Ctrip.com (CTRP) announced its unaudited financial results for the quarter ended June 30, 2005. Net revenues were CNY129.0 million in the second quarter of 2005, up 60% year-on-year.

The company also announced its President and Chief Financial Officer, Neil Shen has indicated his intention to resign from his executive positions at the company to pursue interests in venture capital business. Shen will focus on investment opportunities in China working with Sequoia Capital. To ensure a smooth transition, Shen has committed to remaining in his current position for a three-month period until a suitable successor is appointed.

For the second quarter of 2005, Ctrip reported total revenues of CNY137.4 million, representing a 61% increase from the same period in 2004 and a 33% increase from the first quarter of 2005.

Hotel reservation revenues totaled CNY92.3 million for the second quarter of 2005, representing a 34% increase from the same period in 2004 and a 31% increase from the first quarter of 2005, primarily as a result of the steady growth in hotel room nights sales volume.

The total number of hotel room nights booked was approximately 1.39 million in the second quarter of 2005, compared to approximately 1.05 million room nights for the same period in 2004 and approximately 1.10 million room nights in the first quarter of 2005.

Air ticket booking revenues for the second quarter of 2005 were CNY36.8 million, representing a 178% increase from the same period in 2004 and a 29% increase from the first quarter of 2005, primarily due to a strong growth of air tickets sales volume accompanied by higher average commission per ticket achieved. The total number of air tickets sold in the second quarter of 2005 was approximately 800,000, compared to approximately 380,000 for the same period in 2004 and approximately 680,000 in the first quarter of 2005.

Packaged tour revenues for the first quarter of 2005 were CNY5.8 million, up 167% from the same period in 2004 and 71% from the first quarter of 2005.

For the second quarter of 2005, net revenues were CNY129.0 million, a 60% increase from the same period in 2004 and a 33% increase from the first quarter of 2005.

The gross margin decreased slightly to 85% in the second quarter of 2005 from 86% for the same period in 2004, due to higher cost of services as a result of increased revenue contribution from non-hotel booking services. Gross margin remained at 85%, flat against the first quarter of 2005.

Sales and marketing expenses for the second quarter of 2005 increased by 61% to CNY27.3 million from the same period in 2004, primarily due to increased expenses associated with customer reward program and staff hiring, as well as increased advertisement expenses. Sales and marketing expenses increased by 23% from the first quarter of 2005. Sales and marketing expenses as a percentage of net revenues in the second quarter of 2005 remained the same as the second quarter of 2004.

Product development expenses for the second quarter of 2005 increased by 70% to CNY14.1 million from the same period in 2004, primarily as a result of the staff hiring to expand our travel supplier network. Product development expenses increased by 21% from the first quarter of 2005. Product development expenses as a percentage of net revenues in the second quarter of 2005 were comparable to the same period in 2004.

General and administrative expenses for the second quarter of 2005 increased by 36% to CNY10.1 million from the same period in 2004, primarily due to the hiring of additional staff. General and administrative expenses increased by 21% from the first quarter of 2005. General and administrative expenses as a percentage of net revenues in the second quarter of 2005 decreased slightly from the same period in 2004.

Total operating expenses for the second quarter of 2005 were CNY52.0 million, an increase of 56% from the same period in 2004 and 22% from the first quarter of 2005. Total operating expenses as a percentage of net revenues in the second quarter of 2005 decreased to 40%, compared to 41% in the same period in 2004 and 44% in the first quarter of 2005.

Operating income for the second quarter of 2005 was CNY57.3 million, an increase of 58% from the same period in 2004 and 46% from the first quarter of 2005, respectively.

Operating margin remained mostly flat at 44% compared to the same period in 2004, but increased from 40% in the first quarter of 2005.

Net income for the second quarter of 2005 was CNY56.5 million, representing an 80% increase from the same period in 2004 mainly due to higher income from operations coupled with the lower income tax rate for our PRC subsidiaries in the quarter.

Cash flow from operating activities was CNY57.4 million in the second quarter of 2005, compared to CNY30.6 million in the same period of 2004 and CNY10.8 million (US$1.3 million) in the first quarter of 2005. As of June 30, 2005, the cash balance was CNY642.9 million, compared to CNY617.1 million as of March 31, 2005.

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