20,766,238

Less: Net (income)/loss attributable to noncontrolling interests

(2,077,847)

29,716,374

24,496,519

3,944,181

Net income attributable to Ctrip's shareholders

208,367,342

192,552,026

153,471,473

24,710,419

Comprehensive income

127,215,669

197,932,727

130,095,984

20,946,735

Earnings per ordinary share

- Basic

5.80

5.96

4.73

0.76

- Diluted

5.48

5.51

4.39

0.71

Earnings per ADS

- Basic

1.45

1.49

1.18

0.19

- Diluted

1.37

1.38

1.10

0.18

Weighted average ordinary shares outstanding

- Basic

35,911,996

32,282,299

32,439,013

32,439,013

- Diluted

38,053,311

35,719,079

36,015,108

36,015,108

* Share-based compensation charges included are as follows:

  Product development 

29,767,590

35,881,144

34,854,918

5,611,985

  Sales and marketing 

13,547,719

14,379,832

13,292,481

2,140,220

  General and administrative 

57,363,156

63,478,526

63,440,672

10,214,573

 

Ctrip.com International, Ltd.

Reconciliation of  GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended March 31, 2013

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(267,532,617)

23%

34,854,918

3%

(232,677,699)

20%

Sales and marketing 

(267,494,323)

23%

13,292,481

1%

(254,201,842)

22%

General and administrative 

(161,292,761)

14%

63,440,672

5%

(97,852,089)

8%

Total operating expenses

(696,319,701)

60%

111,588,071

10%

(584,731,630)

50%

Income from operations

160,016,746

14%

111,588,071

10%

271,604,817

23%

Net income attributable to Ctrip's shareholders

153,471,473

13%

111,588,071

10%

265,059,544

23%

Diluted earnings per ordinary share (RMB)       

4.39

3.10

7.49

Diluted earnings per ADS (RMB)

1.10

0.77

1.87

Diluted earnings per ADS (USD)

0.18

0.12

0.30

Quarter Ended December 31, 2012

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(264,099,634)

24%

35,881,144

3%

(228,218,490)

21%

Sales and marketing 

(280,764,753)

25%

14,379,832

1%

(266,384,921)

24%

General and administrative 

(151,879,211)

14%

63,478,526

6%

(88,400,685)

8%

Total operating expenses

(696,743,598)

63%

113,739,502

10%

(583,004,096)

53%

Income from operations

119,906,922

11%

113,739,502

10%

233,646,424

21%

Net income attributable to Ctrip's shareholders

192,552,026

17%

113,739,502

10%

306,291,528

28%

Diluted earnings per ordinary share (RMB)

5.51

3.18

8.70

Diluted earnings per ADS (RMB)

1.38

0.80

2.17

Diluted earnings per ADS (USD)

0.22

0.13

0.35

Quarter Ended March 31, 2012

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(196,216,150)

22%

29,767,590

3%

(166,448,560)

18%

Sales and marketing 

(183,405,064)

20%

13,547,719

1%

(169,857,345)

19%

General and administrative 

(128,674,249)

14%

57,363,156

6%

(71,311,093)

8%

Total operating expenses

(508,295,463)

56%

100,678,465

11%

(407,616,998)

45%

Income from operations

176,556,188

19%

100,678,465

11%

277,234,653

30%

Net income attributable to Ctrip's shareholders

208,367,342

23%

100,678,465

11%

309,045,807

34%

Diluted earnings per ordinary share (RMB)

5.48

2.65

8.12

Diluted earnings per ADS (RMB)

1.37

0.66

2.03

Diluted earnings per ADS (USD)

0.22

0.11

0.32

Notes for all the condensed consolidated financial schedules presented:

Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the certified exchange rate of USD1.00=RMB6.2108 on March 29, 2013 published by the Federal Reserve Board.

SOURCE Ctrip.com International, Ltd.



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