Chinese Internet travel website eLong.com (LONG) says total net revenues increased 27% year-on-year to CNY82.9 million and net loss from continuing operations worsened year-on-year by CNY11.7 million to CNY12.1 million driven primarily by a CNY15.3 million increase in unrealized foreign exchange losses. The company made the announcement as it reported its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007.
"The improvement in eLong's top line performance in Q4 2007 was driven in large by improved call center service levels, the introduction of '24 by 7' air ticketing service and introduction of a triple loyalty points offer to reward customers," said Guangfu Cui, CEO of eLong. "We recognize however that we have significant work ahead of us going forward. In the coming six months we will continue our efforts to improve customer experience by investing in back office systems, streamlining order fulfilment and launching a major website upgrade."
Hotel commissions for the fourth quarter of 2007 increased 20% year-on- year primarily due to higher room volume. Room nights booked through eLong increased 19% to 1,023,000, while commission per room night was CNY0.7 higher than the prior year quarter, at CNY66. eLong increased the number of hotels offered by 37% in 2007, bringing the total to more than 4,800 hotels in over 300 cities across China as of December 2007, compared with 3,500 as of December 2006. Hotel commissions for fiscal 2007 increased 15% year-on-year primarily due to higher room volume. Room nights booked through eLong increased 14% to 3,711,000 for fiscal 2007, while commission per room night was CNY65, up CNY0.5 compared with the prior year.
Air ticketing commissions for the fourth quarter of 2007 increased 66% year-on-year, driven by a 39% increase in air segments to 373,000, and a 73 basis point increase in the average percent commission to 5.6% or CNY43 per air ticket. The quarter also benefited from higher average ticket price, which went up by 4.5% year-on-year, to CNY769. Air ticketing commissions for fiscal 2007 increased 50% compared to the prior year period primarily driven by a 41% increase in air segments to 1,416,000, and average percent air commission per ticket increased to 5.1% or CNY41.
Gross margin in the fourth quarter was 72%, compared with 75% in the prior year period. The primary driver of gross margin reduction was the mix shift from higher margin hotel revenues to lower margin air revenues. The remaining margin reduction was mainly driven by increased call center expenditures associated with improved customer service levels. Gross margin for fiscal 2007 was 72%, compared with 75% in fiscal 2006. Gross margin decreased primarily due to the same factors impacting the fourth quarter year-on-year margin decline.
The total of service development, sales and marketing, general and administrative expenses for the fourth quarter 2007 increased 13% year-on-year; total operating expenses increased 14% year-on-year. The total of service development, sales and marketing, general and administrative expenses for fiscal 2007 increased 12% compared to fiscal 2006; total operating expenses increased 13% over the prior year.
Net loss for the fourth quarter 2007 increased by CNY10.4 million over the prior year quarter to CNY12.1 million. Net loss for 2007 increased by CNY21.1 million to CNY22.1 million.
eLong expects net revenues for the first quarter of 2008 to be within the range of CNY68.0 million to CNY75.0 million, an increase of 10% to 22% from the first quarter of 2007.
