eLong Reports Second Quarter 2010 Unaudited Financial Results
BEIJING, Aug. 16 /PRNewswire-Asia/ -- eLong, Inc. (Nasdaq: LONG), a leading online travel service provider in China, today reported unaudited financial results for the second quarter ended June 30, 2010.
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Highlights -- Second Quarter 2010
-- Net revenues increased 45% to RMB118.9 million, compared to
RMB81.9 million in the second quarter of 2009.
-- Income from operations increased 152% to RMB16.1 million, compared to
RMB6.4 million in the second quarter of 2009. Operating margin was
13.6% compared to 7.8% in the second quarter of 2009.
-- Operating Income Before Amortization ("OIBA")(Non-GAAP)(*) increased
136% to RMB20.8 million, compared to RMB8.8 million in the second
quarter of 2009.
-- Domestic hotel coverage network expanded by 40% to 12,200 domestic
hotels compared to 8,700 a year ago. More than 10,000 of these hotels
participate in our eCoupon program. In addition, we offer more than
120,000 international hotels.
-- In August 2010, received the "2010 Best Call Center in China" award
from the China Federation of IT Promotion.
"eLong is the largest online travel marketplace in China in terms of hotels available for direct booking. With our rich selection of hotels and highly competitive eCoupon program, eLong.com is becoming a preferred hotel booking choice for more and more consumers in China," said Guangfu Cui, Chief Executive Officer of eLong.
"In the second quarter, strong online hotel growth, increasing average selling prices and improving operating efficiencies allowed us to deliver record net revenues and record income from operations," said Mike Doyle, Chief Financial Officer of eLong.
(*) Operating income before amortization ("OIBA") is a non-GAAP measure as
defined by the Securities and Exchange Commission. Please see
"Non-GAAP Financial Measures" and "Tabular Reconciliation for Non-GAAP
Measure" on page 7 for an explanation of this non-GAAP measure.
Business Results
Revenue
Total revenues by product were as follows (figures in RMB million):
Q2 % Q2 % Y/Y
2010 Total 2009 Total Growth
Hotel reservations 85.6 68% 59.3 68% 44%
Air ticketing 30.5 24% 21.8 25% 40%
Other 10.3 8% 5.8 7% 78%
Total revenues 126.4 100% 86.9 100% 45%
Hotel
Hotel commission revenue increased 44% for the second quarter of 2010 compared to the prior year quarter, primarily due to higher volume, which was partially offset by lower commission per room night. Commission per room night decreased 9% year-on-year primarily due to our eCoupon program and the more rapid growth of lower average daily rate hotels. Room nights booked through eLong in the second quarter increased 58% year-on-year to 1.5 million.
Air
Air ticketing commission revenue increased 40% for the second quarter of 2010 compared to the prior year quarter, driven by a 16% increase in air segments to 591,000 and an increase in commission per segment. Commission per segment increased 21%, due to a 25% increase in average ticket price, partially offset by a decrease in air commission rates compared to the same quarter of the prior year.
Other
Other revenue increased 78% year-on-year for the second quarter of 2010. Other revenue is primarily online advertising on our websites. Other revenue grew to 8% of total revenues from 7% in the prior year quarter.
Profitability
Gross margin in the second quarter of 2010 was 72% compared to 71% in the prior year quarter of 2009.
Operating expenses for the second quarter of 2010 and same period in 2009 were as follows (figures in RMB million):
Q2 % Net Q2 % Net Y/Y
2010 Revenues 2009 Revenues Growth
Service development 18.9 16% 13.2 16% 43%
Sales and marketing 38.6 33% 27.4 33% 41%
General and administrative 11.9 10% 11.1 14% 7%
Amortization of intangible assets 0.2 -- 0.2 -- --
Total operating expenses 69.6 59% 51.9 63% 34%
Total operating expenses increased 34% for the second quarter of 2010 compared to the second quarter of 2009. Total operating expenses were 59% of net revenues, a decrease of 4 percentage points compared to the prior year quarter.
Service development expense consists of expenses related to technology and our product offering, including our websites, platforms, other system development and our supplier relations function. Service development expense increased 43% compared to the prior year quarter, mainly driven by an increase in headcount and higher employee compensation. Service development expense was 16% of net revenues, unchanged compared to the same quarter of 2009.
Sales and marketing expenses for the second quarter of 2010 increased 41% over the prior year quarter, mainly driven by increased online marketing expenses and hotel commission payments to our third-party distribution partners, partially offset by reduced headcount. Sales and marketing expense was 33% of net revenues, unchanged compared to the same quarter of 2009.
General and administrative expenses for the second quarter of 2010 increased 7% compared to the prior year quarter, mainly driven by higher employee compensation. General and administrative expenses decreased to 10% of net revenues in the second quarter of 2010 from 14% in the same quarter of the prior year.
Other income/(expenses), which represents interest income, foreign exchange losses and other income/expense, was RMB2.9 million other expense in the second quarter of 2010 compared to RMB3.5 million other income in the second quarter of 2009, driven primarily by an increase in foreign exchange losses and a decrease in interest income. In the second quarter of 2010, our foreign exchange losses on our cash and cash equivalents, short-term and long-term investments increased to RMB3.9 million, from RMB0.4 million in the second quarter of 2009.
Net income for the second quarter of 2010 was RMB9.4 million, compared to net income of RMB9.5 million during the prior year quarter.
Net income per ADS and diluted net income per ADS for the second quarter of 2010 were RMB0.40 and RMB0.36, respectively, compared to net income per ADS and diluted net income per ADS for the prior year quarter of RMB0.40 and RMB0.38, respectively.
Business Outlook
eLong currently expects net revenues for the third quarter of 2010 to be within the range of RMB126 million to RMB136 million, equal to an increase of 30% to 40% compared to the third quarter of 2009.
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, 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 relate to our 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 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 in any forward-looking statement include, but are not limited to, eLong's losses sustained in prior years, declines or disruptions in the travel industry, the international financial crisis, slowdown in the PRC economy, an outbreak of bird flu, H1N1 flu, SARS or other disease, eLong's reliance on having good relationships with airlines, 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 or other requirements of the Sarbanes-Oxley Act, 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, fluctuations in the value of the Renminbi, changes in eLong's management team and other key personnel, changes in third-party distribution partner relationships and other risks mentioned in eLong's filings with the U.S. Securities and Exchange Commission (or SEC), including eLong's Annual Report on Form 20-F.
You 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 second quarter 2010 unaudited financial results on August 17, 2010 at 8:00 am Beijing time (August 16, 2010, 8:00 pm ET). 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 +1-866-844-9413. The dial-in number for Hong Kong participants is +852-3001-3802. International participants can dial +1-210-795-0512. Pass code: eLong.
Additionally, an 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 service provider in China. Headquartered in Beijing, eLong has a national presence across China, and offers a bilingual website and 24-hour call center to provide both business and leisure travelers with accurate travel information, real savings and a worry-free travel booking experience. eLong empowers consumers to make informed decisions by providing convenient online and offline hotel, air ticket and vacation package booking services as well as easy to use tools such as maps, destination guides, photographs, virtual tours and user reviews. In addition to a selection of more than 12,200 hotels in over 500 cities across China, eLong also offers consumers the ability to make bookings at over 120,000 international hotels in more than 100 countries worldwide, and can fulfill domestic and international air ticket reservations in over 80 major cities across China. eLong is a subsidiary of Expedia, Inc. (NASDAQ:EXPE).
eLong operates websites including http://www.elong.com, http://www.elong.net and http://www.xici.net .
For further information, please contact:
eLong, Inc.
Investor Relations
Email: [email protected]
Tel: +86-10-6436-7570
eLong, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)
Three Months Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30,
2009 2010 2010 2010
RMB RMB RMB USD(1)
(Unaudi- (Unaudi- (Unaudi- (Unaudi-
ted) ted) ted) ted)
Revenues:
Hotel reservations 59,276 69,167 85,606 12,623
Air ticketing 21,764 29,430 30,515 4,500
Other 5,886 8,915 10,311 1,520
Total revenues 86,926 107,512 126,432 18,643
Business tax and surcharges (4,982) (6,408) (7,529) (1,110)
Net revenues 81,944 101,104 118,903 17,533
Cost of services (23,666) (31,827) (33,186) (4,894)
Gross profit 58,278 69,277 85,717 12,639
Operating expenses:
Service development (13,195) (18,159) (18,854) (2,780)
Sales and marketing (27,422) (33,530) (38,616) (5,694)
General and administrative (11,147) (11,146) (11,864) (1,749)
Amortization of intangible assets (157) (185) (237) (35)
Total operating expenses (51,921) (63,020) (69,571) (10,258)
Income from operations 6,357 6,257 16,146 2,381
Other income/(expenses):
Interest income 3,882 1,067 1,248 184
Foreign exchange losses (424) (220) (3,942) (581)
Other -- 910 (163) (24)
Total other income, net 3,458 1,757 (2,857) (421)
Income before income tax expense 9,815 8,014 13,289 1,960
Income tax expense (357) (2,079) (3,934) (581)
Net income 9,458 5,935 9,355 1,379
Net income per share 0.20 0.13 0.20 0.03
Diluted net income per share 0.19 0.12 0.18 0.03
Net income per ADS(2)(3) 0.40 0.26 0.40 0.06
Diluted net income per ADS(2)(3) 0.38 0.24 0.36 0.05
Shares used in computing net income
per share:
Basic 47,158 47,388 47,919 47,919
Diluted 50,077 50,870 51,013 51,013
Share-based compensation charges
included in: 2,249 4,130 4,549 671
Cost of services 162 303 336 50
Service development 418 1,470 1,601 236
Sales and marketing 296 825 976 144
General and administrative 1,373 1,532 1,636 241
Six Months Ended
Jun. 30, Jun. 30, Jun. 30,
2009 2010 2010
RMB RMB USD(1)
(Unaudi- (Unaudi- (Unaudi-
ted) ted) ted)
Revenues:
Hotel reservations 115,498 154,773 22,823
Air ticketing 43,012 59,945 8,840
Other 10,889 19,226 2,834
Total revenues 169,399 233,944 34,497
Business tax and surcharges (9,650) (13,937) (2,055)
Net revenues 159,749 220,007 32,442
Cost of services (47,630) (65,013) (9,587)
Gross profit 112,119 154,994 22,855
Operating expenses:
Service development (26,225) (37,013) (5,458)
Sales and marketing (59,029) (72,146) (10,638)
General and administrative (23,571) (23,010) (3,393)
Amortization of intangible assets (314) (422) (62)
Total operating expenses (109,139) (132,591) (19,551)
Income from operations 2,980 22,403 3,304
Other income/(expenses):
Interest income 9,265 2,315 341
Foreign exchange losses (139) (4,162) (613)
Other -- 747 110
Total other income, net 9,126 (1,100) (162)
Income before income tax expense 12,106 21,303 3,142
Income tax expense (647) (6,013) (887)
Net income 11,459 15,290 2,255
Net income per share 0.24 0.32 0.05
Diluted net income per share 0.23 0.30 0.04
Net income per ADS(2)(3) 0.48 0.64 0.09
Diluted net income per ADS(2)(3) 0.46 0.60 0.09
Shares used in computing net income
per share:
Basic 47,119 47,655 47,655
Diluted 50,033 50,899 50,899
Share-based compensation charges
included in: 4,648 8,679 1,280
Cost of services 302 639 94
Service development 1,086 3,071 453
Sales and marketing 1,000 1,801 266
General and administrative 2,260 3,168 467
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=RMB6.7815 on June 30, 2010, USD1.00=RMB6.8258 on March 31,
2010 and USD1.00=RMB6.8302 on June 30, 2009 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 U.S. dollars 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
eLong, Inc.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
Dec. 31, Jun. 30, Jun. 30,
2009 2010 2010
RMB RMB USD
(Unaudited)(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 639,468 727,275 107,244
Short-term investments 313,467 135,818 20,028
Restricted cash 60,000 60,600 8,936
Accounts receivable, net 45,353 67,065 9,889
Due from related parties 321 1,777 262
Prepaid expenses 7,871 13,808 2,036
Other current assets 10,961 9,882 1,458
Total current assets 1,077,441 1,016,225 149,853
Property and equipment, net 44,005 40,253 5,936
Long-term investments -- 94,886 13,992
Goodwill 31,950 49,705 7,329
Intangible assets, net 750 4,972 733
Other non-current assets 29,804 29,830 4,398
Total assets 1,183,950 1,235,871 182,241
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 41,905 62,067 9,152
Income taxes payable 2,908 4,037 595
Due to related parties 1,099 755 111
Accrued expenses and other current
liabilities 92,694 92,385 13,624
Total current liabilities 138,606 159,244 23,482
Other liabilities 1,844 1,393 205
Total liabilities 140,450 160,637 23,687
Shareholders' equity
Ordinary shares 1,879 1,991 294
High-vote ordinary shares 2,363 2,363 348
Treasury stock (103,393) (103,393) (15,246)
Additional paid-in capital 1,326,985 1,343,317 198,085
Accumulated deficit (184,334) (169,044) (24,927)
Total shareholders' equity 1,043,500 1,075,234 158,554
Total liabilities and
shareholders' equity 1,183,950 1,235,871 182,241
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 net income per ADS, diluted net income per ADS and Operating Income Before Amortization ("OIBA"). We believe these non-GAAP financial measures are important to 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.
OIBA is defined as income from operations plus: (1) stock-based compensation charges; (2) acquisition-related impacts, including (i) amortization of intangible assets and impairment of goodwill and intangible assets, and (ii) gains or losses recognized on changes in the fair value of contingent consideration arrangements; and (3) certain items, including restructuring charges and charges related to property and equipment. We exclude the items listed above from OIBA because we believe doing so may provide investors greater insight into management decision making at eLong. We believe OIBA is useful to investors because it is one of the primary internal metrics by which management evaluates the performance of our business as a whole and our individual business segments, on which internal budgets are based, and by which management and employees, including our Chief Executive Officer, are compensated. We believe that investors should have access to the same set of tools that management uses to analyze our performance. In addition, we believe that by excluding certain items, such as stock-based compensation charges and acquisition-related impacts, OIBA corresponds more closely to the cash operating income generated from our business and allows investors to gain additional understanding of factors and trends affecting the ongoing cash earning capabilities of our business, from which capital investments are made. Although depreciation is also a non-cash expense, it is included in OIBA because it is driven directly by the capital expenditure decisions made by management. OIBA also has certain limitations in that it does not take into account the impact of certain expenses to our consolidated statements of operations. We seek to compensate for the limitation of the non-GAAP measure presented by also providing the comparable GAAP measure, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measure.
OIBA 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
Operating Income Before Amortization
(IN THOUSANDS)
2009
Q1 Q2 Q3 Q4
RMB RMB RMB RMB
OIBA (822) 8,763 8,811 7,077
Stock-based compensation charges (2,398) (2,249) (2,747) (3,845)
Amortization of intangible assets (157) (157) (157) (182)
Fair value changes of contingent
consideration -- -- -- 12
Restructuring charges -- -- -- (630)
Charges related to property and
equipment -- -- -- (72)
Income/(loss) from operations (3,377) 6,357 5,907 2,360
2010
Q1 Q2 Q2
RMB RMB USD
OIBA 10,319 20,769 3,063
Stock-based compensation charges (4,130) (4,549) (671)
Amortization of intangible assets (185) (237) (35)
Fair value changes of contingent
consideration 253 163 24
Restructuring charges -- -- --
Charges related to property and
equipment -- -- --
Income/(loss) from operations 6,257 16,146 --
eLong, Inc.
TRENDED OPERATIONAL METRICS
(IN THOUSANDS)
The metrics below are intended as a supplement to the financial statements
found in this press release and in our filings with the SEC. In the event
of discrepancies between amounts in these tables and our historical
financial statements, readers should rely on our filings with the SEC and
financial statements in our most recent press release.
We intend to periodically review and refine the definition, methodology
and appropriateness of each of our supplemental metrics. As a result,
metrics are subject to removal and/or change, and such changes could be
material.
2009
Q1 Q2 Q3 Q4
RMB RMB RMB RMB
OIBA (822) 8,763 8,811 7,077
Hotel Reservations
Room Nights 912 980 1,183 1,241
Room Night Y/Y Growth 4% 1% 13% 18%
Average Daily Rate Y/Y Growth (11%) (13%) (11%) (9%)
Commission/Room Night Y/Y Growth (6%) (7%) (7%) (9%)
Hotel Commissions Y/Y Growth (2%) (6%) 5% 7%
Air Ticketing
Air Segments 506 510 604 586
Air Segments Y/Y Growth 18% 24% 25% 26%
Average Ticket Value Y/Y Growth (8%) (3%) 13% 4%
Commission/Segment Y/Y Growth (8%) (4%) 2% 14%
Air Commissions Y/Y Growth 8% 19% 27% 44%
2010
Q1 Q2
RMB RMB
OIBA 10,319 20,769
Hotel Reservations
Room Nights 1,206 1,549
Room Night Y/Y Growth 32% 58%
Average Daily Rate Y/Y Growth (2%) 5%
Commission/Room Night Y/Y Growth (7%) (9%)
Hotel Commissions Y/Y Growth 23% 44%
Air Ticketing
Air Segments 653 591
Air Segments Y/Y Growth 29% 16%
Average Ticket Value Y/Y Growth 8% 25%
Commission/Segment Y/Y Growth 7% 21%
Air Commissions Y/Y Growth 38% 40%
SOURCE eLong, Inc.
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