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eLong Reports Q3 2005 Financial Results

Total third quarter revenues for Chinese online travel company eLong.com (LONG) increased 56% year-over-year and 15% sequentially to CNY59.4 million and travel revenues increased 60% year-over-year and 15% sequentially to CNY54.2 million. The company made the announcement today for the third quarter ended September 30, 2005.

eLong recorded a net loss of CNY40.5 million for the third quarter, compared to a net loss of CNY723,000 in the corresponding period a year ago, and a net loss of CNY3.3 million in the second quarter.

The third quarter net loss includes a one-time non cash writedown of goodwill and intangibles of CNY17.5 million, which related to Ray Time, a company acquired in November 2004 and an unrealized foreign exchange loss of CNY23.4 million as a result of revaluation of the Renminbi which was partly offset by interest income of CNY8.4 million.

The US GAAP loss per ADS for the third quarter was CNY1.62, compared to US GAAP loss per ADS of CNY0.10 in the corresponding period a year ago and US GAAP loss per ADS of CNY0.14 in the second quarter.

Revenue from hotel commissions for the third quarter of 2005 totaled CNY42.7 million, an increase of 42% from CNY30.2 million year-over-year, and an increase of 15% from CNY37.1 million sequentially.

The increases in hotel commissions were primarily due to higher room volumes accompanied by higher hotel commission per room night. Hotel room nights booked through eLong increased to 684,000 in the third quarter, up 28% from 536,000 in the corresponding period a year ago, and up 11% sequentially from 615,000 in the second quarter.

Hotel commissions per room night were CNY62 in the third quarter of 2005, up 11% from CNY56 in the corresponding period a year ago and up 3% from CNY60 in the second quarter.

As of September 30, 2005, eLong offered its customers a choice of hotel rooms at discounted rates in almost 3,000 hotels in 280 cities across China as compared to almost 2,800 hotels in 230 cities at the end of the second quarter of 2005.

Revenues from air ticketing during the third quarter of 2005 totaled CNY7.5 million, an increase of 121% from CNY3.4 million year-over-year, and an increase of 50% from CNY5.0 million sequentially. Volume in air ticket sales continued to grow with 198,000 air tickets sold in the third quarter, more than double the air tickets sold in the corresponding period a year ago and 47% higher than the 135,000 sold in the second quarter.

Other travel revenue in the third quarter of 2005 was CNY4.0 million, an increase from CNY322,000 year-over-year, and a decrease of 22% from CNY5.1 million sequentially.

Gross margins in the third quarter were 80% as compared to 82% in the corresponding period a year ago and 78% in the second quarter.

Sales and marketing expenses were CNY26.2 million in the third quarter of 2005, an increase of 38% from CNY19.0 million year-over-year, and remained almost flat from CNY26.1 million in the second quarter.

Third quarter other loss was CNY15.2 million, as compared to other income of CNY455,000 in the corresponding period one year ago, and other income of CNY7.5 million in the second quarter of 2005.

As of September 30, 2005, the Company's cash and cash equivalents balance was US$130.7 million, including restricted cash and cash equivalents of US$9.4 million.

eLong expects total revenues for the fourth quarter 2005 within the range of CNY59 million to CNY62 million, an increase of 46% to 54% from the fourth quarter of 2004.

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