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eLong, Inc. (NASDAQ:LONG)

Q3 2006 Earnings Call

November 9, 2006 7:00 pm ET

Executives

Raymond Huang - IR Manager

Tom SooHoo - CEO

Tony Shen - Interim CFO

Analysts

Ming Zhao - Susquehanna Financial Group

Kit Low - Goldman Sachs

Chang Qiu - Forun Technology Research

William Bean - Deutsche Bank

Operator

Good morning to all participants. Welcome to eLong Conference Call. For the duration of the presentation, all lines will be placed under listen-only mode. There will be an opportunity to ask questions after the presentation. At that time, I will provide you with the instructions on how to register for your question. This call is being recorded at the request of the hosting company. If you have any objections, you may disconnect at this time.

I would now like to hand the call over to your moderator today, Mr. Raymond Huang, and I'll be standing by for the Q&A session. Please go ahead, sir.

Raymond Huang

Hello, everyone. Thank you for joining eLong’s third quarter 2006 conference call. Today, Tom SooHoo, our CEO, will make some remarks about the quarter followed by Tony Shen, our Interim CFO, who will provide greater details on our financial results. Following their prepared remarks, Tom and Tony will be available to take your questions.

Before the management’s presentations, please allow me to read our Safe Harbor statement. During this conference call, representatives of the company will make forward-looking statements. These statements are based upon management’s current views and expectations with respect to future events, and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. eLong undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Please refer to eLong’s filings with the SEC, including its Form 20-F as well as the risk factors described in our Form 6-K, which will be filed with the SEC in connection with our press release and this conference call, for a discussion of the important factors that could affect future results.

Our press release and this call include discussions of unaudited GAAP financial information, as well as some unaudited non-GAAP financial measures. Our release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures; and is available on the Investor Relations section of the eLong website at www.elong.net.

I will now turn the call over to our CEO, Tom SooHoo. Tom?

Tom SooHoo

Hello, everyone and thank you all for being on this call. Today, we're pleased to announce eLong’s second consecutive quarter of profitability. On the top line, our travel revenues grew 45% year-over-year and 11% sequentially due to RMB72.3 million. On the bottom line, we had operating income of RMB1.7 million, which is our first operating income after our IPO. Excluding the impact of non-cash stock compensation and amortization, we would have recorded operating income of RMB4.3 million. We had US GAAP net income of RMB2.7 million and adjusted income of RMB16.6 million. These business results show that eLong is executing well on a great business opportunity.

Let me now review with you the third quarter progress we have made in our hotel and air businesses. On the hotel side the solid 38% year-over-year hotel revenue growth to RMB57.4 million confirm the strength of our hotel product. We achieved another record high in the total number of room nights booked. In August, we surpassed 316,000 room nights for the first time.

In the third quarter, we continued to expand our hotel inventory. At the end of the third quarter, we offered our customers a wide choice of hotel rooms at discounted rates in 3,666 hotels in 291 cities across China, which was up about 22% from the 3,000 hotels in 280 cities in the corresponding period a year ago. This is evidence of our continuing efforts to provide better products and service to our customers.

On September of 2006, approximately 78% of our bookings were done through guaranteed allotment as compared to 72% in June of 2006 and 60% in September of 2005. Through guaranteed allotment we can give our customers early conformation of the availability of the rooms, which contributes to a better customer experience. We intend to continue expanding this service.

With respect to the air business, our air ticketing revenues grew to RMB11 million or 47% year-over-year growth and 15% sequentially during the third quarter of 2006. Air segments sold reached a record high in the third quarter as a result of our efforts to improve the booking platform and to strengthen our cooperation with airline partners. Air ticketing represents 15% of total revenues in the third quarter as compared to 15% in the same period one year ago. As of the end of the third quarter, our users were able to book air tickets in 58 cities across China. We will continue to invest in our air infrastructure.

During the third quarter, we are able to continue to expand our customer base by adding 90,000 new customers, as compared to 81,000 new customers in the corresponding period a year ago, and 86,000 new customers in the previous quarter. At the end of September, we had 987,000 cumulative customers. We will continue to invest in customer acQiusition and in our brand through our sales and marketing efforts.

Earlier this year, we determined that the key priorities in our business strategy was to build a great team, to build a stronger execution platform so we can scale up our business and to have a stronger consumer focus to deliver and improve customer experience.

Let me now take this chance to share some (inaudible) space with you. Successful execution on our business needs to be built on a clear and common objectives and logical accountabilities. As we look at the sales and marketing organizations, it is clear to me that it's critical that all the departments in these areas be singularly focused on driving customer retention, new customer acQiusition, and continued demand for our product and services. All departments in the sales and marketing need to be constantly improve their effectiveness and reach our message and communication both to consumers and partners.

eLong has a wide variety of communication sales methods and it's imperative that we use them to drive demand reduce on every efficient manner. In order to reach this objective we recently consolidated the sales and marketing functions together under the umbrella called demand creation. This new organization is run by Richard Xu, our new Chief Marketing Officer, who joined the company in August. Richard brings to eLong a wealth of experience in both multinational companies as well as the Internet industry. We believe our current senior management team is well balanced group of executives with complementary experiences and a team that is strong enough to lead the company to the next level of future success.

During the third quarter, we also set up the function called business planning and integration as the liaison between the business lines and technical departments to help each business to get valuable technical resource of maximized research utilization and allocation at eLong.

Before I give the floor to our Interim CFO, I would like to emphasize that the opportunity of travel -- travel in China is up [next], and we believe eLong's current strength combined with our deep relationship with Expedia positions us extremely well to take advantage of the tremendous growth potential of this market. As well as, only two top tier players in the rapidly growing, but fragmented online travel market in China, we cannot be in a better place at a better time. And we believe that eLong is well positioned to take market share from the traditional travel operators.

I believe that eLong through appropriate investment in the business can become a world-class full service supplier of online travel services that build a company that can sustain profitability in the long term.

Let me now take the -- turn the call over to Tony Shen, our Interim CFO, who will review the financial results in greater detail.

Tony Shen

Thank you, Tom. Hello everyone. Let me now give you an overview of our third quarter results starting with our statement of operations and then our balance sheet. Our first quarter travel revenues, which were RMB72.3 million and comprise 97% of total revenue grew 45% year-over-year and 11% sequentially.

Revenue from hotel commissions third quarter totaled RMB57.4 million, an increase of 38% from RMB41.5 million year-over-year and an increase of 7% from RMB53.8 million sequentially. The 38% year-over-year increase was primarily due to higher room volumes accompanied by higher hotel commission rate per room night. Hotel room nights booked through eLong totaled 893,000 in the third quarter, up 31% from 684,000 in the corresponding period a year ago, and up 7% sequentially from 832,000 in the second quarter.

Hotel commissions per room night were RMB64 in the third quarter of 2006, up 5% from RMB61 in the corresponding period a year ago, and down 2% from RMB65 in the previous quarter. Our hotel commission rate has continued to improve in recent quarters, due to the better override in commissions as a result of higher room volume. Our hotel commission rate of 15.3% was up 110 basis points year-over-year from 14.2% in the corresponding period a year ago, and up 50 basis points sequentially from the previous quarter.

Our third quarter 2006 average daily rate of RMB421 was lower than RMB435 in the previous quarter, due primarily to the fact that the third quarter included the summer and the holiday period, which turned it to be made up of more leisure travel, which in turn led to a higher percentage of bookings with more moderately priced hotels.

Revenue from air ticketing during the third quarter totaled RMB11 million, an increase of 47% from RMB7.5 million year-over-year and an increase of 15% from RMB9.6 million sequentially.

Volume in air segment sales continued to grow, with 273,000 air segments sold in the third quarter, an increase of 38% from 198,000 in the corresponding period a year ago and an increase of 11% from 247,000 in the previous quarter.

Commissions earned per air ticket in the third quarter were RMB41, which is RMB2 higher than the previous quarter, due to an increase in commission rate. The commission rate in the third quarter was 4.7% as compared to 4.3% in the corresponding period a year ago, and 4.8% in the previous quarter. The average ticket price in the third quarter was RMB867 as compared to RMB822 in the second quarter.

Other travel revenue in the third quarter of 2006 was RMB3.9 million, an increase of 338% from RMB881,000 year-over-year and an increase of 137% from RMB1.6 million sequentially. The year-over-year and sequential increase were mainly attributed to a revenue share program with Expedia for inventory procurement as we have explained in detail in today's earnings release.

During the third quarter the company entered into a definitive agreement to sell the assets of one of its divisions operating an interactive online dating community to a related party purchaser. Disposal of the division qualify as discontinued operations in the third quarter of 2006. So, the result of the operation of that division for current and prior periods have been aggregated into a separate line item as discontinued operations in the statement of operations.

Our non-travel revenue, which was 3% of our total revenue in the quarter, consisted mainly of non-travel related short messaging revenue and online advertising on our website. The non-travel business is not a focus for eLong going forward.

Gross margin in the third quarter were 77%, down 4% from 81% in the corresponding period a year ago, and unchanged from 77% in the previous quarter. The year-over-year reduction in gross margin was a result of reduction in higher margin non-travel revenue, additional compensation, and benefits for call center employees as likely increased proportion of revenue contributed by the air ticketing business.

Service developments, sales and marketing, and general and administrative expenses for the third quarter of 2006 were RMB51.4 million, an increase of 10% from RMB46.8 million year-over-year and an increase of 5% from RMB48.8 million sequentially. The year-over-year and sequential increases were mainly due to continuing investment in all the three areas as the business expands.

Our adjusted income was RMB16.6 million in the third quarter, as compared to an adjusted income of RMB4.9 million in the corresponding period a year ago, and an adjusted income of RMB13.1 million in the previous quarter.

Now let me take -- make a few comments on our balance sheet. As of September 30, 2006, the company's cash and cash eQiuvalents balance was $142.1 million, which included prepayment from debt related party purchases of $2.9 million. We intended to continue to use our cash balance to enhance our organic growth and consider strategic acQiusitions.

During the third quarter, we had capital expenditures of RMB5.7 million and our depreciation expense was RMB3.3 million.

Now, finally the business outlook. eLong expects travel revenues for the fourth quarter of 2006 within the range of RMB70 million to RMB73 million, an increase of 30% to 35% from the fourth quarter of 2005 and total revenues of RMB73 million to RMB76 million, an increase of 26% to 31% from the fourth quarter of 2005.

This concludes the financial review, and Tom and I look forward to any questions you may have. Moderator, you can now open the call for questions.

Question-and-Answer Session

Operator

Okay, no problem. (Operator Instructions). So the first question comes from the line of Deutsche Bank, Mr. William Bean. Please go ahead.

William Bean - Deutsche Bank

Hi. You mentioned that you are looking at decent progress in terms of operating your air booking platform, can you just give us a sense on how that’s going and how the e-ticketing transition has worked for you?

Tom SooHoo

Sure. As you could see the e-ticketing transition has affected us. We have -- I think in July, there were some minor disruptions of the business. We are seeing a relatively consistent transition of e-tickets as the portion of our business which is now for Q3 accounts 60% of the total business. And we expect to see that proportion increase through the rest of the year. As it relates to the platform, I think in the previous earning calls, I have mentioned that we were in the process of improving the infrastructure and systems that this project this is currently on track, and we should be expecting to see some enhancements coming through probably sometime in Q4.

William Bean - Deutsche Bank

In terms of your capability or volume capacity, can you characterize where that is at this point air?

Tom SooHoo

In terms of the project?

William Bean - Deutsche Bank

How many tickets in your hand or should I even think about it that way?

Tom SooHoo

No. I think clearly our top line today is to handle -- I think is serving our current capacity and we expect to be able to handle more going forward in the future.

William Bean - Deutsche Bank

Okay. And in terms of improvements, kind of, what should we look for in Q4?

Tom SooHoo

In Q4, we expect to see some improvements in some of the service relative to some of the services functionality as well as some enhancements on the website, that we think will certainly help improve the overall customer experience for both of those different purchasing methods.

William Bean - Deutsche Bank

Okay. And then finally just in terms of Expedia, anything that you are working on them -- with them recently in terms of tech integration or new programs?

Tom SooHoo

Nothing to report at this stage.

William Bean - Deutsche Bank

Okay. I will give somebody else the chance. Thanks guys.

Tom SooHoo

Thank you.

Operator

Next question comes from Ming Zhao. Please go ahead sir.

Ming Zhao - Susquehanna Financial Group

Thank you. Good morning, guys. One question on your expenses seems like you managed your necessity well, and we have seen the operating profit into positive. My question is, how do we -- how should we look at this going forward? Do you think this kind of a margin expansion will continue? I mean operating margin.

Tom SooHoo

We are continuing in driving efficiencies through the business. So, right now, as you know, we don’t normally give our guidance on such specific percentages. But you can expect us to continue on improving our efficiency.

Ming Zhao - Susquehanna Financial Group

Okay. So --

Tom SooHoo

Did that answer your question?

Ming Zhao - Susquehanna Financial Group

Yeah. Just want a little bit more color.

Tom SooHoo

Yes.

Ming Zhao - Susquehanna Financial Group

In terms of expense, is there any season or a pattern, lets say going into the fourth quarter and the first quarter, just directionally is there anything we need to pay attention to?

Tom SooHoo

That part is not very seasonal. So, you don’t need to make any adjustments just because of the -- which quarter it is during the year.

Ming Zhao - Susquehanna Financial Group

Okay. Thank you very much.

Operator

The next question comes from Kit Low. Please go ahead.

Kit Low - Goldman Sachs

Two questions; first question relates to your margin. Could you share -- the message (inaudible), so what extend were disclosed, so I'm just trying to understand your gross margin for hotel business versus air ticketing business?

Tom SooHoo

A lot of the costs were different -- were very difficult to be segregated from air or hotel. So, we don’t disclose or we don’t give guidance on the specific business lines of our gross profit. But I can answer your questions on the gross profit for the whole company.

Kit Low - Goldman Sachs

Okay. So, generally you would agree that air ticketing margin was substantially lower than hotel, as far as the gap between the two, would you be able to comment on that, a rough gap between air ticketing versus hotel margins, just in a general [on events], doesn’t has to be exact, anything that you can [enlighten]?

Tom SooHoo

Yes. In the air business, we are still at relatively low volume. So, we do see that air business has a lower gross margin than the hotel business. Going forward, when we build up our air volume and with the completion of all the improvements that Tom just mentioned, we can expect the air gross margin to be slightly high.

Kit Low - Goldman Sachs

Okay. All right, thanks. Second part of questions relates to a general bigger picture question. How do you view the overall competitive landscape of this space? I understand that it's a very fragmented space. There are arguably only two leading players, i.e. yourself and Ctrip. There have been a lot of discussions, there has been Qiute a few smaller companies which's been emerging including Mango City and so forth. I am just trying to get your sense on where do you think the market is going to be, and I know it's difficult, so you take a three years view, do you think its going to be a market with two to three players coexisting, or are you looking at a market where there are going to be a lot more players around just like the US? I am just trying to get a sense of what -- how you think about market in general?

Tom SooHoo

I think everybody probably has the same view in China. The travel business from China is very robust. Our industry estimates would indicate that this market is -- will grow on a significantly faster rate than the worldwide industry average that would place it at perhaps number two or three in the higher world in terms of market size going forward. And that’s why we are very excited about the market opportunity here. We are continuing to invest in key components of business to improve our service levels to customers. And we anticipate with that overall macro economic picture that, yes, we should expect and continue to see entrance in the business, serving in our space as well and perhaps even from other suppliers of air and hotel product as well.

Kit Low - Goldman Sachs

Okay. Great, thank you.

Operator

Thank you. The next question comes from Chang Qiu. Please go ahead.

Chang Qiu - Forun Technology Research

Hi, good morning Tom and Tony.

Tom SooHoo

Hi

Chang Qiu - Forun Technology Research

Yeah, one question is, you mentioned in the summer you have relatively more [nature capital]. Generally speaking, can you give us some mix, like how many percent in the nature capital? How much of that is business travel?

Tom SooHoo

Well actually, I think there may be a misunderstanding there. Most of our business is actually in the business side and rest on the leisure side; and roughly that splits around 70-30.

Chang Qiu - Forun Technology Research

The 70-30 mix, right now?

Tom SooHoo

Yes. But primarily business plus more, less of leisure.

Chang Qiu - Forun Technology Research

Okay. And, are you guys expanding your business to may be smaller hotels or second or third year cities. And a lots of time there is a long-term gross margin trend we should see -- should we; is the gross margin in the second year or third year city, were they lower than the first year or is about the same?

Tom SooHoo

At this stage our market growth is relatively consistent from the small cities and the large cities. However, we recognized that the growth rate in general, I think generally the secondary cities is growing faster than the first year cities as going forward.

Chang Qiu - Forun Technology Research

Yes. I know the growth rate is faster, what about the gross profit or gross profit margin?

Tom SooHoo

Versus first year versus second year?

Chang Qiu - Forun Technology Research

Yes, first year relative -- second year; third year relative with the first year?

Tom SooHoo

They are largely the same.

Chang Qiu - Forun Technology Research

They are about the same?

Tom SooHoo

Yes correct.

Chang Qiu - Forun Technology Research

Okay, alright. Thank you.

Operator

(Operator Instructions). Next question comes from William Bean. Please go ahead sir.

William Bean - Deutsche Bank

Hi guys, I was wondering whether you could give us a little bit more color on, why the air commission went down?

Tony Shen

You mean down sequentially?

William Bean - Deutsche Bank

Yes.

Tony Shen

It's actually not very different from last quarter to this quarter. In terms of the absolute RMB a month, it's actually higher instead of lower.

William Bean - Deutsche Bank

Okay.

Tony Shen

RMB 41 this quarter than I think it was 39 last quarter.

William Bean - Deutsche Bank

Okay, so what drew it up then? Sorry.

Tony Shen

I am sorry, I didn’t hear you.

William Bean - Deutsche Bank

What drew it up?

Tony Shen

Once again as volume, we get a better override situation, once we -- our volume reaches a certain level with certain airlines.

William Bean - Deutsche Bank

Okay and sorry I guess my question is why did hotel commissions went down? You said, it had to do with lower, or why did hotel commission go down?

Tony Shen

Hotel commission did not go down significantly from this quarter -- from last quarter to this quarter. This quarter it was 64.3 and last quarter 64.6. This quarter because we have the summer period trouble and also in those periods the ADR, the average daily rate is lower. So, you'll expect that most leisure travelers would check in at more moderately priced hotels. But as compared to third quarter last year, we were up by almost RMB 4.

William Bean - Deutsche Bank

Okay. And I know you don’t give specific percentage guidance on the expenses but you have given us a general sense of what your plan is going forward relative to the tax. Maybe you can just give us a little bit more color around what you are doing in the risk development sales and G&A going forward?

Tony Shen

Our revenue is due going Qiute substantially year-over-year and this is a sign that our business is getting more scalable. As you can expect G&A as a percentage revenue should trend steady or slightly down?

William Bean - Deutsche Bank

And sale?

Tom SooHoo

Sales as, we have mentioned that in the past, continues to be a real focus for us but we think its very important that we continue to build the brand and exposure foe eLong in terms of our services and offerings. So, that will continue to be in area of focus for us going forward.

William Bean - Deutsche Bank

And then, how about the research and development or R&D basically looking for that to continue to [off] as a percent to sales or remains flat absolute?

Tom SooHoo

We will make the appropriate investments in the areas that we think is important to take us to the next level of business.

William Bean - Deutsche Bank

Okay. And then, I mean [for guidance] just through some of the housekeeping stuff; just give us a sense of the number of repeat customers in the quarter.

Tony Shen

About 80%.

William Bean - Deutsche Bank

And percentage from top -- percentage of sales in top 10 cities, top few cities?

Tony Shen

About 60% from the top 10 cities.

William Bean - Deutsche Bank

And top 2?

Tony Shen

Its 35%.

William Bean - Deutsche Bank

Okay, and in terms of the hotel commission rate? Once again I caught that, sorry about that, the hotel commission rate?

Tony Shen

15%, this quarter.

William Bean - Deutsche Bank

Is the hotel bookings by international customers?

Tony Shen

Usually, it's hard to segregate that because they can be booked by their relatives or friends in China. But in numbers of customers, we usually see in the high-single digit percent, between 5% to 10% from international customers.

William Bean - Deutsche Bank

And, what's your percentage outbound at this point?

Tom SooHoo

At this stage it just a small percentage, less than 5%.

William Bean - Deutsche Bank

Okay, then word-of-mouth customers?

Tom SooHoo

Word-of-mouth customers is -- we don’t close that.

Tony Shen

We don’t check that.

William Bean - Deutsche Bank

Okay, and online transaction?

Tony Shen

About 20% of all transactions.

William Bean - Deutsche Bank

Could you give us a sense of where e-ticketing was exiting the October?

Tom SooHoo

As I had mention, we have 60% of our e-tickets, in the quarter was for the total quarter. That’s ramped up significantly from July to September. So, we left the quarter about 85%.

William Bean - Deutsche Bank

Okay, as of end of September?

Tom SooHoo

Correct.

William Bean - Deutsche Bank

And then package sales, or did you disclose that?

Tom SooHoo

No, we did not.

William Bean - Deutsche Bank

Okay.

Tom SooHoo

All right. Thank you, William. Moderator, next question please.

William Bean - Deutsche Bank

Okay.

Operator

There is no further questions here. (Operator Instructions).

William Bean - Deutsche Bank

I'll ask then another one?

Tom SooHoo

You are still on. Sure, and where the (inaudible.) you. Still waiting.

William Bean - Deutsche Bank

I'm still on. Okay, sorry. I was just wondering what your tax -- your thoughts on the tax rate would be. Sorry, I thought I was off.

Tom SooHoo

I'm sorry, can you ask the question again.

William Bean - Deutsche Bank

Sorry. The tax rate going forward, seems like it's bouncing a little bit, it is a little bit hard to predict.

Tony Shen

Yeah, this pass quarter as to first quarter, we had an operating income. So, there were some necessary accounting achievements reQiured by FAS 109. But going forward, the tax rate, it's hard to gauge because various entities have various tax benefits from local governments. You can use the guideline rates of corporate income tax, which in China we usually look at 33% to calculate.

William Bean - Deutsche Bank

You were 33%. You probably be the only Company in the sector using 33%, you think that’s really realistic?

Tony Shen

That’s the best we can tell you right now.

William Bean - Deutsche Bank

Okay. Thanks guys.

Tom SooHoo

Thank you.

Operator

The next question comes from Chang Qiu. Please go ahead.

Chang Qiu - Forun Technology Research

Yes. One more question; you mentioned you sold one of your [beneficiaries], just wondering is that feasible?

Tony Shen

No comment on that. But it’s a website hosting a online dating business.

Chang Qiu - Forun Technology Research

So, should we expect any -- for the future quarters, should we expect any revenues from your other revenue lines?

Tony Shen

Yes, we still have some advertising revenue on our website, but this is not a focus of our management attention going forward.

Chang Qiu - Forun Technology Research

I mean it's Q3 and therefore is that amount about the same in the future -- in the future quarters?

Tony Shen

I am sorry, the Q3 what --

Chang Qiu - Forun Technology Research

I mean in the future quarters, should we expect about the same amount of revenue in the other revenue categories?

Tony Shen

Well, when we gave to you guidance of revenue range earlier, the two ranges had a 3 million gap. So, you can expect that that’s our other travel revenue expectation for Q4.

Chang Qiu - Forun Technology Research

Okay, so it is not, not basically -- total series, there is a partial kind of sale of an asset --

Tony Shen

No, actually the revenue in this quarter from the division that we sold is already excluded from the top-line revenue because it's classified as discontinued operation. Its impact to our income statement appears as no gain or loss in -- further down in the other income line.

Chang Qiu - Forun Technology Research

Okay, is (inaudible) here with eLong?

Tony Shen

We have no comment on that.

Chang Qiu - Forun Technology Research

Well, that’s why you only told you don’t omit right now?

Tony Shen

We still have no comment on that. Next question please.

Tom SooHoo

Moderator, next question please, thank you.

Operator

The next question comes from William Bean. Please go ahead.

William Bean - Deutsche Bank

Hey, guys. Nowhere to hide. Sorry, I only had about three hours of sleep and then put the results yesterday. But anyway, I just wanted to step back a little bit and focus on internet partners in terms of your portal partners. Can you give us an update on how things are going there?

Tom SooHoo

In terms of the relationship with portal partners, we still have some of those relationships. Our focus has continued to be in terms of improving our overall web relationships, not only in portal, but also with other web union relationships as well. The portal business is, as you probably know and -- versus China versus US is slightly different. Okay. We, going forward, we think that the focus in portals will not be as strong as it has been in the past.

William Bean - Deutsche Bank

And which ones are you still working with?

Tom SooHoo

I’m working with SINA.

William Bean - Deutsche Bank

Okay.

Tom SooHoo

And SOHU.

William Bean - Deutsche Bank

Okay. And I think you disclosed this before, I can't remember. But when where those partnerships set -- or are agreements to expire?

Tom SooHoo

We don’t talk about our future in this.

William Bean - Deutsche Bank

Okay. And could you just give us a sense of how financial partners or credit card partners, some of the other guys have done reasonably well with a setup of partnering with a card company, is this the direction that you're going to go in?

Tom SooHoo

It's certainly part of our plans going forward, yes.

William Bean - Deutsche Bank

Okay. Thanks a lot.

Tom SooHoo

Thank you.

Operator

There seems to be no more further questions. (Operator Instructions). There seems to be no more further questions. So, now I'll hand the call back to our previous speaker.

Tom SooHoo

Okay. Thank you very much for the -- calling in for the earnings release.

Tony Shen

Thank you.

Operator

So, thank you. That concludes today's conference call. On behalf of eLong, I would like to thank you for your participation in this conference. All line may now disconnect. Thank you.

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Source: eLong Q3 2006 Earnings Call Transcript

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