BEIJING, August 8, 2014 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading mobile and online travel service provider in China, today reported unaudited financial results for the second quarter ended June 30, 2014.
Highlights
Hotel room nights stayed in the second quarter increased 44% to 8.3 million room nights compared to 5.8 million in the prior year period.
Hotel commission revenue for the second quarter increased 28% to RMB254.1 million (US$41.0 million), compared to RMB198.6 million (US$32.4 million) in the second quarter of 2013.
Net revenues for the second quarter increased 25% to RMB292.4 million (US$47.1 million), compared to RMB234.3 million (US$38.2 million) in the second quarter of 2013. Total revenues for the second quarter increased to RMB312.4 million (US$50.4 million).
Mobile bookings comprised 45% of eLong brand room nights* in the second quarter. Cumulative downloads of eLong mobile apps now exceed 80 million.
More than 10,000 properties now use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies.
"In the second quarter, our lodging network grew to 120,000 contracted properties in China and nearly 325,000 properties worldwide. Every day our mobile applications provide real savings to our customers with tens of thousands of discounted lodging products, including pre-paid, flash sale, last minute and groupbuy products. With our broad range of accommodations products and attractive discounts, mobile has now become our largest booking channel, surpassing 60,000 transactions on peak days," said Guangfu Cui, Chief Executive Officer of eLong.
* eLong brand room nights, excludes room nights from non-eLong brand distribution partners and resellers.
Business Results
Revenues
Total revenues by product for the second quarter of 2014 as compared to the same period in 2013 were as follows (in RMB million):
Q2 2014
%
Q2 2013
%
Y/Y
Total
Total
Growth
Hotel reservations
254.1
81%
198.6
79%
28%
Air ticketing
35.1
11%
35.6
14%
(1%)
Other
23.2
8%
17.5
7%
33%
Total revenues
312.4
100%
251.7
100%
24%
Hotel Reservations
Hotel commission revenue increased 28% in the second quarter of 2014 compared to the same period in 2013, primarily due to higher volume, partially offset by lower commission per room night. Room nights stayed in the second quarter increased 44% year-on-year to 8.3 million. Commission per room night decreased 11% year-on-year, primarily due to the growth of lower commission rate and average daily rate hotel room nights. Hotel commission revenuegrew to 81% of total revenues from 79% in the prior year quarter.
Air Ticketing
Air ticketing commission revenue decreased 1% in the second quarter of 2014, compared to the prior year quarter, driven by a 5% decrease in commission per segment, partially offset by a 4% increase in air segments to approximately 699,000. Commission per segment decrease was mainly due to growth of our air coupon program, as well as a decrease in average ticket price. Air ticketing commission revenue decreased to 11% of total revenues from 14% in the prior year quarter.
Other
Other revenue is primarily derived from advertising and travel insurance. Other revenue increased 33% year-on-year in the second quarter of 2014, mainly driven by increased advertising and travel insurance revenues. Other revenue grew to 8% of total revenues from 7% in the prior year quarter.
Profitability
Gross margin in the second quarter of 2014 was 76%, compared to 74% in the second quarter of 2013. The improvement in gross margin was driven by operational efficiencies, partially offset by lower hotel commission revenue per room night.
Operating expenses for the second quarter of 2014 as compared to the same period in 2013 were as follows (in RMB million):
Q2 2014
% of Net Revenue
Q2 2013
% of Net Revenue
Y/Y Growth
Service development
62.4
21%
40.4
18%
55%
Sales and marketing
149.1
51%
164.9
70%
(10%)
General and administrative
36.6
13%
16.1
7%
128%
Amortization of intangible assets
1.5
-
0.9
-
61%
Total operating expenses
249.6
85%
222.3
95%
12%
Total operating expenses increased 12% for the second quarter of 2014 compared to the second quarter of 2013. Total operating expenses decreased to 85% of net revenues in the second quarter of 2014 from 95% in the prior year quarter. Operating income was RMB1.9 million in the second quarter of 2014 compared to operating loss of RMB47.9 million in the prior year quarter.
Service development expenses are expenses related to technology and our product offering, including our websites and other systems, as well as our supplier relations function. Service development expenses increased 55% compared to the prior year quarter, mainly driven by higher personnel expenses. Service development expenses increased to 21% of net revenues in the second quarter of 2014, compared to 18% in the same quarter of 2013.
Sales and marketing expenses for the second quarter of 2014 decreased 10% over the prior year quarter, driven by decreased advertising expenses, partially offset by increased hotel commission payments to affiliates. Sales and marketing expenses decreased to 51% of net revenues in the second quarter of 2014 from 70% in the same quarter of 2013.
General and administrative expenses for the second quarter of 2014 increased 128% compared to the prior year quarter, primarily due to higher share-based compensation charges. General and administrative expenses increased to 13% of net revenues in the second quarter of 2014 from 7% in the same quarter of 2013.
Other operating income in the second quarter of 2014 of RMB30.0 million consisted of compensation paid by Tongcheng Network Technology Share Co., Ltd. in May 2014 to terminate the cooperation agreement entered into by eLong and Tongcheng in April 2014.
Other income was RMB22.0 million in the second quarter of 2014 compared to RMB13.4 million in the second quarter of 2013, primarily due to increased government subsidies, partially offset by higher foreign exchange losses.
Income tax benefit for the second quarter of 2014 was RMB6.2 million, compared to income tax expense of RMB43.1 million during the prior year quarter.
Net income for the second quarter of 2014 was RMB31.5 million, compared to net loss of RMB76.1 million during the prior year quarter.
Basic net income per ADS and diluted net income per ADS for the second quarter of 2014 was RMB0.90 (US$0.14) and RMB0.88 (US$0.14) respectively, compared to basic net loss per ADS and diluted net loss per ADS of RMB2.20 (US$0.36) in the prior year quarter.
As of June 30, 2014, eLong held cash and cash equivalents, short-term investments and restricted cash of RMB1.9 billion (US$311 million), of which 90% was held in Renminbi and 10% was held in US dollars.
Business Outlook
eLong currently expects net revenues for the third quarter of 2014 to increase by 10% to 20% compared to the third quarter of 2013. This outlook reflects eLong's current and preliminary view, which is subject to change.
Share Repurchase Program
Pursuant to eLong's publicly announced share repurchase program, in the second quarter of 2014, eLong purchased 53,252 ADSs (representing 106,504 ordinary shares) at a cost of US$0.7 million.
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, 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," "future," "is/are likely to," "should" and "will" and similar expressions as they relate to eLong 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. Forward-looking statements include, but are not limited to, statements about our anticipated growth strategies, our future business development, results of operations and financial condition, our ability to control costs, limit losses and/or maintain profitability, our ability to attract customers and leverage our brand, and trends and competition in the travel industry in China and globally. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause our actual performance and results to differ materially from those discussed in the forward-looking statements. Factors that could affect our actual results and cause our actual results to differ materially from those referred in any forward-looking statement include, but are not limited to, declines or disruptions in the travel industry, international financial, political or economic crises, a slowdown in the PRC economy, an outbreak of bird flu or other disease, eLong's reliance on maintaining good relationships with, and stable air and hotel inventory from, hotel suppliers and airline ticket suppliers, and on establishing new relationships with suppliers on similar terms, our reliance on the TravelSky GDS system for our air business, Baidu (and its subsidiary Qunar) and Qihoo for our search engine marketing, our reliance on maintaining commercial cooperation with online hotel inventory distribution partners, the risk that eLong will not be able to increase its brand recognition, the possibility that eLong will be unable to continue timely compliance with the Sarbanes-Oxley Act or other regulatory requirements, the risk that eLong will not be successful in competing against new and existing competitors, the risk that our infrastructure and technology are damaged, fail or become obsolete, risks associated with Expedia, Inc.'s (Nasdaq: EXPE) majority ownership interest and Tencent's shareholding in eLong, risks relating to eLong's investments in, and acquisitions of, other businesses and assets, , fluctuations in the value of the Renminbi, inflation in China, changes in eLong's management team and other personnel, risks relating to uncertainties in the PRC legal system, including but not limited to, risks relating to our affiliated Chinese operating entities, risks and uncertainties relating to litigation and arbitration in China, and risks relating to the application of preferential tax policies, and other risks mentioned in eLong's filings with the U.S. Securities and Exchange Commission, including eLong's Annual Report on Form 20-F.
If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward looking-statements. Investors should not rely upon forward-looking statements as predictions of future events. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in this press release are qualified by reference to this cautionary statement.
Conference Call
eLong will host a conference call to discuss its second quarter 2014 unaudited financial results on August 8, 2014 at 8:30 am Beijing time (August 7, 2014, 8:30 pm ET). The dial-in number is +1-866-844-9413 for U.S. participants; +852-3001-3802 for Hong Kong participants; and 10800-712-1470 (China Unicom), 10800-120-1470 (China Telecom) and 86-400-810-4731 for participants in mainland China. International participants can also dial +1-210-795-0512. Pass code: eLong. An archived web cast of this call will be available for one year on the Investor Relations section of the eLong web site at http://elong.investorroom.com/index.php?s=19.
About eLong, Inc.
eLong, Inc. (Nasdaq: LONG - News) is a leader in mobile and onlineaccomodations reservations in China offering consumers a leading network of domestic and international properties worldwide. eLong uses innovative technology to enable travelers to make informed lodging, air and train ticket booking decisions through convenient mobile and tablet applications, websites and easy to use tools such as destination guides, photos, maps and user reviews. eLong's largest shareholders are Expedia, Inc. (Nasdaq: EXPE) and Tencent Holdings Ltd. (HKSE: 0700). eLong operates websites including www.elong.com and www.elong.net.
For further information, please contact:
eLong, Inc.
Investor Relations
ir@corp.elong.com
+86-10-6436-7570
eLong, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)
Three Months Ended
Six Months Ended
Jun. 30,
2013
Mar. 31,
2014
Jun. 30,
2014
Jun. 30,
2014
Jun. 30,
2013
Jun. 30,
2014
Jun. 30,
2014
RMB
RMB
RMB
USD(1)
RMB
RMB
USD(1)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues:
Hotel reservations
198,546
204,841
254,065
40,954
378,698
458,905
73,974
Air ticketing
35,611
35,501
35,122
5,662
67,298
70,623
11,384
Other
17,524
22,362
23,237
3,746
36,728
45,600
7,351
Total revenues
251,681
262,704
312,424
50,362
482,724
575,128
92,709
Business tax, VAT and surcharges
(17,360)
(16,581)
(20,063)
(3,234)
(31,008)
(36,644)
(5,907)
Net revenues
234,321
246,123
292,361
47,128
451,716
538,484
86,802
Cost of services
(59,872)
(66,822)
(70,888)
(11,427)
(114,690)
(137,710)
(22,198)
Gross profit
174,449
179,301
221,473
35,701
337,026
400,774
64,604
Operating expenses:
Service development
(40,385)
(55,070)
(62,421)
(10,062)
(76,880)
(117,492)
(18,939)
Sales and marketing
(164,952)
(136,093)
(149,074)
(24,031)
(277,567)
(285,167)
(45,969)
General and administrative
(16,091)
(33,329)
(36,636)
(5,906)
(37,675)
(69,965)
(11,278)
Amortization of intangible assets
(911)
(1,735)
(1,467)
(236)
(1,824)
(3,202)
(516)
Charges related to property and equipment and intangible assets
-
-
-
-
(177)
-
-
Total operating expenses
(222,339)
(226,227)
(249,598)
(40,235)
(394,123)
(475,826)
(76,702)
Other operating income
-
-
30,000
4,836
-
30,000
4,836
Income/(loss) from operations
(47,890)
(46,926)
1,875
302
(57,097)
(45,052)
(7,262)
Other income/(expense):
Interest income
14,857
15,768
15,496
2,497
29,486
31,265
5,039
Government subsidies
-
2,819
8,776
1,415
-
11,595
1,869
Foreign exchange losses
(483)
(931)
(2,544)
(410)
(1,022)
(3,475)
(560)
Other
(949)
656
228
37
(428)
884
143
Total other income
13,425
18,312
21,956
3,539
28,036
40,269
6,491
Income/(loss) before income tax benefit/(expense)
(34,465)
(28,614)
23,831
3,841
(29,061)
(4,783)
(771)
Income tax benefit/(expense)
(43,069)
(7,702)
6,230
1,004
(46,345)
(1,472)
(237)
Share of net income/(loss) in non-consolidated
affiliates
1,426
(49)
311
50
2,070
261
42
Net income/(loss)
<br