Ctrip Reports Unaudited Second Quarter 2014 Financial Results

Jul 30, 2014, 18:00 ET from Ctrip.com International, Ltd.

SHANGHAI, July 30, 2014 /PRNewswire/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours and corporate travel management in China ("Ctrip" or the "Company"), today announced its unaudited financial results for the quarter ended June 30, 2014.

Highlights for the Second Quarter of 2014

  • Net revenues were RMB1.7 billion (US$278 million) for the second quarter of 2014, up 38% year-on-year, exceeding our net revenue guidance for the second quarter 2014 of 30-35% increase year-on-year.
  • Accommodation reservation revenues increased 47% year-on-year, reaching RMB753 million (US$121 million) for the second quarter of 2014, and accommodation reservation volume increased 64% year-on-year, exceeding our guidance of 50-60% volume increase year-on year.
  • Transportation ticketing revenues increased 39% year-on-year, reaching RMB726 million (US$117 million) for the second quarter of 2014, and transportation ticketing volume increased 83% year-on-year, exceeding our guidance of 50-60% volume increase year-on year.
  • Gross margin was 72% for the second quarter of 2014, compared to 75% in the same period in 2013, and remained consistent with that in the previous quarter.
  • Income from operations was RMB91 million (US$15 million) for the second quarter of 2014, down 54% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB202 million (US$33 million), down 34% year-on-year.
  • Operating margin was 5% for the second quarter of 2014, compared to 16% in the same period in 2013 and 4% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 12%, compared to 25% in the same period in 2013, and remained consistent with that in the previous quarter.
  • Net income attributable to Ctrip's shareholders was RMB135 million (US$22 million) for the second quarter of 2014, down 36% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB246 million (US$40 million), down 23% year-on-year. 
  • Diluted earnings per ADS were RMB0.88 (US$0.14) for the second quarter of 2014. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.58 (US$0.26) for the second quarter of 2014.
  • Share-based compensation charges were RMB111 million (US$18 million), accounting for 6% of the net revenues, or RMB0.7 (US$0.12) per ADS for the second quarter of 2014.

"We have continued to maintain an accelerated growth rate in the second quarter of 2014," said James Liang, Chairman and Chief Executive Officer of Ctrip. "Both accommodation reservation and transportation ticketing services achieved strong volume growth at 64% and 83% year-over-year respectively. During the second quarter of 2014, approximately 80% of Ctrip's total transactions were booked online or through mobile channels. Ctrip has successfully built an industry-leading mobile travel platform by offering travelers the most comprehensive products with the most competitive prices and the best user experience. The number of Ctrip Mobile App downloads has reached 200 million, growing at a rate of 60% quarter-over-quarter. Total mobile transaction value for the second quarter of 2014 more than tripled from a year ago and the peak daily transaction value exceeded RMB 220 million recently."

Second Quarter 2014 Financial Results

For the second quarter of 2014, Ctrip reported total revenues of RMB1.8 billion (US$293 million), representing a 38% increase from the same period in 2013. Total revenues for the second quarter of 2014 increased by 9% from the previous quarter.

Accommodation reservation revenues amounted to RMB753 million (US$121 million) for the second quarter of 2014, representing a 47% increase year-on-year, primarily driven by an increase of 64% in accommodation reservation volume and partially offset by the decrease of commission per room night. Accommodation reservation revenues increased by 15% quarter-on-quarter.

Transportation ticketing revenues for the second quarter of 2014 were RMB726 million (US$117 million), representing a 39% increase year-on-year, driven by an increase of 83% in ticketing volume. Transportation ticketing revenues increased by 11% quarter-on-quarter.

Packaged-tour revenues for the second quarter of 2014 were RMB205 million (US$33 million), representing a 10% increase year-on-year, driven by an increase of 42% in volume of organized tours and self-guided tours. Packaged-tour revenues decreased by 21% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the second quarter of 2014 were RMB90 million (US$15 million), representing a 37% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenue increased by 27% quarter-on-quarter, primarily due to seasonality.

For the second quarter of 2014, net revenues were RMB1.7 billion (US$278 million), representing a 38% increase from the same period in 2013. Net revenues for the second quarter of 2014 increased by 9% from the previous quarter.

Gross margin was 72% for the second quarter of 2014, compared to 75% in the same period in 2013 and remained consistent with that in the previous quarter.

Product development expenses for the second quarter of 2014 increased by 55% to RMB479 million (US$77 million) from the same period in 2013 and 9% from the previous quarter, primarily due to an increase in product development personnel related expenses. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 25% of the net revenues, increased from 22% in the same period in 2013 and remained consistent with that in the previous quarter.

Sales and marketing expenses for the second quarter of 2014 increased by 77% to RMB479 million (US$77 million) from the same period in 2013 and increased by 12% 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 27% of the net revenues, increased from 21% in the same period in 2013 and 26% in the previous quarter.

General and administrative expenses for the second quarter of 2014 increased by 22% to RMB194 million (US$31 million) from the same period in 2013 and 2% from the previous quarter primarily due to an increase in administrative 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 2013 and the previous quarter.

Income from operations for the second quarter of 2014 was RMB91million (US$15 million), representing a decrease of 54% from the same period in 2013 and an increase of 28% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB202 million (US$33 million), representing a decrease of 34% from the same period in 2013 and an increase of 5% from the previous quarter.

Operating margin was 5% for the second quarter of 2014, compared to 16% in the same period in 2013, and 4% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 12%, compared to 25% in the same period in 2013, and remained consistent with that in the previous quarter. 

The effective tax rate for the second quarter of 2014 was 32%, increased from 27% in the same period of 2013, primarily due to the increase in the amount of non-tax-deductible share-based compensation as a percentage to our income as a whole. The effective tax rate for the second quarter of 2014 decreased from 40% in the previous quarter, primarily due to certain tax benefits granted by the local tax bureau in the second quarter of 2014.

Net income attributable to Ctrip's shareholders for the second quarter of 2014 was RMB135 million (US$22 million), representing a decrease of 36% from the same period in 2013 and an increase of 17% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB246 million (US$40 million), representing a decrease of 23% from the same period in 2013 and an increase of 4% from the previous quarter.

Diluted earnings per ADS were RMB0.88 (US$0.14) for the second quarter of 2014. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.58 (US$0.26) for the second quarter of 2014.

As of June 30, 2014, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB10.8 billion (US$1.7 billion).

Business Outlook

For the third quarter of 2014, the Company expects to continue the net revenue growth year-on-year at a rate of approximately 30-35%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.

Recent Development

As of July 30, 2014, Ctrip had purchased approximately 19 million ADSs in aggregate with a total consideration of US$370 million.

Conference Call

Ctrip's management team will host a conference call at 8:00PM U.S. Eastern Time on July 30, 2014 (or 8:00AM on July 31, 2014 in the Shanghai/Hong Kong Time) 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 +1.877.299.4502, International dial-in number +1.617.597.5442, Passcode 85282121#. For pre-registration, please click

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

A telephone replay of the call will be available after the conclusion of the conference call until August 6, 2014. 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 41610502.

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, severe or prolonged downturn in the global or Chinese economy, 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, adverse changes in economic and political policies of the PRC government, inflation in China, 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 2014 and 2013. 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 accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. Ctrip aggregates hotel and flight information to enable business and leisure travellers 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, 2013

June 30, 2014

June 30, 2014

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

7,138,344,814

6,548,622,152

1,055,616,441

Restricted cash

739,543,614

1,209,087,347

194,900,920

Short-term investment 

3,635,090,955

3,012,465,793

485,599,618

Accounts receivable, net

1,518,230,029

1,998,512,645

322,153,692

Prepayments and other current assets

1,237,530,956

1,811,252,378

291,967,951

Deferred tax assets, current

96,979,500

112,223,898

18,090,125

Total current assets

14,365,719,868

14,692,164,213

2,368,328,747

Long-term deposits and prepayments     

559,185,652

2,053,754,455

331,058,491

Land use rights

107,476,794

105,909,243

17,072,223

Property, equipment and software

1,412,943,693

2,095,403,912

337,772,247

Investment

2,857,213,480

3,030,398,888

488,490,375

Goodwill

972,531,184

1,180,513,074

190,294,841

Intangible assets

356,653,022

426,170,269

68,697,251

Other long-term receviables

186,750,769

189,131,150

30,487,322

Total assets

20,818,474,462

23,773,445,204

3,832,201,497

LIABILITIES

Current liabilities:

Short-term borrowings

774,599,341

1,540,973,395

248,399,864

Accounts payable

1,637,545,824

2,171,110,809

349,975,951

Salary and welfare payable

257,641,763

301,002,241

48,520,575

Taxes payable

315,299,656

363,284,813

58,560,322

Advances from customers

2,451,931,450

3,071,903,156

495,180,727

Accrued liability for customer reward program

284,668,935

373,838,765

60,261,584

Other payables and accruals

646,321,729

1,067,255,633

172,038,112

Total current liabilities

6,368,008,698

8,889,368,812

1,432,937,135

Deferred tax liabilities, non-current

63,197,155

72,004,775

11,606,934

Long-term Debt

5,657,182,650

5,797,264,200

934,500,000

Total liabilities

12,088,388,503

14,758,637,787

2,379,044,069

SHAREHOLDERS' EQUITY

Share capital

3,033,490

3,069,141

494,735

Additional paid-in capital

4,088,484,766

4,512,752,886

727,440,984

Statutory reserves

118,449,230

118,449,230

19,093,628

Accumulated other comprehensive income

372,634,580

202,734,123

32,680,077

Retained Earnings

5,498,934,733

5,749,174,666

926,748,125

Treasury stock 

(1,551,141,268)

(1,997,296,415)

(321,957,640)

Total Ctrip's shareholders' equity

8,530,395,531

8,588,883,631

1,384,499,909

Noncontrolling interests

199,690,428

425,923,786

68,657,519

Total shareholders' equity

8,730,085,959

9,014,807,417

1,453,157,428

Total liabilities and shareholders' equity

20,818,474,462

23,773,445,204

3,832,201,497

 

Ctrip.com International, Ltd. 

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

June 30, 2013

March 31, 2014

June 30, 2014

June 30, 2014

RMB

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:

Accommodation reservation **

510,977,850

656,662,297

752,565,453

121,311,086

Transportation ticketing ***

522,013,771

651,065,201

725,513,462

116,950,394

Packaged tour

187,024,425

259,220,548

205,141,896

33,068,202

Corporate travel

65,944,003

70,956,329

90,442,575

14,579,047

Others

34,190,294

35,268,438

45,842,408

7,389,646

Total revenues

1,320,150,343

1,673,172,813

1,819,505,794

293,298,375

Less: business tax and related surcharges

(75,294,640)

(91,384,691)

(97,244,864)

(15,675,554)

Net revenues

1,244,855,703

1,581,788,122

1,722,260,930

277,622,821

Cost of revenues

(309,111,062)

(449,411,887)

(478,601,393)

(77,148,977)

Gross profit

935,744,641

1,132,376,235

1,243,659,537

200,473,844

Operating expenses:

Product development *

(309,851,724)

(440,653,457)

(479,262,194)

(77,255,496)

Sales and marketing *

(271,244,149)

(429,548,555)

(479,274,011)

(77,257,401)

General and administrative *

(158,708,095)

(191,227,092)

(194,203,673)

(31,304,996)

Total operating expenses

(739,803,968)

(1,061,429,104)

(1,152,739,878)

(185,817,893)

Income from operations

195,940,673

70,947,131

90,919,659

14,655,951

Interest income ****

46,994,570

92,166,471

83,277,622

13,424,080

Interest expense ****

(3,932,234)

(32,998,931)

(33,693,033)

(5,431,207)

Other income/(expense)

24,056,241

(14,298,252)

5,265,556

848,790

Income before income tax expense and equity in income

263,059,250

115,816,419

145,769,804

23,497,614

Income tax expense

(70,419,098)

(46,686,845)

(47,090,068)

(7,590,765)

Equity in (loss)/income of affiliates

(4,525,873)

19,231,991

13,215,687

2,130,325

Net income

188,114,279

88,361,565

111,895,423

18,037,174

Less: Net loss attributable to noncontrolling interests

22,266,815

26,990,188

22,992,757

3,706,357

Net income attributable to Ctrip's shareholders

210,381,094

115,351,753

134,888,180

21,743,531

Comprehensive income/(loss) attributable to Ctrip's shareholders                                                                                   

208,157,307

(180,401,468)

260,740,944

42,030,586

Earnings per ordinary share

- Basic

6.44

3.39

3.97

0.64

- Diluted

5.88

3.00

3.51

0.57

Earnings per ADS

- Basic

1.61

0.85

0.99

0.16

- Diluted

1.47

0.75

0.88

0.14

Weighted average ordinary shares outstanding

- Basic

32,677,730

33,994,500

33,952,472

33,952,472

- Diluted

36,573,910

39,496,370

39,339,689

39,339,689

* Share-based compensation charges included are as follows:

  Product development 

35,003,222

44,381,634

41,555,508

6,698,612

  Sales and marketing 

12,325,365

12,995,817

11,715,564

1,888,511

  General and administrative 

63,838,858

64,266,792

58,066,756

9,360,171

** Accommodation reservation revenues mainly represent revenues from reservations of hotels, hostels, vacation rentals and other accommodation related services.

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

**** Interest expenses have been reclassified from interest income with no effect on net income or retained earnings. 

Ctrip.com International, Ltd. 

Reconciliation of  GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended June 30, 2014

GAAP  Result

% of Net Revenues

Share-based Compensation

% of Net Revenues

Non-GAAP Result

% of Net Revenues

Product development 

(479,262,194)

28%

41,555,508

2%

(437,706,686)

25%

Sales and marketing 

(479,274,011)

28%

11,715,564

1%

(467,558,447)

27%

General and administrative 

(194,203,673)

11%

58,066,756

3%

(136,136,917)

8%

Total operating expenses

(1,152,739,878)

67%

111,337,828

6%

(1,041,402,050)

60%

Income from operations

90,919,659

5%

111,337,828

6%

202,257,487

12%

Net income attributable to Ctrip's shareholders

134,888,180

8%

111,337,828

6%

246,226,008

14%

Diluted earnings per ordinary share (RMB)

3.51

2.83

6.34

Diluted earnings per ADS (RMB)

0.88

0.70

1.58

Diluted earnings per ADS (USD)

0.14

0.12

0.26

Quarter Ended March 31, 2014

GAAP  Result

% of Net Revenues

Share-based Compensation

% of Net Revenues

Non-GAAP Result

% of Net Revenues

Product development 

(440,653,457)

28%

44,381,634

3%

(396,271,823)

25%

Sales and marketing 

(429,548,555)

27%

12,995,817

1%

(416,552,738)

26%

General and administrative 

(191,227,092)

12%

64,266,792

4%

(126,960,300)

8%

Total operating expenses

(1,061,429,104)

67%

121,644,243

8%

(939,784,861)

59%

Income from operations

70,947,131

4%

121,644,243

8%

192,591,374

12%

Net income attributable to Ctrip's shareholders

115,351,753

7%

121,644,243

8%

236,995,996

15%

Diluted earnings per ordinary share (RMB)

3.00

3.08

6.08

Diluted earnings per ADS (RMB)

0.75

0.77

1.52

Diluted earnings per ADS (USD)

0.12

0.12

0.24

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

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=RMB6.2036 on June 30, 2014 published by the Federal Reserve Board.

SOURCE Ctrip.com International, Ltd.



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