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eLong Reports Fourth Quarter and Full Year 2009 Unaudited Financial Results
Mar 03, 2010 (04:03 PM EST)


BEIJING, March 3 /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, 2009.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO )

    Highlights -- Fourth Quarter 2009

    -- Total revenues for the fourth quarter increased 18% year-on-year to
       RMB106.9 million and net revenues increased 18% year-on-year to
       RMB100.9 million.

    Total revenues by product were as follows (figures in RMB million):

                            Q4           %         Q4          %         Y/Y
                           2009        Total      2008       Total     Growth
    Hotel commissions      72.7         68%       67.9         75%        7%
    Air ticketing
     commissions           27.7         26%       19.3         21%       44%
    Other                   6.5          6%        3.8          4%       71%
    Total revenues        106.9        100%       91.0        100%       18%


    -- Operating income in the fourth quarter was RMB2.4 million compared to
       operating loss of RMB10.3 million in the prior year period, driven
       primarily by increased net revenues and a decrease in sales and
       marketing expenses.

    -- Net income in the fourth quarter was RMB1.0 million compared to net
       loss of RMB8.2 million in the prior year period, driven primarily by an
       increase of RMB12.6 million in operating income and a decrease of
       RMB3.3 million in income tax expense, partially offset by an increase
       of RMB1.8 million in foreign currency exchange losses and a decrease of
       RMB5.0 million in interest income.

    -- Cash and cash equivalents and short-term investments as of December 31,
       2009 were RMB952.9 million (USD139.6 million).

    Highlights -- Full Year 2009

    -- Total revenues in 2009 increased 9% year-on-year to RMB379.5 million
       and net revenues increased 9% year-on-year to RMB357.9 million.

    Total revenues by product were as follows (figures in RMB million):

                                       %                   %         Y/Y
                           2009      Total      2008     Total     Growth
    Hotel commissions     256.8        68%     253.4       73%        1%
    Air ticketing
     commissions           96.0        25%      77.2       22%       24%
    Other                  26.7         7%      17.8        5%       50%
    Total revenues        379.5       100%     348.4      100%        9%


    -- Operating income in 2009 was RMB11.2 million compared to operating loss
       of RMB41.7 million in the prior year, driven primarily by increased net
       revenues and a decrease in sales and marketing expenses.

    -- Net income in 2009 was RMB19.9 million compared to net loss of RMB76.6
       million in the prior year, driven primarily by an increase of RMB52.9
       million in operating income and a decrease of RMB60.4 million in
       foreign currency exchange losses, partially offset by a decrease of
       RMB16.1 million in interest income and an increase of RMB0.8 million in
       income tax expense.

"The China State Council has made the travel industry a priority sector of the Chinese economy, which we believe improves the opportunities for eLong. Starting in 2010, we have quickened the pace of our product and service expansion and upgrades," said Guangfu Cui, Chief Executive Officer of eLong. "We launched dynamic packages, so that consumers can book hotel rooms and air tickets together as a package in order to save time and money. We have now contracted more than 10,000 domestic hotels and also offer over 100,000 hotels worldwide by connecting to Expedia, making eLong the largest online distributor in China in terms of hotels offered. And we upgraded our online international air booking technology in order to make booking international tickets on eLong as easy as booking domestic tickets."

"In the fourth quarter, we were able to achieve revenue growth of 18% year-on-year. This allowed us to deliver a profitable quarter and eLong's first profitable full year since 2006," said Mike Doyle, Chief Financial Officer of eLong.


    Business Results

Hotel

Hotel commissions increased 7% for the fourth quarter of 2009 compared to the prior year quarter, primarily due to higher volume, which was partially offset by lower commission per room night. Commission per room night decreased 9% year-on-year primarily due to lower average daily rates, including an increase in the proportion of volume from budget hotels, partially offset by an increase in hotel commission rates. Room nights booked through eLong in the fourth quarter increased 18% year-on-year to 1.2 million.

Hotel commissions for full year 2009 increased 1% compared to 2008, primarily due to higher volume, which was partially offset by lower commission per room night. Commission per room night decreased 7% year-on-year primarily due to lower average daily rates, including an increase in the proportion of volume from budget hotels, partially offset by an increase in hotel commission rates. Room nights booked through eLong in 2009 increased 9% year-on-year to 4.3 million.

Air

Air ticketing commissions increased 44% for the fourth quarter of 2009 compared to the prior year quarter, driven by a 26% increase in air segments to 0.6 million and an increase in commission per segment. Commission per segment increased 14%, due to a 4% increase in average ticket price and an increase in air commission rates as compared to the same quarter of the prior year.

Air ticketing commissions for full year 2009 increased 24% compared to 2008, driven by a 23% increase in air segments to 2.2 million and an increase in commission per segment. Commission per segment increased 1%, due to a 2% increase in average ticket price, partially offset by a decrease in air commission rates compared to the prior year.

Profitability

Gross margin in the fourth quarter of 2009 and full year 2009 was 70% which was the same as the fourth quarter and full year 2008.

Operating expenses for the fourth quarter of 2009 and same period in 2008 were as follows (figures in RMB million):

                             Q4       % Net       Q4        % Net       Y/Y
                            2009     Revenues    2008      Revenues    Growth
    Service development     16.7        17%      12.4         14%        34%
    Sales and marketing     38.0        38%      45.1         53%       (16%)
    General and
     administrative         13.3        13%      12.0         14%        11%
    Amortization of
     intangible assets       0.2         --       0.2          --         --
    Charges related to
     property and
     equipment and
     intangible assets       0.1         --       0.8          1%       (90%)
    Total operating
     expenses               68.3        68%      70.5         82%        (3%)

    Operating expenses for full year 2009 and 2008 were as follows (figures in
RMB million):

                                       % Net                % Net        Y/Y
                            2009      Revenues     2008    Revenues     Growth
    Service development     58.1         16%       52.6       16%         11%
    Sales and marketing    133.2         37%      163.5       50%        (19%)
    General and
     administrative         47.7         14%       53.7       16%        (11%)
    Amortization of
     intangible assets       0.6         --         0.8       --         (23%)
    Charges related to
     property and
     equipment and
     intangible assets       0.1         --         1.4        1%        (95%)
    Total operating
     expenses              239.7        67%       272.0       83%        (12%)

Total operating expenses decreased 3% for the fourth quarter of 2009 compared to the fourth quarter of 2008. Total operating expenses were 68% of net revenues, a decrease of 14 percentage points compared to the prior year quarter.

Total operating expenses decreased 12% for full year 2009 compared to 2008. Total operating expenses were 67% of net revenues, a decrease of 16 percentage points compared to 2008.

Service development expense consists of expenses related to technology and our product offering, including our websites, platforms, other system development and our supplier relations function. Service development expense increased 34% compared to the prior year quarter mainly driven by an increase in headcount. As a percentage of net revenues, service development increased from 14% a year ago to 17% in the fourth quarter of 2009.

Full year 2009 service development expense increased 11% over full year 2008 service development expense mainly driven by an increase in headcount, partially offset by a decrease in professional fees. Service development as a percentage of net revenues in 2009 was unchanged compared to 2008.

Sales and marketing expenses for the fourth quarter of 2009 decreased 16% over the prior year quarter, mainly driven by decreased marketing promotion expenses, labor costs and sales commissions. Sales and marketing expenses decreased to 38% of net revenues in the fourth quarter of 2009 from 53% in the same quarter of the prior year.

Sales and marketing expenses for full year 2009 decreased 19% over full year 2008, and decreased by 13 percentage points to 37% of net revenues when compared to 2008. The decrease was primarily driven by decreased marketing promotion expenses, labor costs and sales commissions.

General and administrative expenses for the fourth quarter of 2009 increased 11% compared to the prior year quarter, mainly driven by an increase in labor costs. General and administrative expenses decreased to 13% of net revenues in the fourth quarter of 2009 from 14% in the same quarter of the prior year.

General and administrative expenses for full year 2009 decreased 11% over full year 2008, primarily due to a decrease in professional fees and lower bad debt provisions, partially offset by an increase in labor costs. General and administrative expenses as a percentage of net revenues decreased by 2 percentage points to 14% in the full year 2009.

Other income (expenses), which represents interest income, foreign exchange gains/(losses) and other income/expense, was RMB1.2 million in the fourth quarter of 2009 compared to RMB8.0 million in the fourth quarter of 2008.

Other income (expenses) was RMB12.4 million in full year 2009 compared to other expenses of RMB31.9 million in 2008.

Net income for the fourth quarter of 2009 was RMB1.0 million, compared to net loss of RMB8.2 million during the prior year quarter.

Net income for full year 2009 was RMB19.9 million, compared to net loss of RMB76.6 million in 2008.

Net income per ADS and diluted net income per ADS for the fourth quarter of 2009 were RMB0.04, compared to net loss per ADS and diluted net loss per ADS of RMB0.34 in the prior year quarter.

Net income per ADS and diluted net income per ADS for full year 2009 were RMB0.84 and RMB0.80, compared to net loss per ADS and diluted net loss per ADS of RMB3.08 in 2008.

Business Outlook

eLong currently expects net revenues for the first quarter of 2010 to be within the range of RMB 86 million to RMB93 million, equal to an increase of 10% to 20% compared to the first quarter of 2009.

Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with generally accepted accounting principles in the United States, or GAAP, this press release includes certain non-GAAP financial measures including net income/(loss) per ADS, diluted net income/(loss) per ADS. 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, an outbreak of bird flu, H1N1 flu, SARS 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 or other requirements of the Sarbanes-Oxley Act, 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, fluctuations in the value of the Chinese currency, changes in eLong's management team and other key personnel, changes in third-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. 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 2009 unaudited financial results on March 4, 2010 at 8:00 am Beijing time (March 3, 2010, 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 +1-866-844-9413. The dial-in number for Hong Kong participants is +852-3001-3802. International participants can dial +1-210-795-0512. Pass code: eLong.

A replay of the call will be available for one day between 8:30 pm EST on March 3, 2010 and 8:30 pm EST on March 4, 2010. The toll-free number for U.S. callers is +1-800-839-3119; the dial-in number for Hong Kong is +852-3018-4329, and the dial-in number for international callers is +1-203-369-4602. The pass code for the replay is 9629.

Additionally, an 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 one year.

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, and uses web-based distribution technologies and a 24-hour call center to provide consumers with accurate travel information and high quality travel booking services. Aiming to deliver value and a worry-free travel booking experience to leisure and business travelers, eLong empowers consumers to make informed decisions by providing convenient online and offline hotel and air ticket booking services as well as easy to use tools such as maps, destination guides, photographs, virtual tours and user reviews. In addition to a selection of more than 10,000 hotels in over 450 cities across China, eLong also offers consumers the ability to make bookings at over 100,000 international hotelsin more than 100 countries worldwide, and can fulfill domestic and international air ticket reservations in over 80 major cities across China.

eLong operates websites including http://www.elong.com , http://www.elong.net , and http://www.xici.net .

    For further information, please contact:

    eLong, Inc.
     Investor Relations
     Email: ir@corp.elong.com
     Tel:   +86-10-6436-7570



    eLong, Inc.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)

                                                Three Months Ended
                                      Dec. 31, Sep. 30,   Dec. 31,  Dec. 31,
                                        2008     2009       2009      2009
                                         RMB      RMB        RMB       USD
                                   (Unaudited)(Unaudited)(Unaudited)(Unaudited)
    Revenues:
      Hotel commissions                67,913    68,585     72,748    10,658
      Air ticketing commissions        19,316    25,290     27,732     4,063
      Other                             3,773     9,319      6,458       946
    Total revenues                     91,002   103,194    106,938    15,667

      Business tax and surcharges      (5,302)   (5,957)    (6,032)     (884)
    Net revenues                       85,700    97,237    100,906    14,783

      Cost of services                (25,473)  (29,102)   (30,203)   (4,425)
    Gross profit                       60,227    68,135     70,703    10,358

    Operating expenses:
      Service development             (12,401)  (15,221)   (16,676)   (2,443)
      Sales and marketing             (45,100)  (36,095)   (38,071)   (5,577)
      General and administrative      (12,032)  (10,755)   (13,342)   (1,955)
      Amortization of intangible
       assets                            (197)     (157)      (182)      (27)
      Charges related to property and
       equipment and intangible assets   (753)       --        (72)      (10)
     Total operating expenses         (70,483)  (62,228)   (68,343)  (10,012)

     Income/(loss) from operations    (10,256)    5,907      2,360       346
    Other income (expenses):
      Interest income                   6,201     2,421      1,195       175
      Foreign exchange gains/(losses)   1,723      (323)       (93)      (14)
      Other                                71        --        111        16
    Total other income (expenses),
     net                                7,995     2,098      1,213       177

    Income/(loss) from operations
     before income tax expense         (2,261)    8,005      3,573       523
      Income tax expense               (5,940)     (526)    (2,608)     (382)
    Net income/(loss)                  (8,201)    7,479        965       141

    Net income/(loss) per share         (0.17)     0.16       0.02     0.003
    Diluted net income/(loss) per
     share                              (0.17)     0.15       0.02     0.003

    Net income/(loss) per ADS*          (0.34)     0.32       0.04     0.006
    Diluted net income/(loss) per
     ADS*                               (0.34)     0.30       0.04     0.006

    Shares used in computing net
     income/(loss) per share           48,076    47,199     47,289    47,289
    Shares used in computing diluted
     net income/(loss) per share       48,076    49,909     51,045    51,045

    Note: 1 ADS = 2 shares

    Share-based compensation charges
     included in:                         523     2,747      3,845       563
    Cost of services                      (79)      214        321        47
    Service development                    37       909      1,136       166
    Sales and marketing                  (151)      452        523        77
    General and administrative            716     1,172      1,865       273

    * Non-GAAP financial measures


                                                   Year Ended
                                         Dec. 31,  Dec. 31,   Dec. 31,
                                           2008      2009       2009
                                            RMB       RMB         USD
                                                  (Unaudited) (Unaudited)
    Revenues:
      Hotel commissions                   253,458   256,830      37,626
      Air ticketing commissions            77,205    96,036      14,069
      Other                                17,763    26,666       3,907
    Total revenues                        348,426   379,532      55,602

      Business tax and surcharges         (21,113)  (21,638)     (3,170)
    Net revenues                          327,313   357,894      52,432

      Cost of services                    (96,996) (106,935)    (15,666)
    Gross profit                          230,317   250,959      36,766

    Operating expenses:
      Service development                 (52,584)  (58,122)     (8,515)
      Sales and marketing                (163,528) (133,195)    (19,513)
      General and administrative          (53,652)  (47,670)     (6,984)
      Amortization of intangible
       assets                                (849)     (653)        (96)
      Charges related to property and
       equipment and intangible assets     (1,385)      (72)        (10)
     Total operating expenses            (271,998) (239,712)    (35,118)

     Income/(loss) from operations        (41,681)   11,247       1,648
    Other income (expenses):
      Interest income                      29,020    12,880       1,887
      Foreign exchange gains/(losses)     (61,081)     (709)       (104)
      Other                                   143       266          39
    Total other income (expenses),
     net                                  (31,918)   12,437       1,822

    Income/(loss) from operations
     before income tax expense            (73,599)   23,684       3,470
      Income tax expense                   (2,994)   (3,781)       (554)
    Net income/(loss)                     (76,593)   19,903       2,916


    Net income/(loss) per share             (1.54)     0.42       0.062
    Diluted net income/(loss) per
     share                                  (1.54)     0.40       0.059

    Net income/(loss) per ADS*              (3.08)     0.84       0.124
    Diluted net income/(loss) per
     ADS*                                   (3.08)     0.80       0.118

    Shares used in computing net
     income/(loss) per share               49,784    47,182      47,182
    Shares used in computing diluted
     net income/(loss) per share           49,784    49,973      49,973

    Note: 1ADS = 2 shares

    Share-based compensation charges
     included in:                           7,124    11,240       1,647
    Cost of services                          325       837         123
    Service development                     2,320     3,131         459
    Sales and marketing                       972     1,975         289
    General and administrative              3,507     5,297         776

    * Non-GAAP financial measures

    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=RMB6.8259 on December 31, 2009, USD1.00=RMB6.8262 on
            September 30, 2009 and USD1.00=RMB6.8225 on December 31, 2008 in
            the City of New York for cable transfers of Renminbi as certified
            for customs purposes by the Federal Reserve. No representation is
            made that the RMB amounts could have been, or could be, converted
            or settled into U.S. dollars at the rates stated herein on the
            reporting dates, at any other rates or at all.


    eLong, Inc.
    CONSOLIDATED BALANCE SHEETS
    (IN THOUSANDS)

                                      Dec. 31,       Dec. 31,      Dec. 31,
                                        2008           2009          2009
                                         RMB            RMB           USD
                                                    (Unaudited)   (Unaudited)
    ASSETS
    Current assets:
      Cash and cash equivalents         321,541        639,468        93,683
      Short-term investments            635,810        313,467        45,923
      Restricted cash                        --         60,000         8,790
      Accounts receivable, net           42,471         45,353         6,644
      Due from related parties              518            321            47
      Prepaid expenses                    8,840          7,871         1,153
      Other current assets               14,820         10,961         1,606
        Total current assets          1,024,000      1,077,441       157,846
    Property and equipment, net          52,484         44,005         6,447
    Goodwill                             30,000         31,950         4,681
    Intangible assets, net                  943            750           110
    Other non-current assets             30,538         29,804         4,366
        Total assets                  1,137,965      1,183,950       173,450


    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                   34,146         41,905         6,139
      Income taxes payable                1,152          2,908           426
      Due to related parties              8,120          1,099           161
      Accrued expenses and other
       current liabilities               81,889         92,694        13,580
        Total current liabilities       125,307        138,606        20,306
    Other long-term liabilities             477          1,186           174
    Deferred income taxes                    --            658            96
        Total liabilities               125,784        140,450        20,576

    Shareholders' equity
      Ordinary shares                     4,221          4,242           622
       Treasury Stock                  (103,393)      (103,393)      (15,147)
       Additional paid-in capital     1,315,590      1,326,985       194,404
       Accumulated deficit             (204,237)      (184,334)      (27,005)
        Total shareholders' equity    1,012,181      1,043,500       152,874
        Total liabilities and
         shareholders' equity         1,137,965      1,183,950       173,450

SOURCE eLong, Inc.