eLong Reports Third Quarter 2015 Unaudited Financial Results

18 Nov, 2015, 17:00 ET from eLong, Inc.

BEIJING, Nov. 18, 2015 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading mobile and online travel service provider in China, today reported unaudited financial results for the third quarter ended September 30, 2015.

Highlights

  • Accommodation reservation1 room nights stayed in the third quarter increased 19% to 11.2 million room nights compared to 9.4 million in the prior year period.
  • Gross revenue earned from accommodation reservation (Non-GAAP)2 reached RMB404 million, increasing 20% in the third quarter of 2015 compared to the same period in 2014. Accommodation reservation revenue (GAAP) was RMB298 million, increasing 10% year-on-year in the third quarter of 2015. Net commissions earned from accommodation reservation (Non-GAAP)3 were RMB238 million, decreasing 11% year-on-year in the third quarter of 2015.

Accommodation Reservation Revenue, Gross Revenue and Net Commissions Earned From Accommodation Reservation

(IN THOUSANDS)



2014 Q3


2015 Q2


2015 Q3



RMB


RMB


RMB



(Unaudited)


(Unaudited)


(Unaudited)








Gross revenue earned from accommodation reservation (Non-GAAP)


335,548


363,044


404,061

Cash rebates from the coupon program in our agency accommodation business


(65,726)


(140,676)


(92,194)

Portion of loss in our significantly-discounted merchant accommodation business


-


(23,471)


(13,830)

Accommodation reservation revenue (GAAP)


269,822


198,897


298,037

The excess of gross-up revenues over commissions for inventory risk taking
accommodation transactions


-


(46,598)


(59,050)

Net commissions earned from accommodation reservation (Non-GAAP)


269,822


152,299


238,987

  • Net revenues for the third quarter increased 2% to RMB307.2 million (US$48.3 million), compared to RMB301.5 million in the third quarter of 2014.   
  • Mobile bookings comprised more than 75% of eLong brand room nights4 in the third quarter, and cumulative downloads of eLong mobile apps reached approximately 390 million.
  • Domestic hotel coverage network expanded 94% to over 300,000 domestic hotels as of September 30, 2015, compared to 155,000 as of September 30, 2014.
  • More than 65,000 properties have contracted to use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies.

"We continue to execute our mobile accommodation-focused strategy and our mobile lodging transactions have surpassed 180,000 per day on peak days. We are glad to see our top line in the third quarter is back to growth after the continuous declines in the previous three quarters. Facing a dynamic market in China, we will continue to invest in our mobile products, technology team and marketing campaign to achieve a solid room night growth rate," said Hao Jiang, Chief Executive Officer of eLong.

1 "Accommodation reservation" mainly represents the reservation of hotels, guesthouses, apartments and other accommodation-related services. In our press releases regarding our financial results for periods before 2015, we used "hotel reservation" when referring to this same operational matrix. We believe that "accommodation" better describes the diversified lodging and accommodation services that we offer.

2 "Gross revenue earned from accommodation reservation (Non-GAAP)" is defined as accommodation reservation revenue (GAAP) plus (1) cash rebates to customers from the coupon program in our agency accommodation business that were recorded as contra revenue; and (2) the portion of the loss from significant cash-back discounts in our merchant accommodation business that was recorded as contra revenue.

3 "Net commissions earned from accommodation reservation (Non-GAAP)" are defined as accommodation reservation revenue (GAAP) minus the excess of gross-up revenues over our commissions for accommodation reservation transactions, where we take inventory risk and accordingly recognize revenues on a gross basis.

4 "eLong brand room nights" excludes room nights from non-eLong brand distribution partners and resellers.

Business Results

Total Revenues

Total revenues by product for the third quarter of 2015 as compared to the same period in 2014 were as follows (in RMB million):



Q3 2015


%


Q3 2014


%


Y/Y

Total

Total

Growth

Accommodation reservation


298.0


92%


269.8


84%


10%

Transportation ticketing5


21.0


7%


26.6


8%


(21%)

Other


4.0


1%


27.1


8%


(85%)

Total revenues


323.0


100%


323.5


100%


0%

5 "Transportation ticketing" mainly represents the reservation of air tickets, train tickets, travel insurance, and other transportation-related services. Prior to 2015, we reported our revenues generated from the reservation of train tickets, travel insurance and other transportation-related services in the aggregate as "Other" revenues. We also no longer report "air ticketing" revenues separately from revenues from train tickets, travel insurance, and other transportation-related services in our consolidated statements of comprehensive (loss)/income, which we had done prior to 2015.

Net Revenues

Net revenues for the third quarter increased 2% to RMB307.2 million (US$48.3 million), compared to RMB301.5 million in the third quarter of 2014.    

Accommodation Reservation

Accommodation reservation revenue increased 10% in the third quarter of 2015 compared to the same period in 2014, primarily due to higher volume, partially offset by lower revenue per room night. Room nights stayed in the third quarter increased 19% year-on-year to 11.2 million, and revenue per room night decreased due to the growth of our aggressive coupon program in our agency accommodation business, the significant cash-back discounts in our merchant accommodation business, and the lower commission rate room nights for which we recognize revenues on a net basis, partially offset by the growth of room night transactions for which we take inventory risk and recognize revenues on a gross basis. Accommodation reservation revenue comprised 92% of total revenues, compared to 84% in the prior year quarter.

Transportation Ticketing

Transportation tickets increased to 1.8 million in the third quarter, representing an increase of 62% compared to the prior year period, primarily due to the growth of train tickets. Transportation ticketing revenue decreased 21% in the third quarter, primarily due to a decrease in air commission revenue per ticket. The decline in air commission revenue per ticket was primarily due to the lowering by major Chinese airlines of the base air commission rate from 2% to 1% in February 2015 and then to 0% in June 2015. Transportation ticketing revenue decreased to 7% of our total revenues from 8% in the prior year quarter.

Other

Other revenues are primarily derived from advertising business. Other revenue decreased by 85% year-on-year in the third quarter of 2015, mainly driven by decreased advertising revenue as a result of our disposition of Nanjing Xici Information Technology Share Co., Ltd. in the first quarter of 2015. Other revenues decreased to 1% of total revenues in the third quarter from 8% in the prior year quarter.

Gross Margin

Gross margin in the third quarter of 2015 decreased to 54% from 70% in the prior year quarter.The decline in gross margin in the third quarter of 2015 was primarily due to lower revenue per room night and the growth of room night transactions for which we take inventory risk and recognize revenue on a gross basis.

Operating Expenses

Operating expenses for the third quarter of 2015 as compared to the same period in 2014 were as follows (in RMB million):



Q3 2015


% of Net
Revenue


Q3 2014


% of Net
Revenue


Y/Y
Growth

Service development


93.2


30%


73.7


25%


26%

Sales and marketing


224.0


73%


178.9


59%


25%

General and administrative


25.1


8%


37.4


12%


(33%)

Amortization of intangible assets


5.3


2%


1.5


-


261%

Total operating expenses


347.6


113%


291.5


96%


19%

Total operating expenses increased by 19% in the third quarter of 2015, compared to the prior year quarter. Operating expenses were 113% of net revenue in the third quarter of 2015, compared to 96% in the prior year quarter. Operating loss was RMB180.9 million in the third quarter of 2015, compared to operating loss of RMB79.5 million in the prior year quarter.

Service development expenses are expenses related to technology and our product offerings, including our mobile applications and websites, as well as our supplier relations function. In the third quarter of 2015, service development expenses increased by 26%, primarily due to increased headcount. Service development expenses increased to 30% of net revenues in the third quarter of 2015, compared to 25% in the third quarter of 2014.

Sales and marketing expenses for the third quarter of 2015 increased by 25% over the prior year quarter, driven by increased costs for new mobile customer acquisition, partially offset by decreased media and online marketing expenses. Sales and marketing expenses increased to 73% of net revenues in the third quarter of 2015 from 59% in the third quarter of 2014.

General and administrative expenses for the third quarter of 2015 decreased by 33% compared to the prior year quarter, driven by lower share-based compensation charges, partially offset by increased professional fees. General and administrative expenses decreased to 8% of net revenues in the third quarter of 2015 from 12% in the third quarter of 2014. 

Other income was RMB22.9 million in the third quarter of 2015, compared to other income of RMB19.1 million in the third quarter of 2014.

Income tax expense for the third quarter of 2015 was RMB0.9 million, compared to income tax benefit of RMB4.9 million during the prior year quarter.

Net loss for the third quarter of 2015 was RMB156.3 million, compared to net loss of RMB58.3 million during the prior year quarter.

Basic net loss per ADS and diluted net loss per ADS for the third quarter of 2015 were each RMB4.22 (US$0.66), compared to both basic net loss per ADS and diluted net loss per ADS of RMB1.64 (US$0.26) in the prior year quarter.

As of September 30, 2015, eLong held cash and cash equivalents, short-term investments and restricted cash of RMB1.4 billion (US$218 million), of which 86% was held in Renminbi and 14% was held in US dollars.

Recent Developments

On August 3, 2015, eLong announced that its Board of Directors (the "Board") had received a preliminary non-binding "going-private" proposal letter (the "Transaction") from Tencent Holdings Limited ("Tencent").

On August 13, 2015, the Board formed a special committee (the "Special Committee") consisting of three independent and disinterested directors, Ms. May Wu, Mr. Shengli Wang and Mr. Adam J. Zhao, to consider the "going-private" proposal letter. Ms. May Wu is the chair of the Special Committee. On August 20, 2015, the Special Committee retained Duff & Phelps (Duff & Phelps Securities, LLC and Duff & Phelps, LLC) as its financial advisor, and Kirkland & Ellis as its legal counsel, to assist it in this process.

On September 18, 2015, TCH Sapphire Limited, a wholly owned subsidiary of Tencent; C-Travel International Limited, a wholly-owned subsidiary of Ctrip.com International, Ltd.; and Ocean Imagination L.P. signed a Consortium Agreement to form a consortium (the "Consortium") to undertake the Transaction.

The Board cautions our shareholders and others considering trading in our securities that no decisions have been made by the Special Committee with respect to the response to the Transaction. There can be no assurance that any definitive offer will be made by the Consortium, that any agreement will be executed with the Consortium or that the Transaction or any comparable transaction will be approved or consummated. eLong does not undertake any obligation to provide any updates with respect to the Transaction or any other transaction, except as required under applicable law.

Safe Harbor Statement

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, 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," "future," "is/are likely to," "should" and "will" and similar expressions as they relate to eLong 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. Forward-looking statements include, but are not limited to, statements about our anticipated growth strategies, our future business development, results of operations and financial condition, our ability to control costs, limit losses and/or return to profitability, our ability to attract customers and leverage our brand, and trends and competition in the travel industry in China and globally. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause our actual performance and results to differ materially from those discussed in the forward-looking statements. Factors that could affect our actual results and cause our actual results to differ materially from those referred to in any forward-looking statement include, but are not limited to, declines or disruptions in the travel industry, international financial, political or economic crises, a slowdown in the PRC economy, an outbreak of bird flu or other disease, eLong's reliance on maintaining good relationships with, and stable air and hotel inventory from, hotel suppliers and airline ticket suppliers, and on establishing new relationships with suppliers on similar terms, our reliance on the TravelSky GDS system for our air business, Baidu and Qihoo for our search engine marketing, our reliance on maintaining commercial cooperation with online hotel inventory distribution partners, the risk that eLong will not be able to increase its brand recognition, the possibility that eLong will be unable to continue timely compliance with the Sarbanes-Oxley Act or other regulatory requirements, the risk that eLong will not be successful in competing against new and existing competitors, the risk that our infrastructure and technology are damaged, fail or become obsolete, risks associated with Ctrip's large ownership interest in eLong, risks relating to eLong's investments in, and acquisitions of, other businesses and assets, fluctuations in the value of the Renminbi, inflation in China, changes in eLong's management team and other personnel, risks relating to uncertainties in the PRC legal system, including but not limited to, risks relating to our affiliated Chinese operating entities, risks and uncertainties relating to litigation and arbitration in China, risks relating to the application of preferential tax policies, the risk that eLong will continue to incur losses, and other risks mentioned in eLong's filings with the U.S. Securities and Exchange Commission, including eLong's Annual Report on Form 20-F.

If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward looking-statements. Investors should not rely upon forward-looking statements as predictions of future events. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in this press release are qualified by reference to this cautionary statement.

Conference Call

eLong will host a conference call to discuss its third quarter 2015 unaudited financial results on November 19, 2015 at 10:00 am Beijing time (November 18, 2015, 9:00 pm ET). The dial-in number is +1-866-297-1588 for U.S. participants; +852-3001-3842 for Hong Kong participants; and 86-400-810-4761 for participants in mainland China. International participants can dial +1-210-795-1143. Participant pass code: 5083685. An archived web cast of this call will be available for one year on the Investor Relations section of the eLong web site at http://elong.investorroom.com/.

About eLong, Inc.

eLong, Inc. (Nasdaq: LONG) is a leader in mobile and online accomodations reservations in China. eLong technology enables travelers to book hotels, guesthouses, apartments and other accommodations, as well as air and train tickets, through convenient mobile and tablet applications, websites (www.eLong.com), 24 hour customer service, and easy to use tools such as destination guides, maps and user reviews. eLong's largest shareholders are Ctrip.com International, Ltd. (Nasdaq: CTRP); Ocean Imagination L.P.; and Tencent Holdings Ltd. (HKSE: 0700).

For further information, please contact:
eLong, Inc.
Investor Relations
ir@corp.elong.com 
+86-10-6436-7570

 

 

eLong, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)



Three Months Ended


Nine Months Ended


Sep. 30,
2014

Jun. 30,

2015

Sep. 30,
2015

Sep. 30,
2015


Sep. 30,
2014

Sep. 30,
2015

Sep. 30,
 2015


RMB

RMB

RMB

USD(1)


RMB

RMB

USD(1)


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)

(Unaudited)

Revenues:









Accommodation reservation*

269,822

198,897

298,037

46,894


728,727

687,184

108,123

Transportation ticketing**

26,604

24,636

20,956

3,297


97,227

70,669

11,119

Other

27,104

10,660

3,997

629


72,704

25,084

3,947

Total revenues

323,530

234,193

322,990

50,820


898,658

782,937

123,189

Business tax, VAT and surcharges

(22,036)

(15,661)

(15,775)

(2,482)


(58,680)

(45,269)

(7,123)

Net revenues

301,494

218,532

307,215

48,338


839,978

737,668

116,066

    Cost of services

(89,445)

(134,322)

(140,517)

(22,109)


(227,155)

(425,502)

(66,949)

Gross profit

212,049

84,210

166,698

26,229


612,823

312,166

49,117










Operating expenses:









Service development

(73,726)

(135,521)

(93,163)

(14,658)


(191,217)

(321,340)

(50,560)

Sales and marketing

(178,866)

(165,094)

(224,015)

(35,248)


(464,032)

(556,329)

(87,535)

General and administrative

(37,454)

(155,458)

(25,082)

(3,946)


(107,420)

(228,893)

(36,014)

Amortization of intangible assets

(1,465)

(5,299)

(5,296)

(833)


(4,668)

(15,934)

(2,507)

 Total operating expenses

(291,511)

(461,372)

(347,556)

(54,685)


(767,337)

(1,122,496)

(176,616)

Other operating income

-

-

-

-


30,000

-

-

Loss from operations

(79,462)

(377,162)

(180,858)

(28,456)


(124,514)

(810,330)

(127,499)










Other income/(expense):









Interest income

15,139

11,510

8,823

1,388


46,403

34,382

5,410

Government subsidy

2,684

9,425

8,544

1,344


14,279

19,308

3,038

Foreign exchange gains/(losses)

207

(988)

2,515

396


(3,267)

163

26

Gain from disposition of subsidiary

-

-

-

-


-

74,894

11,784

Other

1,035

82

3,024

476


1,919

485

76

Total other income

19,065

20,029

22,906

3,604


59,334

129,232

20,334

Loss before income tax (expense)/benefit

(60,397)

(357,133)

(157,952)

(24,852)


(65,180)

(681,098)

(107,165)

Income tax (expense)/benefit

4,915

(1,210)

(884)

(139)


3,443

(18,976)

(2,986)

Share of net loss in non-consolidated affiliates

(3,326)

(1,697)

(2,069)

(326)


(3,065)

(4,364)

(687)

Net loss

(58,808)

(360,040)

(160,905)

(25,317)


(64,802)

(704,438)

(110,838)

Net loss attributable to noncontrolling interests

502

3,681

4,595

723


2,590

11,062

1,741

Net loss attributable to eLong, Inc.

(58,306)

(356,359)

(156,310)

(24,594)


(62,212)

(693,376)

(109,097)

Other comprehensive income

-

-

-

-


-

-

-

Total comprehensive loss

(58,306)

(356,359)

(156,310)

(24,594)


(62,212)

(693,376)

(109,097)










Basic net loss per share

(0.82)

(4.91)

(2.11)

(0.33)


(0.88)

(9.51)

(1.50)

Diluted net loss per share

(0.82)

(4.91)

(2.11)

(0.33)


(0.88)

(9.51)

(1.50)










Basic net loss per ADS(2)(3)

(1.64)

(9.82)

(4.22)

(0.66)


(1.76)

(19.02)

(3.00)

Diluted net loss per ADS(2)(3)

(1.64)

(9.82)

(4.22)

(0.66)


(1.76)

(19.02)

(3.00)










Shares used in computing net loss per share:









         Basic

70,943

72,606

74,063

74,063


70,697

72,886

72,886

         Diluted

70,943

72,606

74,063

74,063


70,697

72,886

72,886










Share-based compensation charges included in:

29,877

182,771

(1,730)

( 273)


92,368

208,379

32,787

        Cost of services

1,012

6,342

(1,867)

(294)


2,744

4,613

726

        Service development

9,330

39,851

159

25


23,043

43,889

6,906

        Sales and marketing

(2,611)

5,547

(1,746)

(275)


4,697

2,963

466

        General and administrative

22,146

131,031

1,724

271


61,884

156,914

24,689

 * Accommodation reservation revenues mainly represent revenues from the reservation of hotels, guesthouses, apartments and other accommodation-related services. 

** Transportation ticketing revenues mainly represent revenues from the reservation of air tickets, train tickets, travel insurance, and other transportation-related services.

 Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.3556 on September 30, 2015 in the City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve. No representation is made that the RMB amounts could have been, or could
be, converted or settled into USD at the rates stated herein on the reporting dates, at any other rates or at all.

Note 2: 1 ADS = 2 shares.

Note 3: Non-GAAP financial measures

Note 4: Certain items in prior periods' consolidated statements of comprehensive loss have been reclassified to conform to the current period's presentation in order to facilitate comparison.

                                                                      

 


eLong, Inc.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)




Dec. 31, 2014


Sep. 30, 2015


Sep. 30, 2015



RMB


RMB


USD



(Audited)


(Unaudited)


(Unaudited)

ASSETS







Current assets:







Cash and cash equivalents


504,890


598,439


94,159

Short-term investments


1,306,634


648,736


102,073

Restricted cash


123,937


136,646


21,500

Accounts receivable, net


295,632


355,066


55,867

Amounts due from related parties


52,021


69,086


10,870

Prepaid expenses


55,417


128,292


20,186

Deferred tax assets, current


304


-


-

Advance to suppliers


75,285


120,150


18,905

Other current assets


104,923


88,521


13,928

Total current assets


2,519,043


2,144,936


337,488

Property and equipment, net


112,356


106,452


16,749

Investment in non-consolidated affiliates


96,942


106,854


16,813

Goodwill


181,322


184,242


28,989

Intangible assets, net


84,749


70,600


11,108

Deferred tax assets, non-current


516


-


-

Other non-current assets


51,123


48,791


7,677

Total non-current assets


527,008


516,939


81,336

Total assets


3,046,051


2,661,875


418,824















LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Accounts payable


442,489


650,063


102,281

Income taxes payable


13


2,117


333

Amounts due to related parties


127,910


6,442


1,014

Deferred revenue


47,544


63,016


9,915

Advances and deposits from customers


121,934


179,035


28,170

eCoupon program virtual cash liability


135,648


167,612


26,372

Accrued expenses and other current liabilities


292,310


261,552


41,153

Total current liabilities


1,167,848


1,329,837


209,238

Deferred tax liabilities, non-current


21,187


21,187


3,334

Other liabilities


44


2,464


388

Total non-current liabilities


21,231


23,651


3,722

Total liabilities


1,189,079


1,353,488


212,960








Shareholders' equity







Ordinary shares


2,908


2,981


469

High-vote ordinary shares


2,691


2,691


423

Additional paid-in capital


2,397,868


2,562,019


403,112

Statutory reserves


3,665


3,593


565

Accumulated deficit


(626,810)


(1,326,203)


(208,666)

Total eLong, Inc. shareholders' equity


1,780,322


1,245,081


195,903

Noncontrolling interest


76,650


63,306


9,961

Total shareholders' equity


1,856,972


1,308,387


205,864

Total liabilities and shareholders' equity


3,046,051


2,661,875


418,824








Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with generally accepted accounting principles in the United States, or GAAP, this press release includes certain non-GAAP financial measures including basic net (loss)/income per ADS, diluted net (loss)/income per ADS, Adjusted Earnings Before Interests, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Gross revenue earned from accommodation reservation and Net commissions earned from accommodation reservation. We believe these non-GAAP financial measures may help investors understand eLong's current financial performance and compare business trends among different reporting periods. 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. We seek to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measures. 

Adjusted EBITDA is defined as net (loss)/income plus (1) interest expense (income); (2) income tax expense (benefit); (3) depreciation; (4) amortization of intangible assets; (5) share-based compensation charges; (6) foreign exchange losses (gains); (7) acquisition-related impacts, including (i) goodwill and intangible asset impairment, and (ii) losses (gains) recognized on non-controlling investment basis adjustments when we acquire controlling interests; (8) losses (gains) from disposition of subsidiary; and (9) certain other items, including restructuring charges, impairment loss and disposition gains on equity method investments and equity in net loss/(income) of affiliates. We believe Adjusted EBITDA is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, if any, and income tax expense (benefit). Since share-based compensation charges are non-cash expenses, we believe excluding them from our calculation of Adjusted EBITDA allows us to provide investors with a more useful tool for assessing our operating and financial performance. In addition, we believe that Adjusted EBITDA is used by other companies and may be used by investors as a measure of our financial performance. The presentation of Adjusted EBITDA should not be construed as an indication that eLong's future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business. The use of Adjusted EBITDA has certain limitations. Amortization and depreciation expenses for various non-current assets, share-based compensation charges, other income/(expenses), and income tax expense (benefit) have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of eLong's liquidity. We seek to compensate for these limitations by providing the relevant disclosure of our amortization and depreciation expenses, and share-based compensation charges in the reconciliations to the GAAP financial measure. The term Adjusted EBITDA is not defined under GAAP, and Adjusted EBITDA is not a measure of net (loss)/income, (loss)/income from operations, operating performance or liquidity presented in accordance with GAAP. In addition, eLong's Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA in the same manner as we do.

Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP measures. We present a reconciliation of this non-GAAP financial measure to GAAP below.

eLong, Inc.

TABULAR RECONCILIATION FOR NON-GAAP MEASURE

Adjusted EBITDA

(IN THOUSANDS)



2014 Q3


2015 Q2


2015 Q3


RMB


RMB


RMB


(Unaudited)


(Unaudited)


(Unaudited)







Net loss attributable to eLong, Inc.

(58,306)


(356,359)


(156,310)

Net loss attributable to noncontrolling interests

(502)


(3,681)


(4,595)

Interest income

(15,139)


(11,510)


(8,823)

Government subsidy

(2,684)


(9,425)


(8,544)

Income tax expense/(benefit) 

(4,915)


1,210


884

Depreciation

10,665


13,138


13,267

Amortization of intangible assets

1,465


5,299


5,296

Share-based compensation charges

29,877


182,771


1,730

Foreign exchange (gains)/losses

(207)


988


(2,515)

Restructuring charges

-


3,556


-

Other

2,291


1,614


(955)

Adjusted EBITDA

(37,455)


(172,399)


(164,025)

Gross revenue earned from accommodation reservation is defined as accommodation reservation revenue plus (1) cash rebates to customers from the coupon program in our agency accommodation business that were recorded as contra revenue; and (2) the portion of the loss from significant cash-back discounts in our merchant accommodation business that was recorded as contra revenue. We believe gross revenue earned from accommodation reservation is a useful operating and financial metric to assess our performance before the impact of our promotion activities, including the coupon program and cash-back discounts.

Net commissions earned from accommodation reservation are defined as accommodation reservation revenue minus the excess of gross-up revenues over our commissions for accommodation reservation transactions, where we take inventory risk and accordingly recognize revenues on a gross basis. We believe net commissions earned from accommodation reservation is a useful operating and financial metric to assess our performance excluding the excess of revenues recognized on a gross basis over commissions earned from accommodation reservation, which allows us to provide investors more information as to the financial impact of our room night transactions for which we take inventory risk.

The presentation of gross revenue earned from accommodation reservation and net commissions earned from accommodation reservation should not be construed as an indication that eLong's future results will be unaffected by other activities we consider to be outside the ordinary course of our business. The use of gross revenue earned from accommodation reservation and net commissions earned from accommodation reservation has certain limitations. The two terms are not defined under GAAP, and are not measures of revenues in accordance with GAAP.

Gross revenue earned from accommodation reservation and net commissions earned from accommodation reservation should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP measures. We present a reconciliation of these two non-GAAP financial measures to GAAP below.

eLong, Inc.

TABULAR RECONCILIATION FOR NON-GAAP MEASURE

Accommodation Reservation Revenue, Gross Revenue and Net Commissions Earned From Accommodation Reservation

(IN THOUSANDS)




2014 Q3


2015 Q2


2015 Q3



RMB


RMB


RMB



(Unaudited)


(Unaudited)


(Unaudited)








Gross revenue earned from accommodation reservation (Non-GAAP)


335,548


363,044


404,061

Cash rebates from the coupon program in our agency accommodation business


(65,726)


(140,676)


(92,194)

Portion of loss in our significantly-discounted merchant accommodation business


-


(23,471)


(13,830)

Accommodation reservation revenue (GAAP)


269,822


198,897


298,037

The excess of gross-up revenues over commissions for inventory risk taking
accommodation transactions


-


(46,598)


(59,050)

Net commissions earned from accommodation reservation (Non-GAAP)


269,822


152,299


238,987

 

 

 

SOURCE eLong, Inc.



RELATED LINKS

http://elong.investorroom.com


http://www.eLong.com