eLong Reports Fourth Quarter and Full Year 2012 Unaudited Financial Results
eLong Reports Fourth Quarter and Full Year 2012 Unaudited Financial Results
Hotelroom nights increased 75% in 2012 to more than 16 million
PR Newswire
BEIJING, Feb. 21, 2012
BEIJING, Feb. 21, 2012 /PRNewswire / -- eLong, Inc. (Nasdaq: LONG), a leading
online travel service provider in China, today reported unaudited financial
results for the fourth quarter and full year ended December 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20041118/ELONGLOGO )
Highlights - Fourth Quarter 2012
o Hotel room nights booked through eLong in the fourth quarter increased 94%
to 5.0 million room nights compared to 2.6 million in the prior year
period. This was in part due to technology system improvements by which
groupbuy room nights can be tracked by date of customer stay, rather than
date of groupbuy voucher expiration. Excluding this technology change,
room nights in the fourth quarter increased 81% compared to the fourth
quarter of 2011.
o Online hotel bookings comprised more than three-fourths of total hotel
bookings, compared to more than 60% in the fourth quarter of 2011.
o Hotel commission revenue for the fourth quarter increased 38% to RMB175.0
million (US$28.1 million), compared to RMB126.6 million (US$20.1 million)
in the fourth quarter of 2011. Excluding the groupbuy technology system
change, hotel commission revenue increased 36% compared to the fourth
quarter of 2011.
o Net revenues for the fourth quarter increased 32% to RMB208.8 million
(US$33.5 million), compared to RMB158.2 million (US$25.1 million) in the
fourth quarter of 2011.
o eLong's domestic hotel coverage expanded 53% year-on-year. Customers can
book nearly 200,000 hotels through eLong, including international hotels
available via direct connection to Expedia.
Highlights - Full Year 2012
o Hotel room nights booked through eLong in 2012 increased 75% to 16.1
million room nights compared to 9.2 million in the prior year.
o Hotel commission revenue in 2012 increased 36% to RMB608.3 million
(US$97.6 million), compared to RMB447.9 million (US$71.2 million) in 2011.
o Net revenues in 2012 increased 27% to RMB744.2 million (US$119.5 million),
compared to RMB586.2 million (US$93.1 million) in 2011.
o Launched marketing campaign, with the slogan "Book Hotel, Use eLong", that
improved eLong brand awareness.
"In a dynamic and highly competitive marketplace, eLong performed well in
2012. More and more customers trust eLong to fulfill their hotel booking and
travel needs, and we are also now increasingly seen as an innovator in the
online travel market through our broad hotel coverage, market-leading hotel
groupbuy business and outstanding mobile apps. Our online hotel strategy is
bearing fruit and we will continue our focused execution with an increased
emphasis on mobile in 2013," said Guangfu Cui, Chief Executive Officer of
eLong.
Business Results
Revenues
Total revenues by product for the fourth quarter of 2012 as compared to the
same period in 2011 were as follows (in RMB million):
Q4 2012 % Q4 2011 % Y/Y
Total Total Growth
Hotel reservations 175.0 78% 126.6 76% 38%
Air ticketing 31.4 14% 29.0 17% 8%
Other 18.0 8% 12.6 7% 43%
Total revenues 224.4 100% 168.2 100% 33%
Total revenues by product for the full year 2012 as compared to 2011 were as
follows (in RMB million):
2012 % 2011 % Y/Y
Total Total Growth
Hotel reservations 608.3 76% 447.9 72% 36%
Air ticketing 123.8 16% 125.1 20% (1%)
Other 65.1 8% 52.0 8% 25%
Total revenues 797.2 100% 625.0 100% 28%
Hotel Reservations
Hotel commission revenue increased 38% in the fourth quarter of 2012 compared
to the same period in 2011, primarily due to higher volume, partially offset
by lower commission per room night. Room nights booked through eLong in the
fourth quarter increased 94% year-on-year to 5.0 million. Commission per room
night decreased 29% year-on-year, primarily due to the growth of groupbuy and
budget hotels and lower average daily rates across other hotel segments, as
well as the increase in the size of our coupon program. Hotel commission
revenue grew to 78% of total revenues from 76% in the prior year quarter.
Hotel commission revenue increased 36% for full year 2012 compared to 2011,
primarily due to higher room night volume, partially offset by a 22% decrease
in commission per room night. Room nights booked through eLong in 2012
increased 75% year-on-year to 16.1 million. Commission per room night declined
primarily due to the growth of groupbuy and budget hotels and lower average
daily rates across other hotel segments, as well as an increase in the size of
our coupon program. Hotel commission revenue grew to 76% of total revenues
from 72% in the prior year.
Air Ticketing
Air ticketing commission revenue increased 8% in the fourth quarter of 2012
compared to the prior year quarter, driven by an 11% increase in air segments
to 637,000, partially offset by a 3% decrease in commission per segment.
Commission per segment decreased mainly due to a 4% decrease in average ticket
price compared to the same quarter of 2011, as well as our air coupon program.
Air ticketing commission revenue decreased to 14% of total revenues from 17%
in the prior year quarter.
Air ticketing commission revenue for full year 2012 decreased 1% compared to
2011, driven by a 4% decrease in commission per segment, partially offset by a
3% increase in air segments to 2.4 million. Commission per segment decreased
due to a lower air commission rate compared to 2011, as well as our air coupon
program which we launched in June 2012. Air ticketing commission revenue
decreased to 16% of total revenues from 20% in the prior year.
Other
Other revenue is primarily derived from advertising and travel insurance.
Other revenue increased 43% year-on-year in the fourth quarter of 2012, mainly
driven by increased advertising revenue. Other revenue increased to 8% of
total revenues from 7% in the prior year quarter.
Other revenue for full year 2012 increased 25% compared to 2011, mainly driven
by increased advertising revenue. Other revenue was 8% of total revenues,
consistent with the prior year.
Profitability
Gross margin in the fourth quarter of 2012 decreased to 72%, compared to 74%
in the fourth quarter of 2011. Gross margin for full year 2012 decreased to
73%, compared to 74% in 2011. Gross margin decline was primarily due to lower
hotel commission revenue per room night as well as higher volume-driven
fulfillment costs.
Operating expenses for the fourth quarter of 2012 as compared to the same
period in 2011 were as follows (in RMB million):
% of % of Y/Y
Q4 2012 Net Q4 2011 Net Growth
Revenue Revenue
Service development 36.4 17% 27.5 17% 32%
Sales and marketing 110.1 53% 63.5 40% 74%
General and administrative 17.4 8% 14.6 9% 19%
Amortization of intangible assets 0.2 - 0.1 - N/M
Charges related to intangible assets 1.9 1% - - N/M
Total operating expenses 166.0 79% 105.7 66% 57%
Operating expenses for full year 2012 as compared to 2011 were as follows (in
RMB million):
% of % of Y/Y
2012 Net 2011 Net Growth
Revenue Revenue
Service development 127.5 17% 97.1 17% 31%
Sales and marketing 412.3 55% 230.9 39% 79%
General and administrative 63.0 8% 53.2 9% 18%
Amortization of intangible assets 1.1 - 0.5 - N/M
Charges related to property and equipment 2.2 1% 0.2 - N/M
and intangible assets
Total operating expenses 606.1 81% 381.9 65% 59%
Total operating expenses increased 57% for the fourth quarter of 2012 compared
to the fourth quarter of 2011. Total operating expenses increased to 79% of
net revenues in the fourth quarter of 2012 from 66% in the prior year quarter
which led to an operating loss of RMB15.6 million compared to operating income
of RMB12.0 million in the prior year quarter.
Total operating expenses increased 59% for full year 2012 compared to 2011.
Total operating expenses increased to 81% of net revenues in 2012 from 65% in
2011 which led to an operating loss of RMB66.2 million compared to operating
income of RMB49.3 million in the prior year.
Service development expenses consist of expenses related to technology and our
product offering, including our websites, platforms and other system
development, as well as our supplier relations function. Service development
expenses increased 32% compared to the prior year quarter, mainly driven by
higher personnel expenses. Service development expenses were 17% of net
revenues, consistent with the same quarter of 2011.
Service development expenses for full year 2012 increased 31% compared to
2011, mainly driven by higher personnel expenses. Service development expenses
were 17% of net revenues, consistent with 2011.
Sales and marketing expenses for the fourth quarter of 2012 increased 74% over
the prior year quarter, mainly driven by increased spending on online
marketing, advertising expenses from our brand marketing campaign, and hotel
commission payments to affiliates. Sales and marketing expenses increased to
53% of net revenues in the fourth quarter of 2012 from 40% in the same quarter
of 2011.
Sales and marketing expenses for full year 2012 increased 79% over 2011,
mainly driven by increased spending on online marketing, advertising expenses
from our brand marketing campaign, and hotel commission payments to
affiliates. Sales and marketing expenses increased to 55% of net revenues in
2012 from 39% in 2011.
General and administrative expenses for the fourth quarter of 2012 increased
19% compared to the prior year quarter, mainly driven by higher personnel
expenses. General and administrative expenses decreased to 8% of net revenues
in the fourth quarter of 2012 from 9% in the same quarter of 2011.
General and administrative expenses for full year 2012 increased 18% compared
to 2011, mainly driven by higher personnel expenses. General and
administrative expenses decreased to 8% of net revenues in 2012 from 9% in
2011.
Other income/(expense) represents interest income, foreign exchange losses and
other income/(expense). Other income was RMB13.8 million in the fourth quarter
of 2012 compared to other income of RMB6.3 million in the fourth quarter of
2011, primarily driven by an increase in interest income and a decrease in
foreign exchange losses.
Other income was RMB56.5 million for full year 2012 compared to other income
of RMB1.3 million in 2011, primarily driven by an increase in interest income
and a decrease in foreign exchange losses. Interest income in 2012 increased
to RMB55.3 million, compared to RMB25.6 million in 2011, due to higher
interest yield. Foreign exchange losses on our cash and cash equivalents and
short-term investments decreased to RMB2.0 million in 2012, from RMB19.5
million in 2011 as we held a smaller percentage of our cash and cash
equivalents, short-term investments and restricted cash in US dollars than in
the prior year.
As of December 31, 2012, eLong held cash and cash equivalents, short-term
investments and restricted cash of RMB2.0 billion (US$314 million), of which
98% was held in Renminbi and 2% in US dollars, compared to total cash and cash
equivalents, short-term investments and restricted cash of RMB1.9 billion
(US$303 million), of which 86% was held in Renminbi and 14% held in US dollars
as of December 31, 2011.
Net income for the fourth quarter of 2012 was RMB5.7 million, compared to net
income of RMB15.0 million during the prior year quarter.
Net income for full year 2012 was RMB0.5 million, compared to net income of
RMB39.3 million in 2011.
Net income per ADS and diluted net income per ADS for the fourth quarter of
2012 were each RMB0.16 (US$0.02), compared to net income per ADS and diluted
net income per ADS of RMB0.44 (US$0.08) in the prior year quarter.
Net income per ADS and diluted net income per ADS for full year 2012 were each
RMB0.02 (US$0.002), compared to net income per ADS and diluted net income per
ADS of RMB1.30 (US$0.20) and RMB1.26 (US$0.20) respectively in full year 2011.
Business Outlook
eLong currently expects net revenues for the first quarter of 2013 to increase
by 20% to 30% compared to the first quarter of 2012. This outlook reflects
eLong's current and preliminary view, which is subject to change.
Safe Harbor Statement
It is currently expected that the Business Outlook will not be updated until
the release of eLong's next quarterly earnings announcement; however, eLong
reserves the right to update its Business Outlook at any time for any reason.
Statements in this press release concerning eLong's future business, operating
results and financial condition are "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and as defined in the
Private Securities Litigation Reform Act of 1995. Words such as "anticipate,"
"believe," "estimate," "expect," "forecast," "intend," "may," "plan,"
"project," "predict," "future," "is/are likely to," "should" and "will" and
similar expressions as they relate to eLong are intended to identify such
forward-looking statements, but are not the exclusive means of doing so. These
forward-looking statements are based upon management's current views and
expectations with respect to future events and are not a guarantee of future
performance. Forward-looking statements include, but are not limited to,
statements about our anticipated growth strategies, our future business
development, results of operations and financial condition, our ability to
control costs and/or maintain profitability, our ability to attract customers
and leverage our brand, and trends and competition in the travel industry in
China and globally. Furthermore, these statements are, by their nature,
subject to a number of risks and uncertainties that could cause our actual
performance and results to differ materially from those discussed in the
forward-looking statements. Factors that could affect our actual results and
cause our actual results to differ materially from those referred in any
forward-looking statement include, but are not limited to, declines or
disruptions in the travel industry, international financial, political or
economic crises, a slowdown in the PRC economy, an outbreak of bird flu, H1N1
flu, SARS or other disease, eLong's reliance on maintaining good relationships
with, and stable air and hotel inventory from, hotel suppliers and airline
ticket suppliers, and on establishing new relationships with suppliers on
similar terms, our reliance on the TravelSky GDS system for our air business
and Baidu for our search engine marketing, the risk that eLong will not be
able to increase our brand recognition, the possibility that eLong will be
unable to continue timely compliance with the Sarbanes-Oxley Act or other
regulatory requirements, the risk that eLong will not be successful in
competing against new and existing competitors, the risk that our
infrastructure and technology are damaged, fail or become obsolete, risks
associated with Expedia, Inc.'s (Nasdaq: EXPE) majority ownership interest and
Tencent's shareholding in eLong, risks relating to eLong's investment in other
businesses and assets, fluctuations in the value of the Renminbi, inflation in
China, changes in eLong's management team and other personnel, risks relating
to uncertainties in the PRC legal system, including but not limited to, risks
relating to our affiliated Chinese operating entities and risks relating to
the application of preferential tax policies, and other risks mentioned in
eLong's filings with the U.S. Securities and Exchange Commission, including
eLong's Annual Report on Form 20-F.
If one or more of these risks or uncertainties occur, or if our underlying
assumptions prove to be incorrect, actual events or results may vary
significantly from those implied or projected by the forward
looking-statements. Investors should not rely upon forward-looking statements
as predictions of future events. Except as required by law, we undertake no
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. All
forward-looking statements contained in this press release are qualified by
reference to this cautionary statement.
Conference Call
eLong will host a conference call to discuss its fourth quarter 2012 unaudited
financial results on February 22, 2013 at 8:30 am Beijing time (February 21,
2013, 7:30 pm ET). The management team will be on the call to discuss the
quarterly results and to answer questions. The toll-free number for U.S.
participants is +1-866-844-9413. The dial-in number for Hong Kong participants
is +852-3001-3802. The toll-free numbers for China Mainland participants are
10800-712-1470 (China Unicom) and 10800-120-1470 (China Telecom) and the toll
number for China Mainland participants is 86-400-810-4731. International
participants can dial +1-210-795-0512. Pass code: eLong.
Additionally, an archived web cast of this call will be available on the
Investor Relations section of the eLong web site at
http://www.elong.net/AboutUs/conference.html.
About eLong, Inc.
eLong, Inc. (Nasdaq: LONG - News) is a leader in online hotel reservations in
China offering consumers a leading hotel network of almost 200,000 bookable
domestic and international properties in 200 countries worldwide. eLong uses
innovative technology to enable travelers to make informed hotel and air
ticket booking decisions through its convenient website and mobile (iPhone,
iPad, Android, and Windows Phone) applications and easy to use tools such as
destination guides, photos, virtual tours, maps and user reviews. eLong
provides 24-hour customer support and the ability to fulfill domestic and
international air ticket reservations across China. eLong's largest
shareholders are Expedia, Inc. (Nasdaq: EXPE) and Tencent Holdings Ltd. (HKSE:
0700). eLong operates websites including www.elong.com and www.elong.net.
eLong, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)
Three Months Ended Year Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2011 2012 2012 2012 2011 2012 2012
RMB RMB RMB USD^(1) RMB RMB USD^(1)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited)
Revenues:
Hotel reservations 126,631 156,598 174,983 28,087 447,877 608,319 97,642
Air ticketing 29,002 35,198 31,454 5,049 125,095 123,754 19,864
Other 12,556 20,053 17,987 2,887 52,028 65,136 10,455
Total revenues 168,189 211,849 224,424 36,023 625,000 797,209 127,961
Business tax and (10,037) (14,590) (15,630) (2,509) (38,822) (52,965) (8,501)
surcharges
Net revenues 158,152 197,259 208,794 33,514 586,178 744,244 119,460
Cost of (40,449) (58,514) (58,386) (9,372) (154,864) (204,323) (32,796)
services
Gross profit 117,703 138,745 150,408 24,142 431,314 539,921 86,664
Operating
expenses:
Service (27,502) (33,381) (36,358) (5,836) (97,097) (127,467) (20,460)
development
Sales and (63,449) (144,722) (110,144) (17,679) (230,946) (412,344) (66,186)
marketing
General and (14,598) (16,194) (17,409) (2,794) (53,239) (62,968) (10,107)
administrative
Amortization of (137) (279) (247) (40) (547) (1,056) (170)
intangible assets
Charges related to
property and (4) (378) (1,860) (299) (152) (2,238) (359)
equipment and
intangible assets
Total operating (105,690) (194,954) (166,018) (26,648) (381,981) (606,073) (97,282)
expenses
Income/(loss) from 12,013 (56,209) (15,610) (2,506) 49,333 (66,152) (10,618)
operations
Other
income/(expenses):
Interest income 8,587 14,955 14,691 2,358 25,648 55,259 8,870
Foreign exchange (2,314) (83) (1,237) (199) (19,503) (1,967) (316)
losses
Other 24 1,339 340 55 (4,830) 3,168 509
Total other
income/(expense), 6,297 16,211 13,794 2,214 1,315 56,460 9,063
net
Income/(loss)
before income tax 18,310 (39,998) (1,816) (292) 50,648 (9,692) (1,555)
benefit/(expense)
Income tax (2,790) 7,178 12,450 1,998 (10,746) 16,016 2,571
benefit/(expense)
Impairment loss on
equity method - - (4,812) (772) - (4,812) (772)
investment
Equity in net (516) (320) (107) (17) (631) (1,041) (167)
loss of affiliates
Net income/(loss) 15,004 (33,140) 5,715 917 39,271 471 77
Net income/(loss) 0.22 (0.48) 0.08 0.01 0.65 0.01 0.001
per share
Diluted net
income/(loss) per 0.22 (0.48) 0.08 0.01 0.63 0.01 0.001
share
Net income/(loss) 0.44 (0.96) 0.16 0.02 1.30 0.02 0.002
per ADS^(2)(3)
Diluted net
income/(loss) per 0.44 (0.96) 0.16 0.02 1.26 0.02 0.002
ADS^(2)(3)
Shares used in computing net
income per share[:]
Basic 68,389 68,859 69,196 69,196 60,456 68,833 68,833
Diluted 69,080 69,404 69,862 69,862 62,298 69,443 69,443
Share-based
compensation 5,620 6,979 7,853 1,260 21,922 29,948 4,807
charges included
in:
Cost of 290 417 412 66 1,374 1,932 310
services
Service 2,112 2,660 2,807 450 7,626 11,459 1,839
development
Sales and 943 1,015 952 153 3,620 4,322 694
marketing
General 2,275 2,887 3,682 591 9,302 12,235 1,964
and administrative
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying
rate of USD1.00=RMB6.2301 on December 31, 2012
in the City of New York for cable transfers of Renminbi as certified for customs purposes by the
Federal Reserve. No representation is made that the RMB
amounts could have been, or could be, converted or settled into USD at the rates stated herein on the
reporting dates, at any other rates or at all.
Note 2: 1 ADS = 2
shares
Note 3: Non-GAAP
financial measures
eLong, Inc.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2012
RMB RMB USD
(Audited) (Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 411,676 311,140 49,941
Short-term investments 1,433,425 1,581,502 253,849
Restricted cash 61,400 61,400 9,855
Accounts receivable, net 83,311 127,973 20,541
Amounts due from related parties 11,632 23,639 3,794
Prepaid expenses 18,223 21,240 3,409
Other current assets 33,761 68,666 11,023
Total current assets 2,053,428 2,195,560 352,412
Property and equipment, net 44,230 72,362 11,615
Investment in equity affiliates 15,549 42,031 6,746
Goodwill 61,061 77,782 12,485
Intangible assets, net 5,308 14,712 2,361
Other non-current assets 31,142 68,186 10,945
Total assets 2,210,718 2,470,633 396,564
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 60,899 124,598 19,999
Income taxes payable 7,009 14,671 2,355
Amounts due to related parties 2,624 84,236 13,521
Deferred revenue 20,880 10,197 1,637
Accrued expenses and other current 111,787 198,970 31,937
liabilities
Total current liabilities 203,199 432,672 69,449
Other liabilities 1,536 1,086 174
Total liabilities 204,735 433,758 69,623
Shareholders' equity
Ordinary shares 2,864 2,864 460
High-vote ordinary shares 2,691 2,691 432
Treasury stock (75,494) (70,105) (11,253)
Additional paid-in capital 2,209,469 2,238,577 359,316
Accumulated deficit (133,547) (137,152) (22,014)
Total shareholders' equity 2,005,983 2,036,875 326,941
Total liabilities and shareholders' equity 2,210,718 2,470,633 396,564
eLong, Inc.
TRENDED OPERATIONAL METRICS
(IN THOUSANDS)
The metrics below are intended as a supplement to the financial statements
found in this press release and in our filings with the SEC.
In the event of discrepancies between amounts in these tables and our
historical financial statements, readers should rely on our filings
with the SEC and financial statements in our most recent press release.
We intend to periodically review and refine the definition, methodology and
appropriateness of each of our supplemental metrics. As a
result, metrics are subject to removal and/or change, and such changes could be
material.
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012
Hotel Reservations
Room Nights 1,700 2,217 2,702 2,583 9,202 2,843 3,666 4,601 5,014 16,124
Room Night Y/Y 41% 43% 42% 50% 44% 67% 65% 70% 94% 75%
Average Daily Rate (1%) (9%) (9%) (8%) (7%) (12%) (11%) (9%) (15%) (12%)
Y/Y
Commission/Room (7%) (15%) (12%) (7%) (10%) (19%) (11%) (27%) (29%) (22%)
Night Y/Y
Hotel Commissions 31% 22% 25% 39% 29% 36% 47% 24% 38% 36%
Y/Y
Air Ticketing
Air Segments 587 568 591 571 2,317 554 525 662 637 2,378
Air Segments Y/Y (10%) (4%) (6%) 1% (5%) (6%) (8%) 12% 11% 3%
Average Ticket 11% 7% 0% 4% 5% 1% 5% 0% (4%) 1%
Value Y/Y
Commission/Segment 14% 10% 8% (4%) 7% (5%) 1% (7%) (3%) (4%)
Y/Y
Air Commissions 2% 6% 2% (4%) 2% (10%) (7%) 5% 8% (1%)
Y/Y
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with generally
accepted accounting principles in the United States, or GAAP, this press
release includes certain non-GAAP financial measures including net income per
ADS, diluted net income per ADS, Adjusted Earnings Before Interests, Taxes,
Depreciation and Amortization ("Adjusted EBITDA"), Adjusted Net Income ("ANI")
and Adjusted Net Income Per Share. We believe these non-GAAP financial
measures may help investors understand eLong's current financial performance
and compare business trends among different reporting periods. These non-GAAP
financial measures should be considered in addition to financial measures
presented in accordance with GAAP, but should not be considered as a
substitute for, or superior to, financial measures presented in accordance
with GAAP. We seek to compensate for the limitations of the non-GAAP measures
presented by also providing the comparable GAAP measures, GAAP financial
statements, and descriptions of the reconciling items and adjustments, to
derive the non-GAAP measures.
Adjusted EBITDA is defined as net income plus (1) interest expense (income);
(2) income tax expense (benefit); (3) depreciation; (4) amortization of
intangible assets; (5) share-based compensation charges; (6) foreign exchange
losses (gains); (7) acquisition-related impacts, including (i) goodwill and
intangible asset impairment, and (ii) losses (gains) recognized on
noncontrolling investment basis adjustments when we acquire controlling
interests; and (8) certain other items, including restructuring charges,
impairment loss on equity method investment and equity in net loss (income) of
affiliates. We believe Adjusted EBITDA is a useful financial metric to assess
our operating and financial performance before the impact of investing and
financing transactions, if any, and income tax expense (benefit). Since
share-based compensation charges are non-cash expenses, we believe excluding
them from our calculation of Adjusted EBITDA allows us to provide investors
with a more useful tool for assessing our operating and financial performance.
In addition, we believe that Adjusted EBITDA is used by other companies and
may be used by investors as a measure of our financial performance. The
presentation of Adjusted EBITDA should not be construed as an indication that
eLong's future results will be unaffected by other charges and gains we
consider to be outside the ordinary course of our business. The use of
Adjusted EBITDA has certain limitations. Amortization and depreciation
expenses for various non-current assets, share-based compensation charges,
other income/(expenses), and income tax expense (benefit) have been and will
be incurred and are not reflected in the presentation of Adjusted EBITDA. Each
of these items should also be considered in the overall evaluation of our
results. Additionally, Adjusted EBITDA does not consider capital expenditures
and other investing activities and should not be considered as a measure of
eLong's liquidity. We seek to compensate for these limitations by providing
the relevant disclosure of our amortization and depreciation expenses, and
share-based compensation charges in the reconciliations to the GAAP financial
measure. The term Adjusted EBITDA is not defined under GAAP, and Adjusted
EBITDA is not measure of net income, income from operations, operating
performance or liquidity presented in accordance with GAAP. In addition,
eLong's Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly
titled measures utilized by other companies since such other companies may not
calculate Adjusted EBITDA in the same manner as we do.
Adjusted EBITDA should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for, or
superior to, GAAP measures. We present a reconciliation of this non-GAAP
financial measure to GAAP below.
eLong, Inc.
TABULAR RECONCILIATION FOR NON-GAAP MEASURE
Adjusted EBITDA
(IN THOUSANDS)
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012
RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
Net income/(loss) 7,712 7,119 9,436 15,004 39,271 11,883 16,013 (33,140) 5,715 471
Interest income (4,591) (5,304) (7,166) (8,587) (25,648) (11,607) (14,006) (14,955) (14,691) (55,259)
Income tax expense/(benefit) 2,786 2,250 2,921 2,790 10,747 2,649 963 (7,178) (12,450) (16,016)
Depreciation 4,987 5,206 5,512 5,593 21,298 5,985 6,435 7,096 7,420 26,936
Amortization of intangible assets 136 137 137 137 547 251 279 279 247 1,056
Share-based compensation charges 4,779 5,637 5,886 5,620 21,922 6,948 8,168 6,979 7,853 29,948
Foreign exchange losses 3,131 8,135 5,923 2,314 19,503 618 29 83 1,237 1,967
Impairment loss on equity method investment - - - - - - - - 4,812 4,812
Other 15 84 161 1,155 1,415 (873) - (641) 1,627 113
Adjusted EBITDA 18,955 23,264 22,810 24,026 89,055 15,854 17,881 (41,477) 1,770 (5,972)
Adjusted Net Income generally captures all items on the statements of
operations that occur in normal course operations and have been, or ultimately
will be, settled in cash and is defined as net income plus net of tax: (1)
share-based compensation charges; (2) acquisition-related impacts, including
(i) amortization of intangible assets, including as part of equity-method
investments, and goodwill and intangible asset impairment, (ii) losses (gains)
recognized on changes in the value of contingent consideration arrangements,
and (iii) losses (gains) recognized on noncontrolling investment basis
adjustments when we acquire controlling interests; (3) foreign exchange
losses; (4) certain other items, including restructuring charges; and (5)
discontinued operations. We believe Adjusted Net Income is useful to investors
because it represents eLong's results, taking into account depreciation, which
management believes is an ongoing cost of doing business, but excluding the
impact of other non-cash expenses, infrequently occurring items and items not
directly tied to the core operations of our businesses.
Adjusted Net Income Per Share is defined as Adjusted Net Income divided by
adjusted weighted average shares outstanding, which include dilution from
options and warrants per the treasury stock method and include all shares
relating to Performance Units in shares outstanding for Adjusted Net Income
Per Share. This differs from the GAAP method for including Performance Units,
which treats them on a treasury stock method basis. Shares outstanding for
Adjusted Net Income Per Share purposes are therefore higher than shares
outstanding for GAAP Net Income Per Share purposes. We believe Adjusted Net
Income Per Share is useful to investors because it represents, on a per share
basis, eLong's consolidated results, taking into account depreciation, which
we believe is an ongoing cost of doing business, as well as other items which
are not allocated to the operating businesses such as interest income and
income tax expense (benefit), but excluding the effects of non-cash expenses
not directly tied to the core operations of our businesses. Adjusted Net
Income and Adjusted Net Income Per Share have similar limitations as Adjusted
EBITDA. In addition, Adjusted Net Income does not include all items that
affect our net income and net income per share for the period. Therefore, we
think it is important to evaluate these measures along with our consolidated
statements of operations.
Adjusted Net Income and Adjusted Net Income Per Share should be considered in
addition to results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP measures. We present a
reconciliation of these non-GAAP financial measures to GAAP below.
eLong, Inc.
TABULAR RECONCILIATION FOR NON-GAAP MEASURE
Adjusted Net Income and Adjusted Net Income Per Share
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012
RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
Net income/(loss) 7,712 7,119 9,436 15,004 39,271 11,882 16,014 (33,140) 5,715 471
Share-based compensation charges 4,779 5,637 5,886 5,620 21,922 6,948 8,168 6,979 7,853 29,948
Amortization of intangible assets 136 137 137 137 547 251 279 279 247 1,056
Foreign exchange losses 3,131 8,135 5,923 2,314 19,503 618 29 83 1,237 1,967
Other 3,432 386 263 524 4,605 (40) (73) 317 1,711 1,915
Adjusted net income/(loss) 19,190 21,414 21,645 23,599 85,848 19,659 24,417 (25,482) 16,763 35,357
Shares used in computing adjusted net income per share:
GAAP diluted weighted average shares outstanding 52,105 57,920 69,547 69,080 62,298 69,342 69,225 69,404 69,862 69,443
Additional performance units 316 229 214 280 262 390 796 747 904 724
Adjusted weighted average shares outstanding 52,421 58,149 69,761 69,360 62,560 69,732 70,021 70,151 70,766 70,167
Adjusted net income/(loss) per share 0.37 0.37 0.31 0.34 1.37 0.28 0.35 (0.36) 0.24 0.50
SOURCE eLong, Inc.
Website: http://www.eLong.com
Contact: eLong, Inc., Investor Relations, ir@corp.elong.com, +86-10-6436-7570
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