Ctrip Reports Unaudited Third Quarter 2012 Financial Results

05 Nov, 2012, 17:00 ET from Ctrip.com International, Ltd.

SHANGHAI, Nov. 5, 2012 /PRNewswire/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider of hotel accommodations, airline tickets, packaged tours and corporate travel management in China, today announced its unaudited financial results for the quarter ended September 30, 2012.

Highlights for the Third Quarter of 2012

  • Net revenues were RMB1.17 billion (US$187 million) for the third quarter of 2012, up 20% year-on-year, versus our guidance of 15-20% year-on-year.
  • Gross margin was 76% for the third quarter of 2012, compared to 77% in the same period in 2011.
  • Income from operations was RMB190 million (US$30 million) for the third quarter of 2012, down 38% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB299 million (US$48 million), down 24% year-on-year.
  • Operating margin was 16% for the third quarter of 2012, compared to 31% in the same period in 2011. Excluding share-based compensation charges (non-GAAP), operating margin was 25%, compared to 41% in the same period in 2011.
  • Net income attributable to Ctrip's shareholders was RMB194 million (US$31 million) for the third quarter of 2012, down 40% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB302 million (US$48 million), down 27% year-on-year. 
  • Diluted earnings per ADS were RMB1.41 (US$0.22) for the third quarter of 2012. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.20 (US$0.35) for the third quarter of 2012.
  • Share-based compensation charges were RMB108 million (US$17 million), accounting for 9% of the net revenues, or RMB0.79 (US$0.13) per ADS for the third quarter of 2012.

"We are pleased with the solid results in the third quarter of 2012," said Min Fan, President and Chief Executive Officer of Ctrip. "During the quarter, Ctrip achieved many milestones toward building the leading 'one-stop travel platform' in China by strengthening our partner relationships, upgrading the mobile platform, and lifting the sales and marketing efforts. With Ctrip team's strong execution, we believe Ctrip will continue enhancing the market leadership in China."

Third Quarter 2012 Financial Results

For the third quarter of 2012, Ctrip reported total revenues of RMB1.25 billion (US$198 million), representing a 20% increase from the same period in 2011. Total revenues for the third quarter of 2012 increased by 21% from the previous quarter.

Hotel reservation revenues amounted to RMB457 million (US$73 million) for the third quarter of 2012, representing an 11% increase year-on-year, primarily driven by an increase of 40% in hotel reservation volume and partially offset by a decrease of 21% in commission per room night. The decrease of commission per room night was primarily due to promotional activities. Hotel reservation revenues increased by 11% quarter-on-quarter, primarily due to seasonality.

Air ticket booking revenues for the third quarter of 2012 were RMB478 million (US$76 million), representing a 24% increase year-on-year and an 18% increase from the previous quarter, primarily driven by an increase in air tickets sales volume.

Packaged-tour revenues for the third quarter of 2012 were RMB224 million (US$36 million), representing a 31% increase year-on-year due to the increase of leisure travel volume. Packaged-tour revenues increased by 67% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the third quarter of 2012 were RMB54 million (US$9 million), representing a 25% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenues increased by 10% quarter-on-quarter, primarily due to seasonality.

Net revenues for the third quarter of 2012 were RMB1.17 billion (US$187 million), representing a 20% increase from the same period in 2011. Net revenues for the third quarter of 2012 increased by 20% from the previous quarter.

Gross margin was 76% for the third quarter of 2012, compared to 77% in the same period in 2011 and 75% in the previous quarter.

Product development expenses for the third quarter of 2012 increased by 51% to RMB243 million (US$39 million) from the same period in 2011, and increased by 17% 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 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 third quarter of 2012 increased by 74% to RMB303 million (US$48 million) from the same period in 2011, and increased by 39% 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 25% of the net revenues, increased from 17% in the same period in 2011 and increased from 21% in the previous quarter.

General and administrative expenses for the third quarter of 2012 increased by 39% to RMB151 million (US$24 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 third quarter of 2012 increased by 9% from the previous quarter, primarily due to an increase in administrative personnel. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, increased from 6% in the same period in 2011 and remained consistent with that in the previous quarter.

Income from operations for the third quarter of 2012 was RMB190 million (US$30 million), representing a decrease of 38% from the same period in 2011 and an increase of 13% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB299 million (US$48 million), representing a decrease of 24% from the same period in 2011 and an increase of 8% from the previous quarter.

Operating margin was 16% for the third quarter of 2012, compared to 31% in the same period in 2011, and 17% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 25%, decreased from 41% in the same period in 2011 and 28% in the previous quarter. 

The effective tax rate for the third quarter of 2012 was 24%, increased from 21% in the same periods of 2011, primarily due to the increase in the amount of non tax-deductible share-based compensation as a percentage to our income before income tax expense as a whole. The effective tax rate for the third quarter of 2012 decreased from 45% in the previous quarter, primarily due to the provision of withholding tax and preferential tax treatment available to certain consolidated PRC entities in the previous quarter. In the second quarter of 2012, we made the provision of 5% PRC withholding tax related to the dividends that our PRC subsidiaries would pay to their direct parent, which is our Hong Kong subsidiary to fund the share repurchase program announced in June 2012. This was partially offset by the preferential tax treatment of certain consolidated PRC entities.

Net income attributable to Ctrip's shareholders for the third quarter of 2012 was RMB194 million (US$31 million), representing a decrease of 40% from the same period in 2011 and an increase of 62% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB302 million (US$48 million), representing a decrease of 27% from the same period in 2011 and an increase of 32% from the previous quarter.

Diluted earnings per ADS were RMB1.41 (US$0.22) for the third quarter of 2012. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.20 (US$0.35) for the third quarter of 2012.

As of September 30, 2012, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB5.4 billion (US$859 million).

Business Outlook

For the fourth 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 September 2012, Ctrip completed the offering of US$180 million principal amount of convertible senior notes due 2017 (the "notes"). The notes bears an annual interest of 0.5% and may have dilutive effect on the diluted earnings per ADS presented. As the offering was completed within a relatively short period of time close to the end of third quarter of 2012, its impact on income statement and diluted earnings per ADS for third quarter of 2012 was insignificant. The offering cost of the notes will be amortized over the life of the notes.

As of November 5, 2012, Ctrip had purchased approximately 17.2 million ADSs in aggregate with a total consideration of US$294 million under three existing share repurchase plans adopted in 2008, 2011 and 2012.

Conference Call

Ctrip's management team will host a conference call at 7:00PM U.S. Eastern Time on November 5, 2012 (or 8:00AM on November 6, 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 8018, International dial-in number +1 617 213 4845, Passcode 706 306 82#. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PQ63GVUN7 .

A telephone replay of the call will be available after the conclusion of the conference call through November 13, 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 98014038.

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 2012 and 2011. 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. 

Unaudited Condensed Consolidated Balance Sheets

December 31, 2011

September 30, 2012

September 30, 2012

RMB

RMB

USD

(unaudited)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

3,503,428,418

2,849,990,911

453,473,605

Restricted cash

211,636,294

1,299,837,969

206,822,487

Short-term investment 

1,288,471,562

1,251,016,553

199,054,314

Accounts receivable, net

789,036,329

1,050,091,257

167,084,276

Prepayments and other current assets

566,187,711

931,971,381

148,289,744

Deferred tax assets, current

39,782,201

53,488,098

8,510,708

Total current assets

6,398,542,515

7,436,396,169

1,183,235,134

Long-term deposits and prepayments     

155,360,492

387,369,609

61,635,948

Land use rights

113,460,899

111,373,523

17,721,093

Property, equipment and software

683,903,870

736,282,355

117,152,870

Investment

1,305,145,043

1,435,620,564

228,427,406

Goodwill

798,601,767

801,585,341

127,543,492

Intangible assets

306,420,192

323,336,669

51,447,408

Total assets

9,761,434,778

11,231,964,230

1,787,163,351

LIABILITIES

Current liabilities:

Short-term borrowings

-

947,080,758

150,693,858

Accounts payable

763,256,074

965,431,397

153,613,702

Salary and welfare payable

145,524,036

173,590,307

27,620,657

Taxes payable

220,604,123

207,172,862

32,964,114

Advances from customers

1,090,852,066

1,223,772,416

194,719,389

Accrued liability for customer reward program

161,838,531

201,193,567

32,012,724

Other payables and accruals

185,985,423

445,032,669

70,810,952

Total current liabilities

2,568,060,253

4,163,273,976

662,435,396

Deferred tax liabilities, non-current

48,308,692

53,470,352

8,507,884

Long-term Debt

-

1,131,264,000

180,000,000

Total liabilities

2,616,368,945

5,348,008,328

850,943,280

SHAREHOLDERS' EQUITY

Share capital

2,939,527

2,969,092

472,424

Additional paid-in capital

3,465,924,424

3,262,784,016

519,154,789

Statutory reserves

98,049,668

98,049,668

15,601,080

Accumulated other comprehensive loss

(172,466,277)

(64,159,376)

(10,208,658)

Retained Earnings

3,806,608,747

4,328,462,585

688,719,225

Treasury stock 

(158,761,225)

(1,803,696,281)

(286,993,426)

Total Ctrip's shareholders' equity

7,042,294,864

5,824,409,704

926,745,434

Noncontrolling interests

102,770,969

59,546,198

9,474,637

Total shareholders' equity

7,145,065,833

5,883,955,902

936,220,071

Total liabilities and shareholders' equity

9,761,434,778

11,231,964,230

1,787,163,351

      

Ctrip.com International, Ltd. 

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

September 30, 2011

June 30, 2012

September 30, 2012

September 30, 2012

RMB

RMB

RMB

 USD 

(unaudited)

(unaudited)

(unaudited)

 (unaudited) 

Revenues:

Hotel reservation

410,428,429

410,370,431

457,041,173

72,721,673

Air-ticketing

385,068,223

404,268,226

478,367,942

76,115,062

Packaged tour

171,367,702

133,776,555

223,779,798

35,606,511

Corporate travel

43,367,133

49,348,796

54,073,606

8,603,871

Others

28,982,115

33,187,613

34,085,035

5,423,408

Total revenues

1,039,213,602

1,030,951,621

1,247,347,554

198,470,525

Less: business tax and related surcharges

(64,512,791)

(57,326,573)

(74,345,010)

(11,829,336)

Net revenues

974,700,811

973,625,048

1,173,002,544

186,641,189

Cost of revenues

(226,126,062)

(241,168,887)

(285,960,720)

(45,500,369)

Gross profit

748,574,749

732,456,161

887,041,824

141,140,820

Operating expenses:

Product development *

(161,579,311)

(208,344,014)

(243,244,924)

(38,703,686)

Sales and marketing *

(173,855,350)

(217,235,897)

(302,596,451)

(48,147,348)

General and administrative *

(108,847,827)

(138,826,378)

(151,107,619)

(24,043,346)

Total operating expenses

(444,282,488)

(564,406,289)

(696,948,994)

(110,894,380)

Income from operations

304,292,261

168,049,872

190,092,830

30,246,440

Interest income

31,233,511

31,865,564

54,099,884

8,608,052

Other income

54,347,195

56,366,412

6,104,967

971,386

Income before income tax expense and equity in income

389,872,967

256,281,848

250,297,681

39,825,878

Income tax expense

(82,055,004)

(116,557,710)

(59,394,448)

(9,450,491)

Equity in income/(loss) of affiliates

20,372,237

(18,189,504)

4,792,055

762,483

Net income

328,190,200

121,534,634

195,695,288

31,137,870

Less: Net income attributable to noncontrolling interests

(2,909,902)

(1,864,935)

(1,878,491)

(298,894)

Net income attributable to Ctrip's shareholders

325,280,298

119,669,699

193,816,797

30,838,976

Comprehensive income

146,006,823

137,792,479

365,152,591

58,100,909

Earnings per ordinary share

- Basic

9.02

3.37

5.82

0.93

- Diluted

8.54

3.26

5.65

0.90

Earnings per ADS

- Basic

2.26

0.84

1.46

0.23

- Diluted

2.13

0.81

1.41

0.22

Weighted average ordinary shares outstanding

- Basic

36,049,244

35,497,512

33,287,150

33,287,150

- Diluted

38,102,980

36,709,280

34,283,839

34,283,839

* Share-based compensation charges included are as follows:

  Product development 

26,713,733

33,262,981

33,671,462

5,357,603

  Sales and marketing 

12,693,885

13,936,624

14,028,219

2,232,087

  General and administrative 

51,099,151

61,614,211

60,789,858

9,672,521

   

  

Ctrip.com International, Ltd. 

Reconciliation of  GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended September 30, 2012

GAAP  Result

% of Net Revenue

Share-based Compensation

% of Net Revenue

Non-GAAP Result

% of Net Revenue

Product development 

(243,244,924)

21%

33,671,462

3%

(209,573,462)

18%

Sales and marketing 

(302,596,451)

26%

14,028,219

1%

(288,568,232)

25%

General and administrative 

(151,107,619)

13%

60,789,858

5%

(90,317,761)

8%

Total operating expenses

(696,948,994)

59%

108,489,539

9%

(588,459,455)

50%

Income from operations

190,092,830

16%

108,489,539

9%

298,582,369

25%

Net income attributable to Ctrip's shareholders

193,816,797

17%

108,489,539

9%

302,306,336

26%

Diluted earnings per ordinary share (RMB)

5.65

3.16

8.82

Diluted earnings per ADS (RMB)

1.41

0.79

2.20

Diluted earnings per ADS (USD)

0.22

0.13

0.35

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 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

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=RMB6.2848 on September 28, 2012 published by the Federal Reserve Board.

  

 

SOURCE Ctrip.com International, Ltd.



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