BEIJING, Aug. 14 /Xinhua-PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading online travel service provider in China, today reported unaudited financial results for the second quarter ended June 30, 2007.
(Logo: http://www.prnasia.com/sa/200708022023-min.JPG )
Business Highlights for the Second Quarter 2007.
-- Travel revenues, comprised of hotel, air and other travel service
revenues, increased 16% to RMB75.4 million for the second quarter 2007
compared with the prior year period.
-- Travel revenues by service line for the second quarters of 2007 and
2006 were as follows (figures in RMB 000’s):
% % Y/Y
Q2 2007 Total Q2 2006 Total Growth
Hotel commissions 60,162 79.8 % 53,753 82.7 % 12 %
Air ticketing
commissions 13,850 18.4 % 9,641 14.8 % 44 %
Other travel revenue 1,400 1.9 % 1,629 2.5 % -14 %
Total travel revenue 75,412 100 % 65,023 100 % 16 %
-- The Company recorded an operating loss of RMB 2.2 million for the
second quarter, compared with an operating loss of RMB1.2 million for
the second quarter of 2006, with greater sales and marketing and
service development expense offsetting the Company’s increased gross
profit.
-- The Company recorded a net loss of RMB 1.8 million for the second
quarter, compared with a net income of RMB10.2 million for the second
quarter of 2006. Net income decreased RMB 12.0 million primarily due
to prior year other income of RMB 8.5 million related to interest
income and unrealized exchange loss and a gain on the sale of
discontinued operations of RMB 2.6 million. Excluding these items, net
loss for the second quarter 2006 would have been RMB 0.9 million.
-- As of June 30, 2007 cash and cash equivalents were RMB1.17 billion
(US$154 million), down 2% from RMB1.20 billion at December 31, 2006.
Cash balances decreased RMB28.6 million primarily due to the majority
of our cash being held in US$ and the resulting impact of the
appreciation of the RMB.
“While eLong’s top-line results were in line with our expectations, we are not nearly satisfied with our performance. We have begun a comprehensive turnaround program to improve the Company’s execution,” said Henrik Kjellberg, Chairman and interim Chief Executive Officer of eLong, Inc. “Management is committed to making structural improvements in our hotel and air products, our customer service and our overall management talent. It will take time to regain momentum, but we are confident that eLong can successfully improve its performance and better leverage the growing Chinese travel market.”
“We are focused on striking an optimum balance between the need for fiscal discipline and reigniting our growth momentum,” said Chris Chan, eLong’s Chief Financial Officer. “We remain confident in the long-term opportunity of China’s online travel market, and over time we seek to drive financial gains from our structural improvements to the Company’s bottom-line.”
Business Results
Total and travel revenues increased 17% and 16%, respectively, for the second quarter of 2007 compared with the prior year period, reflecting continued growth in our core hotel commissions business and the 44% increase in air ticketing commissions.
Hotel
Hotel commission revenue increased 12% year-over-year primarily due to higher room volume. Room nights booked through eLong increased 11% to 922,000, while commission per room night remained largely unchanged at RMB65.
eLong has grown its hotel offering over 28% since second quarter 2006, and now features discounted rates at nearly 4,500 hotels in over 300 cities across China.
Air
Air ticketing commission revenue increased 44% primarily due to a 41% increase in air segments to 347,000, as well as a modest 2% increase in commission per air ticket to RMB40.
Profitability
Gross margin in the second quarter of 2007 was 73.5%, a decrease of 364 basis points compared with 77.1% in the prior year period. Gross margin decreased due to the increased mix of lower margin air commissions and increased compensation expense related to investments in our call center talent and infrastructure.
Operating expenses for the second quarter of 2007 and 2006 were as follows (figures in RMB 000’s):
% % Y/Y
Q2 2007 Revenue Q2 2006 (1) Revenue Growth
Service
development 12,257 15.6 % 10,094 15.1 % 21 %
Sales and
marketing 29,313 37.4 % 25,302 37.9 % 16 %
General and
administrative 13,540 17.3 % 13,355 20.0 % 1 %
Business tax and
surcharges 4,026 5.1 % 3,643 5.5 % 11 %
Writedown of
property and
equipment and
intangibles 526 0.7 % -- 0.0 % N/A
Amortization of
intangibles 265 0.3 % 265 0.4 % 0 %
Total operating
expenses 59,927 76.4 % 52,659 78.8 % 13.8 %
Note 1 - Effective second quarter 2006, prior period sales and marketing,
service development and business tax and surcharge expenses have
been revised to exclude expenses related to our discontinued
operations
Service development, sales and marketing, and general and administrative expenses increased 13.0% during the second quarter, while total operating expenses increased 13.8%.
Service development expense is composed of expenses related to technology and product offering, including our website, the platform and the Company’s air and hotel products. Second quarter service development expense increased 21% and increased 50 basis points as a percentage of revenue to 15.6% because we maintained the pace of investment in our air booking and online payment platforms, and invested in other product enhancements.
Sales and marketing expense increased 16%, and decreased 50 basis points as a percentage of revenue to 37.4%. The increased expense was due to increases in business volume.
General and administrative expense increased 1%. General and administrative expenses as a percentage of revenue decreased 270 basis points to 17.3% in the second quarter.
Operating loss was RMB2.2 million as compared to an operating loss of RMB1.2 million in second quarter of 2006, an increased loss of RMB1.0 million primarily due to lower percent gross margin resulting from the higher air revenue mix, as well as higher spending in sales and marketing and service development expenses.
Other loss, which represents interest income, unrealized exchange gains/losses and other income/expense, was RMB1.1 million in the second quarter of 2007, primarily due to an unrealized foreign exchange loss of RMB15.4 million resulting from nearly 1.4% appreciation in the Renminbi from the prior quarter. This exchange loss was partially offset by net interest income of RMB14.1 million in the second quarter of 2007.
The Company recorded a net loss of RMB1.8 million for the second quarter compared to a net income of RMB10.2 million in the prior year period, an increased loss of RMB12.0 million primarily due to RMB8.9 million in higher continuing operating loss in the second quarter of 2007 and RMB3.1 million of income from discontinued operations which benefited the second quarter of 2006.
Our US GAAP diluted loss per ADS for the second quarter of 2007 was RMB0.08 compared to a diluted income per ADS of RMB0.38 in the prior year period.
Management Addition
eLong is pleased to welcome Thomas Chen as Vice-President of Marketing, whose responsibilities include eLong branding, product promotions, customer retention and analysis, loyalty programs, public relations and market research. Mr. Chen has ten years of brand management and FMCG marketing experience, of which eight years for SC Johnson & Son. He has worked in mainland China for four years, most recently as the marketing director for the Ting Hsin chain restaurant business. Mr. Chen, who hails from Taiwan, holds a master degree in Integrated Marketing from Northwestern University.
Business Outlook
eLong expects total revenues for the third quarter of 2007 within the range of RMB79.0 million to RMB87.0 million, an increase of 6% to 17% from the third quarter of 2006.
Note to the Unaudited Interim Consolidated Financial Information
Financial information in this press release is unaudited and was prepared in accordance with generally accepted accounting principles in the United States.
eLong suspended its vacation package service business on July 12, 2007.
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, 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 fluctuations 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 2006 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 second quarter and fiscal 2007 earnings at August 13, 2007, 8:00 pm Eastern (Beijing/Hong Kong time: August 14, 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. International participants can dial +1-210-795-0492. Passcode ELONG.
A replay of conference call will be available for one day starting from 9:30 pm Eastern Time on August 13, 2007. US toll-free dial-in number: +1-800- 477-5518, international dial-in number: +1-203-369-4576. Passcode: 734540.
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 .
eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
IN LOCAL CURRENCY
Three Months Ended Six Months Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2007 2007 2006 2007 2006
RMB RMB RMB RMB RMB
Revenues
Hotel commissions 60,162 48,879 53,753 109,042 95,837
Air ticketing
commissions 13,850 12,050 9,641 25,900 17,650
Other travel revenue 1,400 2,077 1,629 3,476 3,086
Travel 75,412 63,006 65,023 138,418 116,573
Other 3,019 2,275 1,770 5,295 3,674
Total revenues 78,431 65,281 66,793 143,713 120,247
Cost of services (20,701) (17,701) (15,285) (38,403) (28,470)
Gross profit 57,730 47,580 51,508 105,310 91,777
Operating expenses
Service development (12,257) (10,594) (10,094) (22,852) (20,635)
Sales and marketing (29,313) (27,020) (25,302) (56,331) (47,207)
General and
administrative (13,540) (11,188) (13,355) (24,728) (33,690)
Amortization of
intangibles (265) (265) (265) (530) (530)
Writedown of PP&E (526) -- -- (526) --
Business tax and
surcharges (4,026) (3,675) (3,643) (7,701) (6,656)
Total operating
expenses (59,927) (52,742) (52,659) (112,668) (108,718)
Loss from operations (2,197) (5,162) (1,151) (7,358) (16,941)
Other income/(loss) (1,053) 4,329 8,497 3,276 12,761
Income/(loss) before
income tax expense (3,250) (833) 7,346 (4,082) (4,180)
Income tax
benefit/(expense ) 1,433 (52) (250) 1,380 (787)
Income/(loss) from
continuing
operations (1,817) (885) 7,096 (2,702) (4,967)
Discontinued
operations
Income/(loss) from
discontinued
operations -- 112 526 112 114
Income tax benefit
/(expense) of
discontinued
operations -- (8) (48) (8) (42)
Gain on sale of
discontinued
operations -- -- 2,650 -- 2,650
Total discontinued
operations -- 104 3,128 104 2,722
Net income/(loss)
before cumulative
effect of change in
accounting
principles (1,817) (781) 10,224 (2,598) (2,245)
Cumulative effect of
change in accounting
principles -- -- -- -- 282
Net income/(loss) (1,817) (781) 10,224 (2,598) (1,963)
Basic income/(loss)
per share
Continuing operations (0.04) (0.02) 0.14 (0.05) (0.09)
Discontinued
operations 0.00 0.00 0.06 0.00 0.05
Cumulative effect of
change in accounting
principles 0.00 0.00 0.00 0.00 0.00
Basic income/(loss)
per share (0.04) (0.02) 0.20 (0.05) (0.04)
Diluted income/(loss)
per share
Continuing operations (0.04) (0.02) 0.13 (0.05) (0.09)
Discontinued
operations 0.00 0.00 0.06 0.00 0.05
Cumulative effect of
change in accounting
principles 0.00 0.00 0.00 0.00 0.00
Diluted income/(loss)
per share (0.04) (0.02) 0.19 (0.05) (0.04)
Basic income/(loss)
per ADS
Continuing operations (0.08) (0.04) 0.28 (0.10) (0.18)
Discontinued
operations 0.00 0.00 0.12 0.00 0.10
Cumulative effect of
change in accounting
principles 0.00 0.00 0.00 0.00 0.00
Basic income/(loss)
per ADS (0.08) (0.04) 0.40 (0.10) (0.08)
Diluted income/(loss)
per ADS
Continuing operations (0.08) (0.04) 0.26 (0.10) (0.18)
Discontinued
operations 0.00 0.00 0.12 0.00 0.10
Cumulative effect of
change in accounting
principles 0.00 0.00 0.00 0.00 0.00
Diluted income/(loss)
per ADS (0.08) (0.04) 0.38 (0.10) (0.08)
Shares used in
computing basic net
income/(loss) per
share 50,732 50,685 50,374 50,709 50,364
Shares used in
computing diluted
net income/(loss)
per share 50,732 50,685 53,870 50,709 50,364
Note that 1ADS = 2
shares
* Share-based
compensation charges
included are as
follows: 1,760 2,769 2,519 4,529 6,753
Cost of services 29 21 42 50 106
Service development 569 677 669 1,246 1,437
Sales and marketing 83 201 134 284 334
General and
administrative 1,079 1,870 1,674 2,949 4,876
*Unrealized Foreign
exchange losses 15,421 9,614 2,772 25,034 9,547
eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
IN U.S. DOLLARS
Three Months Ended Six Months Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2007 2007 2006 2007 2006
US$ US$ US$ US$ US$
Revenues
Hotel commissions 7,904 6,329 6,724 14,325 11,988
Air ticketing commissions 1,819 1,560 1,206 3,403 2,208
Other travel revenue 184 269 204 457 386
Total travel revenue 9,907 8,158 8,134 18,185 14,582
Other 397 295 221 696 460
Total revenues 10,304 8,453 8,355 18,881 15,042
Cost of services (2,720) (2,292) (1,912) (5,045) (3,562)
Gross profit 7,584 6,161 6,443 13,836 11,480
Operating expenses
Service development (1,610) (1,372) (1,262) (3,002) (2,581)
Sales and marketing (3,851) (3,499) (3,164) (7,400) (5,906)
General and administrative (1,779) (1,449) (1,671) (3,249) (4,214)
Amortization of intangibles (35) (34) (33) (70) (66)
Writedown of PPE and
intangibles (69) -- -- (69) --
Business tax and surcharges (529) (476) (456) (1,012) (833)
Total operating expenses (7,873) (6,830) (6,586) (14,802) (13,600)
Loss from operations (289) (669) (143) (966) (2,120)
Other income/(loss) (138) 561 1,063 429 1,596
Income/(loss) before income tax
expense (427) (108) 920 (536) (524)
Income tax benefit/(expense) 188 (7) (31) 181 (98)
Income/(loss) from continuing
operations (239) (115) 889 (355) (622)
Discontinued operations
Income/(loss) from discontinued
operations -- 15 66 15 14
Income tax benefit /(expense) of
discontinued operations -- (1) (6) (1) (5)
Gain on sale of discontinued
operations -- -- 331 -- 331
Total discontinued operations -- 14 391 14 340
Net income/(loss) before
cumulative effect of change in
accounting principles (239) (101) 1,280 (341) (282)
-- -- -- -- --
Cumulative effect of change in
accounting principles -- -- -- -- 35
Net income/(loss) (239) (101) 1,280 (341) (247)
Basic income/( loss) per share
Continuing operations (0.005) (0.003) 0.018 (0.007) (0.011)
Discontinued operations 0.000 0.000 0.008 0.000 0.006
Cumulative effect of change in
accounting principles 0.000 0.000 0.000 0.000 0.000
Basic income/(loss) per share (0.005) (0.003) 0.026 (0.007) (0.005)
Diluted income/(loss) per share
Continuing operations (0.005) (0.003) 0.016 (0.007) (0.011)
Discontinued operations 0.000 0.000 0.008 0.000 0.006
Cumulative effect of change in
accounting principles 0.000 0.000 0.000 0.000 0.000
Diluted income/(loss) per share (0.005) (0.003) 0.024 (0.007) (0.005)
Basic income/(loss) per ADS
Continuing operations (0.011) (0.005) 0.036 (0.013) (0.023)
Discontinued operations 0.000 0.000 0.015 0.000 0.013
Cumulative effect of change in
accounting principles 0.000 0.000 0.000 0.000 0.000
Basic income/(loss) per ADS (0.011) (0.005) 0.051 (0.013) (0.010)
Diluted income/(loss) per ADS
Continuing operations (0.011) (0.005) 0.033 (0.013) (0.023)
Discontinued operations 0.000 0.000 0.015 0.000 0.013
Cumulative effect of change in
accounting principles 0.000 0.000 0.000 0.000 0.000
Diluted income/(loss) per ADS (0.011) (0.005) 0.048 (0.013) (0.010)
Shares used in computing basic
net income/(loss) per share 50,732 50,685 50,374 50,709 50,364
Shares used in computing diluted
net income/(loss) per share 50,732 50,685 53,870 50,709 50,364
Note that 1ADS = 2 shares
* Share-based compensation
charges included are as
follows: 231 358 315 595 845
Cost of services 4 3 5 7 13
Service development 75 88 84 164 180
Sales and marketing 11 26 17 37 42
General and administrative 142 242 209 387 610
*Unrealised foreign
exchange losses 2,026 1,245 347 3,289 1,194
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=RMB7.6120 on June 30, 2007,USD1.00 = RMB7.7232 on March
31,2007 and USD1.00 = RMB7.9943 on June 30, 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)
Jun. 30, Dec. 31, Jun. 30, Dec. 31,
2007 2006 2007 2006
RMB RMB US$ US$
ASSETS
Current assets:
Cash and cash equivalents 1,170,752 1,199,323 153,803 153,679
Restricted cash 11,473 -- 1,507 --
Accounts receivable, net 39,868 28,237 5,238 3,618
Due from related parties 572 2,099 75 269
Deferred income taxes, net 2,577 708 339 91
Prepaid expenses and other current
assets 11,833 10,384 1,555 1,331
Total current assets 1,237,075 1,240,751 162,517 158,987
Property and equipment, net 41,420 37,809 5,441 4,845
Goodwill 30,000 30,000 3,941 3,844
Intangible assets, net 3,216 3,746 422 480
Deferred income taxes, net 707 982 93 126
Other non-current assets 19,049 22,029 2,503 2,823
Total assets 1,331,467 1,335,318 174,917 171,105
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable 40,428 32,753 5,311 4,197
Income taxes payable 3,478 16,757 457 2,147
Due to related parties 4,094 3,374 538 432
Accrued expenses and other current
liabilities 79,496 81,540 10,443 10,448
Total current liabilities 127,496 134,424 16,749 17,225
Other long-term liabilities 327 980 43 126
Deferred income taxes 132 132 17 17
Total liabilities 127,955 135,537 16,809 17,367
Shareholders’ equity
Ordinary shares 4,199 4,192 552 537
Additional paid-in capital 1,307,487 1,301,312 171,765 166,747
Accumulated other comprehensive
income (loss) 118 (29) 16 (4)
Accumulated deficit (108,292) (105,694) (14,227) (13,543)
Total shareholders’ equity 1,203,512 1,199,781 158,108 153,737
Total liabilities and
shareholders’ equity 1,331,467 1,335,318 174,917 171,105
For more information, please contact:
eLong, Inc.
Investor Relations
Tel: +86-10-5860-2288 x6555
Email: ir@corp.elong.com
