BEIJING, May 15 /Xinhua-PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a
leading online travel service provider in China, today reported unaudited
financial results for the first quarter ended March 31, 2007.
(Logo: http://www.prnasia.com/sa/20061103193112-91.jpg )
Business Highlights
-- Travel revenue, comprised of hotel, air and other travel product and
service revenue, increased 22% to RMB63.0 million for the first quarter
2007 compared with the prior year period.
-- Travel revenues by product line for the first quarter of 2007 and 2006
were as follows (figures in RMB 000's):
Y/Y
Q1 2007 % Total Q1 2006 % Total Growth
Hotel commissions 48,879 77.6% 42,084 81.6% 16%
Air ticketing commissions 12,050 19.1% 8,009 15.5% 50%
Other travel revenue 2,077 3.3% 1,456 2.8% 43%
Total travel revenue 63,006 100% 51,549 100% 22%
-- The Company recorded an operating loss of RMB5.2 million for the first
quarter, a significant improvement from an operating loss of RMB15.5
million for the prior year quarter;
-- The Company recorded a net loss of RMB0.8 million for the first quarter,
compared with a net loss of RMB12.2 million for the prior year quarter;
and
-- As of March 31, 2007 cash and cash equivalents were RMB1.18 billion,
down 1% from RMB1.20 billion at December 31, 2006. Cash balances
decreased RMB14.6 million primarily due to the unrealized foreign
exchange loss of 9.6 million and capital expenditures of 4.5 million.
"eLong increased air ticketing commissions to nearly 20% of our travel
revenue during the first quarter," said Henrik Kjellberg, Chairman and interim
Chief Executive Officer of eLong, Inc. "We are pleased with our progress in
diversifying the Company's revenues, as well as continued efficiency gains
across our operating expense base, and remain confident in the long-term
opportunity of China's online travel market."
"eLong approaches the burgeoning Chinese travel market from a solid
financial foundation," said Chris Chan, eLong's Chief Financial Officer. "The
management team is committed to responsible growth, with an aim toward
maximizing free cash flow over the long-term, while increasing shareholder
return."
Business Results
Total and travel revenues both increased 22% for the first quarter of 2007
compared with the prior year period, reflecting continued growth in our core
hotel commissions business, as well by a 50% increase in our air ticketing
commission business.
Hotel
Revenue from hotel commissions increased 16% primarily due to higher room
volume, as well as a modest increase in commission per room night. Room nights
booked through eLong increased 14% to 756,000, while commission per room night
increased 3% to RMB65. Commission per room night increased due to our hitting
higher room volume thresholds.
eLong has grown its hotel offering over 22% since first quarter 2006, and
now features discounted rates at nearly 4,000 hotels in over 300 cities across
China.
Air
Revenue from air ticketing commissions increased 50%, our highest rate of
growth in the recent three quarters. The increase in revenue was volume driven,
with a 50% increase in air segments to 326,000. Revenue per air ticket was
flat at RMB37.
Profitability
Gross margin in the first quarter was 72.9%, a decrease of 247 basis
points compared with 75.4% in the prior year period. Gross margin decreased
due to the increased mix of lower gross margin air revenue, as well as
increased compensation expense as we invest in improvements to our call center.
Operating expenses for the first quarter of 2007 and 2006 were as follows
(figures in RMB 000's):
% % Y/Y
Q1 2007 Revenue Q1 2006 Revenue Growth
Sales and marketing 27,020 41.4% 21,849 40.9% 24%
General and administrative 11,188 17.1% 20,185 37.8% -45%
Service development 10,594 16.2% 10,475 19.6% 1%
Business tax and surcharges 3,675 5.6% 3,013 5.6% 22%
Amortization of intangibles 265 0.4% 265 0.5% 0%
Total 52,742 80.8% 55,787 104.4% -5%
Please note that prior period sales and marketing, service development
expenses and business tax and surcharge expenses as presented in the above
table have been reclassified to exclude expenses related to our discontinued
operations in order to conform with the current period presentation.
Sales and marketing, general and administrative expense and service
development expenses decreased 7% during the first quarter, while total
operating expenses decreased 5%.
Sales and marketing expense increased 24%, and increased 52 basis points
as a percentage of revenue to 41.4%. The increased expense was due to
increases in business volume and higher marketing spending.
General and administrative expense decreased 45% due to lower professional
fees during the quarter. General and administrative expenses as a percentage
of revenue were 17.1% in the first quarter.
Service development expense is composed of expenses related to technology
and product offering, including our website, the platform and the Company's
air, hotel and vacation package products. First quarter service development
expense increased just 1%, and decreased 337 basis points as a percentage of
revenue as we leveraged previous investments in our technology.
Operating loss was RMB5.2 million as compared to an operating loss of
RMB15.5 million in the first quarter of 2006, an improvement of RMB10.3
million due to higher revenue and lower general and administrative expense,
partially offset by the increase in sales and marketing expenses and cost of
services.
Other income, which represents interest income, unrealized exchange
gains/losses and other income/expenses, was RMB4.3 million in the first
quarter of both 2007 and 2006. The unrealized foreign exchange loss was RMB9.6
million in the first quarter of 2007 compared to a loss of RMB6.8 million in
the prior year period, reflecting Renminbi appreciation since March 31, 2006.
This increased loss was offset by net interest income of RMB13.8 million.
The Company recorded a net loss of RMB0.8 million for the first quarter
compared to a net loss of RMB12.2 million in the prior year period, an
improvement of RMB11.4 million primarily due to RMB10.3 million of lower
operating loss.
Our US GAAP diluted loss per ADS for the first quarter of 2007 was RMB0.04
compared to a diluted loss per ADS of RMB0.50 in the prior year period. Our US
GAAP diluted loss per ADS decreased RMB0.46 due to a lower net loss, partially
offset by a slight increase in the number of shares used in computing our loss
per share
Business Outlook
eLong expects total revenues for the second quarter of 2007 within the
range of RMB73.0 million (US$9.5 million) to RMB81.0 million (US$10.5 million),
an increase of 9% to 21% from the second quarter of 2006.
Note to the Unaudited Interim Consolidated Financial Statements
Financial information in this press release from eLong's unaudited
financial statements was prepared in accordance with generally accepted
accounting principles in the United States.
In May 2006, eLong disposed of Raytime, an operator of hotel loyalty
programs. In October 2006, eLong sold the assets and business of one of its'
divisions operating an interactive online dating community (the "Division").
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the results of operations, financial position and cash
flows of Raytime and the Division have been reflected in the consolidated
financial statements and notes as a discontinued operation for all periods
presented. Accordingly, certain items in the first quarter of 2006 have been
reclassified to conform with the current period presentation to facilitate
comparison.
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, May 14, 2007 (Beijing/Hong Kong time:
May 15, 2007 at 8:00 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 +852 2258 4000. The toll number for international participants
is +1 210 795 0492. The pass code for all participants is "eLong".
A replay of the call will be available for 1 day between 9:15 pm Eastern
Time on May 14, 2007 and 9:15 pm Eastern Time on May 15, 2007. The toll-free
number for U.S. callers is +1 203 369 4590. The dial-in number for
international callers is +1 800 945 6632. The pass code for the replay is
736960.
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 55
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
Mar. 31, Dec. 31, Mar. 31,
2007 2006 2006
RMB RMB RMB
Revenues
Hotel commissions 48,879 56,026 42,084
Air ticketing commissions 12,050 9,593 8,009
Other travel revenue 2,077 1,452 1,456
Total travel revenue 63,006 67,071 51,549
Non travel 2,275 2,647 1,904
Total revenues 65,281 69,718 53,453
Cost of services 17,701 16,651 13,173
Gross profit 47,580 53,067 40,280
Operating expenses
Service development 10,594 10,569 10,475
Sales and marketing 27,020 26,555 21,849
General and administrative 11,188 12,611 20,185
Amortization of intangibles 265 265 265
Business tax and surcharges 3,675 4,347 3,013
Total operating expenses 52,742 54,347 55,787
Loss from operations (5,162) (1,280) (15,507)
Other income 4,329 2,289 4,263
Income/(loss) before income tax
expense (833) 1,009 (11,244)
Income tax expense 52 1,490 537
Loss from continuing operations (885) (481) (11,781)
Discontinued operations
Income/(loss) from discontinued
operations 112 (1,332) (412)
Income tax expense/(benefit) of
discontinued operations 8 (2) (6)
Gain on sale of discontinued
operations - - -
Total discontinued operations 104 (1,330) (406)
Net loss (781) (1,811) (12,187)
Basic loss per share -
Continuing operations (0.02) (0.01) (0.24)
Discontinued operations 0.00 (0.03) (0.01)
Basic loss per share (0.02) (0.04) (0.25)
Basic loss per ADS
Continuing operations (0.04) (0.02) (0.48)
Discontinued operations 0.00 (0.06) (0.02)
Basic loss per ADS (0.04) (0.08) (0.50)
Diluted loss per ADS
Continuing operations (0.04) (0.02) (0.48)
Discontinued operations 0.00 (0.06) (0.02)
Diluted loss per ADS (0.04) (0.08) (0.50)
Shares used in computing basic net
income/(loss) per share 50,685 50,464 50,354
Shares used in computing diluted net
income/(loss) per share 50,685 50,464 50,354
Note that 1ADS = 2 shares
* Stock-based compensations 2,769 3,194 3,952
*Unrealised foreign exchange losses 9,614 11,899 6,775
eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
IN U.S. DOLLARS
Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2007 2006 2006
US$ US$ US$
Revenues
Hotel commissions 6,329 7,179 5,250
Air ticketing commissions 1,560 1,229 999
Other travel revenue 269 186 182
Total travel revenue 8,158 8,594 6,431
Non travel 295 339 238
Total revenues 8,453 8,933 6,669
Cost of services 2,292 2,134 1,643
Gross profit 6,161 6,799 5,026
Operating expenses
Service development 1,372 1,354 1,308
Sales and marketing 3,499 3,403 2,726
General and administrative 1,449 1,616 2,519
Amortization of intangibles 34 34 33
Business tax and surcharges 476 557 376
Total operating expenses 6,830 6,964 6,962
Loss from operations (669) (165) (1,936)
Other income 561 293 532
Income/(loss) before income tax
expense (108) 128 (1,404)
Income tax expense 7 191 67
Loss from continuing operations (115) (63) (1,471)
Discontinued operations
Income/(loss) from discontinued
operations 15 (171) (51)
Income tax expense/(benefit) of
discontinued operations 1 - (1)
Gain on sale of discontinued
operations - - -
Total discontinued operations 14 (171) (50)
Net loss (101) (234) (1,521)
Basic loss per share
Continuing operations (0.003) (0.001) (0.030)
Discontinued operations 0.000 (0.004) (0.001)
Basic loss per share (0.003) (0.005) (0.031)
Diluted loss per share
Continuing operations (0.003) (0.001) (0.030)
Discontinued operations 0.000 (0.004) (0.001)
Diluted loss per share (0.003) (0.005) (0.031)
Basic loss per ADS
Continuing operations (0.005) (0.003) (0.060)
Discontinued operations 0.000 (0.008) (0.002)
Basic loss per ADS (0.005) (0.011) (0.062)
Diluted loss per ADS
Continuing operations (0.005) (0.003) (0.060)
Discontinued operations 0.000 (0.008) (0.002)
Diluted loss per ADS (0.005) (0.011) (0.062)
Shares used in computing basic net
income/(loss) per share 50,685 50,464 50,354
Shares used in computing diluted net
income/(loss) per share 50,685 50,464 50,354
* Stock-based compensations 359 409 493
*Unrealised foreign exchange losses 1,245 1,525 845
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 = RMB7.7232 on March 31, 2007, USD1.00 = RMB7.8041 on December 31,
2006 and USD1.00 = RMB8.0167 on March 31, 2006 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)
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
2007 2006 2007 2006
ASSETS RMB RMB US$ US$
Current assets
Cash and cash equivalents 1,184,725 1,199,323 153,398 153,679
Total Accounts receivable, net 37,559 28,493 4,863 3,651
Investment securities 284 163 37 21
Prepaid expenses and other
current assets 11,701 12,772 1,515 1,636
Total current assets 1,234,269 1,240,751 159,813 158,987
Equipment and software, net 40,231 37,809 5,209 4,845
Goodwill 30,000 30,000 3,884 3,844
Intangibles 3,481 3,746 451 480
Other non-current assets 25,658 22,029 3,322 2,823
Deferred tax assets 982 982 127 126
Total assets 1,334,621 1,335,317 172,806 171,105
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable, accrued expenses
and other payables 119,871 112,328 15,521 14,394
Advances from customers 1,353 1,361 175 174
Taxes payable 9,155 20,735 1,185 2,657
Total current liabilities 130,379 134,424 16,881 17,225
Other long term liabilities 653 980 85 126
Deferred Tax Liabilities 132 132 17 17
Total liabilities 131,164 135,536 16,983 17,368
Shareholders' equity
Ordinary shares 4,197 4,192 543 537
Additional paid-in capital 1,305,643 1,301,312 169,055 166,747
Other equity items 2,398 2,398 310 307
Accumulated deficit and other
comprehensive income (108,781) (108,121) (14,085) (13,854)
Total shareholders' equity 1,203,457 1,199,781 155,823 153,737
Total liabilities and
shareholders' equity 1,334,621 1,335,317 172,806 171,105
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