eLong Reports Fourth Quarter and Fiscal Year 2006 Unaudited Financial Results

BEIJING, March 9 /Xinhua-PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a

leading online travel service provider in China, today reported unaudited

financial results for the fourth quarter and fiscal year ended December 31,

2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO )

Business Highlights

Highlights for the fourth quarter of 2006:

* Travel revenues increased 24% year-over-year and decreased 7%

sequentially to RMB67.1 million (US$8.6 million), and total revenues

grew 20% year-over-year and decreased 7% sequentially to RMB69.7 million

(US$8.9 million);

* Hotel commissions increased 23% year-over-year and decreased 2%

sequentially to RMB56.0 million (US$7.2 million);

* Air ticketing commissions increased 27% year-over-year and decreased 13%

sequentially to RMB9.6 million (US$1.2 million);

* The Company recorded operating loss of RMB1.3 million(US$165,000) for

the fourth quarter of 2006, which included non-cash related stock-based

compensation expense and amortization of intangibles of RMB3.5 million

(US$443,000), as compared to operating loss of RMB16.8 million

(US$2.1 million) in the same period one year ago and operating income of

RMB1.7 million (US$215,000) in the third quarter of 2006;

* The Company recorded net loss of RMB1.8 million (US$234,000) for the

fourth quarter of 2006, as compared to net loss of RMB8.7 million

(US$1.1 million) in the same period a year ago, and net income of RMB2.7

million (US$337,000) in the third quarter of 2006;

* The Company recorded adjusted income (a non-GAAP measure)of RMB13.5

million (US$1.7 million) for the fourth quarter of 2006, as compared to

adjusted loss of RMB1.9 million(US$237,000) in the same period a year

ago and adjusted income of RMB16.6 million (US$2.1 million) in the third

quarter of 2006; and

* As of December 31, 2006, the Company's cash and cash equivalents balance

was RMB1,199.3 million (US$153.7 million).

Highlights for fiscal 2006:

* Travel revenues increased 43% year-over-year to RMB256.0 million

(US$32.8 million), and total revenues increased 39% year-over-year to

RMB264.5 million (US$33.9 million);

* Hotel commissions increased 38% year-over-year to RMB209.3 million

(US$26.8 million);

* Air ticketing commissions increased 61% year-over-year to RMB38.3

million (US$4.9 million);

* The Company recorded operating loss of RMB16.2 million (US$2.1 million)

for fiscal 2006, which included non-cash related stock-based

compensation expense and amortization of intangibles of RMB13.1 million

(US$1.7 million), as compared to operating loss of RMB47.9 million

(US$5.9 million) in fiscal 2005;

* The Company recorded net loss of RMB1.1 million (US$142,000) for fiscal

2006, as compared to net loss of RMB62.2 million (US$7.7 million) in

fiscal 2005; and

* The Company recorded adjusted income (a non-GAAP measure)of

RMB42.1 million (US$5.4 million) for fiscal 2006, as compared to

adjusted loss of RMB82,000 (US$11,000) in fiscal 2005.

"While we faced a challenging fourth quarter, we are pleased with the

improvements we have made to our infrastructure during the period. With the

December launch of our new air search system complementing our innovative 360-

degree virtual hotel tours, we believe we lead the industry in leveraging

technology to provide Chinese travelers with enhanced selection and features.

We made significant operational and financial progress in 2006, achieving 39%

growth in total revenues with only a 10% increase in total operating expenses.

Service development increased only 15% while we made demonstrable web

improvements to homepage, hotel and community content, and to the domestic and

international air booking platform. We are confident that eLong is

fundamentally stronger than ever and well-positioned to capture the growth

potential in the online travel market," said Tom SooHoo, Chief Executive

Officer of eLong.

Separately eLong also announced today the election of Henrik Kjellberg as

Chairman of the board of directors and the appointment of Chris Chan as Chief

Financial Officer.

Business Results

Total revenues for the fourth quarter of 2006 were RMB69.7 million

(US$8.9 million), an increase of 20% from RMB57.9 million (US$7.2 million)

reported in the same period in 2005, and a decrease of 7% from RMB74.6 million

(US$9.4 million) reported in the third quarter of 2006.

Total revenues for fiscal 2006 were RMB264.5 million (US$33.9 million), an

increase of 39% from RMB190.3 million (US$23.6 million) in fiscal 2005.

Revenue from hotel commissions for the fourth quarter of 2006 totaled

RMB56.0 million (US$7.2 million), an increase of 23% from RMB45.6 million

(US$5.6 million) year-over-year, and a decrease of 2% from RMB57.4 million

(US$7.3 million) sequentially.

The year-over-year increase in revenue from hotel commissions was

primarily due to higher room volumes accompanied by higher hotel commissions

per room night. Hotel room nights booked through eLong increased 19% to

860,000 in the fourth quarter from 724,000 room nights in the corresponding

period a year ago and were down 4% sequentially from 893,000 in the third

quarter of 2006. The sequential decrease in revenue from hotel commissions was

due to lower room volumes. Hotel commissions per room night were RMB65 in the

fourth quarter of 2006, up 3% from RMB63 in the corresponding period a year

ago, and up 2% from RMB64 in the third quarter. Hotel commissions increased

due to better override as a result of higher room volume.

Revenue from hotel commissions for fiscal 2006 totaled RMB209.3 million

(US$26.8 million), an increase of 38% from RMB152.0 million (US$18.8 million)

in fiscal 2005. The total number of hotel room nights booked through eLong in

fiscal 2006 was 3.25 million compared to 2.54 million in fiscal 2005, an

increase of 28%. Hotel commissions per room night were RMB64 in 2006, up 7%

from RMB60 in fiscal 2005 mainly due to higher commissions associated with

increased volume.

As of December 31, 2006, eLong offered discounted rates at a choice of

3,505 hotels in 294 cities across China as compared to slightly fewer than

3,100 hotels in 278 cities a year ago.

Revenue from air ticketing commissions during the fourth quarter of 2006

totaled RMB9.6 million (US$1.2 million), an increase of 27% from RMB7.6

million (US$936,000) year-over-year, and a decrease of 13% from RMB11.0

million (US$1.4 million) sequentially. Volume in air segment sales totaled

269,000 in the fourth quarter of 2006, an increase of 25% from 215,000 in the

corresponding period a year ago and a decrease of 1% from 273,000 in the third

quarter. Revenue per air ticket was RMB36 in the fourth quarter of 2006 as

compared to RMB35 in the corresponding period a year ago and RMB41 in the

third quarter. The sequential decrease of revenue per air ticket was primarily

due to a decrease in the average air ticket price.

Revenues from air ticketing commissions for fiscal 2006 totaled RMB38.3

million (US$4.9 million), an increase of 61% from RMB23.8 million

(US$2.9 million) in fiscal 2005. Air segment sales were 1.01 million in fiscal

2006, an increase of 55% from 651,000 air segments sold in fiscal 2005. Year-

over-year growth in air ticketing revenues was primarily driven by the

acquisition of new air customers, increased sales of air tickets to eLong's

existing hotel customer base and better product offerings.

Other travel revenue in the fourth quarter of 2006 was RMB1.5 million

(US$186,000), an increase of 79% from RMB813,000 (US$101,000) year-over-year,

and a decrease of 62% from RMB3.9 million(US$488,000) sequentially. The

sequential decrease was attributable to RMB2.6 million (US$325,000) in revenue

recorded when the related contract was finalized in the third quarter of 2006

for inventory procurement services provided to Expedia by eLong for the period

from January 2005 through September 2006.

Other travel revenue for fiscal 2006 was RMB8.4 million (US$1.1 million)

as compared to RMB2.7 million (US$334,000) in fiscal 2005. The year-over-year

increase was mainly due to the increased revenues of vacation packages and as

well as services provided to Expedia as explained above.

Gross margin in the fourth quarter of 2006 was 76%, as compared to 80% in

the corresponding period a year ago and 77% in the third quarter. The year-

over-year reduction in gross margin was a result of reduction in higher-margin

non-travel revenue, additional compensation and benefits for call center

employees and a slightly increased proportion of revenue contributed by the

air ticketing business.

Gross margin in fiscal 2006 was 76% as compared to 79% in fiscal 2005. The

year-over-year reduction in gross margin was due to reasons similar to those

explained above.

Service development, sales and marketing and general and administrative

expenses for the fourth quarter of 2006 totaled RMB49.7 million

(US$6.4 million), a decrease of 17% from RMB59.7 million (US$7.4 million)

year-over-year, and a decrease of 3% from RMB51.4 million (US$6.5 million)

sequentially. These expenses for fiscal 2006 were RMB202.4 million

(US$25.9 million), an increase of 8% from RMB186.7 million (US$23.1 million)

in fiscal 2005.

Service development expenses were RMB10.6 million (US$1.4 million) in the

fourth quarter of 2006, a decrease of 14% from RMB12.4 million

(US$1.5 million) year-over-year, and a decrease of 1% from RMB10.7 million

(US$1.4 million) sequentially. The year-over-year decrease reflected

improvements in operational efficiencies. Service development expenses in the

fourth quarter of 2006 were 15% of revenues as compared to 21% in the

corresponding period a year ago and 14% in the third quarter.

Service development expenses for fiscal 2006 were RMB41.9 million

(US$5.4 million), an increase of 15% from RMB36.3 million (US$4.5 million) in

fiscal 2005 due to ramped-up investments to support the eLong.com website and

the Company's air, hotel and vacation package businesses. Service development

expenses for fiscal 2006 were 16% of revenues as compared to 19% in fiscal

2005.

Sales and marketing expenses were RMB26.6 million (US$3.4 million) in the

fourth quarter of 2006,a decrease of 8% from RMB28.8 million (US$3.6 million)

year-over-year, and an increase of 5% from RMB25.3 million (US$3.2 million) in

the third quarter. Sales and marketing expenses in the fourth quarter of 2006

were 38% of revenues as compared to 50% in the corresponding period a year ago

and 34% in the third quarter.

Sales and marketing expenses for fiscal 2006 were RMB99.0 million

(US$12.7 million),an increase of 6% from RMB93.2 million (US$11.5 million) in

fiscal 2005. Sales and marketing expenses for fiscal 2006 were 37% of revenues

as compared to 49% in fiscal 2005.

General and administrative expenses were RMB12.6 million (US$1.6 million)

in the fourth quarter of 2006,a decrease of 32% from RMB18.6 million

(US$2.3 million) year-over-year, and a decrease of 18% from RMB15.4 million

(US$1.9 million) sequentially. The year-over-year and sequential decreases

were due to lower professional fees in the fourth quarter. General and

administrative expenses in the fourth quarter of 2006 were 18% of revenues as

compared to 32% in the corresponding period a year ago and 21% in the third

quarter.

General and administrative expenses for fiscal 2006 were RMB61.5 million

(US$7.9 million), an increase of 8% from RMB57.2 million (US$7.1 million) in

fiscal 2005. The rise was due to additional professional fees, headcount

expenses and other expenditures associated with business expansion and public

company expenses. General and administrative expenses for fiscal 2006 were 23%

of revenues as compared to 30% in fiscal 2005.

Operating loss in the fourth quarter of 2006 was RMB1.3 million

(US$165,000), as compared to an operating loss of RMB16.8 million

(US$2.1 million) in the corresponding period of 2005 and an operating income

of RMB1.7 million (US$215,000) in the third quarter. The fourth quarter

operating loss included non-cash related stock-based compensation expense and

amortization of intangibles of RMB3.5 million (US$443,000), and the comparable

non-cash related stock-based compensation expense and amortization amount was

RMB3.8 million (US$472,000) for the corresponding period of 2005 and RMB2.6

million (US$330,000) for the third quarter of 2006.

Operating loss for fiscal 2006 was RMB16.2 million (US$2.1 million), as

compared to an operating loss of RMB47.9 million (US$5.9 million) in fiscal

2005.

Other income, which represents interest income, unrealized exchange

gains/losses and other income/expenses, was RMB2.3 million (US$293,000) for

the fourth quarter of 2006, as compared to other income of RMB6.5 million

(US$805,000) in the corresponding period a year ago, and other income of

RMB3.4 million (US$424,000) in the third quarter of 2006. The sequential

decrease in other income was primarily due to a higher unrealized foreign

exchange loss on the translation for financial reporting purposes of eLong's

US dollar denominated cash deposits and interest income into Renminbi. The

unrealized foreign exchange loss was RMB11.9 million (US$1.5 million) in the

fourth quarter as compared to an unrealized exchange loss of RMB11.4 million

(US$1.4 million) in the third quarter.

Other income for fiscal 2006 was RMB18.4 million (US$2.4 million) as

compared to other income of RMB4.5 million (US$563,000) in fiscal 2005 due to

higher interest income generated from higher cash balance and higher interest

rate, partially offset by higher unrealized foreign exchange losses.

The Company recorded a net loss of RMB1.8 million (US$234,000) for the

fourth quarter of 2006, as compared to a net loss of RMB8.7 million

(US$1.1 million) in the corresponding period a year ago, and a net income of

RMB2.7 million (US$337,000) in the third quarter. The US GAAP diluted loss per

ADS for the fourth quarter of 2006 was RMB0.08 (US$0.011), as compared to US

GAAP diluted loss per ADS of RMB0.34 (US$0.042) in the corresponding period a

year ago and US GAAP diluted income per ADS of RMB0.10 (US$0.013) in the third

quarter. Adjusted income for the fourth quarter of 2006 (a non-GAAP measure)

was RMB13.5 million (US$1.7 million), as compared to adjusted loss of RMB1.9

million (US$237,000) in the corresponding period a year ago and adjusted

income of RMB16.6 million (US$2.1 million) in the third quarter. Diluted

adjusted income per ADS for the fourth quarter (also a non-GAAP measure) was

RMB0.50 (US$0.064), as compared to diluted adjusted loss per ADS of RMB0.08

(US$0.010) in the corresponding period a year ago and diluted adjusted income

per ADS of RMB0.62 (US$0.078) in the third quarter. Please refer to the

attached table for a reconciliation of net income/loss and basic and diluted

income/loss per ADS under US GAAP to adjusted income/loss and basic and

diluted adjusted income/loss per ADS.

The Company recorded a net loss of RMB1.1 million (US$142,000) for fiscal

2006, as compared to a net loss of RMB62.2 million (US$7.7 million) in fiscal

2005. The US GAAP diluted loss per ADS for fiscal 2006 was RMB0.06 (US$0.008),

as compared to US GAAP diluted loss per ADS of RMB2.5 (US$0.310) in fiscal

2005. Adjusted income for fiscal 2006 (a non-GAAP measure) was RMB42.1 million

(US$5.4 million), as compared to adjusted loss of RMB82,000 (US$11,000) in

fiscal 2005. Diluted adjusted income per ADS for fiscal 2006 (also a non-GAAP

measure) was RMB1.56 (US$0.200), compared to diluted adjusted loss per ADS of

RMB0.00 (US$0.000) in fiscal 2005. Please refer to the attached table for a

reconciliation of net income/loss and income/loss per ADS under US GAAP to

adjusted income/loss and basic and diluted adjusted income/loss per ADS.

As of December 31, 2006, the Company's cash and cash equivalents balance

was RMB1,199.3 million (US$153.7 million).

"We are pleased with the year-over-year improvement in operating leverage.

Building on the solid progress eLong has made in the past year, in 2007 we

will continue to focus on our execution and investment in the business for

long-term sustained profitability," said Tony Shen, interim Chief Financial

Officer of eLong.

Business Outlook

eLong expects total revenues for the first quarter of 2007 within the

range of RMB62.0 million (US$8.0 million) to RMB66.0 million (US$8.5 million),

an increase of 16% to 23% from the first quarter of 2006.

Note to the Unaudited Interim Consolidated Financial Statements

The unaudited financial information disclosed above is preliminary. The

audit of the financial statements and related notes to be included in our

annual report on Form 20-F for the year ended December 31, 2006, is still in

progress.

Adjustments to the financial statements may be identified when the audit

work is completed, which could result in significant differences between our

audited financial statements and this preliminary unaudited financial

information.

In the fourth quarter, The Company recognized net proceeds of RMB94.2

million (US$12.1 million) in equity, which was related to a sale of a division

operating an interactive online dating community to a related party purchaser.

The transaction was disclosed in the third quarter earnings release.

As of December 31, 2006, the Company's additional paid-in capital was

RMB1,301.3 million (US$166.7 million), the increase of which was mainly due to

proceeds received as explained above.

Certain 2005 compensation amounts have been reclassified to conform to the

current year's presentation.

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

historical operating losses, its limited operating history, declines or

disruptions in the travel industry, the recurrence of SARS, an outbreak of

bird flu, 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 timely comply 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, subsequent

revaluations of the Chinese currency, changes in eLong's management team and

other key personnel and other risks outlined in eLong's filings with the U.S.

Securities and Exchange Commission(or SEC), including eLong's Form 20-F filed

with the SEC in connection with the Company's fiscal year 2005 results.

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 fourth quarter and fiscal

2006 earnings at 8:00 pm Eastern Time, March 8, 2007(Beijing/Hong Kong time:

March 9, 2007 at 9:00 am). The management team will be on the call to discuss

quarterly results and highlights 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 +85222584000. The toll number for international participants

is +1 210 795 0492. The passcode for all participants is "eLong".

A replay of the call will be available for 1 day between 9:15 pm Eastern

Time on March 8, 2007 and 9:15 pm Eastern Time on March 9, 2007. The toll-free

number for U.S. callers is +1 8884852361. The dial-in number for international

callers is +1 203 369 4583. The passcode for the replay is 789530.

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://ir.elong.net

for three months.

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 choices by providing a one-stop travel solution and

consolidated travel tools and information such as maps, virtual tours and user

ratings. eLong has the capacity to fulfill air ticket reservations in over 57

major cities across China. In addition to choice of a wide hotel selection in

the Greater China region, eLong offers Chinese consumers the ability to make

bookings at international hotels in over 140 destinations worldwide. eLong

operates the websites http://www.elong.com and http://www.elong.net.

Investor Contact:

Raymond Huang

eLong, Inc.

Investor Relations Manager

ir@corp.elong.com

86-10-5860-2288 ext. 6633

eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

IN LOCAL CURRENCY

Three Months Ended Year Ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,

2006 2006 2005 2006 2005

RMB RMB RMB RMB RMB

Revenues

Hotel commissions 56,026 57,412 45,580 209,275 151,990

Air ticketing commissions 9,593 11,045 7,551 38,288 23,773

Other travel revenue 1,452 3,860 813 8,398 2,696

Total travel revenue 67,071 72,317 53,944 255,961 178,459

Non travel 2,647 2,263 3,991 8,583 11,870

Total revenues 69,718 74,580 57,935 264,544 190,329

Cost of services 16,651 17,124 11,439 62,234 40,447

Gross profit 53,067 57,456 46,496 202,310 149,882

Operating expenses

Service development 10,569 10,718 12,359 41,855 36,298

Sales and marketing 26,555 25,331 28,781 99,038 93,185

General and administrative 12,611 15,376 18,601 61,528 57,212

Amortization of intangibles 265 265 189 1,060 634

Business tax and surcharges 4,347 4,064 3,325 15,067 10,488

Total operating expenses 54,347 55,754 63,255 218,548 197,817

Income/(loss) from operations (1,280) 1,702 (16,759) (16,238) (47,935)

Other income 2,289 3,353 6,499 18,403 4,547

Income/(loss) before income

tax expense 1,009 5,055 (10,260) 2,165 (43,388)

Income tax expense 1,490 2,199 948 4,475 1,603

Income/(loss) from continuing

operations (481) 2,856 (11,208) (2,310) (44,991)

Discontinued operations

Income/(loss) from

discontinued operations (1,332) (204) 2,770 (1,423) (16,952)

Income tax expense/(benefit)

of discontinued operations (2) (15) 227 24 281

Gain on sale of discontinued

operations - - - 2,650 -

Total discontinued operations (1,330) (189) 2,543 1,203 (17,233)

Net income/(loss) (1,811) 2,667 (8,665) (1,107) (62,223)

Basic income/(loss) per share - -

Continuing operations (0.01) 0.06 (0.22) (0.05) (0.91)

Discontinued operations (0.03) 0.00 0.05 0.02 (0.35)

Basic income/(loss) per share (0.04) 0.06 (0.17) (0.03) (1.25)

Diluted income/(loss) per

share

Continuing operations (0.01) 0.05 (0.22) (0.05) (0.91)

Discontinued operations (0.03) 0.00 0.05 0.02 (0.35)

Diluted income/(loss) per

share (0.04) 0.05 (0.17) (0.03) (1.25)

Basic income/(loss) per ADS

Continuing operations (0.02) 0.12 (0.45) (0.10) (1.81)

Discontinued operations (0.06) 0.00 0.10 0.04 (0.68)

Basic income/(loss) per ADS (0.08) 0.12 (0.34) (0.06) (2.50)

Diluted income/(loss) per ADS

Continuing operations (0.02) 0.10 (0.45) (0.10) (1.81)

Discontinued operations (0.06) 0.00 0.10 0.04 (0.68)

Diluted income/(loss) per ADS (0.08) 0.10 (0.34) (0.06) (2.50)

Shares used in computing basic

net income/(loss) per share 50,464 50,374 50,311 50,392 49,638

Shares used in computing

diluted net income/(loss) per

share 50,464 53,878 50,311 50,392 49,638

Note that 1ADS = 2 shares

eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

IN U.S. DOLLARS

Three Months Ended Year Ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,

2006 2006 2005 2006 2005

US$ US$ US$ US$ US$

Revenues

Hotel commissions 7,179 7,264 5,648 26,816 18,833

Air ticketing

commissions 1,229 1,397 936 4,906 2,946

Other travel revenue 186 488 101 1,076 334

Total travel revenue 8,594 9,149 6,684 32,798 22,113

Non travel 339 286 495 1,100 1,471

Total revenues 8,933 9,435 7,179 33,898 23,584

Cost of services 2,134 2,166 1,417 7,975 5,012

Gross profit 6,799 7,269 5,761 25,923 18,572

Operating expenses

Service development 1,354 1,356 1,531 5,363 4,498

Sales and marketing 3,403 3,205 3,566 12,691 11,547

General and

administrative 1,616 1,945 2,305 7,884 7,089

Amortization of

intangibles 34 34 23 136 79

Business tax and

surcharges 557 514 412 1,931 1,300

Total operating expenses 6,964 7,054 7,838 28,005 24,512

Income/(loss) from

operations (165) 215 (2,077) (2,082) (5,940)

Other income 293 424 805 2,358 563

Income/(loss) before

income tax expense 128 639 (1,271) 276 (5,376)

Income tax expense 191 278 117 573 199

Income/(loss) from

continuing operations (63) 361 (1,389) (297) (5,575)

Discontinued operations

Income/(loss) from

discontinued operations (171) (26) 343 (182) (2,101)

Income tax

expense/(benefit) of

discontinued operations - (2) 28 3 35

Gain on sale of

discontinued operations - - - 340 -

Total discontinued

operations (171) (24) 315 155 (2,135)

Net income/(loss) (234) 337 (1,074) (142) (7,710)

Basic income/(loss) per

share

Continuing operations (0.001) 0.008 (0.028) (0.006) (0.112)

Discontinued operations (0.004) 0.000 0.006 0.003 (0.043)

Basic income/(loss) per

share (0.005) 0.008 (0.021) (0.003) (0.155)

Diluted income/(loss)

per share

Continuing operations (0.001) 0.006 (0.028) (0.006) (0.112)

Discontinued operations (0.004) 0.000 0.006 0.003 (0.043)

Diluted income/(loss)

per share (0.005) 0.006 (0.021) (0.003) (0.155)

Basic income/(loss) per

ADS

Continuing operations (0.003) 0.015 (0.055) (0.013) (0.225)

Discontinued operations (0.008) 0.000 0.013 0.005 (0.085)

Basic income/(loss) per

ADS (0.011) 0.015 (0.042) (0.008) (0.310)

Diluted income/(loss)

per ADS

Continuing operations (0.003) 0.013 (0.055) (0.013) (0.225)

Discontinued operations (0.008) 0.000 0.013 0.005 (0.085)

Diluted income/(loss)

per ADS (0.011) 0.013 (0.042) (0.008) (0.310)

Shares used in computing

basic net income/(loss)

per share 50,464 50,374 50,311 50,392 49,638

Shares used in computing

diluted net

income/(loss) per share 50,464 53,878 50,311 50,392 49,638

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 =

RMB7.8041 on December 31,2006, USD1.00 = RMB7.904 on September 30, 2006

and USD1.00 = RMB8.0702 on December 31, 2005 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 on the reporting dates.

eLong, Inc.

CONSOLIDATED SUMMARY BALANCE SHEET DATA

(UNAUDITED, IN THOUSANDS)

Dec. 31, Dec. 31, Dec. 31, Dec. 31,

2006 2005 2006 2005

ASSETS RMB RMB US$ US$

Current assets

Cash and cash equivalents 1,199,323 988,560 153,679 122,495

Restricted cash equivalents - 76,177 - 9,439

Total Accounts receivable, net 28,493 34,655 3,651 4,294

Investment securities 163 260 21 32

Prepaid expenses and other current

assets 12,772 9,982 1,636 1,237

Total current assets 1,240,751 1,109,634 158,987 137,498

Equipment and software, net 37,809 33,306 4,845 4,127

Goodwill 30,000 34,083 3,844 4,223

Intangibles 3,746 4,806 480 596

Other non-current assets 22,029 6,508 2,823 806

Deferred tax assets 982 84 126 10

Total assets 1,335,317 1,188,421 171,105 147,260

LIABILITIES AND SHAREHOLDERS'

EQUITY

Current liabilities

Accounts payable, accrued expenses

and other payables 112,328 88,013 14,394 10,906

Advances from customers 1,361 736 174 91

Short term loans - 6,000 - 743

Taxes payable 20,735 3,004 2,657 372

Total current liabilities 134,424 97,753 17,225 12,112

Other long term liabilities 980 - 126 -

Deferred Tax Liabilities 132 132 17 16

Total liabilities 135,536 97,885 17,368 12,128

Minority interest - 1,628 - 202

Shareholders' equity

Ordinary shares 4,192 4,167 537 516

Additional paid-in capital 1,301,312 1,216,879 166,747 150,787

Other equity items 2,398 (26,441) 307 (3,276)

Accumulated deficit and other

comprehensive income (108,121) (105,697) (13,854) (13,097)

Total shareholders' equity 1,199,781 1,088,908 153,737 134,930

Total liabilities and

shareholders' equity 1,335,317 1,188,421 171,105 147,260

eLong, Inc.

RECONCILIATION OF US GAAP INCOME/(LOSS) AND EPS TO NON-GAAP ADJUSTED

INCOME/(LOSS) AND EPS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

IN LOCAL CURRENCY

Three Months Ended Year Ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,

2006 2006 2005 2006 2005

RMB RMB RMB RMB RMB

Net income/(loss) (1,811) 2,667 (8,665) (1,107) (62,223)

Amortization of non-cash stock-

based compensation 3,194 2,341 3,626 12,006 16,507

Amortization of intangibles 265 265 189 1,060 1,190

Other non-cash compensation - - 505 - 1,011

Unrealised foreign exchange

losses on US$ net monetary

assets/liabilities 11,899 11,357 2,439 32,803 25,888

Writedown of subsidiary's

goodwill and intangibles - - - - 17,545

Gain on disposal of discontinued

operations - - - (2,650) -

Adjusted income/(loss) 13,547 16,630 (1,906) 42,112 (82)

Basic adjusted income/(loss) per

share 0.27 0.33 (0.04) 0.84 0.00

Diluted adjusted income/(loss)

per share 0.25 0.31 (0.04) 0.78 0.00

Basic adjusted income/(loss) per

ADS 0.54 0.66 (0.08) 1.68 0.00

Diluted adjusted income/(loss)

per ADS 0.50 0.62 (0.08) 1.56 0.00

Shares used in computing adjusted

basic income/(loss) per share 50,464 50,374 50,311 50,392 49,638

Shares used in computing adjusted

diluted income/(loss) per share 53,860 53,878 50,311 53,749 49,638

eLong, Inc.

RECONCILIATION OF US GAAP INCOME/(LOSS) AND EPS TO NON-GAAP ADJUSTED

INCOME/(LOSS) AND EPS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

IN U.S. DOLLARS

Three Months Ended Year Ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,

2006 2006 2005 2006 2005

US$ US$ US$ US$ US$

Net income/(loss) (234) 337 (1,074) (142) (7,710)

Amortization of non-cash stock-

based compensation 409 296 449 1,538 2,045

Amortization of intangibles 34 34 23 136 147

Other non-cash compensation - - 63 - 125

Unrealised foreign exchange losses

on US$ net monetary

assets/liabilities 1,525 1,437 302 4,203 3,208

Writedown of subsidiary's goodwill

and intangibles - - - - 2,174

Gain on disposal of discontinued

operations - - - (340) -

Adjusted income/(income) 1,734 2,104 (237) 5,395 (11)

Basic adjusted income/(loss) per

share 0.034 0.042 (0.005) 0.107 (0.000)

Diluted adjusted income/(loss) per

share 0.032 0.039 (0.005) 0.100 (0.000)

Basic adjusted income/(loss) per

ADS 0.068 0.084 (0.009) 0.214 (0.000)

Diluted adjusted income/(loss) per

ADS 0.064 0.078 (0.010) 0.200 (0.000)

Shares used in computing adjusted

basic income/(loss) per share 50,464 50,374 50,311 50,392 49,638

Shares used in computing adjusted

diluted income/(loss) per share 53,860 53,878 50,311 53,749 49,638

Use of Non-GAAP Financial Information

To supplement our consolidated financial statements presented herein in

accordance with accounting principles generally accepted in the United

States ("US GAAP"), the Company also uses non-GAAP measures of adjusted

net income/(loss) and adjusted diluted income/(loss) per ADS, which are

adjusted from results based on US GAAP to exclude the impact of (1)

amortization of non-cash stock-based compensation expense, (2)

amortization of intangible assets, (3) other non-cash compensation, (4)

unrealised foreign exchange losses on the conversion of eLong's US$

denominated net monetary assets/liabilities into Renminbi,(5)writedown of

subsidiary good will and in tangibles, and (6)gain on disposal of

discontinued operations. Management believes these non-GAAP financial

measures enhance the user's overall understanding of our current financial

performance and our prospects for the future and, additionally, uses these

non-GAAP financial measures internally for the general purpose of

analyzing and managing the Company's business. Specifically, we believe

the non-GAAP financial measures provide useful information to both

management and investors by excluding certain charges that we believe are

not indicative of our core operating results. The presentation of this

additional information is not meant to be considered superior to, in

isolation from or as a substitute for results prepared in accordance with

US GAAP.