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Qunar Reports Second Quarter 2014 Financial Results

08/22/2014| 12:12:13 PM| 中文

BEIJING, Aug. 21, 2014 (GLOBE NEWSWIRE) -- Qunar Cayman Islands Limited (Nasdaq:QUNR) ("Qunar" or the "Company"), China's leading search-based travel commerce platform, today announced its unaudited financial results for the second quarter ended June 30, 2014.

Highlights for the Second Quarter of 2014

• Total revenues for the second quarter of 2014 were RMB400.4 million (US$64.5 million), an increase of 127.3% year-on-year, the highest revenue growth rate in ten quarters.
• Mobile revenues for the second quarter of 2014 were RMB142.3 million (US$22.9 million), an increase of 511.8% year-on-year, representing 35.5% of total revenues, compared to 13.2% in the corresponding period of 2013.
• Total Estimated Flight Ticket volume (TEFT) and Total Estimated Hotel Room-night volume (TEHR) for the second quarter of 2014 were 19.1 million and 7.3 million, respectively, an increase of 66.1% and 105.2% year-on-year.

"We witnessed another strong quarter of accelerating revenue growth and impressive volume growth across our business units, driven by market share gains and pricing leverage. Returns on our investments have been coming in earlier and quicker than we had expected," said Chenchao (CC) Zhuang, chief executive officer and co-founder of Qunar. "Flight revenue per ticket grew 46% year-on-year, a testament to our growing market position and to the superior value proposition Qunar brings to travel service providers.

"We remain focused on providing consumers with the most comprehensive product offerings and best deals in the industry," Mr. Zhuang added. "In the second quarter alone, we signed over 72,000 hotels, taking our direct sales network to over 165,000 hotels. We also consolidated our position as the platform of choice for mobile users. Tour package GMV maintained its rapid momentum, expanding by more than five times year-on-year."

"We are pleased to see our investments in technology and product sourcing continue to drive strong growth right across the business," said Sam Sun, chief financial officer of Qunar. "Given the positive results of our investment up to this point, we will continue our investment to ensure we capture the enormous market opportunities ahead."

Second Quarter 2014 Financial Results

Total revenues for the second quarter of 2014 were RMB400.4 million (US$64.5 million), an increase of 127.3% year-on-year and 19.4% quarter-on-quarter. Mobile revenues for the second quarter of 2014 were RMB142.3 million (US$22.9 million), an increase of 511.8% year-on-year, representing 35.5% of total revenues. Pay-for-performance ("P4P") revenues for the second quarter of 2014 were RMB378.6 million (US$61.0 million), an increase of 137.4% year-on-year and 18.7% quarter-on-quarter.

Among the P4P revenues, flight and flight related revenues for the second quarter of 2014 were RMB279.4 million (US$45.0 million), an increase of 143.3% year-on-year. Year-on-year P4P flight revenue growth was primarily due to a 66.1% increase in TEFT and a 46.4% increase in revenue per ticket.

P4P hotel revenues were RMB71.5 million (US$11.5 million), an increase of 79.5% year-on-year. Year-on-year P4P hotel revenue growth was primarily due to a 105.2% increase in TEHR and was slightly offset by a 12.5% decrease in revenue per room night, mainly as a result of coupon-related promotional costs and a decrease in average daily room rates.

Gross profit for the second quarter of 2014 was RMB294.7 million (US$47.5 million), an increase of 114.1% year-on-year. Gross margin for the second quarter of 2014 was 73.6%, compared to 78.2% for the corresponding period of 2013 and 78.1% for the first quarter of 2014. The year-on-year increase in gross profit during the quarter was primarily due to the significant increase in total revenues, and was partially offset by an increase in online payment processing fees recorded in cost of revenues. Gross profit grew on an accelerated basis, compared to previous quarters.

Product development expenses for the second quarter of 2014 were RMB181.6 million (US$29.3 million), an increase of 181.6% year-on-year, primarily due to an increase in salary, welfare and other expenses associated with headcount increases. Excluding share-based compensation expenses, product development expenses accounted for 41.8% of total revenues, compared to 34.5% for the corresponding period of 2013 and 31.6% for the first quarter of 2014.

Product sourcing expenses for the second quarter of 2014 were RMB67.7 million (US$10.9 million), an increase of 416.1% year-on-year, primarily due to an increase in product sourcing headcount. Excluding share-based compensation expenses, product sourcing expenses increased 428.5% year-on-year, and accounted for 16.9% of total revenues, compared to 7.3% for the corresponding period of 2013 and 11.4% for the first quarter of 2014.

Sales and marketing expenses for the second quarter of 2014 were RMB215.0 million (US$34.7 million), an increase of 212.4% year-on-year, primarily due to an increase in salary and welfare expenses as a result of increased headcount, as well as an increase in online marketing expenses. Excluding share-based compensation, sales and marketing expenses increased 211.4% year-on-year, accounting for 52.9% of total revenues, compared to 38.6% for the corresponding period of 2013 and 38.4% for the first quarter of 2014.

Online marketing expenses for the Company's Baidu Zhixin Cooperation for the second quarter of 2014 were RMB147.6 million (US$23.8 million), an increase of 120.5% quarter-on-quarter. The increase was primarily due to a significant increase in Zhixin-related page views acquired during the period. Online marketing expenses from the Zhixin Cooperation Agreement were recognized ratably over the period of service required to earn each tranche of warrants based upon the estimated exercisable number of the Baidu warrants and the fair value of the warrants at each reporting date.

General and administrative expenses for the second quarter of 2014 were RMB111.8 million (US$18.0 million), an increase of 432.9% year-on-year, primarily due to an increase in share-based compensation, salary and welfare expenses as a result of an increase in headcount and average salary. Excluding share-based compensation expenses, general and administrative expenses accounted for 13.3% of total revenues, compared to 10.8% for the corresponding period of 2013 and 11.0% for the first quarter of 2014. The increase was largely due to an increase in costs associated with being a public company.

Operating loss for the second quarter of 2014 was RMB429.0 million (US$69.1 million), compared to RMB29.7 million in the corresponding period of 2013 and RMB174.1 million in the first quarter of 2014. On a non-GAAP basis, which excludes online marketing expenses from the Zhixin Cooperation Agreement of RMB147.6 million, share-based compensation expenses of RMB76.0 million, and non-cash expenses relating to free user traffic contributed by Baidu of RMB1.5 million, operating loss for the second quarter of 2014 was RMB203.8 million (US$32.9 million). Operating margin (non-GAAP) for the second quarter of 2014 was negative 50.9%, compared to negative 12.2% in the corresponding period of 2013 and negative 13.8% in the first quarter of 2014.

Net loss attributable to Qunar's shareholders for the second quarter of 2014 was RMB421.6 million (US$68.0 million), compared to RMB41.2 million in the corresponding period of 2013 and RMB183.6 million in the first quarter of 2014. The increase in net loss attributable to Qunar's shareholders was primarily due to continued investment in product development and sourcing, marketing efforts to drive business growth, and an increase in share-based compensation expenses. Basic and diluted net loss per ADS for the second quarter of 2014 was RMB3.60 (US$0.57).

Adjusted net loss (non-GAAP), defined as net loss excluding online marketing expenses from the Zhixin Cooperation Agreement, share-based compensation expenses and non-cash expenses relating to free user traffic contributed by Baidu, Inc., was RMB196.5 million (US$31.7 million), compared to adjusted net loss of RMB33.0 million in the corresponding period of 2013 and adjusted net loss of RMB55.7 million in the first quarter of 2014.

Adjusted EBITDA (non-GAAP), defined as net loss before income taxes, interest expenses, depreciation and amortization, further adjusted to exclude online marketing expenses from the Zhixin Cooperation Agreement, share-based compensation expenses and non-cash expenses relating to free user traffic contributed by Baidu, Inc., for the second quarter of 2014 was negative RMB183.2 million (US$29.5 million), compared to negative RMB14.8 million in the corresponding period of 2013 and negative RMB45.8 million in the first quarter of 2014.

As of June 30, 2014, Qunar had cash, cash equivalents and short-term investments of RMB1.3 billion (US$ 211.0 million). As of July 31, 2014, Qunar had 255,070,668 Class A ordinary shares and 100,631,019 Class B ordinary shares outstanding.

Business Outlook

For the third quarter of 2014, the Company expects year-on-year revenue growth in the range of 90% to 95%. This forecast reflects Qunar's current and preliminary view, which is subject to change.

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