LONG Elong ADS Representing 2 Ordinary Shares (MM)

BEIJING, May 28 /Xinhua-PRNewswire/ -- eLong, Inc. (NASDAQ:LONG), a leading online travel service provider in China, today reported unaudited financial results for the first quarter ended March 31, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO ) Highlights -- Total gross revenues increased 25% year-on-year to RMB81.4 million and net revenues increased 24% year-on-year to RMB76.7 million. -- Travel revenues before business tax and surcharges comprised of hotel, air and other travel product and service revenues, increased 23% year-on-year to RMB77.7 million. Travel revenues before business tax and surcharges by product were as follows (figures in RMB 000's): Q1 2008 % Total Q1 2007 % Total Y/Y Growth Hotel commissions 57,234 74% 48,879 78% 17% Air ticketing commissions 19,632 25% 12,050 19% 63% Other travel revenue 791 1% 2,077 3% -62% Total travel revenue before business tax and surcharges 77,657 100% 63,006 100% 23% -- Operating loss reduced year-on-year by RMB1.6 million to RMB3.6 million, driven primarily by increased revenue offset by greater service development, and general and administrative expenses. -- Net loss from continuing operations worsened year-on-year by RMB31.7 million to RMB32.6 million, driven primarily by a RMB28.3 million increase in unrealized foreign exchange losses and a RMB4.1 million decrease in interest income compared to the prior year quarter, caused by the appreciation of the Renminbi and lower U.S. interest rates. -- Cash, cash equivalents and short-term investments as of March 31, 2008 were RMB1.12 billion (USD$159.7 million). -- As of May 23, 2008, the Company repurchased 288,000 ADS at a cost of USD$2.6 million. "While we are pleased with the 24% year-on-year net revenue growth that we achieved in the first quarter, there is more work to be done," said Guangfu Cui, Chief Executive Officer of eLong. "Going forward, we will continue to focus on building a strong team, improving customer experience through the website and call center, and building a strong eLong brand via effective marketing programs." "Our efforts to position the Company for sustained growth are going to take some time," said Chris Chan, Chief Financial Officer of eLong. "We expect that additional investment and strong execution of plan will be needed before we realize a stronger operating performance." Business Results Hotel Hotel commissions for the first quarter of 2008 increased 17% year-on-year primarily due to higher room volume. Room nights booked through eLong increased 16% to 875,000, while commission per room night was RMB0.8 higher than the prior year quarter, at RMB65.4. Air Air ticketing commissions for the first quarter of 2008 increased 63% year-on-year, driven by a 31% increase in air segments to 428,000, and an increase of 75 basis points in the average percent commission to 5.5% or RMB46 per air ticket. The quarter also benefited from a higher average ticket price, which increased 7.3% year-on-year, to RMB828. Profitability Gross margin in the first quarter was 69% compared to 71% in the prior year period driven by the growth of lower margin air revenues. Operating expenses for the first quarter of 2008 and 2007 were as follows (figures in RMB 000's): % Net % Net Y/Y Q1 2008 Revenues Q1 2007 Revenues Growth Service development 12,697 17% 10,594 17% 20% Sales and marketing 28,907 38% 27,020 44% 7% General and administrative 14,778 19% 11,188 18% 32% Amortization of intangibles 217 0% 265 0% -18% Total operating expenses 56,599 74% 49,067 79% 15% Total operating expenses increased 15% for the first quarter of 2008 compared to the first quarter of 2007. Operating expenses were 74% of net revenues decreasing by 5 percentage points compared to the first quarter of the prior year. Service development expense is composed of expenses related to technology and product offering, including our website, platforms and other related system development. Service development expense increased 20% over the prior year period, mainly driven by increased investment in platform enhancements. Service development expense as a percentage of net revenues, decreased 64 basis points to 17%. Sales and marketing expense for the first quarter 2008 increased 7% over the prior year period, mainly driven by higher sales commissions in line with revenue growth, offset by lower marketing expense year-on-year. The sales and marketing expense decreased by 6 percentage points to 38% of net revenues when compared to the same period last year. General and administrative expense for the first quarter 2008 increased 32% over the prior year period mainly due to consulting expense related to ERP implementation and higher professional fees. General and administrative expense as a percentage of net revenues, increased by 1 percentage point year-on-year, to 19% in the first quarter. Other loss, which represents interest income, foreign exchange losses and other income/expense, was RMB28.2 million in the first quarter of 2008, primarily due to an unrealized foreign exchange loss of RMB37.9 million resulting from the appreciation of Renminbi during the quarter. This exchange loss was partially offset by interest income of RMB9.7 million in the first quarter of 2008. Net loss for the first quarter 2008 increased by RMB31.8 million over the prior year quarter to RMB32.6 million. Our basic and diluted loss per ADS for the first quarter of 2008 was RMB1.28 compared to a basic and diluted loss per ADS of RMB0.04 in the prior year period. Business Outlook eLong expects net revenues, that is net of business tax and surcharges, for the second quarter of 2008 to be within the range of RMB79 million to RMB88 million, an increase of 6% to 18% from the second quarter of 2007. Notes to the Unaudited Interim Consolidated Financial Statements Financial information in this press release from eLong's unaudited financial statements was prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). The accompanying consolidated financial statements as of and for the year ended December 31, 2007 have been revised or updated from previously released financial information as a result of immaterial corrections of accounting error and subsequent event. The effect of the revision is an increase of RMB273K, RMB217K and RMB269K to income tax expense, service development and general & administrative expense, a decrease of RMB497K and RMB224K to deferred tax asset and income tax payable, an increase of RMB269K and RMB217K to accounts payable and accrued expenses and other current liabilities. All references in the accompanying consolidated financial information of this press release have been adjusted to reflect this revision. 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 historical operating losses, its limited operating history, declines or disruptions in the travel industry, the recurrence of SARS, an outbreak of bird flu, 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 timely comply 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, subsequent revaluations 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 Form 20-F filed with the SEC in connection with the Company's fiscal year 2006 results. 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 2008 earnings on May 28, 2008, at 8:00 pm Eastern Time (Beijing/Hong Kong time: May 29, 2008 at 8:00 am). 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 conference call will be available for one day starting from 8:30 pm Eastern Time on May 28, 2008 to 8:00 am Eastern Time on May 29, 2008. US toll-free dial-in number: +1-800-839-3451, Hong Kong dial-in number: +852-2802-5151, international dial-in number: +1-203-369-4607. The pass code for the replay is 765890. 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://ir.elong.net/ for three months. 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 choices by providing a one-stop travel solution and consolidated travel tools and information 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 choice of a wide hotel selection in the Greater China region, eLong offers Chinese consumers the ability to make bookings at international hotels in over 140 destinations worldwide. eLong operates the websites http://www.elong.com/ and http://www.elong.net/ . eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months Ended Mar. 31, Dec. 31, Mar. 31, Mar. 31, 2007 2007 2008 2008 RMB RMB RMB USD Revenues: Hotel commissions 48,879 67,345 57,234 8,162 Air ticketing commissions 12,050 15,971 19,632 2,800 Other travel revenue 2,077 1,242 791 113 Travel 63,006 84,558 77,657 11,075 Other 2,275 3,264 3,792 541 Gross revenues 65,281 87,822 81,449 11,616 Business tax and surcharges (3,675) (4,969) (4,754) (678) Net revenues 61,606 82,853 76,695 10,938 Cost of services (17,701) (23,288) (23,703) (3,380) Gross profit 43,905 59,565 52,992 7,558 Operating expenses: Service development (10,594) (13,770) (12,697) (1,811) Sales and marketing (27,020) (33,783) (28,907) (4,123) General and administrative (11,188) (9,000) (14,778) (2,108) Amortization of intangibles (265) (265) (217) (31) Write-down of property and equipment and intangibles -- (513) -- -- Total operating expenses (49,067) (57,331) (56,599) (8,073) Income/(loss) from operations (5,162) 2,234 (3,607) (515) Other income/(loss) 4,329 (14,548) (28,248) (4,028) Loss from continuing operations before income tax expense (833) (12,314) (31,855) (4,543) Income tax expense (52) (516) (738) (105) Loss from continuing operations (885) (12,830) (32,593) (4,648) Discontinued operations: Income from discontinued operations 112 -- -- -- Income tax expense of discontinued operations (8) -- -- -- Total discontinued operations 104 -- -- -- Net loss (781) (12,830) (32,593) (4,648) Basic loss per share Continuing operations (0.02) (0.25) (0.64) (0.09) Discontinued operations 0.00 0.00 0.00 0.00 Basic loss per share (0.02) (0.25) (0.64) (0.09) Diluted loss per share Continuing operations (0.02) (0.25) (0.64) (0.09) Discontinued operations 0.00 0.00 0.00 0.00 Diluted loss per share (0.02) (0.25) (0.64) (0.09) Basic loss per ADS Continuing operations (0.04) (0.50) (1.28) (0.18) Discontinued operations 0.00 0.00 0.00 0.00 Basic loss per ADS (0.04) (0.50) (1.28) (0.18) Diluted loss per ADS Continuing operations (0.04) (0.50) (1.28) (0.18) Discontinued operations 0.00 0.00 0.00 0.00 Diluted loss per ADS (0.04) (0.50) (1.28) (0.18) Shares used in computing basic net loss per share 50,685 50,846 50,905 50,905 Shares used in computing diluted net loss per share 50,685 50,846 50,905 50,905 Note that 1ADS = 2 shares Share-based compensation charges included are as follows: 2,769 (1,539) 2,357 336 Cost of services 21 72 144 20 Service development 677 838 974 139 Sales and marketing 201 42 494 70 General and administrative 1,870 (2,491) 745 107 Un-realized foreign exchange losses 9,614 27,188 37,896 5,404 Note: The conversions of Renminbi (RMB) into United States dollars (USD) as at the reporting dates are based on the noon buying rate of USD1.00=RMB7.0120 on March 31, 2008, in the City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve. No representation is intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on the reporting dates. eLong, Inc. CONSOLIDATED SUMMARY BALANCE SHEET DATA (UNAUDITED, IN THOUSANDS) Dec. 31, Mar. 31, Mar. 31, 2007 2008 2008 RMB RMB US$ ASSETS Current assets: Cash, cash equivalents and short-term investment 1,157,567 1,119,623 159,672 Restricted assets 11,274 10,944 1,561 Accounts receivable, net 41,138 44,507 6,347 Due from related parties 924 -- -- Deferred income taxes, net 3,750 3,625 517 Prepaid expenses and other current assets 14,572 12,875 1,836 Total current assets 1,229,225 1,191,574 169,933 Property and equipment, net 43,962 48,338 6,894 Goodwill 30,000 30,000 4,278 Intangible assets, net 2,192 1,975 282 Deferred income taxes, net 237 502 72 Other non-current assets 28,730 29,982 4,276 Total assets 1,334,346 1,302,371 185,735 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 57,957 62,542 8,919 Income taxes payable 2,945 3,608 515 Due to related parties 4,529 5,747 820 Accrued expenses and other current liabilities 83,441 79,728 11,370 Total current liabilities 148,872 151,625 21,624 Deferred income taxes 100 100 14 Total liabilities 148,972 151,725 21,638 Shareholders' equity Ordinary shares 4,208 4,213 601 Treasury Stock -- (4,932) (703) Additional paid-in capital 1,308,056 1,310,848 186,943 Accumulated deficit (126,890) (159,483) (22,744) Total shareholders' equity 1,185,374 1,150,646 164,097 Total liabilities and shareholders' equity 1,334,346 1,302,371 185,735 Note: The conversions of Renminbi (RMB) into United States dollars (USD) as at the reporting dates are based on the noon buying rate of USD1.00=RMB7.0120 on March 31, 2008, in the City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve. No representation is intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on the reporting dates. For further information, please contact: Investor Relations Tel: +86-10-6436-7570 Email: http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO DATASOURCE: eLong, Inc. CONTACT: Investor Relations of eLong, Inc., +86-10-6436-7570, or Web site: http://www.elong.com/ http://www.elong.net/

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