LONG Elong ADS Representing 2 Ordinary Shares (MM)

BEIJING, China, May 26 /PRNewswire-Asia/ -- 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. Highlights -- 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): % % Y/Y Q1 2009 Total Q1 2008 Total Growth Hotel commissions 56,222 73 % 57,234 74 % -2 % Air ticketing commissions 21,248 27 % 19,632 25 % 8 % Other travel revenue 350 -- 791 1 % -56 % Total travel revenue 77,820 100 % 77,657 100 % -- -- 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." Business Results 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): % Net % Net Y/Y Q1 2009 Revenue Q1 2008 Revenue Growth Service development 13,030 17 % 12,697 17 % 3 % Sales and marketing 31,607 41 % 28,907 38 % 9 % General and administrative 12,424 16 % 14,778 19 % -16 % Amortization of intangibles 157 -- 217 -- -28 % Total operating expenses 57,218 74 % 56,599 74 % 1 % 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 EDT). 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/ . For further information, please contact: eLong, Inc. Investor Relations Tel: +86-10-6436-7570 Email: eLong, Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months Ended Mar. 31, Dec. 31, Mar. 31, Mar. 31, 2008 2008 2009 2009 RMB RMB RMB USD Revenues: Hotel commissions 57,234 67,913 56,222 8,228 Air ticketing commissions 19,632 19,316 21,248 3,110 Other travel revenue 791 74 350 51 Travel 77,657 87,303 77,820 11,389 Other 3,792 3,699 4,653 681 Gross revenues 81,449 91,002 82,473 12,070 Business tax and surcharges (4,754) (5,302) (4,668) (683) Net revenues 76,695 85,700 77,805 11,387 Cost of services (23,703) (25,473) (23,964) (3,507) Gross profit 52,992 60,227 53,841 7,880 Operating expenses: Service development (12,697) (12,401) (13,030) (1,907) Sales and marketing (28,907) (45,100) (31,607) (4,626) General and administrative (14,778) (12,032) (12,424) (1,818) Amortization of intangibles (217) (197) (157) (23) Write-down of property and equipment and intangibles -- (753) -- -- Total operating expenses (56,599) (70,483) (57,218) (8,374) Income/(loss) from operations (3,607) (10,256) (3,377) (494) Other income(loss) (28,248) 7,995 5,668 829 Income/(loss) from operations before income tax expense (31,855) (2,261) 2,291 335 Income tax expense (738) (5,940) (290) (42) Net income/(loss) (32,593) (8,201) 2,001 293 Basic earning/(loss) per share (0.64) (0.17) 0.04 0.006 Diluted earning/(loss) per share (0.64) (0.17) 0.04 0.006 Basic earning/(loss) per ADS (1.28) (0.34) 0.08 0.012 Diluted earning/(loss) per ADS (1.28) (0.34) 0.08 0.012 Shares used in computing basic net earning/loss per share 50,905 48,076 47,079 47,079 Shares used in computing diluted net earning/loss per share 50,905 48,076 49,556 49,556 Note: 1ADS = 2 shares. Share-based compensation charges included are as follows: 2,357 523 2,398 351 Cost of services 144 (79) 139 20 Service development 974 37 668 98 Sales and marketing 494 (151) 704 103 General and administrative 745 716 887 130 Un-realized foreign exchange losses/(gains) 37,896 (1,723) (144) (21) Note 1: 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=RMB6.8329 on March 31, 2009, USD1.00=RMB6.8225 on December 31, 2008 and 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, or at any rate, on the reporting dates. eLong, Inc. UNAUDITED CONDENSED CONSOLIDATED SUMMARY BALANCE SHEET DATA (IN THOUSANDS) Dec. 31, Mar. 31, Mar. 31, 2008 2009 2009 RMB RMB USD ASSETS Current assets: Cash, cash equivalents 321,541 348,992 51,075 Short-term investments 635,810 615,927 90,141 Accounts receivable, net 42,471 41,489 6,072 Due from related parties 518 799 117 Prepaid expenses and other current assets 23,660 22,609 3,309 Total current assets 1,024,000 1,029,816 150,714 Property and equipment, net 52,484 50,367 7,371 Goodwill 30,000 30,000 4,391 Intangible assets, net 943 786 115 Other non-current assets 30,538 29,552 4,325 Total assets 1,137,965 1,140,521 166,916 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 34,146 35,503 5,196 Income taxes payable 1,152 684 100 Due to related parties 8,120 7,046 1,031 Accrued expenses and other current liabilities 81,889 80,194 11,736 Total current liabilities 125,307 123,427 18,063 Other long-term liabilities 477 451 66 Total liabilities 125,784 123,878 18,129 Shareholders' equity Ordinary shares 4,221 4,227 619 Treasury Stock (103,393) (103,393) (15,132) Additional paid-in capital 1,315,590 1,318,045 192,897 Accumulated deficit (204,237) (202,236) (29,597) Total shareholders' equity 1,012,181 1,016,643 148,787 Total liabilities and shareholders' equity 1,137,965 1,140,521 166,916 DATASOURCE: eLong, Inc. CONTACT: eLong, Inc., Investor Relations, +86-10-6436-7570, Web site: http://www.elong.com/

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