BEIJING, Nov. 27 /PRNewswire-Asia/ -- eLong, Inc. (Nasdaq: LONG), a leading online travel service provider in China, today reported unaudited financial results for the third quarter ended September 30, 2008.
(Logo: http://www.prnchina.com/sa/200708022023.JPG )
Highlights
-- Total gross revenues increased 7% year-on-year to RMB90.0 million and
net revenues increased 6% year-on-year to RMB84.1 million.
-- Travel revenues before business tax and surcharges comprised of hotel,
air and other travel product and service revenues increased 6% year-on-
year to RMB85.4 million.
Travel revenues before business tax and surcharges by product were as follows (figures in RMB 000's; some numbers may not add due to rounding):
% % Y/Y
Q3 2008 Total Q3 2007 Total Growth
Hotel commissions 65,152 77% 64,417 80% 1%
Air ticketing
commissions 19,929 23% 15,585 19% 28%
Other travel revenue 306 -- 869 1% -65%
Total travel revenue 85,387 100% 80,871 100% 6%
-- Operating loss increased year-on-year by RMB10.6 million to RMB19.9
million, driven primarily by greater service development, and sales and
marketing expenses.
-- Net loss from continuing operations increased year-on-year by RMB8.1
million to RMB15.5 million, driven primarily by greater service
development, and sales and marketing expenses, and a RMB8.1 million
decrease in interest income offset by a RMB8.7 million decrease in
foreign currency exchange losses when compared to the prior year
quarter.
-- Cash, cash equivalents and short-term investment as of September 30,
2008 were RMB1.02 billion (USD$150.5 million).
-- From the commencement of the Company's share buyback program in March
through November 25, 2008, the Company repurchased 1,811,222 ADS at a
cost of USD$13.7 million.
"We achieved several key milestones in the third quarter including improving the call centre service to the highest standard in the China online travel industry and the continuous improvement of the online booking experience" said Guangfu Cui, Chief Executive Officer of eLong. "Although we expect the near term environment to be challenging, we believe we are making the right strategic moves and we will continue to set our company on a path to long-term growth."
"In light of the current environment, we intend to balance prudent expense management against investments for growth in 2009, and are taking steps to streamline our costs," said Chris Chan, Chief Financial Officer of eLong. "We believe that our increased but focused investment in marketing, technology, and our product competitiveness will pay off over time while the reduced cost base relative to the business growth opportunity will help protect the bottom line and drive a higher efficiency."
Business Results
Hotel
Hotel commissions increased 1% for the third quarter of 2008 when compared to the prior year quarter, primarily due to higher room volume which was offset by lower commission per room night. Room nights booked through eLong increased 4% year-on-year to 1,050,000, while commission per room night of RMB62 was lower than the commission per room night of RMB 64 in the prior year quarter.
Air
Air ticketing commissions increased 28% for the third quarter of 2008, driven by a 31% year-on-year increase in air segments to 484,000, and an increase of 66 basis points in the average percent commission to 5.4%, offset partially by a lower average ticket price, which decreased by 14% to RMB764 when compared to the prior year quarter.
Profitability
Gross margin in the third quarter was 71% compared to 74% in the prior year quarter driven primarily by the higher growth of lower margin air revenue relative to hotel revenue and the lower average ticket price compared to the prior year quarter.
Operating expenses for the third quarter of 2008 and 2007 were as follows (figures in RMB 000's; some numbers may not add due to rounding):
% Net % Net Y/Y
Q3 2008 Revenues Q3 2007 Revenues Growth
Service development 14,155 17% 12,196 15% 16%
Sales and marketing 50,654 60% 36,858 47% 37%
General and
administrative 13,849 16% 18,277 23% -24%
Amortization of
intangibles 217 -- 265 -- -18%
Write-down of
property and
equipment and
intangibles 510 1% -- -- --
Total operating
expenses 79,385 94% 67,596 85% 17%
Total operating expenses increased 17% for the third quarter of 2008 compared to the third quarter of 2007. Operating expenses were 94% of net revenues, an increase of 9 percentage points compared to the prior year quarter.
Service development expense is composed of expenses related to technology and our product offering, including our website, platforms and other related system development. Service development expense increased 16% over the prior year quarter, mainly driven by increased investment in platform enhancements. Service development expense increased by 141 basis points to 17% of net revenues when compared to the same quarter last year.
Sales and marketing expense for the third quarter 2008 increased 37% over the prior year quarter, mainly driven by the brand awareness and consumer promotion marketing campaign which began in July, higher sales commissions, and increased online marketing expense. Sales and marketing expense increased by 13 percentage points to 60% of net revenues when compared to the same quarter last year.
General and administrative expense for the third quarter 2008 decreased 24% over the prior year quarter, mainly driven by decreases in external consulting fees. General and administrative expense as a percentage of net revenues, decreased by 7 percentage points year-on-year, to 16% in the third quarter.
Other income, which represents interest income, foreign exchange losses and other income/expense, was RMB1.4 million in the third quarter of 2008, primarily due to interest income of RMB6.3 million in the third quarter of 2008. This interest income was offset by the foreign currency exchange loss of RMB5.0 million resulting from the appreciation of the Renminbi against the US dollar during the quarter.
Net loss for the third quarter 2008 increased by RMB8.1 million over the prior year quarter to RMB15.5 million.
Our basic and diluted loss per ADS for the third quarter of 2008 was RMB0.62 compared to a basic and diluted loss per ADS of RMB0.30 in the prior year quarter.
Business Outlook
eLong expects net revenues, net of business tax and surcharges, for the fourth quarter of 2008 to be within the range of RMB83 million to RMB92 million, or an increase of 1% to 12% compared to the fourth quarter of 2007.
Notes to the Unaudited Interim Consolidated Financial Statements
To supplement the financial measures calculated in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes certain non-GAAP financial measures including basic loss per ADS, diluted loss per ADS, share-based compensation charges and unrealized foreign exchange losses. The Company believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. 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.
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 operating losses, declines or disruptions in the travel industry, the international financial crisis, slowdown in the PRC economy, the recurrence of SARS, an outbreak of bird flu or other disease, 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 continue timely compliance 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, fluctuations in the value of the Chinese currency, changes in eLong's management team and other key personnel, changes in third-party distribution partner relationships and other risks outlined in eLong's filings with the U.S. Securities and Exchange Commission (or SEC), including eLong's Annual Report on Form 20-F for the fiscal year ended December 31, 2007. 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 third quarter 2008 earnings on November 27, 2008, 8:00 AM Beijing local time (November 26, 2008, 7 PM EST). The management team will be on the call to discuss the quarterly results and to answer questions. The toll-free number for U.S. participants is +1-800-365-8460. The dial-in number for Hong Kong participants is +852-2258-4000. International participants can dial +1-210-795-0492. Pass code: eLong.
A replay of the call will be available for one day between 8:30 pm Eastern Time on November 26, 2008 and 8:30 am Eastern Time on November 27, 2008. The toll-free number for U.S. callers is +1-800-395-8064; the Hong Kong dial in number is +852-2802- 5151, and the dial-in number for international callers is +1-203-369-4627. The pass code for the replay is 759460.
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://www.elong.net/AboutUs/conference.html 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 such as maps, virtual tours and user ratings. eLong has the capacity to fulfill air ticket reservations in over 80 major cities across China. In addition to a wide selection of thousands of hotels in China and in the Greater China region, eLong offers consumers the ability to make bookings at international hotels in more than 100 countries worldwide.
eLong operates websites including http://www.elong.com and http://www.elong.net .
eLong, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended
Sep. 30, Jun. 30, Sep. 30, Sep. 30,
2007 2008 2008 2008
RMB RMB RMB USD
Revenues:
Hotel commissions 64,417 63,158 65,152 9,595
Air ticketing commissions 15,585 18,329 19,929 2,935
Other travel revenue 869 113 306 45
Travel 80,871 81,600 85,387 12,575
Other 2,991 4,384 4,603 678
Gross revenues 83,862 85,984 89,990 13,253
Business tax and surcharges (4,776) (5,170) (5,887) (867)
Net revenues 79,086 80,814 84,103 12,386
Cost of services (20,807) (23,192) (24,628) (3,627)
Gross profit 58,279 57,622 59,475 8,759
Operating expenses:
Service development (12,196) (13,331) (14,155) (2,085)
Sales and marketing (36,858) (38,867) (50,654) (7,460)
General and administrative (18,277) (12,994) (13,849) (2,040)
Amortization of intangibles (265) (217) (217) (32)
Write-down of property and
equipment and intangibles -- (121) (510) (75)
Total operating expenses (67,596) (65,530) (79,385) (11,692)
Income/(loss) from operations (9,317) (7,908) (19,910) (2,933)
Other income(loss) 1,055 (13,067) 1,402 207
Loss from continuing operations
before income tax expense (8,262) (20,975) (18,508) (2,726)
Income tax benefit(expense) 861 721 2,963 436
Loss from continuing operations (7,401) (20,254) (15,545) (2,290)
Discontinued operations:
Income from discontinued operations -- -- -- --
Income tax expense of discontinued
operations -- -- -- --
Total discontinued operations -- -- -- --
Net loss (7,401) (20,254) (15,545) (2,290)
Basic loss per share (0.15) (0.40) (0.31) (0.046)
Diluted loss per share (0.15) (0.40) (0.31) (0.046)
Basic loss per ADS (0.30) (0.80) (0.62) (0.092)
Diluted loss per ADS (0.30) (0.80) (0.62) (0.092)
Shares used in computing basic
net loss per share 50,766 50,568 49,610 49,610
Shares used in computing diluted
net loss per share 50,766 50,568 49,610 49,610
Note that 1ADS = 2 shares
Share-based compensation charges
included are as follows: 3,012 1,817 2,428 358
Cost of services 89 81 179 26
Service development 901 625 684 101
Sales and marketing 354 292 338 50
General and administrative 1,668 819 1,227 181
Un-realized foreign exchange
losses 13,696 19,913 4,996 736
Nine Months Ended
Sep. 30, Sep. 30, Sep. 30,
2007 2008 2008
RMB RMB USD
Revenues:
Hotel commissions 173,458 185,544 27,327
Air ticketing commissions 41,484 57,890 8,526
Other travel revenue 4,346 1,210 178
Travel 219,288 244,644 36,031
Other 8,286 12,779 1,882
Gross revenues 227,574 257,423 37,913
Business tax and surcharges (12,477) (15,810) (2,328)
Net revenues 215,097 241,613 35,585
Cost of services (59,209) (71,523) (10,534)
Gross profit 155,888 170,090 25,051
Operating expenses:
Service development (35,049) (40,183) (5,918)
Sales and marketing (93,188) (118,429) (17,442)
General and administrative (43,005) (41,620) (6,130)
Amortization of intangibles (795) (652) (96)
Write-down of property and
equipment and intangibles (526) (632) (93)
Total operating expenses (172,563) (201,516) (29,679)
Income/(loss) from operations (16,675) (31,426) (4,628)
Other income(loss) 4,330 (39,912) (5,878)
Loss from continuing operations
before income tax expense (12,345) (71,338) (10,506)
Income tax benefit(expense) 2,242 2,945 434
Loss from continuing operations (10,103) (68,393) (10,072)
Discontinued operations:
Income from discontinued
operations 112 -- --
Income tax expense of
discontinued operations (8) -- --
Total discontinued operations 104 -- --
Net loss (9,999) (68,393) (10,072)
Basic loss per share (0.20) (1.36) (0.200)
Diluted loss per share (0.20) (1.36) (0.200)
Basic loss per ADS (0.40) (2.72) (0.400)
Diluted loss per ADS (0.40) (2.72) (0.400)
Shares used in computing basic
net loss per share 50,728 50,358 50,358
Shares used in computing
diluted net loss per share 50,728 50,358 50,358
Note that 1ADS = 2 shares
Share-based compensation charges
included are as follows: 7,541 6,600 972
Cost of services 139 403 59
Service development 2,146 2,283 336
Sales and marketing 638 1,123 165
General and administrative 4,618 2,791 412
Un-realized foreign exchange
losses 38,730 62,804 9,250
Note 1: The conversions of Renminbi (RMB) into United States dollars (USD)
as at the reporting dates are based on the noon buying rate of
USD1.00=RMB6.7899 on September 30, 2008, USD1.00=RMB6.8591 on June
30, 2008 and USD1.00 = RMB7.4928 on September 30, 2007 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.
UNAUDITED CONDENSED CONSOLIDATED SUMMARY BALANCE SHEET DATA
(IN THOUSANDS)
Dec. 31, Sep. 30, Sep. 30,
2007 2008 2008
RMB RMB US$
ASSETS
Current assets:
Cash, cash equivalents and
short-term investment 1,157,567 1,021,663 150,468
Restricted assets 11,274 -- --
Accounts receivable, net 41,138 57,736 8,503
Due from related parties 1,502 401 59
Prepaid expenses and other
current assets 15,645 27,589 4,064
Total current assets 1,227,126 1,107,389 163,094
Property and equipment, net 43,962 53,829 7,928
Goodwill 30,000 30,000 4,418
Intangible assets, net 2,192 1,541 227
Other non-current assets 28,966 32,220 4,745
Total assets 1,332,246 1,224,979 180,412
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable 57,957 58,877 8,671
Income taxes payable 1,238 (710) (105)
Due to related parties 5,107 8,175 1,204
Accrued expenses and other
current liabilities 83,233 92,535 13,629
Total current liabilities 147,535 158,877 23,399
Other long-term liabilities -- 481 71
Deferred income taxes 100 100 15
Total liabilities 147,635 159,458 23,485
Shareholders' equity
Ordinary shares 4,208 4,219 621
Treasury Stock -- (57,772) (8,508)
Additional paid-in capital 1,308,047 1,315,111 193,686
Accumulated deficit (127,644) (196,037) (28,872)
Total shareholders' equity 1,184,611 1,065,521 156,927
Total liabilities and
shareholders' equity 1,332,246 1,224,979 180,412
For further information, please contact:
eLong, Inc.
Investor Relations
Tel: +86-10-6436-7570
Email: ir@corp.elong.com
