Chinese online travel service provider eLong.com (LONG) reported unaudited financial results for the first quarter ended March 31, 2006.
Total revenues for the first quarter were CNY58.4 million, an increase of 53% from CNY38.1 million reported in the same period in 2005, and a decrease of 10% from CNY64.8 million reported in the fourth quarter of 2005.
Revenue from hotel commissions for the first quarter of 2006 totaled CNY42.1 million, an increase of 46% from CNY28.9 million year-over-year, and a decrease of 8% from CNY45.6 million sequentially.
The company says the year-over-year increase in hotel commissions was primarily due to higher room volumes accompanied by higher hotel commission per room night. Hotel room nights booked through eLong increased 30% to 666,000 in the first quarter from 513,000 in the corresponding period a year ago.
The sequential decrease in hotel commissions was due to the traditionally low season during the first quarter Chinese New Year holidays, which resulted in an 8% decline in hotel room nights compared to 724,000 room nights in the fourth quarter of 2005.
Hotel commissions per room night were CNY63 in the first quarter of 2006, up 13% from CNY56 in the corresponding period a year ago, and remained unchanged from the fourth quarter of 2005. The year-over-year increase was mainly due to higher commissions associated with increased volume.
"We are pleased to report that eLong has achieved strong first quarter results with healthy year-over-year growth," said Tom SooHoo, CEO of eLong. "In addition, eLong continues to bring cutting-edge products and services to the Chinese market, such as the launch of the 360-degree hotel virtual tour capability and a vastly expanded international hotel offering on our site, aimed towards offering our customers the most enriching and convenient online travel booking experience."
Revenues from air ticketing commissions during the first quarter of 2006 totaled CNY8.0 million, an increase of 115% from CNY3.7 million year-over-year, and an increase of 6% from CNY7.6 million sequentially.
Volume in air segment sales continued to grow with 218,000 air segments sold in the first quarter of 2006, an increase of 112% from 103,000 in the corresponding period a year ago and 1% higher than the 215,000 sold in the fourth quarter of 2005. Revenue per air ticket was CNY37 in the first quarter of 2006 as compared to CNY36 in the corresponding period one year ago and CNY35 in the fourth quarter of 2005. The sequential increase was primarily due to an increase in the average air ticket price.
Other travel revenue in the first quarter of 2006 was CNY3.2 million, a decrease of 13% from CNY3.7 million year-over- year, and an increase of 10% from CNY2.9 million sequentially.
The company says year-over-year decrease was due to lower revenues from Ray Time as a result of closing unprofitable projects and the sequential increase was mainly driven by seasonal uptick in vacation package sales for travel during the Chinese New Year holidays.
Gross margins in the first quarter of 2006 were 77%, unchanged from the corresponding period a year ago and down from 82% in the fourth quarter of 2005. The sequential decrease in gross margins was due to lower first quarter hotel revenues, increased revenue contribution from the air ticketing business, which has lower gross margins than the hotel business, and a sequential reduction in non travel revenue.
Operating loss in the first quarter of 2006 was CNY14.2 million, as compared with an operating loss of CNY15.5 million in the corresponding period of 2005 and CNY14.2 million in the fourth quarter of 2005.
The company recorded a net loss of CNY10.4 million for the first quarter of 2006, compared to a net loss of CNY9.8 million in the corresponding period a year ago, and a net loss of CNY8.7 million in the fourth quarter of 2005.
As of March 31, 2006, eLong's cash and cash equivalents balance was US$131.4 million, including restricted cash and cash equivalents of US$9.6 million.
"At this early stage of the online travel market in China, we will continue to focus on growth as eLong gains market share from traditional channels," said Derek Palaschuk, Chief Financial Officer of eLong. "While we will continue to focus on optimizing our cost structure, we believe our current level of investment in the business is appropriate as we expect it to further strengthen our competitive position."
eLong expects travel revenues for the second quarter of 2006 within the range of CNY60 million to CNY65 million, an increase of 30% to 41% from the second quarter of 2005, and total revenues of CNY65 million to CNY70 million, an increase of 28% to 38% from the second quarter of 2005.
The company expects the operating loss in the second quarter of 2006 to be less than the operating loss of CNY14.2 million in the first quarter of 2006.