eLong News

BEIJING, China - May 27, 2009 - eLong, Inc. (Nasdaq: LONG), a leading online travel service provider in China, today reported unaudited financial results for the first quarter ended March 31, 2009.

• Total gross revenues increased 1% year-on-year to RMB82.5 million and net revenues increased 1% year-on-year to RMB77.8 million.
• Travel revenues before business tax and surcharges comprised of hotel, air and other travel product and service revenues were flat year-on-year at RMB77.8 million.
• Travel revenues before business tax and surcharges by product were as follows (figures in RMB 000's; some numbers may not add due to rounding):
  
• Operating loss in the first quarter was RMB3.4 million compared to RMB3.6 million in the prior year period, driven primarily by a decrease in general and administrative expenses, partially offset by greater sales and marketing expenses.
• Net income in the first quarter was RMB2.0 million compared to net loss of RMB32.6 million in the prior year period, driven primarily by a RMB38.2 million decrease in foreign currency exchange losses, partially offset by a decrease of RMB4.3 million in interest income.
• Cash, cash equivalents and short term investments as of March 31, 2009 were RMB964.9 million (USD$141.2 million). Short term investments of RMB615.9 million (USD$90.1 million) were comprised of time deposits of six or nine months duration held in commercial banks located outside mainland China.

"Q1 was a tough quarter, but see early indications that our focus on expanding our presence online, driving product innovation and improving supply will yield results." said Guangfu Cui, Chief Executive Officer of eLong.

"The impact of transaction processing and customer service efficiencies are reflected in our gross margin performance for the quarter," said Mike Doyle, Chief Financial Officer of eLong. "We were able to hold margin flat while facing headwinds from both lower average selling prices and a greater mix of lower margin air bookings. We also demonstrated some progress in our cost containment initiative by reducing general and administrative expenses as compared with the prior year period."

Hotel
Hotel commissions decreased 2% for the first quarter of 2009 compared to the prior year quarter, primarily due to lower commission per room night, which was partially offset by higher volume. Commission per room night decreased to RMB62 from RMB65 in the prior year quarter primarily due to lower average selling prices and mix shift to lower margin budget hotels. Room nights booked through eLong increased 4% year-on-year to 912,000.

Air
Air ticketing commissions increased 8% for the first quarter of 2009 compared to the prior year quarter, driven by an 18% year-on-year increase in air segments to 506,000, partially offset by a decrease of 8% in the average ticket price to RMB758 compared to the prior year quarter.

Profitability
Gross margin in the first quarter of 2009 was 69% which was the same as in the first quarter of 2008.

• Operating expenses for the first quarter of 2009 and 2008 were as follows (figures in RMB 000's; some numbers may not add due to rounding):
  

Total operating expenses increased 1% for the first quarter of 2009 compared to the first quarter of 2008. Operating expenses were 74% of net revenue, a decrease of 26 basis points compared to the prior year quarter.

Service development expense is composed of expenses related to technology and our product offerings, including our website, platforms and other related systems development. Service development expense increased 3% in the first quarter 2009 compared to the prior year quarter, mainly driven by increases in labor costs, partially offset by a decrease in outside service fees, and was unchanged as a percentage of net revenues in 2009 compared to 2008.

Sales and marketing expenses for the first quarter 2009 increased 9% over the prior year quarter, mainly driven by increased loyalty point awards and higher online marketing expenses, partially offset by decreases in sales commissions and professional fees. Sales and marketing expenses increased by 3 percentage points to 41% of net revenues in the first quarter 2009 compared to the same quarter of the prior year.

General and administrative expenses for the first quarter 2009 decreased 16% compared to the prior year quarter, mainly driven by a decrease in professional fees and lower bad debt provisions. General and administrative expenses decreased by 3 percentage points to 16% of net revenues in the first quarter of 2009 compared to the same quarter of the prior year.

Other income, which represents interest income, foreign exchange gains/losses and other income/expense, was RMB5.7 million in the first quarter of 2009, due to interest income of RMB5.4 million in the first quarter of 2009 and a foreign currency exchange gain of RMB0.3 million resulting from the depreciation of the Renminbi against the US dollar during the quarter.

Net income for the first quarter 2009 was RMB2.0 million, which compared to net loss of RMB32.6 million over the prior year quarter.

Basic and diluted earnings per ADS for the first quarter of 2009 were RMB0.08 compared to basic and diluted losses per ADS of RMB1.28 in the prior year quarter.

Business Outlook
eLong expects net revenues, for the second quarter of 2009 to be within the range of RMB77 million to RMB85 million, equal to a decline of 5% to an increase of 5% compared to the second quarter of 2008.

Notes to the Unaudited Interim Consolidated Financial Statements
To supplement the financial measures calculated in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes certain non-GAAP financial measures including basic earning/loss per ADS, diluted earning/loss per ADS, share-based compensation charges and unrealized foreign exchange losses/(gains). The Company believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Safe Harbor Statement
It is currently expected that the Business Outlook will not be updated until the release of eLong's next quarterly earnings announcement; however, eLong reserves the right to update its Business Outlook at any time for any reason.

Statements in this press release concerning eLong's future business, operating results and financial condition are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they related to the Company are intended to identify such forward-looking statements, but are not the exclusive means of doing so. These forward looking 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. Factors that could affect the Company's actual results and cause actual results to differ materially from those included in any forward-looking statement include, but are not limited to, eLong's operating losses, declines or disruptions in the travel industry, the international financial crisis, slowdown in the PRC economy, the recurrence of SARS, an outbreak of bird flu, swine flu or other disease, eLong's reliance on having good relationships with hotel suppliers and airline ticket suppliers, our reliance on the Travelsky GDS system for our air business, the possibility that eLong will be unable to continue timely compliance with Section 404 of the Sarbanes-Oxley Act of 2002, the risk that eLong will not be successful in competing against new and existing competitors, risks associated with Expedia, Inc.'s (Nasdaq: EXPE) majority ownership interest in eLong and the integration of eLong's business with that of Expedia's, fluctuations in the value of the Chinese currency, changes in eLong's management team and other key personnel, changes in third-party distribution partner relationships and other risks outlined in eLong's filings with the U.S. Securities and Exchange Commission (or SEC), including eLong's Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their dates.

Conference Call
eLong will host a conference call to discuss its first quarter 2009 earnings on May 27, 2009 at 8:00 AM Beijing time (May 26, 2009, 8:00 PM EST). The management team will be on the call to discuss the quarterly results and to answer questions. The toll-free number for U.S. participants is +1-800-365-8460. The dial-in number for Hong Kong participants is +852-2258-4000. International participants can dial +1-210-795-0492. Pass code: eLong.

A replay of the call will be available for one day between 9:30 pm Eastern Time on May 26, 2009 and 9:30 pm Eastern Time on May 27, 2009. The toll-free number for U.S. callers is +1-800-477-5821; the Hong Kong dial in number is +852-2802-5151, and the dial-in number for international callers is +1-203-369-4577. The pass code for the replay is 717980.

Additionally, a live and archived web cast of this call will be available on the Investor Relations section of the eLong web site at http://www.elong.net/AboutUs/conference.html for one year.

About eLong, Inc.
eLong, Inc. (NASDAQ: LONG) is a leading online travel company in China. Headquartered in Beijing, eLong has a national presence across China. eLong uses web-based distribution technologies and a 24-hour call center to provide consumers with access to travel reservation services. Aiming to enrich people's lives through the freedom of independent travel, eLong empowers consumers to make informed decisions such as maps, virtual tours and user ratings. eLong has the capacity to fulfill air ticket reservations in over 80 major cities across China. In addition to a selection of more than 7,000 thousand hotels in China, eLong offers consumers the ability to make bookings at international hotels in more than 100 countries worldwide.

eLong operates websites including http://www.elong.com and http://www.elong.net