Ctrip Reports Second Quarter 2013 Financial Results

31 Jul, 2013, 18:00 ET from Ctrip.com International, Ltd.

SHANGHAI, July 31, 2013 /PRNewswire/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider of hotel accommodations, ticketing services, packaged tours and corporate travel management in China, today announced its unaudited financial results for the quarter ended June 30, 2013.

Highlights for the Second Quarter of 2013

  • Net revenues were RMB1.2 billion (US$203 million) for the second quarter of 2013, up 28% year-on-year.
  • Gross margin was 75% for the second quarter of 2013, remained consistent with that in the same period of 2012.
  • Income from operations was RMB196 million (US$32 million) for the second quarter of 2013, up 17% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB307 million (US$50 million), up 11% year-on-year.
  • Operating margin was 16% for the second quarter of 2013, compared to 17% in the same period of 2012. Excluding share-based compensation charges (non-GAAP), operating margin was 25%, compared to 28% in the same period of 2012.
  • Net income attributable to Ctrip's shareholders was RMB210 million (US$34 million) in the second quarter of 2013, up 76% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB322 million (US$52 million), up 41% year-on-year. 
  • Diluted earnings per ADS were RMB1.47 (US$0.24) for the second quarter of 2013. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.23 (US$0.36) for the second quarter of 2013.
  • Share-based compensation charges were RMB111 million (US$18 million), accounting for 9% of the net revenues, or RMB0.76 (US$0.12) per ADS for the second quarter of 2013.

"We are pleased to report strong results in the second quarter of 2013," said James Liang, Chairman of the Board and Chief Executive Officer of Ctrip. "Mobile Internet is changing the travel industry rapidly and our mobile strategy builds upon Ctrip's one-stop travel platform that features comprehensive products, industry leading service quality, and competitive prices. Transactions from Ctrip mobile channels tripled year-over-year in the second quarter and contributed to over 20% of hotel booking and approximately 15% of air ticket booking. We are excited to embrace the changes in the travel industry in China and will endeavor to create more value for our business partners and customers in an innovative fashion."

Second Quarter 2013 Financial Results and Business Updates

For the second quarter of 2013, Ctrip reported total revenues of RMB1.3 billion (US$215 million), representing a 28% increase from the same period of 2012. Total revenues for the second quarter of 2013 increased by 7% from the previous quarter.

Hotel reservation revenues amounted to RMB511 million (US$83 million) for the second quarter of 2013, representing a 25% increase year-on-year, primarily driven by an increase of 44% in hotel reservation volume and partially offset by 14% decrease of commission per room night. The decrease of commission per room night was primarily due to promotional activities. Hotel reservation revenues increased by 13% quarter-on-quarter, primarily driven by hotel reservation volume growth.

Ticketing services revenues for the second quarter of 2013 were RMB522 million (US$85 million), representing a 29% increase year-on-year, primarily driven by an increase of 34% in air ticketing sales volume and partially offset by 6% decrease of commission per air ticket. Ticketing services revenues increased 14% quarter-on-quarter, primarily driven by air ticketing sales volume growth.

Packaged-tour revenues for the second quarter of 2013 were RMB187 million (US$30 million), representing a 40% 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 2013 were RMB66 million (US$11 million), representing a 34% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenues increased 29% quarter-on-quarter, primarily due to seasonality.

For the second quarter of 2013, net revenues were RMB1.2 billion (US$203 million), representing a 28% increase from the same period of 2012. Net revenues for the second quarter of 2013 increased by 7% from the previous quarter.

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

Product development expenses for the second quarter of 2013 increased by 49% to RMB310 million (US$50 million) from the same period of 2012 and by 16% from the previous quarter, primarily due to an increase in product development personnel related expense. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 22% of the net revenues, increased from 18% in the same period of 2012 and 20% in the previous quarter.

Sales and marketing expenses for the second quarter of 2013 increased by 25% to RMB271 million (US$44 million) from the same period in 2012, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the second quarter of 2013 increased by 1% from the previous quarter. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 21% of the net revenues, remained consistent with that in the same period of 2012 and decreased from 22% in the previous quarter.

General and administrative expenses for the second quarter of 2013 increased by 14% to RMB159 million (US$26 million) from the same period in 2012, primarily due to an increase in administrative personnel related expense and share-based compensation charges. General and administrative expenses for the second quarter of 2013 decreased by 2% from the previous quarter. 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 of 2012 and the previous quarter.

Income from operations for the second quarter of 2013 was RMB196 million (US$32 million), representing an increase of 17% from the same period in 2012 and an increase of 22% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB307 million (US$50 million), representing an increase of 11% from the same period in 2012 and an increase of 13% from the previous quarter.

Operating margin was 16% in the second quarter of 2013, compared to 17% in the same period of 2012 and 14% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 25%, decreased from 28% in the same period of 2012 and increased from 23% in the previous quarter. 

The effective tax rate for the second quarter of 2013 was 27%, decreased from 45% in the same period of 2012, primarily because Ctrip accrued the provision of 5% PRC withholding tax related to the dividends that our PRC subsidiaries would pay to our Hong Kong subsidiary to fund the share repurchase program in the second quarter of 2012. The effective tax rate for the second quarter of 2013 decreased from 32% in the previous quarter, primarily due to the decrease in the amount of non tax-deductible share-based compensation as a percentage to our income as a whole.

Net income attributable to Ctrip's shareholders for the second quarter of 2013 was RMB210 million (US$34 million), representing an increase of 76% from the same period in 2012 and 37% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB322 million (US$52 million), representing an increase of 41% from the same period in 2012 and 21% from the previous quarter.

Diluted earnings per ADS were RMB1.47 (US$0.24) for the second quarter of 2013. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.23 (US$0.36) for the second quarter of 2013.

As of June 30, 2013, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB6.7 billion (US$1.1 billion).

Suyang Zhang, an independent director of Ctrip, has voluntarily tendered a letter of resignation to the board of directors of the company (the "Board") and confirmed that his resignation did not result from any disagreement with the Company. The Board has approved the resignation, which is effective from August 1, 2013. After Mr. Zhang's resignation, the Board will consist of six directors, including four independent directors. James Liang, Chairman of the Board and Chief Executive Officer of Ctrip said, "As an active member of our Board, Suyang has made many contributions to Ctrip from the startup. We appreciate his great support to the Company and wish him the best in his future endeavors."

Business Outlook

For the third quarter of 2013, the Company expects the net revenue growth to continue year-on-year at a rate of approximately 20-25%. 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 July 31, 2013 (or 8:00 AM on August 1, 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 445 529 12#. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PDRKVPYFX  

A telephone replay of the call will be available after the conclusion of the conference call through August 8, 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 96778845.

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, ticketing services, 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 X 12928 Email: iremail@ctrip.com

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Balance Sheets

December 31, 2012

June 30, 2013

June 30, 2013

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

3,421,532,962

2,750,523,923

448,157,839

Restricted cash

768,228,577

735,970,778

119,915,726

Short-term investment 

1,408,664,335

3,225,957,978

525,622,899

Accounts receivable, net

983,804,403

1,545,038,631

251,741,557

Prepayments and other current assets

999,148,710

957,350,902

155,986,395

Deferred tax assets, current

61,840,526

103,005,234

16,783,204

Total current assets

7,643,219,513

9,317,847,446

1,518,207,620

Long-term deposits and prepayments     

210,618,310

196,873,152

32,077,615

Land use rights

110,659,284

108,970,499

17,755,157

Property, equipment and software

1,123,937,191

1,331,911,480

217,015,590

Investment

1,437,247,949

1,368,876,743

223,038,541

Goodwill

822,585,341

828,989,339

135,071,747

Intangible assets

321,483,420

318,007,012

51,814,614

Total assets

11,669,751,008

13,471,475,671

2,194,980,884

LIABILITIES

Current liabilities:

Short-term borrowings

453,478,628

446,631,874

72,772,163

Accounts payable

1,023,672,151

1,532,591,707

249,713,512

Salary and welfare payable

229,969,924

265,013,465

43,180,087

Taxes payable

216,456,010

265,930,261

43,329,465

Advances from customers

1,414,865,769

1,834,217,371

298,859,024

Accrued liability for customer reward program

217,548,153

251,719,921

41,014,097

Other payables and accruals

354,153,607

406,170,328

66,179,544

Total current liabilities

3,910,144,242

5,002,274,927

815,047,892

Deferred tax liabilities, non-current

53,309,153

53,014,655

8,637,966

Long-term Debt

1,121,418,000

1,104,732,000

180,000,000

Total liabilities

5,084,871,395

6,160,021,582

1,003,685,858

SHAREHOLDERS' EQUITY

Share capital

2,979,144

3,007,548

490,036

Additional paid-in capital

3,818,256,227

4,120,652,353

671,400,325

Statutory reserves

103,222,512

103,222,512

16,818,606

Accumulated other comprehensive loss

(58,778,675)

(84,377,951)

(13,748,159)

Retained Earnings

4,515,841,767

4,879,694,334

795,075,168

Treasury stock 

(1,891,888,900)

(1,891,888,900)

(308,255,760)

Total Ctrip's shareholders' equity

6,489,632,075

7,130,309,896

1,161,780,216

Noncontrolling interests

95,247,538

181,144,193

29,514,810

Total shareholders' equity

6,584,879,613

7,311,454,089

1,191,295,026

Total liabilities and shareholders' equity

11,669,751,008

13,471,475,671

2,194,980,884

 

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

June 30, 2012

March 31, 2013

June 30, 2013

June 30, 2013

RMB

RMB

RMB

 USD 

(unaudited)

(unaudited)

(unaudited)

 (unaudited) 

Revenues:

Hotel reservation

410,370,431

450,524,886

510,977,850

83,256,403

Ticketing services **

404,268,226

456,502,524

522,013,771

85,054,546

Packaged tour

133,776,555

235,208,743

187,024,425

30,472,908

Corporate travel

49,348,796

50,973,701

65,944,003

10,744,615

Others

33,187,613

35,198,400

34,190,294

5,570,811

Total revenues

1,030,951,621

1,228,408,254

1,320,150,343

215,099,283

Less: business tax and related surcharges

(57,326,573)

(67,900,120)

(75,294,640)

(12,268,166)

Net revenues

973,625,048

1,160,508,134

1,244,855,703

202,831,117

Cost of revenues

(241,168,887)

(304,171,687)

(309,111,062)

(50,365,148)

Gross profit

732,456,161

856,336,447

935,744,641

152,465,969

Operating expenses:

Product development *

(208,344,014)

(267,532,617)

(309,851,724)

(50,485,829)

Sales and marketing *

(217,235,897)

(267,494,323)

(271,244,149)

(44,195,286)

General and administrative *

(138,826,378)

(161,292,761)

(158,708,095)

(25,859,174)

Total operating expenses

(564,406,289)

(696,319,701)

(739,803,968)

(120,540,289)

Income from operations

168,049,872

160,016,746

195,940,673

31,925,680

Interest income

31,865,564

22,559,420

43,062,336

7,016,381

Other income

56,366,412

7,689,137

24,056,241

3,919,614

Income before income tax expense and equity in income

256,281,848

190,265,303

263,059,250

42,861,675

Income tax expense

(116,557,710)

(61,378,155)

(70,419,098)

(11,473,767)

Equity in (loss)/income of affiliates

(18,189,504)

87,806

(4,525,873)

(737,425)

Net income

121,534,634

128,974,954

188,114,279

30,650,483

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

(1,864,935)

24,496,519

22,266,815

3,628,053

Net income attributable to Ctrip's shareholders

119,669,699

153,471,473

210,381,094

34,278,536

Comprehensive income

137,792,479

130,095,984

208,157,307

33,916,203

Earnings per ordinary share

- Basic

3.37

4.73

6.44

1.05

- Diluted

3.26

4.39

5.88

0.96

Earnings per ADS

- Basic

0.84

1.18

1.61

0.26

- Diluted

0.81

1.10

1.47

0.24

Weighted average ordinary shares outstanding

- Basic

35,497,512

32,439,013

32,677,730

32,677,730

- Diluted

36,709,280

36,015,108

36,573,910

36,573,910

* Share-based compensation charges included are as follows:

  Product development 

33,262,981

34,854,918

35,003,222

5,703,266

  Sales and marketing 

13,936,624

13,292,481

12,325,365

2,008,239

  General and administrative 

61,614,211

63,440,672

63,838,858

10,401,613

** Ticketing services revenues mainly represent revenues from reservations of air tickets, railway tickets and other related services.

 

Ctrip.com International, Ltd.

Reconciliation of GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended June 30, 2013

GAAP  Result

% of Net Revenues

Share-based Compensation

% of Net Revenues

Non-GAAP Result

% of Net Revenues

Product development                                           

(309,851,724)

25%

35,003,222

3%

(274,848,502)

22%

Sales and marketing 

(271,244,149)

22%

12,325,365

1%

(258,918,784)

21%

General and administrative 

(158,708,095)

13%

63,838,858

5%

(94,869,237)

8%

Total operating expenses

(739,803,968)

59%

111,167,445

9%

(628,636,523)

50%

Income from operations

195,940,673

16%

111,167,445

9%

307,108,118

25%

Net income attributable to Ctrip's shareholders

210,381,094

17%

111,167,445

9%

321,548,539

26%

Diluted earnings per ordinary share (RMB)

5.88

3.04

8.92

Diluted earnings per ADS (RMB)

1.47

0.76

2.23

Diluted earnings per ADS (USD)

0.24

0.12

0.36

Quarter Ended March 31, 2013

GAAP  Result

% of Net Revenues

Share-based Compensation

% of Net Revenues

Non-GAAP Result

% of Net Revenues

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 June 30, 2012

GAAP  Result

% of Net Revenues

Share-based Compensation

% of Net Revenues

Non-GAAP Result

% of Net Revenues

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

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=RMB6.1374 on June 28, 2013 published by the Federal Reserve Board.

SOURCE Ctrip.com International, Ltd.



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