eLong Reports Second Quarter 2015 Unaudited Financial Results

Quarterly room nights exceed 11 million for the first time in eLong's history

Aug 03, 2015, 18:00 ET from eLong, Inc.

BEIJING, Aug. 3, 2015 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading mobile and online travel service provider in China, today reported unaudited financial results for the second quarter ended June 30, 2015.

Highlights

  • Accommodation reservation[1] room nights stayed in the second quarter increased 36% to 11.4 million room nights compared to 8.3 million in the prior year period.
  • Gross revenue earned from accommodation reservation (Non-GAAP)[2] reached RMB363 million, increasing 10% in the second quarter of 2015 compared to the same period in 2014. Accommodation reservation revenue (GAAP) was RMB199 million, decreasing 22% year-on-year in the second quarter of 2015. Net commissions earned from accommodation reservation (Non-GAAP)[3] were RMB152 million, decreasing 40% year-on-year in the second quarter of 2015.

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

(IN THOUSANDS)

2014 Q2

2015 Q1

2015 Q2

RMB

RMB

RMB

(Unaudited)

(Unaudited)

(Unaudited)

Gross revenue earned from accommodation reservation (Non-GAAP)

328,741

360,874

363,044

Cash rebates from the coupon program in our agency accommodation business 

(74,676)

(123,670)

(140,676)

Portion of loss in our significantly-discounted merchant accommodation business

-

(46,953)

(23,471)

Accommodation reservation revenue (GAAP)

254,065

190,251

198,897

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

-

(72,401)

(46,598)

Net commissions earned from accommodation reservation (Non-GAAP)

254,065

117,850

152,299

  • Mobile bookings comprised more than 75% of eLong brand room nights[4] in the second quarter, and cumulative downloads of eLong mobile apps reached approximately 290 million.
  • Domestic hotel coverage network expanded 142% to over 290,000 domestic hotels as of June 30, 2015, compared to 120,000 as of June 30, 2014.
  • More than 50,000 properties have contracted to use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies.
  • On May 22, 2015, Expedia Asia Pacific-Alpha, Ltd., a wholly-owned subsidiary of Expedia, Inc., sold all of its interest in us to C-Travel International, Ltd. ("C-Travel"), a wholly-owned subsidiary of Ctrip.com International, Ltd. (Nasdaq: CTRP); Keystone Lodging Holdings Limited ("Keystone") and Plateno Group Limited ("Plateno"); and Luxuriant Holdings Limited ("Luxuriant") (the "Deal"). Upon the completion of the Deal, C-Travel held a 37.6% equity interest including a small interest purchased from our former chief executive officer; Keystone and Plateno, which is an indirect subsidiary of Keystone, together held a 22.2% equity interest; and Luxuriant held a 3.7% equity interest.

"We are facing fierce competition in China, but eLong is well positioned with a strong leadership team, significant customer base, and adequate cash balance. The eLong board of directors and management team will focus more on the mobile accommodation market place and invest more in mobile products, our technology team and promotion to achieve a solid room night growth rate with more balance between our revenues and spending," said Hao Jiang, Chief Executive Officer of eLong. "We believe the accommodation space is large enough for significant future growth for us and will drive eLong to be an accommodation-focused company."

Business Results

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



Q2 2015


%


Q2 2014


%


Y/Y

Total

Total

Growth

Accommodation reservation


198.9


85%


254.1


81%


(22%)

Transportation ticketing[5]


24.6


11%


35.1


11%


(30%)

Other


10.7


4%


23.2


8%


(54%)

Total revenues


234.2


100%


312.4


100%


(25%)

Net Revenues
Net revenues for the second quarter decreased 25% to RMB218.5 million (US$35.2 million), compared to RMB292.4 million (US$47.1 million) in the second quarter of 2014.

Accommodation Reservation
Accommodation reservation revenue decreased 22% in the second quarter of 2015 compared to the same period in 2014, primarily due to lower revenue per room night, partially offset by higher volume. Room nights stayed in the second quarter increased 36% year-on-year to 11.4 million, and revenue per room night decreased due to the growth of our aggressive coupon program, the significant direct 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 85% of total revenues, compared to 81% in the prior year quarter.

Transportation Ticketing
Transportation tickets increased to 1.6 million in the second quarter, representing an increase of 89% compared to the prior year period, primarily due to the growth of train tickets. Transportation ticketing revenue decreased 30% in the second 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 3% to 2% in July 2014, then to 1% in February 2015 and further to 0% in June 2015. Transportation ticketing revenue accounted for 11% of our total revenues, consistent with the prior year quarter.

Other
Other revenues are primarily derived from advertising business. Other revenue decreased by 54% year-on-year in the second 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 4% of total revenues in the second quarter from 8% in the prior year quarter.

Gross Margin
Gross margin in the second quarter of 2015 decreased to 39% from 76% in the prior year quarter.The decline in gross margin in the second 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 second quarter of 2015 as compared to the same period in 2014 were as follows (in RMB million):



Q2 2015


% of Net Revenue


Q2 2014


% of Net Revenue


Y/Y Growth

Service development


135.5


62%


62.4


21%


117%

Sales and marketing


165.1


76%


149.1


51%


11%

General and administrative


155.5


71%


36.6


13%


324%

Amortization of intangible assets


5.3


2%


1.5


-


261%

Total operating expenses


461.4


211%


249.6


85%


85%

Total operating expenses increased by 85% in the second quarter of 2015, compared to the prior year period. Operating expenses were 211% of net revenue in the second quarter of 2015, compared to 85% in the prior year quarter. Operating loss was RMB377.2 million in the second quarter of 2015, compared to operating income of RMB1.9 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 second quarter of 2015, service development expenses increased 117%, primarily due to increased headcount and higher share-based compensation charges from the accelerated vesting of restricted shares for certain employees. Service development expenses increased to 62% of net revenues in the second quarter of 2015, compared to 21% in the second quarter of 2014. Excluding share-based compensation charges, service development expenses accounted for 44% of the net revenues, an increase from 19% in the second quarter of 2014 (the exclusion of share-based compensation charges is a non-GAAP financial measure).

Sales and marketing expenses for the second quarter of 2015 increased 11% over the prior year quarter, driven by increased costs for new mobile customer acquisition and increased mobile and online marketing expenses, partially offset by an RMB88.8 million reduction in sales and marketing expenses, as Beijing Qunar Software Technology Co. Ltd. ("Qunar") compensated us that amount through a credit to our advertising account at Qunar following the Beijing Municipal High Court's issuance of a final judgment in our contract dispute with Qunar. Sales and marketing expenses increased to 76% of net revenues in the second quarter of 2015 from 51% in the second quarter of 2014.

General and administrative expenses for the second quarter of 2015 increased 324% compared to the prior year quarter, driven by higher share-based compensation charges from the accelerated vesting of restricted shares for our former chief executive officer in connection with the Deal and certain other employees. General and administrative expenses increased to 71% of net revenues in the second quarter of 2015 from 13% in the second quarter of 2014. Excluding share-based compensation charges, general and administrative expenses were 11% of net revenues, an increase from 5% in the second quarter of 2014 (the exclusion of share-based compensation charges is a non-GAAP financial measure). 

Other income was RMB20.0 million in the second quarter of 2015 compared to other income of RMB22.0 million in the second quarter of 2014.

Income tax expense for the second quarter of 2015 was RMB1.2 million, compared to income tax benefit of RMB6.2 million during the prior year quarter.

Net loss for the second quarter of 2015 was RMB356.4 million, compared to net income of RMB31.5 million during the prior year quarter.

Basic net loss per ADS and diluted net loss per ADS for the second quarter of 2015 were each RMB9.82 (US$1.58), compared to basic net income per ADS and diluted net income per ADS was RMB0.90 (US$0.14) and RMB0.88 (US$0.14) respectively in the prior year quarter.

As of June 30, 2015, eLong held cash and cash equivalents, short-term investments and restricted cash of RMB1.5 billion (US$246 million), of which 87% was held in Renminbi and 13% was held in US dollars.

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 its subsidiary Qunar) 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 second quarter 2015 unaudited financial results on August 4, 2015 at 10:00 am Beijing time (August 3, 2015, 10:00 pm EDT). 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 (m.eLong.com), 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); Keystone Lodging Holdings Limited and Plateno Group Limited together; 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)/INCOME







(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)



















Three Months Ended


Six Months Ended



Jun. 30,  
2014

Mar. 31,  
2015

Jun. 30,  
2015

Jun. 30,  
2015


Jun. 30,  
2014

Jun. 30,  
2015   

Jun. 30,  
2015    



RMB

RMB

RMB

USD(1)


RMB

RMB

USD(1)



(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)

(Unaudited)

Revenues:










Accommodation reservation*


254,065

190,251

198,897

32,081


458,905

389,148

62,766

Transportation ticketing**


35,122

25,078

24,636

3,973


70,623

49,713

8,018

Other


23,237

10,427

10,660

1,719


45,600

21,088

3,401

Total revenues


312,424

225,756

234,193

37,773


575,128

459,949

74,185

Business tax, VAT and surcharges


(20,063)

(13,833)

(15,661)

(2,526)


(36,644)

(29,494)

(4,757)

Net revenues


292,361

211,923

218,532

35,247


538,484

430,455

69,428

    Cost of services


(70,888)

(150,663)

(134,322)

(21,665)


(137,710)

(284,985)

(45,965)

Gross profit


221,473

61,260

84,210

13,582


400,774

145,470

23,463











Operating expenses:










Service development


(62,421)

(92,656)

(135,521)

(21,858)


(117,492)

(228,177)

(36,803)

Sales and marketing


(149,074)

(167,220)

(165,094)

(26,628)


(285,167)

(332,314)

(53,599)

General and administrative


(36,636)

(48,354)

(155,458)

(25,074)


(69,965)

(203,812)

(32,873)

Amortization of intangible assets


(1,467)

(5,339)

(5,299)

(855)


(3,202)

(10,638)

(1,716)

 Total operating expenses


(249,598)

(313,569)

(461,372)

(74,415)


(475,826)

(774,941)

(124,991)

Other operating income


30,000

-

-

-


30,000

-

-

(Loss)/income from operations


1,875

(252,309)

(377,162)

(60,833)


(45,052)

(629,471)

(101,528)











Other income:










Interest income


15,496

14,050

11,510

1,857


31,265

25,559

4,122

Government subsidy


8,776

1,339

9,425

1,520


11,595

10,763

1,736

Foreign exchange losses


(2,544)

(1,364)

(988)

(159)


(3,475)

(2,352)

(379)

Gain from disposition of subsidiary


-

71,762

-

-


-

71,718

11,567

Other


228

509

82

13


884

637

103

Total other income


21,956

86,296

20,029

3,231


40,269

106,325

17,149

(Loss)/income before income tax (expense)/benefit


23,831

(166,013)

(357,133)

(57,602)


(4,783)

(523,146)

(84,379)

Income tax (expense)/benefit


6,230

(16,882)

(1,210)

(195)


(1,472)

(18,092)

(2,918)

Share of net (loss)/income in non-consolidated affiliates

311

(598)

(1,697)

(274)


261

(2,295)

(370)

Net (loss)/income


30,371

(183,493)

(360,040)

(58,071)


(5,994)

(543,533)

(87,667)

Net loss attributable to noncontrolling interests


1,091

2,786

3,681

594


2,087

6,467

1,043

Net (loss)/income attributable to eLong, Inc.


31,462

(180,707)

(356,359)

(57,477)


(3,907)

(537,066)

(86,624)

Other comprehensive income


-

-

-

-


-

-

-

Total comprehensive (loss)/income


31,462

(180,707)

(356,359)

(57,477)


(3,907)

(537,066)

(86,624)











Basic net (loss)/income per share


0.45

(2.51)

(4.91)

(0.79)


(0.06)

(7.43)

(1.20)

Diluted net (loss)/income per share


0.44

(2.51)

(4.91)

(0.79)


(0.06)

(7.43)

(1.20)











Basic net (loss)/income per ADS(2)(3)


0.90

(5.02)

(9.82)

(1.58)


(0.12)

(14.86)

(2.40)

Diluted net (loss)/income per ADS(2)(3)


0.88

(5.02)

(9.82)

(1.58)


(0.12)

(14.86)

(2.40)











Shares used in computing net (loss)/income per share:










         Basic


70,657

71,967

72,606

72,606


70,572

72,289

72,289

         Diluted


71,392

71,967

72,606

72,606


70,572

72,289

72,289











Share-based compensation charges included in:


33,633

27,338

182,771

29,480


62,491

210,109

33,888

        Cost of services


896

138

6,342

1,023


1,732

6,481

1,045

        Service development


7,178

3,879

39,851

6,428


13,713

43,730

7,053

        Sales and marketing


3,976

(838)

5,547

895


7,307

4,709

759

        General and administrative


21,583

24,159

131,031

21,134


39,739

155,189

25,031

 

* Accommodation reservation revenue mainly represents 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 insurances, 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=RMB6.2000 on June 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)/income 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


Jun. 30, 2015


Jun. 30, 2015



RMB


RMB


USD



(Audited)


(Unaudited)


(Unaudited)

ASSETS







Current assets:







Cash and cash equivalents


504,890


488,189


78,740

Short-term investments


1,306,634


906,040


146,135

Restricted cash


123,937


131,605


21,227

Accounts receivable, net


295,632


396,118


63,890

Amounts due from related parties


52,021


20,487


3,304

Prepaid expenses


55,417


150,601


24,290

Deferred tax assets, current


304


-


-

Advance to suppliers


75,285


93,531


15,086

Other current assets


104,923


86,311


13,922

Total current assets


2,519,043


2,272,882


366,594

Property and equipment, net


112,356


113,795


18,354

Investment in non-consolidated affiliates


96,942


111,347


17,959

Goodwill


181,322


184,242


29,716

Intangible assets, net


84,749


75,892


12,241

Deferred tax assets, non-current


516


-


-

Other non-current assets


51,123


51,413


8,293

Total non-current assets


527,008


536,689


86,563

Total assets


3,046,051


2,809,571


453,157















LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Accounts payable


442,489


703,230


113,425

Income taxes payable


13


1,242


200

Amounts due to related parties


127,910


4,881


787

Deferred revenue


47,544


49,621


8,003

Advances and deposits from customers


121,934


91,779


14,803

eCoupon program virtual cash liability


135,648


164,856


26,590

Accrued expenses and other current liabilities


292,310


317,409


51,195

Total current liabilities


1,167,848


1,333,018


215,003

Deferred tax liabilities, non-current


21,187


21,187


3,417

Other liabilities


44


1,977


319

Total non-current liabilities


21,231


23,164


3,736

Total liabilities


1,189,079


1,356,182


218,739








Shareholders' equity







Ordinary shares


2,908


2,947


475

High-vote ordinary shares


2,691


2,691


434

Additional paid-in capital


2,397,868


2,543,986


410,320

Statutory reserves


3,665


3,593


580

Accumulated deficit


(626,810)


(1,167,967)


(188,382)

Total eLong, Inc. shareholders' equity


1,780,322


1,385,250


223,427

Noncontrolling interest


76,650


68,139


10,991

Total shareholders' equity


1,856,972


1,453,389


234,418

Total liabilities and shareholders' equity


3,046,051


2,809,571


453,157








 

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 on equity method investment 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 Q2


2015 Q1


2015 Q2


RMB


RMB


RMB


(Unaudited)


(Unaudited)


(Unaudited)







Net income/(loss) attributable to eLong, Inc.

31,462


(180,707)


(356,359)

Net loss attributable to noncontrolling interests

(1,091)


(2,786)


(3,681)

Interest income

(15,496)


(14,050)


(11,510)

Government subsidy

(8,776)


(1,339)


(9,425)

Income tax expense/(benefit) 

(6,230)


16,882


1,210

Depreciation

10,064


12,817


13,138

Amortization of intangible assets

1,467


5,339


5,299

Share-based compensation charges

33,633


27,338


182,771

Foreign exchange losses

2,544


1,364


988

Restructuring charges

-


-


3,556

Gain from disposition of subsidiary

-


(71,762)


-

Other

(539)


89


1,614

Adjusted EBITDA

47,038


(206,815)


(172,399)

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 direct 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 direct 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 are 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 Q2


2015 Q1


2015 Q2



RMB


RMB


RMB



(Unaudited)


(Unaudited)


(Unaudited)








Gross revenue earned from accommodation reservation (Non-GAAP)

328,741


360,874


363,044

Cash rebates from the coupon program in our agency accommodation business

(74,676)


(123,670)


(140,676)

Portion of loss in our significantly-discounted merchant accommodation business

-


(46,953)


(23,471)

Accommodation reservation revenue (GAAP)

254,065


190,251


198,897

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

-


(72,401)


(46,598)

Net commissions earned from accommodation reservation (Non-GAAP)

254,065


117,850


152,299







[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 direct 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.

[5] "Transportation ticketing" mainly represents the reservation of air tickets, train tickets, travel insurances, 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 insurances, and other transportation-related services in our consolidated statements of comprehensive (loss)/income, which we had done prior to 2015.

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SOURCE eLong, Inc.



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