eLong, Inc. (LONG)

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eLong, Inc. (LONG)

Q2 2010 Earnings Call Transcript

August 16, 2010 8:00 pm ET


Guangfu Cui – CEO

Mike Doyle – CFO

Philip Yang - Investor Relations


Eddie Leung - Bank of America Merrill Lynch

Fawne Jiang - Brean Murray, Carret & Co

Nan Li - Susquehanna International Group



Good day to everyone and welcome to eLong's Second Quarter 2010 earnings report conference call. (Operator Instructions) I will now hand over the line to Philip Yang and I will be standing by for the Q&A session. Please go ahead, thank you.

Philip Yang

Hello everyone, thank you for joining eLong’s second quarter 2010 conference call.

Today, Guangfu Cui, our CEO, will make some remarks about the company’s performance in the second quarter 2010 followed by Mike Doyle, our CFO, who will provide additional detail on our financial results. Following their prepared remarks, Guangfu and Mike will be available to take your questions.

Before the management presentations, please allow me to read our Safe Harbor Statement. During this conference call representatives of the company will make certain forward-looking statements within the meaning of the U.S. Securities Act and the Securities Exchange Act. 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 large 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 wide variety 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 the risk factors described in our Annual Report on Form 20-F, as well as the full text of the Safe Harbor Statement in our Form 6-K, which will be furnished to the SEC in connection with our press release and this conference call, for discussion of some of the important factors that could affect future results.

I will now turn the call over to our CEO, Guangfu Cui.

Guangfu Cui

Thank you, Philip. Hello everyone, thank you for being on this call.

We are proud to report a quarter of strong top line growth with net revenues growing 45% year over year to RMB119 million, and income from operations growing 152% year over year to RMB16 million. We are also happy to disclose that our on-line hotel room nights more than doubled compared to the prior year quarter, and our on-line bookings for all products are now more than one third of our total bookings. Among the factors which contributed to our performance in Q2 were: our efforts to drive online growth; strong demand in China travel industry, and the Shanghai World Expo.

We increased hotel coverage over 40% to approximately 12,200 hotels in the second quarter from approximately 8,700 during the same period a year ago. In addition, eLong.com now offers our customers more than 120,000 hotels worldwide through our interface with Expedia. eLong.com is the largest online distributor in China in terms of hotels offered which can be directly booked. We will continue to expand hotel coverage where we see demand from our customers. This effort is in line with our vision, which is to become the largest online travel marketplace in China.

We have run our “eCoupon” promotion for 9 months. eCoupon offers discounts of up to 100 reminbi off hotel bookings made online, and in conjunction with the World Expo in Shanghai, customers can receive coupons for hotel stays in Shanghai equal to the total value of their hotel stay. The eCoupon has reinforced eLong’s brand position of “real savings and a worry-free booking experience,” and rewarded customers for transacting online. We have been also investing in online marketing. We are happy to see the continuing growth of our online hotel bookings in the past few quarters, and will keep driving our business online going forward as we believe this represents the best opportunity for our long term growth.

We have been improving our customer experience both online and offline. In the second quarter, we upgraded our website, which provided customers with faster page loading time and better website availability. Our call center continued its high quality service with a 99% customer satisfaction rate and a 92% very satisfied rate.

Starting from June, on top of increased TravelSky GDS communication fees, our air ticketing business faces new challenges as airlines cut commissions, and as airlines aggressively promote their own websites. To embrace the new challenge, we must simplify our air operations and strengthen our focus on meeting customer needs.

Our priorities in 2010 for the remainder of remain the same as shared with you at the beginning of the year.

to upgrade our product and service offerings such as dynamic packages, hotels, and air tickets;

to further improve online booking and after sales service experience;

to continue our efforts to launch effective online marketing programs; and

to work with hotel and air suppliers to procure competitively priced products for our customers.

Successful execution of our priorities and plans remains critical, and we are confident to the long-term growth of our business.

Now, I would like to hand the call over to Mike for a review of our financial results.

Mike Doyle

Thank you, Guangfu. In the second quarter, we delivered a significant acceleration in year-on-year revenue growth to 45%. We were profitable and continued to make progress on our efficiency improvement initiatives. Income from operations was RMB16.1 million, an increase of RMB9.7 million from our income from operations of a year ago and net income was RMB9.4 million in line with that of a year ago.

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