eLong.com's (LONG) third quarter results for the period ended September 30, 2004, show good growth for China's online travel giant.
"We are pleased to see growing demand for eLong's travel service offerings as evidenced by our healthy revenue growth," said Justin Tang, Chairman and Chief Executive Officer of eLong. "We are also proud of the recent completion of a strategic investment by IAC as well as our NASDAQ listing, two landmark events which we believe will bring significant benefits to our shareholders, customers, and suppliers. We reached these milestones with the valued support of eLong's customers, suppliers and employees."
Total revenues for the third quarter ended September 30, 2004 were CNY38 million (US$4.6 million). eLong recorded a net loss of CNY723,000 (US$88,000) for the quarter. GAAP loss per ADS for the third quarter was CNY0.10 (US$0.012). Adjusted net income for the quarter, which excludes amortization of stock compensation and intangibles and is a non-GAAP measure, was CNY1.4 million (US$167,000). Adjusted diluted income per ADS for the quarter, which is also a non-GAAP measure, was CNY0.08 (US$0.009).
Revenue from hotel reservations for the quarter totaled CNY30.2 million (US$3.6 million), an increase of 58% year-over-year and 12% sequentially. The total number of hotel room nights booked through eLong in the third quarter was 536,000, compared with 472,000 in the previous quarter and 315,000 in the corresponding period a year ago. Sequential growth in hotel reservation revenues was due primarily to both an increase in customers selecting eLong for their travel needs and traditionally stronger seasonal demand in the third quarter, compared with the second quarter.
As of September 30, 2004, eLong's customers were able to book hotel rooms through eLong at discounted rates at more than 2,600 hotels in 220 cities across China.
Revenues from air ticketing during the third quarter totaled CNY3.4 million (US$410,000), a 196% increase year-over-year and a 51% increase sequentially. Volume in air ticket sales continued to grow with approximately 86,000 air tickets sold in the third quarter, compared with 55,000 in the second quarter. Growth in third quarter air ticketing revenues was primarily driven by increased cross-selling of air tickets to eLong's existing hotel customers.
Gross margins in the third quarter remained relatively unchanged from the previous quarter at 87%.
Operating expenses for the third quarter, excluding stock-based compensation and amortization of goodwill and intangibles, were CNY32.05 million (US$3.87 million), a decrease of 10% from the previous quarter. This reduction in operating expenses was largely due to certain one-time expenditures incurred during the second quarter that were not incurred during the third quarter.
Adjusted income, a non-GAAP measure which excludes amortization of stock compensation and intangibles, in the third quarter increased to CNY1.4 million (US$167,000), compared with an adjusted loss of CNY6.3 million (US$765,000) in the second quarter. This improvement was primarily due to an additional CNY3.7 million (US$447,000) in gross profit generated during the third quarter from higher revenue and the reduction in third quarter operating expenses mentioned above.
After completion of eLong's initial public offering on November 2, 2004, the Company's cash balance was approximately US$74 million.
"Our third quarter financial results showed both strong sequential and year-over-year revenue growth," said Derek Palaschuk, eLong's Chief Financial Officer. "This top-line growth will continue to be a strategic focus for eLong. Our recent Nasdaq listing and investment from IAC provide us with a strong financial foundation that will allow us to take advantage of opportunities in China's travel market."
