BEIJING, China, May 26 /PRNewswire-Asia/ -- eLong, Inc. (Nasdaq: LONG), a leading online travel service provider in China, today reported unaudited financial results for the first quarter ended March 31, 2009.

    Highlights

    -- Total gross revenues increased 1% year-on-year to RMB82.5 million and
       net revenues increased 1% year-on-year to RMB77.8 million.

    -- Travel revenues before business tax and surcharges comprised of hotel,
       air and other travel product and service revenues were flat
       year-on-year at RMB77.8 million.



    Travel revenues before business tax and surcharges by product were as
    follows (figures in RMB 000's; some numbers may not add due to rounding):

                                         %                    %        Y/Y
                            Q1 2009     Total     Q1 2008   Total     Growth
    Hotel commissions        56,222      73 %      57,234    74 %        -2 %
    Air ticketing
     commissions             21,248      27 %      19,632    25 %         8 %
    Other travel revenue        350      --           791     1 %       -56 %
    Total travel revenue     77,820     100 %      77,657   100 %        --


    -- Operating loss in the first quarter was RMB3.4 million compared to
       RMB3.6 million in the prior year period, driven primarily by a decrease
       in general and administrative expenses, partially offset by greater
       sales and marketing expenses.

    -- Net income in the first quarter was RMB2.0 million compared to net loss
       of RMB32.6 million in the prior year period, driven primarily by a
       RMB38.2 million decrease in foreign currency exchange losses, partially
       offset by a decrease of RMB4.3 million in interest income.

    -- Cash, cash equivalents and short term investments as of March 31, 2009
       were RMB964.9 million (USD$141.2 million).  Short term investments of
       RMB615.9 million (USD$90.1 million) were comprised of time deposits of
       six or nine months duration held in commercial banks located outside
       mainland China.

"Q1 was a tough quarter, but see early indications that our focus on expanding our presence online, driving product innovation and improving supply will yield results." said Guangfu Cui, Chief Executive Officer of eLong.

"The impact of transaction processing and customer service efficiencies are reflected in our gross margin performance for the quarter," said Mike Doyle, Chief Financial Officer of eLong. "We were able to hold margin flat while facing headwinds from both lower average selling prices and a greater mix of lower margin air bookings. We also demonstrated some progress in our cost containment initiative by reducing general and administrative expenses as compared with the prior year period."

Business Results

Hotel

Hotel commissions decreased 2% for the first quarter of 2009 compared to the prior year quarter, primarily due to lower commission per room night, which was partially offset by higher volume. Commission per room night decreased to RMB62 from RMB65 in the prior year quarter primarily due to lower average selling prices and mix shift to lower margin budget hotels. Room nights booked through eLong increased 4% year-on-year to 912,000.

Air

Air ticketing commissions increased 8% for the first quarter of 2009 compared to the prior year quarter, driven by an 18% year-on-year increase in air segments to 506,000, partially offset by a decrease of 8% in the average ticket price to RMB758 compared to the prior year quarter.

Profitability

Gross margin in the first quarter of 2009 was 69% which was the same as in the first quarter of 2008.

    Operating expenses for the first quarter of 2009 and 2008 were as follows
    (figures in RMB 000's; some numbers may not add due to rounding):

                                        % Net                  % Net     Y/Y
                            Q1 2009    Revenue     Q1 2008    Revenue  Growth
    Service development      13,030       17 %      12,697      17 %      3 %
    Sales and marketing      31,607       41 %      28,907      38 %      9 %
    General and
     administrative          12,424       16 %      14,778      19 %    -16 %
    Amortization of
     intangibles                157       --           217      --      -28 %
    Total operating
     expenses                57,218       74 %      56,599      74 %      1 %

Total operating expenses increased 1% for the first quarter of 2009 compared to the first quarter of 2008. Operating expenses were 74% of net revenue, a decrease of 26 basis points compared to the prior year quarter.

Service development expense is composed of expenses related to technology and our product offerings, including our website, platforms and other related systems development. Service development expense increased 3% in the first quarter 2009 compared to the prior year quarter, mainly driven by increases in labor costs, partially offset by a decrease in outside service fees, and was unchanged as a percentage of net revenues in 2009 compared to 2008.

Sales and marketing expenses for the first quarter 2009 increased 9% over the prior year quarter, mainly driven by increased loyalty point awards and higher online marketing expenses, partially offset by decreases in sales commissions and professional fees. Sales and marketing expenses increased by 3 percentage points to 41% of net revenues in the first quarter 2009 compared to the same quarter of the prior year.

General and administrative expenses for the first quarter 2009 decreased 16% compared to the prior year quarter, mainly driven by a decrease in professional fees and lower bad debt provisions. General and administrative expenses decreased by 3 percentage points to 16% of net revenues in the first quarter of 2009 compared to the same quarter of the prior year.

Other income, which represents interest income, foreign exchange gains/losses and other income/expense, was RMB5.7 million in the first quarter of 2009, due to interest income of RMB5.4 million in the first quarter of 2009 and a foreign currency exchange gain of RMB0.3 million resulting from the depreciation of the Renminbi against the US dollar during the quarter.

Net income for the first quarter 2009 was RMB2.0 million, which compared to net loss of RMB32.6 million over the prior year quarter.

Basic and diluted earnings per ADS for the first quarter of 2009 were RMB0.08 compared to basic and diluted losses per ADS of RMB1.28 in the prior year quarter.

Business Outlook

eLong expects net revenues, for the second quarter of 2009 to be within the range of RMB77 million to RMB85 million, equal to a decline of 5% to an increase of 5% compared to the second quarter of 2008.

Notes to the Unaudited Interim Consolidated Financial Statements

To supplement the financial measures calculated in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes certain non-GAAP financial measures including basic earning/loss per ADS, diluted earning/loss per ADS, share-based compensation charges and unrealized foreign exchange losses/(gains). The Company believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Safe Harbor Statement

It is currently expected that the Business Outlook will not be updated until the release of eLong's next quarterly earnings announcement; however, eLong reserves the right to update its Business Outlook at any time for any reason.

Statements in this press release concerning eLong's future business, operating results and financial condition are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they related to the Company are intended to identify such forward-looking statements, but are not the exclusive means of doing so. These forward looking statements are based upon management's current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. Factors that could affect the Company's actual results and cause actual results to differ materially from those included in any forward-looking statement include, but are not limited to, eLong's operating losses, declines or disruptions in the travel industry, the international financial crisis, slowdown in the PRC economy, the recurrence of SARS, an outbreak of bird flu, swine flu or other disease, eLong's reliance on having good relationships with hotel suppliers and airline ticket suppliers, our reliance on the Travelsky GDS system for our air business, the possibility that eLong will be unable to continue timely compliance with Section 404 of the Sarbanes-Oxley Act of 2002, the risk that eLong will not be successful in competing against new and existing competitors, risks associated with Expedia, Inc.'s (Nasdaq: EXPE) majority ownership interest in eLong and the integration of eLong's business with that of Expedia's, fluctuations in the value of the Chinese currency, changes in eLong's management team and other key personnel, changes in third-party distribution partner relationships and other risks outlined in eLong's filings with the U.S. Securities and Exchange Commission (or SEC), including eLong's Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their dates.

Conference Call

eLong will host a conference call to discuss its first quarter 2009 earnings on May 27, 2009 at 8:00 AM Beijing time (May 26, 2009, 8:00 PM EDT). The management team will be on the call to discuss the quarterly results and to answer questions. The toll-free number for U.S. participants is +1-800-365-8460. The dial-in number for Hong Kong participants is +852-2258-4000. International participants can dial +1-210-795-0492. Pass code: eLong.

A replay of the call will be available for one day between 9:30 pm Eastern Time on May 26, 2009 and 9:30 pm Eastern Time on May 27, 2009. The toll-free number for U.S. callers is +1-800-477-5821; the Hong Kong dial in number is +852-2802-5151, and the dial-in number for international callers is +1-203-369-4577. The pass code for the replay is 717980.

Additionally, a live and archived web cast of this call will be available on the Investor Relations section of the eLong web site at http://www.elong.net/AboutUs/conference.html for one year.

About eLong, Inc.

eLong, Inc. (Nasdaq: LONG) is a leading online travel company in China. Headquartered in Beijing, eLong has a national presence across China. eLong uses web-based distribution technologies and a 24-hour call center to provide consumers with access to travel reservation services. Aiming to enrich people's lives through the freedom of independent travel, eLong empowers consumers to make informed decisions such as maps, virtual tours and user ratings. eLong has the capacity to fulfill air ticket reservations in over 80 major cities across China. In addition to a selection of more than 7,000 thousand hotels in China, eLong offers consumers the ability to make bookings at international hotels in more than 100 countries worldwide.

eLong operates websites including http://www.elong.com and http://www.elong.net .

    For further information, please contact:

     eLong, Inc.
     Investor Relations
     Tel:   +86-10-6436-7570
     Email: ir@corp.elong.com



    eLong, Inc.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

                                               Three Months Ended
                                      Mar. 31, Dec. 31,  Mar. 31,  Mar. 31,
                                        2008     2008      2009      2009
                                         RMB      RMB       RMB       USD
    Revenues:
      Hotel commissions                57,234   67,913    56,222     8,228
      Air ticketing commissions        19,632   19,316    21,248     3,110
      Other travel revenue                791       74       350        51
      Travel                           77,657   87,303    77,820    11,389
      Other                             3,792    3,699     4,653       681
    Gross revenues                     81,449   91,002    82,473    12,070

      Business tax and surcharges      (4,754)  (5,302)   (4,668)     (683)
    Net revenues                       76,695   85,700    77,805    11,387

    Cost of services                  (23,703) (25,473)  (23,964)   (3,507)
    Gross profit                       52,992   60,227    53,841     7,880

    Operating expenses:
      Service development             (12,697) (12,401)  (13,030)   (1,907)
      Sales and marketing             (28,907) (45,100)  (31,607)   (4,626)
      General and administrative      (14,778) (12,032)  (12,424)   (1,818)
      Amortization of intangibles        (217)    (197)     (157)      (23)
      Write-down of property and
       equipment and intangibles           --     (753)       --        --
    Total operating expenses          (56,599) (70,483)  (57,218)   (8,374)

    Income/(loss) from operations      (3,607) (10,256)   (3,377)     (494)
      Other income(loss)              (28,248)   7,995     5,668       829
    Income/(loss) from operations
     before income tax expense        (31,855)  (2,261)    2,291       335
      Income tax expense                 (738)  (5,940)     (290)      (42)

    Net income/(loss)                 (32,593)  (8,201)    2,001       293

    Basic earning/(loss) per share      (0.64)   (0.17)     0.04     0.006
    Diluted earning/(loss) per share    (0.64)   (0.17)     0.04     0.006

    Basic earning/(loss) per ADS        (1.28)   (0.34)     0.08     0.012
    Diluted earning/(loss) per ADS      (1.28)   (0.34)     0.08     0.012

    Shares used in computing basic
     net earning/loss per share        50,905   48,076    47,079    47,079
    Shares used in computing diluted
     net earning/loss per share        50,905   48,076    49,556    49,556

    Note: 1ADS = 2 shares.

    Share-based compensation charges
     included are as follows:           2,357      523     2,398       351
    Cost of services                      144      (79)      139        20
    Service development                   974       37       668        98
    Sales and marketing                   494     (151)      704       103
    General and administrative            745      716       887       130

    Un-realized foreign exchange
     losses/(gains)                    37,896   (1,723)     (144)      (21)

    Note 1: The conversions of Renminbi (RMB) into United States dollars (USD)
            as at the reporting dates are based on the noon buying rate of
            USD1.00=RMB6.8329 on March 31, 2009, USD1.00=RMB6.8225 on December
            31, 2008 and USD1.00=RMB7.0120 on March 31, 2008 in the City of
            New York for cable transfers of Renminbi as certified for customs
            purposes by the Federal Reserve. No representation is intended to
            imply that the RMB amounts could have been, or could be, converted,
            realized or settled into U.S. dollars at that rate, or at any rate,
            on the reporting dates.



    eLong, Inc.
    UNAUDITED CONDENSED CONSOLIDATED SUMMARY BALANCE SHEET DATA
    (IN THOUSANDS)

                                       Dec. 31,       Mar. 31,       Mar. 31,
                                         2008          2009           2009
                                          RMB           RMB            USD
    ASSETS
    Current assets:
      Cash, cash equivalents           321,541        348,992         51,075
      Short-term investments           635,810        615,927         90,141
      Accounts receivable, net          42,471         41,489          6,072
      Due from related parties             518            799            117
      Prepaid expenses and other
       current assets                   23,660         22,609          3,309
        Total current assets         1,024,000      1,029,816        150,714
    Property and equipment, net         52,484         50,367          7,371
    Goodwill                            30,000         30,000          4,391
    Intangible assets, net                 943            786            115
    Other non-current assets            30,538         29,552          4,325
        Total assets                 1,137,965      1,140,521        166,916


    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                  34,146         35,503          5,196
      Income taxes payable               1,152            684            100
      Due to related parties             8,120          7,046          1,031
      Accrued expenses and other
       current liabilities              81,889         80,194         11,736
        Total current liabilities      125,307        123,427         18,063
    Other long-term liabilities            477            451             66
        Total liabilities              125,784        123,878         18,129

    Shareholders' equity
      Ordinary shares                    4,221          4,227            619
      Treasury Stock                  (103,393)      (103,393)       (15,132)
      Additional paid-in capital     1,315,590      1,318,045        192,897
      Accumulated deficit             (204,237)      (202,236)       (29,597)
        Total shareholders' equity   1,012,181      1,016,643        148,787
        Total liabilities and
         shareholders' equity        1,137,965      1,140,521        166,916

SOURCE eLong, Inc.

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