Ctrip Reports Third Quarter 2011 Financial Results

Nov 13, 2011, 17:00 ET from Ctrip.com International, Ltd.

SHANGHAI, Nov. 13, 2011 /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 September 30, 2011.

Highlights for the Third Quarter of 2011

  • Net revenues were RMB975 million (US$153 million) for the third quarter of 2011, up 20% year-on-year.
  • Gross margin was 77% for the third quarter of 2011, compared to 78% in the same period in 2010.
  • Income from operations was RMB304 million (US$48 million) for the third quarter of 2011, down 1% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB395 million (US$62 million), up 7% year-on-year.
  • Operating margin was 31% for the third quarter of 2011, compared to 38% in the same period in 2010. Excluding share-based compensation charges (non-GAAP), operating margin was 41%, compared to 45% in the same period in 2010.
  • Net income attributable to Ctrip's shareholders was RMB325 million (US$51 million) in the third quarter of 2011, up 2% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB416 million (US$65 million), up 9% year-on-year.  
  • Diluted earnings per ADS were RMB2.13 (US$0.33) for the third quarter of 2011. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.73 (US$0.43) for the third quarter of 2011.
  • Share-based compensation charges were RMB91 million (US$14 million), accounting for 9% of the net revenues, or RMB0.59 (US$0.09) per ADS for the third quarter of 2011.

"Despite a challenging comparison base, Ctrip has continued to outperform the industry with solid growth in the third quarter of 2011," said Min Fan, President and Chief Executive Officer of Ctrip. "The Ctrip team effectively implemented the Company's strategies to extend market leadership in all areas. We are encouraged by the progress in sales and marketing, product development and system enhancement. Building on these concerted efforts, we believe the team will continue to succeed in this promising and challenging market."

Third Quarter 2011 Financial Results

For the third quarter of 2011, Ctrip reported total revenues of RMB1 billion (US$163 million), representing a 20% increase from the same period in 2010. Total revenues for the third quarter of 2011 increased by 17% from the previous quarter.

Hotel reservation revenues amounted to RMB410 million (US$64 million) for the third quarter of 2011, representing a 17% increase year-on-year and 12% increase quarter-on-quarter, primarily driven by an increase in hotel reservation volume.

Air ticket booking revenues for the third quarter of 2011 were RMB385 million (US$60 million), representing a 22% increase year-on-year, primarily driven by a 16% increase in air ticketing sales volume and a 6% increase in commission per ticket year-on-year. Air ticket booking revenues increased 11% quarter-on-quarter.

Packaged-tour revenues for the third quarter of 2011 were RMB171 million (US$27 million), representing a 22% increase year-on-year due to the increase of leisure travel volume. Packaged-tour revenues increased 58% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the third quarter of 2011 were RMB43 million (US$7 million), representing a 28% increase year-on-year and a 10% increase quarter-on-quarter, primarily driven by the increased corporate travel demand from business activities.

For the third quarter of 2011, net revenues were RMB975 million (US$153 million), representing a 20% increase from the same period in 2010. Net revenues for the third quarter of 2011 increased by 17% from the previous quarter.

Gross margin was 77% in the third quarter of 2011, compared to 78% in the same period in 2010 and remained consistent with that in the previous quarter.

Product development expenses for the third quarter of 2011 increased by 31% to RMB162 million (US$25 million) from the same period in 2010, and increased by 18% from the previous quarter, primarily due to an increase in product development personnel and share-based compensation charges. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 14% of the net revenues, increased from 13% in the same period in 2010 and remained consistent with that in the previous quarter.

Sales and marketing expenses for the third quarter of 2011 increased by 39% to RMB174 million (US$27 million) from the same period in 2010, primarily due to an increase in sales and marketing related activities and an increase in sales and marketing personnel. Sales and marketing expenses for the third quarter of 2011 increased by 23% from the previous quarter, primarily due to an increase in sales and marketing related activities. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 17% of the net revenues, increased from 14% in the same period in 2010 and increased from 16% in the previous quarter.

General and administrative expenses for the third quarter of 2011 increased by 37% to RMB109 million (US$17 million) from the same period in 2010, primarily due to an increase in administrative personnel and share-based compensation charges. General and administrative expenses for the third quarter of 2011 increased by 13% from the previous quarter, primarily due to the increase in administrative personnel. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 6% of the net revenues, increased from 5% in the same period in 2010 and in the previous quarter.

Income from operations for the third quarter of 2011 was RMB304 million (US$48 million), representing a decrease of 1% from the same period in 2010 and an increase of 13% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB395 million (US$62 million), representing an increase of 7% from the same period in 2010 and an increase of 11% from the previous quarter.

Operating margin was 31% in the third quarter of 2011, compared to 38% in the same period in 2010, and 32% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 41%, decreased from 45% in the same period in 2010 and 43% in the previous quarter.  

The effective tax rate for the third quarter of 2011 was 21%, increased from 17% in the same periods of 2010, primarily due to the normalization of the tax rate in the third quarter of 2011. The effective tax rate for the third quarter of 2011 increased from 16% in the previous quarter, primarily due to certain tax benefit granted by the local tax bureau in the second quarter of 2011.

Net income attributable to Ctrip's shareholders for the third quarter of 2011 was RMB325 million (US$51 million), representing an increase of 2% from the same period in 2010 and an increase of 23% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB416 million (US$65 million), representing an increase of 9% from the same period in 2010 and an increase of 18% from the previous quarter.

Diluted earnings per ADS were RMB2.13 (US$0.33) for the third quarter of 2011. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.73 (US$0.43) for the third quarter of 2011.

As of September 30, 2011, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB4.2 billion (US$664 million).

Business Outlook

For the fourth quarter of 2011, 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 November 13, 2011 (or 9:00AM on November 14, 2011 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 +1.888.679.8034, International dial-in number + 1.617.213.4847, Passcode 71329203. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PQF9VA9F3.

A telephone replay of the call will be available after the conclusion of the conference call through November 21, 2011. 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 31797822.

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 12258 Email: iremail@ctrip.com

Ctrip.com International, Ltd.

Consolidated Balance Sheets Information

December 31, 2010

September 30, 2011

September 30, 2011

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

2,153,935,111

2,900,100,504

454,703,748

Restricted cash

224,179,126

209,747,411

32,886,079

Short-term investment

1,178,278,063

1,124,602,452

176,325,251

Accounts receivable, net

621,548,849

859,767,242

134,802,013

Prepayments and other current assets

355,831,117

744,337,793

116,703,950

Deferred tax assets, current

37,136,184

39,437,172

6,183,313

Total current assets

4,570,908,450

5,877,992,574

921,604,354

Long-term deposits

155,856,622

157,983,472

24,770,065

Land use rights

106,333,805

104,392,645

16,367,614

Property, equipment and software

653,678,980

650,687,294

102,020,585

Investment

1,574,230,623

1,271,948,031

199,427,412

Goodwill

758,231,441

798,601,767

125,211,942

Intangible assets

296,964,092

308,307,541

48,339,219

Total assets

8,116,204,013

9,169,913,324

1,437,741,191

LIABILITIES

Current liabilities:

Accounts payable

595,283,281

736,318,369

115,446,593

Salary and welfare payable

159,258,508

135,915,909

21,310,114

Taxes payable

161,772,241

209,328,113

32,820,338

Advances from customers

595,737,152

738,008,367

115,711,566

Accrued liability for customer reward program

121,319,301

148,659,930

23,308,236

Other payables and accruals

247,528,032

195,798,678

30,699,069

Total current liabilities

1,880,898,515

2,164,029,366

339,295,916

Deferred tax liabilities, non-current

45,382,710

48,524,633

7,608,127

Total liabilities

1,926,281,225

2,212,553,999

346,904,043

SHAREHOLDERS' EQUITY

Share capital

2,926,132

2,938,508

460,726

Additional paid-in capital

3,073,551,037

3,365,782,583

527,717,558

Statutory reserves

93,384,908

93,384,908

14,641,723

Accumulated other comprehensive (loss) / income

198,972,084

(164,319,915)

(25,763,549)

Retained Earnings

2,734,858,610

3,558,749,613

557,972,658

Total Ctrip's shareholders' equity

6,103,692,771

6,856,535,697

1,075,029,116

Noncontrolling interests

86,230,017

100,823,628

15,808,032

Total shareholders' equity

6,189,922,788

6,957,359,325

1,090,837,148

Total liabilities and shareholders' equity

8,116,204,013

9,169,913,324

1,437,741,191

Ctrip.com International, Ltd.

Consolidated Statements of Operations Information

Quarter Ended

Quarter Ended

Quarter Ended

 Quarter Ended 

September 30, 2010

June 30, 2011

September 30, 2011

September 30, 2011

RMB

RMB

RMB

 USD 

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:

Hotel reservation

349,655,584

366,453,694

410,428,429

64,350,647

Air-ticketing

315,236,102

347,339,141

385,068,223

60,374,447

Packaged tour

140,858,679

108,282,983

171,367,702

26,868,564

Corporate travel

33,938,560

39,560,736

43,367,133

6,799,488

Others

23,035,896

24,751,318

28,982,115

4,544,076

Total revenues

862,724,821

886,387,872

1,039,213,602

162,937,222

Less: business tax and related surcharges

(50,520,118)

(53,360,164)

(64,512,791)

(10,114,894)

Net revenues

812,204,703

833,027,708

974,700,811

152,822,328

Cost of revenues

(176,199,743)

(189,763,780)

(226,126,062)

(35,454,071)

Gross profit

636,004,960

643,263,928

748,574,749

117,368,257

Operating expenses:

Product development *

(123,199,772)

(136,823,269)

(161,579,311)

(25,333,852)

Sales and marketing *

(125,160,008)

(141,444,111)

(173,855,350)

(27,258,600)

General and administrative *

(79,623,531)

(96,617,795)

(108,847,827)

(17,066,138)

Total operating expenses

(327,983,311)

(374,885,175)

(444,282,488)

(69,658,590)

Income from operations

308,021,649

268,378,753

304,292,261

47,709,667

Interest income

9,767,903

23,045,312

31,233,511

4,897,070

Other income

44,345,553

17,520,128

54,347,195

8,521,040

Income before income tax expense and equity in income

362,135,105

308,944,193

389,872,967

61,127,777

Income tax expense

(62,186,716)

(47,954,023)

(82,055,004)

(12,865,319)

Equity in income of affiliates

23,192,105

4,681,110

20,372,237

3,194,142

Net income

323,140,494

265,671,280

328,190,200

51,456,600

Less: Net income attributable to noncontrolling interests

(3,001,333)

(1,968,908)

(2,909,902)

(456,241)

Net income attributable to Ctrip's shareholders

320,139,161

263,702,372

325,280,298

51,000,359

Earnings per ordinary share

- Basic

8.94

7.33

9.02

1.41

- Diluted

8.42

6.90

8.54

1.34

Earnings per ADS

- Basic

2.23

1.83

2.26

0.35

- Diluted

2.11

1.72

2.13

0.33

Weighted average ordinary shares outstanding

- Basic

35,815,709

35,962,623

36,049,244

36,049,244

- Diluted

38,005,087

38,237,702

38,102,980

38,102,980

* Share-based compensation charges included are as follows:

 Product development

16,583,720

24,155,875

26,713,733

4,188,418

 Sales and marketing

8,168,446

11,940,120

12,693,885

1,990,261

 General and administrative

35,491,501

51,104,033

51,099,151

8,011,783

Ctrip.com International, Ltd.

Reconciliation of  GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended September 30, 2011

GAAP Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(161,579,311)

17%

26,713,733

3%

(134,865,578)

14%

Sales and marketing 

(173,855,350)

18%

12,693,885

1%

(161,161,465)

17%

General and administrative 

(108,847,827)

11%

51,099,151

5%

(57,748,676)

6%

Total operating expenses

(444,282,488)

46%

90,506,769

9%

(353,775,719)

36%

Income from operations

304,292,261

31%

90,506,769

9%

394,799,030

41%

Net income attributable to Ctrip's shareholders

325,280,298

33%

90,506,769

9%

415,787,067

43%

Diluted earnings per ordinary share (RMB)

8.54

2.38

10.91

Diluted earnings per ADS (RMB)

2.13

0.59

2.73

Diluted earnings per ADS (USD)

0.33

0.09

0.43

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

Quarter Ended September 30, 2010

GAAP Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(123,199,772)

15%

16,583,720

2%

(106,616,052)

13%

Sales and marketing 

(125,160,008)

15%

8,168,446

1%

(116,991,562)

14%

General and administrative 

(79,623,531)

10%

35,491,501

4%

(44,132,030)

5%

Total operating expenses

(327,983,311)

40%

60,243,667

7%

(267,739,644)

33%

Income from operations

308,021,649

38%

60,243,667

7%

368,265,316

45%

Net income attributable to Ctrip's shareholders

320,139,161

39%

60,243,667

7%

380,382,828

47%

Diluted earnings per ordinary share (RMB)

8.42

1.59

10.01

Diluted earnings per ADS (RMB)

2.11

0.40

2.50

Diluted earnings per ADS (USD)

0.31

0.06

0.37

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=RMB6.378 on September 30, 2011 published by the Federal Reserve Board.

Note 2: Effective on January 21, 2010, Company changed ratio of the American Depositary Shares (“ADSs”) to ordinary shares from two (2) ADSs representing one (1) ordinary share to four (4) ADSs representing one (1) ordinary share.   The change is reflected retroactively in the numbers for all the periods presented above.

SOURCE Ctrip.com International, Ltd.



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