Ctrip Reports Second Quarter 2012 Financial Results

24 Jul, 2012, 18:01 ET from Ctrip.com International, Ltd.

SHANGHAI, July 24, 2012 /PRNewswire-Asia/ -- 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 June 30, 2012.

Highlights for the Second Quarter of 2012

  • Net revenues were RMB974 million (US$153 million) for the second quarter of 2012, up 17% year-on-year, versus our guidance of 15-20% year-on-year.
  • Gross margin was 75% for the second quarter of 2012, compared to 77% in the same period in 2011.
  • Income from operations was RMB168 million (US$26 million) for the second quarter of 2012, down 37% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB277 million (US$44 million), down 22% year-on-year.
  • Operating margin was 17% for the second quarter of 2012, compared to 32% in the same period in 2011. Excluding share-based compensation charges (non-GAAP), operating margin was 28%, compared to 43% in the same period in 2011.
  • Net income attributable to Ctrip's shareholders was RMB120 million (US$19 million) in the second quarter of 2012, down 55% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB228 million (US$36 million), down 35% year-on-year. 
  • Diluted earnings per ADS were RMB0.81 (US$0.13) for the second quarter of 2012. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.56 (US$0.24) for the second quarter of 2012.
  • Share-based compensation charges were RMB109 million (US$17 million), accounting for 11% of the net revenues, or RMB0.74 (US$0.11) per ADS for the second quarter of 2012.

"We are pleased with the solid results in the second quarter of 2012," said Min Fan, President and Chief Executive Officer of Ctrip. "To strengthen Ctrip's capability of providing travelers with the one-stop travel products and services, we continued to invest heavily on product developments, especially in leisure travel products and services. We also launched intensified marketing campaigns to reach out to new customers. We believe that our investment today will further enhance Ctrip's market leadership in the long run."

Second Quarter 2012 Financial Results

For the second quarter of 2012, Ctrip reported total revenues of RMB1.0 billion (US$162 million), representing a 16% increase from the same period in 2011. Total revenues for the second quarter of 2012 increased by 7% from the previous quarter.

Hotel reservation revenues amounted to RMB410 million (US$65 million) for the second quarter of 2012, representing a 12% increase year-on-year, primarily driven by an increase of 20% in hotel reservation volume and partially offset by 7% decrease of commission per room night. The decrease of commission per room night was primarily due to promotional activities. Hotel reservation revenues increased by 12% quarter-on-quarter, primarily due to seasonality.

Air ticket booking revenues for the second quarter of 2012 were RMB404 million (US$64 million), representing a 16% increase year-on-year, primarily driven by an increase in air ticketing sales volume. Air ticket booking revenues increased 12% quarter-on-quarter, primarily due to seasonality.

Packaged-tour revenues for the second quarter of 2012 were RMB134 million (US$21 million), representing a 24% increase year-on-year due to the increase of leisure travel volume. Packaged-tour revenues decreased 20% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the second quarter of 2012 were RMB49 million (US$8 million), representing a 25% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenues increased 27% quarter-on-quarter, primarily due to seasonality.

For the second quarter of 2012, net revenues were RMB974 million (US$153 million), representing a 17% increase from the same period in 2011. Net revenues for the second quarter of 2012 increased by 7% from the previous quarter.

Gross margin was 75% in the second quarter of 2012, compared to 77% in the same period in 2011 and 75% in the previous quarter.

Product development expenses for the second quarter of 2012 increased by 52% to RMB208 million (US$33 million) from the same period in 2011, and increased by 6% from the previous quarter, primarily due to an increase in product development personnel related expense and share-based compensation charges. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 18% of the net revenues, increased from 14% in the same period in 2011 and remained consistent with that in the previous quarter.

Sales and marketing expenses for the second quarter of 2012 increased by 54% to RMB217 million (US$34 million) from the same period in 2011, and increased by 18% from the previous quarter, primarily due to an increase in sales and marketing related activities and personnel related expense as a result of our recently launched intensified marketing campaigns as well as our efforts to expand in the leisure travel market. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 21% of the net revenues, increased from 16% in the same period in 2011 and increased from 19% in the previous quarter.

General and administrative expenses for the second quarter of 2012 increased by 44% to RMB139 million (US$22 million) from the same period in 2011, primarily due to an increase in administrative personnel, share-based compensation charges and the incremental turnover tax due to the new value-added tax reform. General and administrative expenses for the second quarter of 2012 increased by 8% from the previous quarter, primarily due to an increase in share-based compensation charges and the incremental turnover tax due to the new value-added tax reform. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, increased from 5% in the same period in 2011 and remained consistent with that in the previous quarter.

Income from operations for the second quarter of 2012 was RMB168 million (US$26 million), representing a decrease of 37% from the same period in 2011 and a decrease of 5% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB277 million (US$44 million), representing a decrease of 22% from the same period in 2011 and remained consistent with that the previous quarter.

Operating margin was 17% in the second quarter of 2012, compared to 32% in the same period in 2011, and 19% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 28%, decreased from 43% in the same period in 2011 and 30% in the previous quarter. 

The effective tax rate for the second quarter of 2012 was 45%, increased from 16% in the same periods of 2011 and increased from 28% in the previous quarter, primarily due to the provision of 5% PRC withholding tax related to the dividends that our PRC subsidiaries will pay to our Hong Kong subsidiary to fund the recently announced share repurchase program, which was partially offset by the preferential tax treatment of two PRC consolidated entities. Those two entities were approved to apply the preferential tax rate of 15% under the Corporate Income Tax Preferential Policies for China's Western Region. This preferential status is effective retroactively as of January 1, 2011. Before the company obtained the official approval for the preferential tax treatment, those entities applied the statutory tax rate of 25% for 2011 and first quarter in 2012.

Net income attributable to Ctrip's shareholders for the second quarter of 2012 was RMB120 million (US$19 million), representing a decrease of 55% from the same period in 2011 and a decrease of 29% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB228 million (US$36 million), representing a decrease of 35% from the same period in 2011 and a decrease of 15% from the previous quarter.

Diluted earnings per ADS were RMB0.81 (US$0.13) for the second quarter of 2012. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.56 (US$0.24) for the second quarter of 2012.

As of June 30, 2012, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB5.3 billion (US$831 million).

Business Outlook

For the third quarter of 2012, 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.

Recent Development

In June 2012, Ctrip announced a new share repurchase program up to US$300 million approved by board of directors. Ctrip expects to fund the repurchase out of its existing cash balance, including cash dividends that it receives from its PRC subsidiaries. The dividends paid by those PRC subsidiaries to Ctrip through its Hong Kong subsidiary will be subject to a 5% PRC withholding tax amounting up to US$15 million.

As of July 24, 2012, Ctrip cumulatively purchased approximately 11.3 million ADSs with a total consideration of US$202 million from open market under three existing share repurchase plans adopted in 2008, 2011 and 2012.

Conference Call

Ctrip's management team will host a conference call at 9:00PM U.S. Eastern Time on July 24, 2012 (or 9:00AM on July 25, 2012 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 +1.888.679.8037, International dial-in number + 1.617.213.4849, Passcode 114 693 54#. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PCKXHNNUM.

A telephone replay of the call will be available after the conclusion of the conference call through August 1, 2012. 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 91559706.

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 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, "Stock Compensation" for 2011 and 2010. 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 books 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 X 12928 Email: iremail@ctrip.com

 

Ctrip.com International, Ltd. 

Consolidated Balance Sheets Information

December 31, 2011

June 30, 2012

June 30, 2012

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

3,503,428,418

2,850,207,554

448,639,628

Restricted cash

211,636,294

800,411,906

125,989,596

Short-term investment 

1,288,471,562

1,630,600,004

256,666,143

Accounts receivable, net

789,036,329

1,045,488,633

164,566,131

Prepayments and other current assets

566,187,711

672,745,793

105,894,191

Deferred tax assets, current

39,782,201

45,074,318

7,094,966

Total current assets

6,398,542,515

7,044,528,208

1,108,850,655

Long-term deposits and prepayments     

155,360,492

190,674,554

30,013,309

Land use rights

113,460,899

112,069,315

17,640,377

Property, equipment and software

683,903,870

728,493,097

114,669,148

Investment

1,305,145,043

1,337,829,420

210,582,311

Goodwill

798,601,767

801,585,341

126,174,302

Intangible assets

306,420,192

324,768,635

51,120,516

Total assets

9,761,434,778

10,539,948,570

1,659,050,618

LIABILITIES

Current liabilities:

Short-term borrowings

-

381,110,460

59,989,054

Accounts payable

763,256,074

1,017,255,831

160,122,120

Salary and welfare payable

145,524,036

135,506,750

21,329,569

Taxes payable

220,604,123

128,151,301

20,171,777

Advances from customers

1,090,852,066

1,179,800,535

185,707,624

Accrued liability for customer reward program

161,838,531

184,686,026

29,070,679

Other payables and accruals

185,985,423

383,970,748

60,439,281

Deferred tax liabilities

-

94,852,500

14,930,348

Total current liabilities

2,568,060,253

3,505,334,151

551,760,452

Deferred tax liabilities, non-current

48,308,692

53,559,933

8,430,652

Total liabilities

2,616,368,945

3,558,894,084

560,191,104

SHAREHOLDERS' EQUITY

Share capital

2,939,527

2,959,701

465,875

Additional paid-in capital

3,465,924,424

3,800,963,433

598,294,260

Statutory reserves

98,049,668

98,049,668

15,433,601

Accumulated other comprehensive loss

(172,466,277)

(235,495,170)

(37,068,341)

Retained Earnings

3,806,608,747

4,095,331,447

644,629,537

Treasury stock 

(158,761,225)

(846,758,547)

(133,284,833)

Total Ctrip's shareholders' equity

7,042,294,864

6,915,050,532

1,088,470,099

Noncontrolling interests

102,770,969

66,003,954

10,389,415

Total shareholders' equity

7,145,065,833

6,981,054,486

1,098,859,514

Total liabilities and shareholders' equity

9,761,434,778

10,539,948,570

1,659,050,618

 

Ctrip.com International, Ltd. 

Consolidated Statements of Operations Information

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

June 30, 2011

March 31, 2012

June 30, 2012

June 30, 2012

RMB

RMB

RMB

 USD 

(unaudited)

(unaudited)

(unaudited)

 (unaudited) 

Revenues:

Hotel reservation

366,453,694

366,784,363

410,370,431

64,594,748

Air-ticketing

347,339,141

360,463,420

404,268,226

63,634,224

Packaged tour

108,282,983

166,379,981

133,776,555

21,057,226

Corporate travel

39,560,736

38,801,113

49,348,796

7,767,794

Others

24,751,318

31,170,118

33,187,613

5,223,928

Total revenues

886,387,872

963,598,995

1,030,951,621

162,277,920

Less: business tax and related surcharges

(53,360,164)

(52,790,604)

(57,326,573)

(9,023,544)

Net revenues

833,027,708

910,808,391

973,625,048

153,254,376

Cost of revenues

(189,763,780)

(225,956,740)

(241,168,887)

(37,961,418)

Gross profit

643,263,928

684,851,651

732,456,161

115,292,958

Operating expenses:

Product development *

(136,823,269)

(196,216,150)

(208,344,014)

(32,794,587)

Sales and marketing *

(141,444,111)

(183,405,064)

(217,235,897)

(34,194,223)

General and administrative *

(96,617,795)

(128,674,249)

(138,826,378)

(21,852,098)

Total operating expenses

(374,885,175)

(508,295,463)

(564,406,289)

(88,840,908)

Income from operations

268,378,753

176,556,188

168,049,872

26,452,050

Interest income

23,045,312

45,773,353

31,865,564

5,015,829

Other income

17,520,128

9,437,752

56,366,412

8,872,409

Income before income tax expense and equity in income

308,944,193

231,767,293

256,281,848

40,340,288

Income tax expense

(47,954,023)

(64,797,513)

(116,557,710)

(18,346,877)

Equity in income/(loss) of affiliates

4,681,110

4,161,068

(18,189,504)

(2,863,136)

Net income

265,671,280

171,130,848

121,534,634

19,130,275

Less: Net income attributable to noncontrolling interests

(1,968,908)

(2,077,847)

(1,864,935)

(293,552)

Net income attributable to Ctrip's shareholders

263,702,372

169,053,001

119,669,699

18,836,723

Comprehensive income

247,004,622

87,901,328

137,792,479

21,689,356

Earnings per ordinary share

- Basic

7.33

4.71

3.37

0.53

- Diluted

6.90

4.44

3.26

0.51

Earnings per ADS

- Basic

1.83

1.18

0.84

0.13

- Diluted

1.72

1.11

0.81

0.13

Weighted average ordinary shares outstanding

- Basic

35,962,623

35,911,996

35,497,512

35,497,512

- Diluted

38,237,702

38,053,311

36,709,280

36,709,280

* Share-based compensation charges included are as follows:

  Product development 

24,155,875

29,767,590

33,262,981

5,235,791

  Sales and marketing 

11,940,120

13,547,719

13,936,624

2,193,708

  General and administrative 

51,104,033

57,363,156

61,614,211

9,698,443

 

Ctrip.com International, Ltd. 

Reconciliation of  GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended June 30, 2012

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(208,344,014)

21%

33,262,981

3%

(175,081,033)

18%

Sales and marketing 

(217,235,897)

22%

13,936,624

1%

(203,299,273)

21%

General and administrative 

(138,826,378)

14%

61,614,211

6%

(77,212,167)

8%

Total operating expenses

(564,406,289)

58%

108,813,816

11%

(455,592,473)

47%

Income from operations

168,049,872

17%

108,813,816

11%

276,863,688

28%

Net income attributable to Ctrip's shareholders

119,669,699

12%

108,813,816

11%

228,483,515

23%

Diluted earnings per ordinary share (RMB)

3.26

2.96

6.22

Diluted earnings per ADS (RMB)

0.81

0.74

1.56

Diluted earnings per ADS (USD)

0.13

0.12

0.24

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

169,053,001

19%

100,678,465

11%

269,731,466

30%

Diluted earnings per ordinary share (RMB)

4.44

2.65

7.09

Diluted earnings per ADS (RMB)

1.11

0.66

1.77

Diluted earnings per ADS (USD)

0.18

0.11

0.28

Quarter Ended June 30, 2011

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(136,823,269)

16%

24,155,875

3%

(112,667,394)

14%

Sales and marketing 

(141,444,111)

17%

11,940,120

1%

(129,503,991)

16%

General and administrative 

(96,617,795)

12%

51,104,033

6%

(45,513,762)

5%

Total operating expenses

(374,885,175)

45%

87,200,028

10%

(287,685,147)

35%

Income from operations

268,378,753

32%

87,200,028

10%

355,578,781

43%

Net income attributable to Ctrip's shareholders

263,702,372

32%

87,200,028

10%

350,902,400

42%

Diluted earnings per ordinary share (RMB)

6.90

2.28

9.18

Diluted earnings per ADS (RMB)

1.72

0.57

2.29

Diluted earnings per ADS (USD)

0.27

0.09

0.35

Notes for all the 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=RMB6.3530 on June 29, 2012 published by the Federal Reserve Board.

 

SOURCE Ctrip.com International, Ltd.



RELATED LINKS

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