eLong (LONG) remains on a long road to profitability (1Q05 conf call)

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.