Ctrip Reports Unaudited Second Quarter of 2015 Financial Results

(Ctrip) Ctrip.com International, Ltd., a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours and corporate travel management in China today announced its unaudited financial results for the second quarter ended June 30, 2015.

Highlights for the Second Quarter of 2015

• Net revenues were RMB2.53 billion (US$408 million) for the second quarter of 2015, up 47% year-on-year.

• Net commission earned (non-GAAP) was RMB2.49 billion for the second quarter, up 45% year-on-year. Net commission earned (non-GAAP) is calculated by deducting from the revenues the cost of transactions where the Company undertakes majority of the business risks, including the inventory risks*. The Company accounts for discount offered to the customers as reduction to its revenues, and certain significant discount may result in selling price lower than cost. 

• Accommodation reservation volume increased 55% year-on-year, and accommodation reservation revenues increased 47% year-on-year, reaching RMB1.1 billion (US$178 million) for the second quarter of 2015.

• Transportation ticketing volume increased 106% year-on-year, and transportation ticketing revenues increased 45% year-on-year, reaching RMB1.1 billion (US$170 million) for the second quarter of 2015.

• Gross margin was 71% for the second quarter of 2015, compared to 72% in the same period in 2014, and 70% in the previous quarter.

• Net income attributable to Ctrip's shareholders was RMB143 million (US$23 million) for the second quarter of 2015, compared to RMB135 million (US$22 million) in the same period in 2014. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB296 million (US$48 million), compared to RMB246 million (US$40 million) in the same period in 2014.

• Diluted earnings per ADS were RMB0.90 (US$0.15) for the second quarter of 2015. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.86 (US$0.30) for the second quarter of 2015.

• Share-based compensation charges were RMB153 million (US$25 million), accounting for 6% of the net revenues, or RMB0.96 (US$0.15) per ADS for the second quarter of 2015.

The Company presents the revenue on a net basis. Revenues are recognized at gross basis when the Company undertakes the majority of the business risks and acts as principal. In the second quarter of 2015, the Company recognized the revenue on gross basis of RMB0.05 billion and associated cost of RMB0.04 billion. Should all these transactions being presented on net basis, the net commission earned was RMB2.49 billion.

"We saw continued robust growth across all business lines," said James Liang, Chairman of the Board and Chief Executive Officer of Ctrip. "Both our accommodation reservation and transportation ticketing businesses reached record-high revenues of over RMB1 billion, a landmark achievement in China's online travel industry. Accommodation reservation, air ticketing and transportation ticketing maintained strong year-over-year volume growth of 55%, 60% and 106% respectively, with high revenue quality and sales and marketing efficiency. Such performance, coupled with increased revenue generation and improved cost control of our new businesses, has allowed us to remain the most profitable travel company in China. We will continue to enhance our core competencies, strengthen our leadership and strive for a balance between investment and profitability in the coming quarters."

Second Quarter of 2015 Financial Results and Business Updates

For the second quarter of 2015, Ctrip reported total revenues of RMB2.7 billion (US$430 million), representing a 46% increase from the same period in 2014. Total revenues for the second quarter of 2015 increased by 9% from the previous quarter.

Accommodation reservation revenues amounted to RMB1.1 billion (US$178 million) for the second quarter of 2015, representing a 47% increase year-on-year, primarily driven by an increase of 55% in accommodation reservation volume. Accommodation reservation revenues increased by 16% quarter-on-quarter.

Transportation ticketing revenues for the second quarter of 2015 were RMB1.1 billion (US$170 million), representing a 45% increase year-on-year, primarily driven by an increase of 106% in ticketing volume. Transportation ticketing revenues increased by 11% quarter-on-quarter.

Packaged-tour revenues for the second quarter of 2015 were RMB329 million (US$53 million), representing a 61% increase year-on-year, primarily driven by an increase in volume growth of organized tours and self-guided tours. Packaged-tour revenues decreased by 17% quarter-on-quarter, primarily due to seasonality.

Corporate travel revenues for the second quarter of 2015 were RMB121 million (US$19 million), representing a 34% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenues increased by 30% quarter-on-quarter, primarily due to seasonality.

For the second quarter of 2015, net revenues were RMB2.5 billion (US$408 million), representing a 47% increase from the same period in 2014. Net revenues for the second quarter of 2015 increased by 9% from the previous quarter.

Gross margin was 71% for the second quarter of 2015, compared to 72% in the same period in 2014 and 70% in the previous quarter.

Product development expenses for the second quarter of 2015 increased by 66% to RMB797 million (US$128 million) from the same period in 2014, primarily due to an increase in product development personnel related expenses. Product development expenses for the second quarter of 2015 decreased by 1% from the previous quarter. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 29% of the net revenues, increased from 25% in the same period in 2014 and decreased from 32% in the previous quarter.

Sales and marketing expenses for the second quarter of 2015 increased by 42% to RMB679 million (US$109 million) from the same period in 2014, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the second quarter of 2015 decreased by 6% from the previous quarter. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 26% of the net revenues, decreased from 27% in the same period in 2014 and 30% in the previous quarter.

General and administrative expenses for the second quarter of 2015 increased by 34% to RMB261 million (US$42 million) from the same period in 2014 primarily due to an increase in amortization expenses for intangible assets of newly acquired entities and other office expenses. General and administrative expenses for the second quarter of 2015 increased by 1% from the previous quarter. 

Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, remained consistent with the same period in 2014 and the previous quarter.

Income from operations for the second quarter of 2015 was RMB61 million (US$10 million), compared to RMB91 million (US$15 million) in the same period in 2014 and loss from operations of RMB180 million (US$29 million) in the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB214 million (US$35 million), compared to RMB202 million (US$33 million) in the same period in 2014 and loss from operations of RMB21 million (US$3 million) in the previous quarter.

Operating margin was 2% for the second quarter of 2015, compared to 5% in the same period in 2014, and -8% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 8%, compared to 12% in the same period in 2014 and -1% in the previous quarter. 

Income tax expense for the second quarter of 2015 was RMB31 million (US$5 million), compared to income tax expense of RMB47 million (US$8 million) in the same period of 2014 and RMB6 million (US$1 million) in the previous quarter.

Net income attributable to Ctrip's shareholders for the second quarter of 2015 was RMB143 million (US$23 million), compared to RMB135 million (US$22 million) in the same period in 2014 and net loss attributable to Ctrip's shareholders of RMB126 million (US$20 million) in the previous quarter. 

Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB296 million (US$48 million), compared to RMB246 million (US$40 million) in the same period in 2014 and RMB33 million (US$5 million) in the previous quarter.

Diluted earnings per ADS were RMB0.90 (US$0.15) for the second quarter of 2015. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.86 (US$0.30) for the second quarter of 2015.

As of June 30, 2015, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB20.5 billion (US$3.3billion).

Recent Development As of August 3, 2015, Ctrip had purchased approximately 20 million ADSs in aggregate with a total consideration of US$474 million.

Business Outlook For the third quarter of 2015, the Company expects to continue the net revenue growth year-on-year at a rate of approximately 45-50%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.

Source: Ctrip

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