omniture

Ctrip Reports Second Quarter 2007 Financial Results

Ctrip.com International, Ltd.
2007-08-07 10:20 1217

SHANGHAI, China, Aug. 6 /Xinhua-PRNewswire-FirstCall/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, today announced its unaudited financial results for the quarter ended June 30, 2007.

Effective on July 31, 2007, the ratio of Ctrip's ADSs to ordinary shares was changed from one ADS representing one ordinary share to two ADSs representing one ordinary share, retroactive to all previous periods. This ratio change had the same effect as a two for one ADS split. The information in this press release reflects this ratio change for all the periods presented.

Highlights for the second quarter of 2007

-- Net revenues were RMB288 million (US$38 million) in the second quarter

of 2007, up 52% year-on-year.

-- Gross margin was 80% in the second quarter of 2007, compared to 81% in

the same period in 2006 largely due to higher cost of service as a

result of increased revenue contribution from air ticketing and

packaged tour businesses.

-- Income from operations was RMB95 million (US$13 million) in the

second quarter of 2007. Excluding share-based compensation charges

(non-GAAP), income from operations was RMB118 million (US$16

million), up 49% year-on-year.

-- Operating margin was 33% in the second quarter of 2007. Excluding

share-based compensation charges (non-GAAP), operating margin was

41%, compared to 42% during the same period in 2006.

-- Net income was RMB88 million (US$12 million) in the second quarter of

2007. Excluding share-based compensation charges (non-GAAP), net

income was RMB111 million (US$15 million), up 51% year-on-year.

-- Diluted earnings per ADS were RMB1.30 (US$0.17). Excluding share-

based compensation charges (non-GAAP), diluted earnings per ADS were

RMB1.64 (US$0.22).

-- Share-based compensation charges were RMB23 million (US$3 million),

accounting for 8% of the net revenues, or RMB0.34 (US$0.04) per ADS

for the second quarter of 2007.

"The robust growth of our core businesses contributed to the strong financial results in the second quarter of 2007," said Min Fan, Chief Executive Officer of Ctrip. "We continued to enrich our service offerings, expand our coverage geographically and focus on delivering superior customer experience. All these efforts have enabled us to acquire a larger customer base and increase market share."

Financial results for the second quarter of 2007

For the second quarter of 2007, Ctrip reported total revenues of RMB309 million (US$41million), representing a 53% increase from the same period in 2006 and a 24% increase from the previous quarter.

Hotel reservation revenues totaled RMB171 million (US$23 million) for the second quarter of 2007, representing a 45% increase from the same period in 2006 and a 28% increase from the previous quarter primarily due to increased volume in hotel bookings.

The total number of hotel room nights booked was approximately 2.41 million in the second quarter of 2007, compared to approximately 1.70 million for the same period in 2006 and approximately 1.92 million room nights in the previous quarter.

Air ticket booking revenues for the second quarter of 2007 were RMB117 million (US$15 million), representing a 67% increase from the same period in 2006, primarily due to strong growth of air tickets sales volume. Air ticket booking revenues for the second quarter of 2007 increased 24% from the previous quarter, primarily due to the growth of air tickets sales volume and increased commission per ticket sold.

The total number of air tickets sold in the second quarter of 2007 was approximately 2.55 million, compared to approximately 1.49 million for the same period in 2006 and approximately 2.22 million in the previous quarter.

Packaged-tour revenues for the second quarter of 2007 were RMB13 million (US$2 million), up 49% from the same period in 2006 and decreased by 20% from the previous quarter due to seasonality.

For the second quarter of 2007, net revenues were RMB288 million (US$38 million), a 52% increase from the same period in 2006. Net revenues increased by 24% from the previous quarter.

The gross margin was 80% in the second quarter of 2007, compared to 81% for the same period in 2006 and 79% in the previous quarter. The change in gross margin was largely related to the revenue mix among hotel reservations, air ticketing and packaged tour businesses.

Product development expenses for the second quarter of 2007 increased by 69% to RMB42 million (US$5 million) from the same period in 2006 and increased by 22% compared to the previous quarter, primarily due to the increase of product development personnel resources. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 12% of the net revenues, compared to 11% in the same period last year and 13% in the previous quarter.

Sales and marketing expenses for the second quarter of 2007 increased by 42% to RMB59 million (US$8 million) from the same period in 2006 and increased by 22% compared to the previous quarter, primarily due to the increase of sales and marketing personnel resources. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 19% of the net revenues, slightly lower than 21% in the same period last year and 20% in the previous quarter.

General and administrative expenses for the second quarter of 2007 increased by 58% to RMB35 million (US$5 million) from the same period in 2006 and increased by 16% from the previous quarter, primarily due to the incurrence of RMB14 million (US$2 million) share-based compensation charges. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 7% of the net revenues, remained relatively consistent with 7% for the same period last year and 8% in the previous quarter.

Income from operations for the second quarter of 2007 was RMB95 million (US$13 million). Excluding share-based compensation charges (non-GAAP), income from operations was RMB118 million (US$16 million), increased by 49% from the same period in 2006, and 32% from the previous quarter.

Operating margin was 33% in the second quarter of 2007. Excluding share-based compensation charges (non-GAAP), operating margin was 41% compared to 42% in the same period in 2006 and 39% in the previous quarter.

Net income for the second quarter of 2007 was RMB88 million (US$12 million). Excluding share-based compensation charges (non-GAAP), net income was RMB111 million (US$15 million), representing a 51% increase from the same period in 2006 and a 33% increase from the previous quarter, mainly due to higher income from operations.

The diluted earnings per ADS were RMB1.30 (US$0.17) and the diluted earnings per ordinary share were RMB2.60 (US$0.34). Excluding share-based compensation charges (non-GAAP), the diluted earnings per ADS were RMB1.64 (US$0.22) for the second quarter of 2007.

As of June 30, 2007, Ctrip's cash balance increased to RMB978 million (US$128 million), compared to RMB866 million as of March 31, 2007.

Business Outlook

For the third quarter of 2007, Ctrip expects to continue strong year-on-year net revenue growth of approximately 35%.

Note to Financial Information

Certain prior year amounts have been reclassified with no effect on net income or retained earnings to conform to the 2007 financial information presentation.

Conference Call

Ctrip's management team will host a conference call at 9:00PM Eastern Time on August 6, 2007 (or 9:00AM on August 7, 2007 in the Shanghai/HK time zone) following the announcement.

The conference call will be available on Webcast live and replay at: http://ir.ctrip.com .

The call will be archived for 12 months at this website.

The dial-in details for the live conference call: U.S. Toll Free Number +1-888-679-8035, International dial-in number +1-617-213-4848; Passcode 94213005.

A telephone replay of the call will be available after the conclusion of the conference call through August 13, 2007. The dial-in details for the replay: U.S. Toll Free Number +1-888-286-8010, International dial-in number +1-617-801-6888; Passcode 97854153.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expect," "anticipate," "future," "intend," "plan," "believe" "estimate," and "confident" and similar statements. Among other things, quotations from management and Business Outlook section in this press release, as well as Ctrip's strategic and operational plans, contain forward-looking statements. Ctrip may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Ctrip's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, a slow-down of economic growth, declines or disruptions in the travel industry, volatility in the trading price of Ctrip's ADSs, Ctrip's reliance on the relationships with travel suppliers and strategic alliances, failure to further increase brand recognition to obtain new business partners and consumers, failure to attract, train and retain key individuals and employees, failure to compete against new and existing competitors, Ctrip's limited operating history, fluctuations in quarterly operating results, damage to infrastructure and technology, loss of services of key executives, PRC laws and regulations governing internet content providers in China and other risks outlined in Ctrip's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of August 6, 2007, and Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Ctrip's unaudited consolidated financial statements presented in accordance with the United States Generally Accepted Accounting Principles ("GAAP"), Ctrip uses non-GAAP financial information related to product development expenses, sales and marketing expenses, general and administrative expenses, income from operations, operating margin, net income, and diluted earnings per ADS and per share, each of which is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under Statement of Financial Accounting Standard 123R, "Share-Based Payment", for 2007 and 2006. Ctrip's management believes the non-GAAP financial measures facilitate better understanding of operating results from quarter to quarter and provides the management better capability to plan and forecast future periods.

The non-GAAP information is not in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for the GAAP results. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in our business for the foreseeable future.

Reconciliations of Ctrip's non-GAAP financial data to the most comparable GAAP data included in the consolidated statement of operations are included at the end of this press release.

About Ctrip.com International, Ltd.

Ctrip.com International, Ltd. is a leading travel service provider of hotel accommodations, airline tickets and packaged-tours in China. Ctrip aggregates information on hotels and flights and enables customers to make informed and cost-effective hotel and flight bookings. Ctrip targets primarily business and leisure travelers in China who do not travel in groups. These travelers form a traditionally under-served yet fast-growing segment of the travel industry in China. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.

-- Tables to Follow -

Ctrip.com International, Ltd.

Consolidated Balance Sheet Information

December

31, 2006 June 30,2007 June 30,2007

RMB RMB USD

(unaudited) (unaudited) (unaudited)

ASSETS

Current assets:

Cash 844,392,604 971,009,682 127,563,017

Restricted cash 6,600,000 6,600,000 867,052

Short-term investment -- 13,000,000 1,707,830

Accounts receivable 136,688,354 235,952,798 30,997,477

Prepayments and other

current assets 62,870,154 61,179,245 8,037,210

Deferred tax assets 2,916,151 4,069,351 534,597

Total current assets 1,053,467,263 1,291,811,076 169,707,183

Long-term deposits 80,174,984 112,605,303 14,793,130

Land use rights 66,449,208 65,766,511 8,639,846

Property, equipment and

software 153,690,484 252,881,270 33,221,396

Investment 80,416,250 80,416,250 10,564,405

Goodwill 14,595,849 14,595,849 1,917,479

Other long-term assets 3,058,465 2,988,637 392,622

Total assets 1,451,852,503 1,821,064,896 239,236,061

LIABILITIES

Current liabilities:

Accounts payable 151,408,198 237,251,818 31,168,132

Salary and welfare

payable 32,778,110 38,912,388 5,111,980

Taxes payable 34,913,392 31,680,995 4,161,980

Advances from

customers 38,178,866 43,603,659 5,728,279

Accrued liability for

customer reward

program 29,566,712 36,272,589 4,765,185

Dividend payable 72,169,155 72,169,155 9,480,971

Other payables and

accruals 62,030,840 88,018,480 11,563,121

Total current

liabilities 421,045,273 547,909,084 71,979,648

Other long-term payables 2,437,500 1,625,000 213,479

Total liabilities 423,482,773 549,534,084 72,193,127

Minority interests 672,780 667,002 87,625

SHAREHOLDERS' EQUITY

Share capital 2,700,889 2,730,815 358,751

Additional paid-in

Capital 627,461,168 724,251,225 95,145,984

Statutory reserves 53,787,911 53,787,911 7,066,200

Cumulative translation

adjustments (16,099,263) (22,902,511) (3,008,738)

Retained Earnings 359,846,245 512,996,370 67,393,112

Total shareholders'

equity 1,027,696,950 1,270,863,810 166,955,309

Total liabilities and

shareholders' equity 1,451,852,503 1,821,064,896 239,236,061

Ctrip.com International, Ltd.

Consolidated Statement of Operations Information

Quarter Ended Quarter Ended Quarter Ended Quarter Ended

June 30, March 31, June 30, June 30,

2006 2007 2007 2007

RMB RMB RMB USD

(unaudited) (unaudited) (unaudited) (unaudited)

Revenues:

Hotel

reservation 117,898,002 133,468,270 171,428,902 22,520,875

Air-ticketing 69,978,237 94,616,770 116,940,167 15,362,607

Packaged tour 8,611,708 15,996,277 12,858,353 1,689,221

Others 6,031,070 5,100,040 7,950,457 1,044,464

Total revenues 202,519,017 249,181,357 309,177,879 40,617,167

Less: business tax

and related

surcharges (12,503,723) (16,965,212) (21,159,382) (2,779,740)

Net revenues 190,015,294 232,216,145 288,018,497 37,837,427

Cost of revenues (35,557,687) (48,559,779) (57,223,269) (7,517,507)

Gross profit 154,457,607 183,656,366 230,795,228 30,319,920

Operating expenses:

Product

development * (24,590,478) (34,017,541) (41,554,054) (5,459,019)

Sales and

marketing * (41,544,155) (48,394,455) (58,973,708) (7,747,466)

General and

administrative *(22,177,304) (30,166,714) (35,065,802) (4,606,648)

Total operating

expenses (88,311,937) (112,578,710) (135,593,564) (17,813,133)

Income from

operations 66,145,670 71,077,656 95,201,664 12,506,787

Interest income 4,540,286 3,266,557 3,079,558 404,566

Other income 625,231 2,834,202 5,671,677 745,097

Income before income

tax expense and

minority interest 71,311,187 77,178,415 103,952,899 13,656,450

Income tax

Expense (10,571,713) (12,249,292) (15,737,675) (2,067,482)

Minority interests (191,242) (6,752) 12,530 1,646

Net income 60,548,232 64,922,371 88,227,754 11,590,614

Earnings per

ordinary share

- Basic 1.87 1.99 2.69 0.35

- Diluted 1.82 1.92 2.60 0.34

Earnings per ADS

- Basic 0.94 0.99 1.35 0.18

- Diluted 0.91 0.96 1.30 0.17

Weighted average

ordinary shares

outstanding

- Basic 32,293,221 32,669,661 32,796,200 32,796,200

- Diluted 33,270,085 33,742,356 33,887,925 33,887,925

* Share-based compensation

charges included are as

follows:

Product

development 3,245,904 4,844,239 5,909,391 776,326

Sales and

marketing 2,010,748 2,971,775 3,562,392 467,997

General and

Administrative 8,062,924 10,772,464 13,626,650 1,790,154

Ctrip.com International, Ltd.

Reconciliation of GAAP and Non-GAAP Results

(In RMB, except % and per share information)

Quarter Ended June 30, 2007

% of % of % of

GAAP Net Share-based Net Non-GAAP Net

Result Revenue Compensation Revenue Result Revenue

Product

development (41,554,054) 14% 5,909,391 2% (35,644,663) 12%

Sales and

marketing (58,973,708) 20% 3,562,392 1% (55,411,316) 19%

General and

administrative (35,065,802) 12% 13,626,650 5% (21,439,152) 7%

Total operating

expenses (135,593,564) 47% 23,098,433 8% (112,495,131) 39%

Income from

operations 95,201,664 33% 23,098,433 8% 118,300,097 41%

Net income 88,227,754 31% 23,098,433 8% 111,326,187 39%

Diluted earnings

per ordinary

share (RMB) 2.60 -- 0.68 -- 3.29 --

Diluted earnings

per ADS (RMB) 1.30 -- 0.34 -- 1.64 --

Diluted earnings

per ADS (USD) 0.17 -- 0.04 -- 0.22 --

Quarter Ended March 31, 2007

% of % of % of

GAAP Net Share-based Net Non-GAAP Net

Result Revenue Compensation Revenue Result Revenue

Product

development (34,017,541) 15% 4,844,239 2% (29,173,302) 13%

Sales and

marketing (48,394,455) 21% 2,971,775 1% (45,422,680) 20%

General and

administrative (30,166,714) 13% 10,772,464 5% (19,394,250) 8%

Total operating

expenses (112,578,710) 48% 18,588,478 8% (93,990,232) 40%

Income from

operations 71,077,656 31% 18,588,478 8% 89,666,134 39%

Net income 64,922,371 28% 18,588,478 8% 83,510,849 36%

Diluted earnings

per ordinary

share (RMB) 1.92 -- 0.55 -- 2.47 --

Diluted earnings

per ADS (RMB) 0.96 -- 0.28 -- 1.24 --

Diluted earnings

per ADS (USD) 0.12 -- 0.04 -- 0.16 --

Quarter Ended June 30, 2006

% of % of % of

GAAP Net Share-based Net Non-GAAP Net

Result Revenue Compensation Revenue Result Revenue

Product

development (24,590,478) 13% 3,245,904 2% (21,344,574) 11%

Sales and

marketing (41,544,155) 22% 2,010,748 1% (39,533,407) 21%

General and

administrative (22,177,304) 12% 8,062,924 4% (14,114,380) 7%

Total operating

expenses (88,311,937) 46% 13,319,576 7% (74,992,361) 39%

Income from

operations 66,145,670 35% 13,319,576 7% 79,465,246 42%

Net income 60,548,232 32% 13,319,576 7% 73,867,808 39%

Diluted earnings

per ordinary share

(RMB) 1.82 -- 0.40 -- 2.22 --

Diluted earnings

per ADS (RMB) 0.91 -- 0.20 -- 1.11 --

Diluted earnings

per ADS (USD) 0.11 -- 0.03 -- 0.14 --

Notes for all the financial schedules presented:

Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is

based on the noon buying rate of USD1.00=RMB7.6120 on June 30,

2007 in The City of New York for cable transfers of RMB as

certified for customs purposes by the Federal Reserve Bank of

New York.

Note 2: Certain prior year amounts have been reclassified with no

effect on net income or retained earnings to conform to the 2007

financial information presentation.

Note 3: Effective on July 31, 2007, Company changed ratio of the

American Depositary Shares ("ADSs") to ordinary shares from one

(1) ADS representing one (1) ordinary shares to two (2) ADS

representing one (1) ordinary share. The change is reflected

retroactively in the numbers for all the periods presented above.

For further information

Tracy Cui

Ctrip.com International, Ltd.

Tel: +86-21-3406-4880 X 12216

Email: jrcui@ctrip.com

Source: Ctrip.com International, Ltd.
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