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eLong Reports Third Quarter 2014 Unaudited Financial Results

11/13/2014| 3:36:25 PM|

BEIJING, Nov. 13, 2014 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), reported unaudited financial results for the third quarter ended September 30, 2014.

BEIJING, Nov. 13, 2014 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading mobile and online travel service provider in China, today reported unaudited financial results for the third quarter ended September 30, 2014.

Highlights

Hotel room nights stayed in the third quarter increased 22% to 9.4 million room nights compared to 7.7 million in the prior year period.
Hotel commission revenue for the third quarter increased 6% to RMB269.8 million (US$44.0 million), compared to RMB255.2 million (US$41.7 million) in the third quarter of 2013.
Net revenues for the third quarter increased 2% to RMB301.5 million (US$49.1 million), compared toRMB296.9 million (US$48.5 million) in the third quarter of 2013. Total revenues for the third quarter increased to RMB323.5 million (US$52.7 million).
Mobile bookings comprised 48% of eLong brand room nights*, and cumulative downloads of eLong mobile apps reached the 100 million milestone, in the third quarter.
More than 20,000 properties have contracted to use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies, compared to over 10,000 in the second quarter.

"Our mobile lodging transactions have now surpassed 100,000 per day on peak days during holiday periods; and our lodging network has grown to more than 155,000 properties in China and over 365,000 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 and last minute products," 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 third quarter of 2014 as compared to the same period in 2013 were as follows(in RMB million):

 

Hotel Reservations

Hotel commission revenue increased 6% in the third 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 third quarter increased 22% year-on-year to 9.4 million; a slower rate of room night growth than in recent quarters. Commission per room night decreased 13% year-on-year, primarily due to growth of lower commission rate and lower average daily rate hotel room nights, and growth of our coupon program. Hotel commission revenue grew to 84% of total revenues from 81% in the prior year quarter.

Air Ticketing

Air ticketing commission revenue decreased 24% in the third quarter of 2014 compared to the prior year quarter, due to a 21% decrease in commission per segment and a 4% decrease in air segments. Decline in commission per segment was primarily due to the lowering by major Chinese airlines of the base air commission rate from 3% to 2% in July 2014. Air ticketing commission revenue decreased to 8% of total revenues from 11% in the prior year quarter.

Other

Other revenue is primarily derived from advertising and travel insurance. Other revenue increased 6% year-on-year in the third quarter of 2014, mainly driven by increased travel insurance revenues. Other revenue was 8% of total revenues, consistent with the prior year quarter.

Profitability

Gross margin in the third quarter of 2014 was 70%, compared to 75% in the third quarter of 2013. Gross margin decline was primarily due to a decrease in hotel commission revenue per room night.

Operating expenses for the third quarter of 2014 as compared to the same period in 2013 were as follows (in RMB million):

 

Total operating expenses increased 4% for the third quarter of 2014 compared to the third quarter of 2013. Total operating expenses increased to 96% of net revenues in the third quarter of 2014 from 95% in the prior year quarter. Operating loss was RMB79.5 million in the third quarter of 2014 compared to operating loss of RMB57.9 million in the prior year quarter.

Service development expenses are expenses related to technology and our product offering, including our mobile applications, websites and other systems, as well as our supplier relations function. Service development expenses increased 53% compared to the prior year quarter, mainly driven by higher personnel expenses. Service development expenses increased to 25% of net revenues in the third quarter of 2014, compared to 16% in the same quarter of 2013.

Sales and marketing expenses for the third quarter of 2014 decreased 16% over the prior year quarter, driven by decreased advertising expenses. Sales and marketing expenses decreased to 59% of net revenues in the third quarter of 2014 from 72% in the same quarter of 2013.

General and administrative expenses for the third quarter of 2014 increased 82% compared to the prior year quarter, primarily due to higher share-based compensation charges. General and administrative expenses increased to 12% of net revenues in the third quarter of 2014 from 7% in the same quarter of 2013.

Other income was RMB19.1 million in the third quarter of 2014 compared to RMB16.5 million in the third quarter of 2013, primarily due to increased government subsidies.

Income tax benefit for the third quarter of 2014 was RMB4.9 million, compared to income tax expense of RMB9.6 million during the prior year quarter.

Net loss for the third quarter of 2014 was RMB58.3 million, compared to net loss of RMB50.4 million during the prior year quarter.

Basic net loss per ADS and diluted net loss per ADS for the third quarter of 2014 were each RMB1.64 (US$0.26), compared to basic net loss per ADS and diluted net loss per ADS of RMB1.44 (US$0.24) in the prior year quarter.

As of September 30, 2014, eLong held cash and cash equivalents, short-term investments and restricted cash ofRMB1.9 billion (US$315 million), of which 90% was held in Renminbi and 10% was held in US dollars.

Business Outlook

eLong currently expects net revenues for the fourth quarter of 2014 to be within the range of a decline of 20% to an increase of 10% compared to the fourth quarter of 2013. This outlook reflects eLong's current and preliminary view, which is subject to change.

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