BEIJING, Feb. 25 /PRNewswire-Asia/ -- eLong, Inc. (Nasdaq: LONG), a
leading online travel service provider in China, today reported unaudited
financial results for the fourth quarter and full year ended December 31, 2008.
(Logo:http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO )
Highlights - Fourth Quarter 2008
-- Total gross revenues for the fourth quarter increased 4% year-on-year
to RMB91.0 million and net revenues increased 4% year-on-year to
RMB85.7 million.
-- Travel revenues before business tax and surcharges comprised of hotel,
air and other travel product and service revenues increased 3% in the
fourth quarter year-on-year to RMB87.3 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
Q4 2008 Total Q4 2007 Total Growth
Hotel commissions 67,913 78 % 67,345 80 % 1 %
Air ticketing
commissions 19,316 22 % 15,971 19 % 21 %
Other travel revenue 74 -- 1,242 1 % -94 %
Total travel revenue 87,303 100 % 84,558 100 % 3 %
-- Operating loss in the fourth quarter was RMB10.3 million compared to
operating income of RMB2.1 million in the prior year period, driven
primarily by greater sales and marketing expenses.
-- Net loss from continuing operations in the fourth quarter decreased by
RMB7.4 million year-on-year to RMB8.2 million, driven primarily by a
RMB28.9 million decrease in foreign currency exchange losses, partially
offset by increased sales and marketing, and a decrease of RMB7.0
million in interest income.
-- Cash, cash equivalents and short-term investments as of December 31,
2008 were RMB957.4 million (USD$140.3 million). Short-term investments
of RMB635.8 million (USD$93.2 million) consisting of time deposits of
six or nine months duration held in commercial banks located outside
mainland China.
-- From the commencement of the Company's share buyback program in March
2008 through December 31, 2008, the Company repurchased 2,000,000 ADSs
at a cost of USD$15.0 million. The Company does not intend to make
further repurchases at this time.
Highlights - Full Year 2008
-- Total gross revenues in 2008 increased 10% year-on-year to RMB348.4
million and net revenues increased 10% year-on-year to RMB327.3 million.
-- Travel revenues before business tax and surcharges comprised of hotel,
air and other travel product and service revenues increased 9% in 2008
to RMB331.9 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
2008 Total 2007 Total Growth
Hotel commissions 253,458 77 % 240,803 79 % 5 %
Air ticketing
commissions 77,205 23 % 57,456 19 % 34 %
Other travel revenue 1,284 -- 5,588 2 % -77 %
Total travel revenue 331,947 100 % 303,847 100 % 9 %
-- Operating loss increased year-on-year by RMB27.1 million to RMB41.7
million in 2008, driven primarily by greater sales and marketing
expenses, and to a lesser extent by increased service development
expense.
-- Net loss from continuing operations increased year-on-year by RMB50.9
million to RMB76.6 million in 2008, driven primarily by greater sales
and marketing expenses and a RMB26.5 million decrease in interest
income, partially offset by a RMB4.8 million decrease in foreign
currency exchange losses.
"In 2008, we have fixed the fundamentals of the Company and established
our core competencies in our on-line hotel and air businesses." said Guangfu
Cui, Chief Executive Officer of eLong. "In 2009, our goal is to demonstrate
our competitiveness in the marketplace."
"In 2009, while cognizant of the uncertain economic climate, we will
continue to make prudent investments in information technology and marketing
to position the company for long term success." said Chris Chan, Chief
Financial Officer of eLong. "At the same time, we will take a disciplined
approach to our spending and streamline our general and administrative and
other costs."
Mr. Cui also stated, "We are aware of the recent Schedule 13D filing by
Oak Pacific Interactive (or "OPI") which stated that OPI had acquired
approximately 5 million of our ordinary shares. We have had preliminary
discussions with OPI relating to potential commercial arrangements, and
welcome the interest and support of all our shareholders. We remain confident
in the long term potential of the Chinese on-line travel market."
Business Results
Hotel
Hotel commissions increased 1% for the fourth quarter of 2008 compared to
the prior year quarter, primarily due to higher volume, which was partially
offset by lower commission per room night. Room nights booked through eLong
increased 3% year-on-year to 1,052,000, while commission per room night
decreased to RMB65 from RMB66 in the prior year quarter.
Hotel commissions for full year 2008 increased 5% compared to 2007,
primarily due to higher volume. Room nights booked through eLong in 2008
increased 6% to 3,945,000, while commission per room night of RMB64 declined
RMB0.7 compared to 2007.
Air
Air ticketing commissions increased 21% for the fourth quarter of 2008
compared to the prior year quarter, driven by a 24% year-on-year increase in
air segments to 463,000, and an increase of 11 basis points in the average
percent commission to 5.7%, partially offset by a decrease of 5% in the
average ticket price to RMB734 compared to the prior year quarter.
Air ticketing commissions for full year 2008 increased 34% compared to
2007 primarily driven by a 26% increase in air segments to 1,788,000, and an
increase of 57 basis points in the average percent commission to 5.6%,
partially offset by a decrease of 4% in the average ticket price to RMB765.
Profitability
Gross margin in the fourth quarter of 2008 and full year 2008 was 70%
compared to 72% in the fourth quarter and full year 2007, driven primarily by
the higher growth of lower margin air revenue relative to hotel revenue.
Operating expenses for the fourth 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
Q4 2008 Revenue Q4 2007 Revenue Growth
Service development 12,401 14 % 13,554 16 % -9 %
Sales and marketing 45,100 53 % 33,783 41 % 33 %
General and
administrative 12,032 14 % 9,000 11 % 34 %
Amortization of
intangibles 197 -- 265 -- -26 %
Write-down of property
and equipment and
intangibles 753 1 % 513 1 % 47 %
Total operating
expenses 70,483 82 % 57,115 69 % 23 %
Operating expenses for full year 2008 and 2007 were as follows (figures in
RMB 000's; some numbers may not add due to rounding):
% Net % Net Y/Y
2008 Revenue 2007 Revenue Growth
Service development 52,584 16 % 48,602 16 % 8 %
Sales and marketing 163,528 50 % 126,971 43 % 29 %
General and
administrative 53,652 16 % 52,006 17 % 3 %
Amortization of
intangibles 849 -- 1,060 -- -20 %
Write-down of property
and equipment and
intangibles 1,385 1 % 1,039 -- 33 %
Total operating
expenses 271,998 83 % 229,678 76 % 18 %
Total operating expenses increased 23% for the fourth quarter of 2008
compared to the fourth quarter of 2007. Operating expenses were 82% of net
revenues, an increase of 13 percentage points compared to the prior year
quarter.
Total operating expenses increased 18% for full year 2008 compared to 2007.
Operating expenses were 83% of net revenues, an increase of 7 percentage
points compared to 2007.
Service development expense is composed of expenses related to technology
and our product offerings, including our website, platforms and other related
systems development. Service development expense decreased 9% in the fourth
quarter 2008 compared to the prior year quarter, mainly driven by decreases in
expensed information technology labor costs and outside service fees. In the
fourth quarter 2008, service development expense decreased by 2 percentage
points to 14% of net revenues compared to 16% in the fourth quarter of 2007.
Full year 2008 service development expense increased 8% over full year
2007 service development expense, and was unchanged as a percentage of net
revenues in 2008 compared to 2007.
Sales and marketing expenses for the fourth quarter 2008 increased 33%
over the prior year quarter, mainly driven by higher sales commissions,
increased loyalty point awards and higher online marketing expenses. Sales and
marketing expenses increased by 12 percentage points to 53% of net revenues in
the fourth quarter 2008 compared to the same quarter of the prior year.
Sales and marketing expenses for full year 2008 increased 29% over full
year 2007, and increased by 7 percentage points to 50% of net revenues when
compared to 2007. The increase was primarily driven by increased sales
commissions and increased marketing and promotion.
General and administrative expenses for the fourth quarter 2008 increased
34% over the prior year quarter, mainly driven by an increase in professional
fees and restructuring charges. General and administrative expenses as a
percentage of net revenues increased by 3 percentage points year-on-year to
14% in the fourth quarter of 2008.
General and administrative expenses for full year 2008 increased 3% over
full year 2007, primarily due to increased employee compensation. General and
administrative expenses as a percentage of net revenues decreased by 1
percentage point to 16% in the full year 2008.
Other income, which represents interest income, foreign exchange
gains/losses and other income/expense, was RMB8.0 million in the fourth
quarter of 2008, due to interest income of RMB6.2 million in the fourth
quarter of 2008 and a foreign currency exchange gain of RMB1.7 million
resulting from the depreciation of the Renminbi against the US dollar during
the quarter.
Other loss for full year 2008 was RMB31.9 million, primarily due to a
foreign exchange loss of RMB61.1 million resulting from the appreciation of
the Renminbi during the year, partially offset by interest income of RMB29.0
million for full year 2008.
Net loss for the fourth quarter 2008 decreased by RMB7.4 million over the
prior year quarter to RMB8.2 million.
Net loss for full year 2008 increased by RMB51.0 million to RMB76.6
million.
Basic and diluted loss per ADS for the fourth quarter of 2008 was RMB0.34
compared to basic and diluted loss per ADS of RMB0.62 in the prior year
quarter.
Basic and diluted loss per ADS for full year 2008 was RMB3.08 compared to
basic and diluted loss per ADS of RMB1.02 in full year 2007.
Business Outlook
eLong expects net revenues, net of business tax and surcharges, for the
first quarter of 2009 to be within the range of RMB74 million to RMB82 million,
equal to a decline of 4% to an increase of 7% compared to the first quarter of
2008.
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/(gains). 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 fourth-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 fourth quarter 2008
earnings on February 26, 2009 at 8:00 AM Beijing time (February 25, 2009, 7:00
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 February 25, 2009 and 8:30 pm Eastern Time on February 26, 2009. The
toll-free number for U.S. callers is +1-888-485-2359; the Hong Kong dial in
number is +852-2802-5151, and the dial-in number for international callers is
+1-203-369-4581. The pass code for the replay is 753900.
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 decisions 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 selection of more than 7,000
thousand hotels in China, 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
Dec. 31, Sep. 30, Dec. 31, Dec. 31,
2007 2008 2008 2008
RMB RMB RMB USD
Revenues:
Hotel commissions 67,345 65,152 67,913 9,954
Air ticketing commissions 15,971 19,929 19,316 2,831
Other travel revenue 1,242 306 74 11
Travel 84,558 85,387 87,303 12,796
Other 3,264 4,603 3,699 542
Gross Revenues 87,822 89,990 91,002 13,338
Business tax and surcharges (5,333) (5,887) (5,302) (777)
Net revenues 82,489 84,103 85,700 12,561
Cost of Services (23,288) (24,628) (25,473) (3,733)
Gross Profit 59,201 59,475 60,227 8,828
Operating expenses:
Service development (13,554) (14,155) (12,401) (1,818)
Sales and Marketing (33,783) (50,654) (45,100) (6,610)
General and administrative (9,000) (13,849) (12,032) (1,764)
Amortization of intangibles (265) (217) (197) (29)
Write-down of property and
equipment and intangibles (513) (510) (753) (110)
Total operating expenses (57,115) (79,385) (70,483) (10,331)
Income/(loss) from operations 2,086 (19,910) (10,256) (1,503)
Other income(loss) (14,548) 1,402 7,995 1,172
Loss from continuing operations
before income tax expense (12,462) (18,508) (2,261) (331)
Income tax benefit (expense) (3,127) 2,963 (5,940) (871)
Loss from continuing operations (15,589) (15,545) (8,201) (1,202)
Discontinued operations:
Income from discontinued
operations -- -- -- --
Income tax expense of
discontinued operations -- -- -- --
Total discontinued operations -- -- -- --
Net loss (15,589) (15,545) (8,201) (1,202)
Basic loss per share (0.31) (0.31) (0.17) (0.025)
Diluted loss per share (0.31) (0.31) (0.17) (0.025)
Basic loss per ADS (0.62) (0.62) (0.34) (0.050)
Diluted loss per ADS (0.62) (0.62) (0.34) (0.050)
Shares used in computing basic
net loss per share 50,846 49,610 48,076 48,076
Shares used in computing
diluted net loss per share 50,846 49,610 48,076 48,076
Note: 1ADS = 2 shares
Share-based compensation charges
included are as follows: (1,538) 2,428 523 76
Cost of services 72 179 (79) (12)
Service development 838 684 37 5
Sales and marketing 42 338 (151) (22)
General and administrative (2,490) 1,227 716 105
Un-realized foreign
exchange losses/(gains) 27,188 4,996 (1,723) (253)
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=RMB6.8225 on December 31, 2008, USD1.00=RMB6.7899 on
September 30, 2008 and USD1.00=RMB7.2946 on December 31, 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 such rates
on the reporting dates.
Year Ended
Dec. 31, Dec. 31, Dec. 31,
2007 2008 2008
RMB RMB USD
Revenues:
Hotel commissions 240,803 253,458 37,150
Air ticketing commissions 57,456 77,205 11,317
Other travel revenue 5,588 1,284 188
Travel 303,847 331,947 48,655
Other 11,550 16,479 2,415
Gross Revenues 315,397 348,426 51,070
Business tax and surcharges (17,810) (21,113) (3,095)
Net revenues 297,587 327,313 47,975
Cost of Services (82,498) (96,996) (14,217)
Gross Profit 215,089 230,317 33,758
Operating expenses:
Service development (48,602) (52,584) (7,707)
Sales and Marketing (126,971) (163,528) (23,969)
General and administrative (52,006) (53,652) (7,864)
Amortization of intangibles (1,060) (849) (124)
Write-down of property and
equipment and intangibles (1,039) (1,385) (203)
Total operating expenses (229,678) (271,998) (39,867)
Income/(loss) from operations (14,589) (41,681) (6,109)
Other income(loss) (10,217) (31,918) (4,679)
Loss from continuing operations
before income tax expense (24,806) (73,599) (10,788)
Income tax benefit (expense) (885) (2,994) (439)
Loss from continuing operations (25,691) (76,593) (11,227)
Discontinued operations:
Income from discontinued
operations 112 -- --
Income tax expense of
discontinued operations (8) -- --
Total discontinued operations 104 -- --
Net loss (25,587) (76,593) (11,227)
Basic loss per share (0.51) (1.54) (0.226)
Diluted loss per share (0.51) (1.54) (0.226)
Basic loss per ADS (1.02) (3.08) (0.452)
Diluted loss per ADS (1.02) (3.08) (0.452)
Shares used in computing basic
net loss per share 50,758 49,784 49,784
Shares used in computing
diluted net loss per share 50,758 49,784 49,784
Note: 1ADS = 2 shares
Share-based compensation charges
included are as follows: 6,002 7,124 1,045
Cost of services 211 325 48
Service development 2,984 2,320 340
Sales and marketing 680 972 142
General and administrative 2,127 3,507 515
Un-realized foreign
exchange losses/(gains) 65,918 61,081 8,953
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=RMB6.8225 on December 31, 2008, USD1.00=RMB6.7899 on
September 30, 2008 and USD1.00=RMB7.2946 on December 31, 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 such rates
on the reporting dates.
eLong, Inc.
UNAUDITED CONDENSED CONSOLIDATED SUMMARY BALANCE SHEET DATA
(IN THOUSANDS)
Dec. 31, Dec. 31, Dec. 31,
2007 2008 2008
RMB RMB USD
ASSETS
Current assets:
Cash, cash equivalents 1,138,447 321,541 47,130
Short-term investments 19,120 635,810 93,193
Restricted assets 11,274 -- --
Accounts receivable, net 41,138 42,471 6,225
Due from related parties 924 518 76
Prepaid expenses and other current assets 15,645 23,660 3,468
Total current assets 1,226,548 1,024,000 150,092
Property and equipment, net 43,962 52,484 7,693
Goodwill 30,000 30,000 4,397
Intangible assets, net 2,192 943 138
Other non-current assets 28,966 30,538 4,476
Total assets 1,331,668 1,137,965 166,796
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 57,957 34,146 5,005
Income taxes payable 1,238 1,152 169
Due to related parties 4,529 8,120 1,190
Accrued expenses and other current
liabilities 83,233 81,889 12,003
Total current liabilities 146,957 125,307 18,367
Other long-term liabilities -- 477 70
Deferred income taxes 100 -- --
Total liabilities 147,057 125,784 18,437
Shareholders' equity
Ordinary shares 4,208 4,221 619
Treasury Stock -- (103,393) (15,155)
Additional paid-in capital 1,308,047 1,315,590 192,831
Accumulated deficit (127,644) (204,237) (29,936)
Total shareholders' equity 1,184,611 1,012,181 148,359
Total liabilities and shareholders'
equity 1,331,668 1,137,965 166,796
For further information, please contact:
eLong, Inc.
Investor Relations
Tel: +86-10-6436-7570
Email: ir@corp.elong.com
