eLong (ticker: LONG), a Chinese online travel service provider reported Q1 2005 results today. Here are key points from Chairman and CEO Justin Tang and CFO Derek Palaschuk:
Q1 Highlights
- E-tickets were 6% of total air ticket bookings.
- 103,000 air tickets sold versus 83,000 in Q4.
- Decrease in hotel bookings due to seasonality.
- No seasonality for air ticketing business.
- Added 58,000 new customers.
- Bookings from first time consumers were 25% of total revenue.
- 20% of transactions online; 80% through call center.
- % of sales using credit cards is increasing rapidly.
- Strong balance sheet with lots of cash.
- Continues not to charge fees to online consumers.
- Improved functionality of web site - mapping.
- Implemented credit card payment platform on site.
- English web site eLong.net started selling Expedia's international inventory.
Q2 Guidance
- 120,000 air tickets.
- 615,000 room nights.
Long-Term Outlook
- Investing in organic growth.
- Focused on growing market share and not necessarily on improving margins.
- Expanding sales and marketing and product inventory.
- Improving technology infrastructure.
- Supported by shareholder base focused on the long-term.
Industry Outlook
- Travel market in China - trend similar to last quarter - growing rapidly.
- E-ticketing will grow.
Business Breakdown
- Business travel: 65-70%.
- Leisure travel: 30-35%.
- Domestic travel business 95%+
Strategic Agreements:
- eLong signed long-term exclusive strategic agreements with Yahoo! China and Sohu.com (ticker: SOHU).
- eLong will operate travel channels on both of their web sites and has exclusivity in providing own travel content.
- Already has strategic partnerships with China Telecom (ticker:
CHA) and China Netcom (ticker: CN) to provide hotel booking services to
their customers.
- New partnerships with Industrial and Commerce Bank and China
Construction Bank to provide travel booking services to their credit card base.
Relationship with IAC's Expedia
- Assisting Expedia to secure China hotel inventory.
- Adopting Expedia technology.
- Integrating to link eLong booking platform with IAC's booking system.
On Re-valuation of the Yuan
- Don't see any effects from possible re-valuation of Yuan.
Comment: The same comment we made relating to eLong's Q4 results applies today. The Company remains on a long road to profitability.