BEIJING, May 14 /Xinhua-PRNewswire/ -- eLong, Inc. (Nasdaq: LONG - News), a leading online travel service provider in China, today reported unaudited financial results for the first quarter ended March 31, 2007.
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").
