eLong Beats on Adjusted Basis; Continues to Invest in the Future; Hotel and Air Ticketing Revs Show Solid Growth (LONG 3Q05 Earnings)

eLong (ticker: LONG), a Chinese online consolidator of hotel accommodations and airline tickets reported Q3 2005 earnings results today. Key stats from the quarter:

Q3 Results
(all percentage changes and comparisons are year on year, unless stated otherwise, assumes RMB 8.0920 : US $ 1)

• Total revenue rose 59.8% to $7.3 million. There were no revenue estimates available.
• Total travel revenue rose 63.6% to $6.7 million.
• Hotel commissions rose 44.8% to $5.3 million.
• Air ticketing commissions rose 126.1% to $927,000.
• Other travel revenue rose 1,161.5% to $492,000.
• Non-travel revenue rose 29.6% to $652,000.
• Gross margin was 80.5% vs 81.7%.
• Total operating expenses rose 130.1% to $9.0 million.
• Total operating expenses excluding business taxes, writedown of goodwill and intangibles, stock-based compensation and amortization of intangibles rose 70% to $5.9 million and rose 6% sequentially.
• Service development expenses rose 181.8% to $1.2 million.
• Sales and marketing expenses rose 41.3% to $3.2 million.
• General and administrative expenses rose 121.0% to $1.5 million.
• Operating loss of $3.0 million vs loss of $139,000.
• Net loss of $5.0 million vs loss of $88,000, and vs loss of $396,000 in Q2.
• Loss per ADS of $0.20 vs loss of $0.01, and vs loss of $0.017 in Q2. Consensus estimate (1 analyst) of $0.00.
• Adjusted income of $609,000 vs $167,000, and vs $49,000 in Q2.
• Diluted adjusted income per ADS of $0.022 vs $0.009, and vs $0.002 in Q2.

Balance Sheet
(as of September 30, 2005, assumes RMB 8.0920 : US $ 1)

• Cash and equivalents of $121.4 million.
• Restricted cash equivalents of $9.4 million.

Q4 Guidance

• Total revenue of $7.3 million - $7.7 million.
• Excluding the impact of the writedown in goodwill and intangibles in Q3 2005 expect an increase in operating loss in Q4 2005 vs Q3 2005.

Derek Palaschuk, eLong's Chief Financial Officer

"eLong is still in the early stage of a promising and potentially huge online travel market. We believe our current level of investment in the business is appropriate as we expect it to further strengthen our leading position and drive long-term value for our shareholders. Along with our healthy revenue growth, we are pleased to note the improvement in our adjusted income, which demonstrates progress in our business operations."

LONG chart.