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Ctrip Reports Unaudited Third Quarter of 2017 Financial Results

SHANGHAI, Nov. 1, 2017 /PRNewswire/ -- Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours and corporate travel management in China ("Ctrip" or the "Company"), today announced its unaudited financial results for the third quarter ended September 30, 2017.

Key Highlights

  • Ctrip reported strong financial results in the third quarter of 2017.
    • Net revenue increased 42% year-on-year to RMB7.9 billion in the third quarter of 2017.
      • Accommodation reservation revenue for the third quarter of 2017 increased 36% year-on-year, primarily driven by an increase in the accommodation reservation volume.
    • Gross margin was 83% for the third quarter of 2017, improving from 78% for the same period of 2016 and 82% for the second quarter of 2017, due to further efficiency gain.
    • Operating margin for the third quarter of 2017 was 17%. Excluding share-based compensation charges, Non-GAAP operating margin for the third quarter of 2017 was 22%, improving from 18% for the same period of 2016, primarily driven by improvements in overall operating efficiency and synergies from the invested companies.
  • The Company has continued to strengthen its leading position in lower-tier cities.
    • In the third quarter of 2017, Ctrip brand's average DAU grew over 60% year-over-year in second-tier cities.
    • Qunar's hotel revenue in the third- and fourth-tier cities has maintained over 80% growth rates in three consecutive quarters this year.
    • In the third quarter of 2017, Ctrip and Qunar opened 100 offline stores across China and we will continue to expand our store network going forward.
  • Ctrip's international businesses have sustained robust growth momentum.
    • International air ticketing maintained robust volume growth in the third quarter of 2017, and the tickets sold by our International Business Unit continued to grow impressively at a triple-digit percentage rate.

"We are pleased to deliver another quarter of solid results." said Jane Sun, Chief Executive Officer. "The investments we've made in products, services and technologies cement an unrivaled value proposition for our customers and supply chain partners. Customer-centricity is a core value and we will continue to diligently uphold it."

"Ctrip's foundation is based on travel innovation, one-stop experience and best in class 24/7 service," said James Liang, Executive Chairman. "The growth we've delivered through the years has been tremendous yet we're still only touching the tip of the whole travel opportunity. Our successful track record and our ability to stay inquisitive and innovative will further solidify our competitive moat."

Third Quarter of 2017 Financial Results and Business Updates

For the third quarter of 2017, Ctrip reported net revenue of RMB7.9 billion (US$1.2 billion), representing a 42% increase from the same period of 2016. Net revenue for the third quarter of 2017 increased 23% from the previous quarter.

Accommodation reservation revenue for the third quarter of 2017 was RMB2.8 billion (US$424 million), representing a 36% increase from the same period of 2016, primarily driven by an increase in accommodation reservation volume. Accommodation reservation revenue for the third quarter of 2017 increased 22% from the previous quarter, primarily driven by an increase in accommodation reservation volume and seasonality.

Transportation ticketing revenue for the third quarter of 2017 was RMB3.4 billion (US$515 million), representing a 41% increase from the same period of 2016, primarily driven by an increase in ticketing volume and the consolidation of Skyscanner's financial results since December 31, 2016. Transportation ticketing revenue increased 15% from the previous quarter, primarily due to an increase in ticketing volume and seasonality.

Packaged-tour revenue for the third quarter of 2017 was RMB1.0 billion (US$155 million), representing a 27% increase from the same period of 2016, primarily driven by an increase in volume growth of organized tours and self-guided tours. Packaged-tour revenue for the third quarter of 2017 increased 69% from the previous quarter, primarily due to seasonality.

Corporate travel revenue for the third quarter of 2017 was RMB203 million (US$30 million), representing a 22% increase from the same period of 2016, primarily driven by expansion in travel product coverage. Corporate travel revenue for the third quarter of 2017 increased 2% from the previous quarter.

Gross margin was 83% for the third quarter of 2017, compared to 78% for the same period of 2016, and 82% for the previous quarter.

Product development expenses for the third quarter of 2017 increased by 18% to RMB2.2 billion (US$328 million) from the same period of 2016, primarily due to an increase in product development personnel related expenses. Product development expenses for the third quarter of 2017 increased 7% from the previous quarter. Product development expenses for the third quarter of 2017 accounted for 28% of the net revenue. Excluding share-based compensation charges, Non-GAAP product development expenses for the third quarter of 2017 accounted for 25% of the net revenue, which decreased from 27% for the same period of 2016 and the previous quarter.

Sales and marketing expenses for the third quarter of 2017 increased by 58% to RMB2.4 billion (US$357 million) from the same period of 2016, primarily due to an increase in sales and marketing related activities. Sales and marketing expenses for the third quarter of 2017 increased 19% from the previous quarter. Sales and marketing expenses for the third quarter of 2017 accounted for 30% of the net revenue. Excluding share-based compensation charges, Non-GAAP sales and marketing expenses for the third quarter of 2017 accounted for 30% of the net revenue, which increased from 26% for the same period of 2016 and remained consistent with the previous quarter.

General and administrative expenses for the third quarter of 2017 increased by 25% to RMB674 million (US$101 million) from the same period of 2016, primarily due to an increase in general and administrative personnel related expenses and consulting expenses. General and administrative expenses for the third quarter of 2017 increased 11% from the previous quarter. General and administrative expenses for the third quarter of 2017 accounted for 9% of the net revenue. Excluding share-based compensation charges, Non-GAAP general and administrative expenses accounted for 7% of the net revenue, which remained consistent with the same period of 2016 and the previous quarter.

Income from operations for the third quarter of 2017 was RMB1.4 billion (US$204 million), compared to income of RMB447 million for the same period of 2016 and income of RMB645 million for the previous quarter. Excluding share-based compensation charges, Non-GAAP income from operations was RMB1.7 billion (US$262 million), compared to RMB1.0 billion for the same period of 2016 and RMB1.2 billion for the previous quarter.

Operating margin was 17% for the third quarter of 2017, compared to 8% for the same period of 2016, and 10% for the previous quarter. Excluding share-based compensation charges, Non-GAAP operating margin was 22%, compared to 18% for the same period of 2016 and 18% for the previous quarter.

Income tax expense for the third quarter of 2017 was RMB313 million (US$47 million), compared to RMB221 million for the same period of 2016 and RMB529 million for the previous quarter. The change in the Group's effective tax rates is primarily due to the change in profitability in the subsidiaries with different tax rates and certain non-tax deductible losses including the share based compensation.

Net income attributable to Ctrip's shareholders for the third quarter of 2017 was RMB1.2 billion (US$185 million), compared to net income of RMB24 million for the same period of 2016 and net income of RMB327 million for the previous quarter.

Diluted earnings per ADS were RMB2.10 (US$0.32) for the third quarter of 2017. Excluding share-based compensation charges, Non-GAAP diluted earnings per ADS were RMB2.70 (US$0.41) for the third quarter of 2017.

As of September 30, 2017, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB47 billion (US$7 billion).

Business Outlook

For the fourth quarter of 2017, the Company expects the net revenue growth to continue at a year-on-year rate of approximately 25-30%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.

Conference Call

Ctrip's management team will host a conference call at 8:00PM U.S. Eastern Time on November 1, 2017 (or 8:00AM on November 2, 2017 in the Shanghai/Hong Kong Time) following the announcement.

The conference call will be available on Webcast live and replay at: http://ir.ctrip.com. The call will be archived for twelve months at this website.

The dial-in details for the live conference call: U.S. Toll Free Number +1.888.268.4180, International dial-in number +1.617.597.5485, Passcode 731 941 24#. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PU4LBP6UX.

A telephone replay of the call will be available after the conclusion of the conference call until November 9, 2017. The dial-in details for the replay: U.S. Toll Free Number +1.888.286.8010, International dial-in number +1.617.801.6888, Passcode 32849003.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "is/are likely to," "confident" or other similar statements. Among other things, quotations from management and the Business Outlook section in this press release, as well as Ctrip's strategic and operational plans, contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, severe or prolonged downturn in the global or Chinese economy, general declines or disruptions in the travel industry, volatility in the trading price of Ctrip's ADSs, Ctrip's reliance on its relationships and contractual arrangements with travel suppliers and strategic alliances, failure to compete against new and existing competitors, failure to successfully manage current growth and potential future growth, risks associated with any strategic investments or acquisitions, seasonality in the travel industry in the relevant jurisdictions where Ctrip operates, failure to successfully develop Ctrip's existing or future business lines, damage to or failure of Ctrip's infrastructure and technology, loss of services of Ctrip's key executives, adverse changes in economic and political policies of the PRC government, inflation in China, risks and uncertainties associated with PRC laws and regulations with respect to the ownership structure of Ctrip's affiliated Chinese entities and the contractual arrangements among Ctrip, its affiliated Chinese entities and their shareholders, and other risks outlined in Ctrip's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the issuance, and Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Ctrip's unaudited condensed consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Ctrip uses non-GAAP financial information related to product development expenses, sales and marketing expenses, general and administrative expenses, income from operations, operating margin, net income attributable to Ctrip's shareholders, and diluted earnings per ordinary share and per ADS, each of which (except for net commission earned) is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under ASC 718, "Compensation-Stock Compensation" and its share-based compensation charges are not tax deductible. Ctrip's management believes the non-GAAP financial measures facilitate better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods.

Non-GAAP information is not prepared in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Ctrip's business for the foreseeable future.

Reconciliations of Ctrip's non-GAAP financial data to the most comparable GAAP data included in the consolidated statement of operations are included at the end of this press release.

About Ctrip.com International, Ltd.

Ctrip.com International, Ltd. is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. It is the largest online consolidator of accommodations and transportation tickets in China in terms of transaction volume. Ctrip enables business and leisure travelers to make informed and cost-effective bookings by aggregating comprehensive travel related information and offering its services through an advanced transaction and service platform consisting of its mobile apps, Internet websites and centralized, toll-free, 24-hour customer service center. Ctrip also helps customers book vacation packages and guided tours. In addition, through its corporate travel management services, Ctrip helps corporate clients effectively manage their travel requirements. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.

For further information, please contact:

Investor Relations
Ctrip.com International, Ltd.
Tel: (+86) 21 3406 4880 X 12229
Email: iremail@ctrip.com

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Balance Sheets










December 31, 2016


September 30, 2017


September 30, 2017



RMB


RMB


USD










(unaudited)


(unaudited)


(unaudited)








ASSETS







Current assets:







Cash and cash equivalents


18,434,681,251


18,323,479,861


2,754,043,837

Restricted cash


1,744,490,307


2,024,575,239


304,296,400

Short-term investment


14,112,862,288


27,062,816,401


4,067,577,954

Accounts receivable, net


4,624,818,322


5,855,141,594


880,035,711

Prepayments and other current assets


6,994,589,672


9,975,341,849


1,499,307,389








Total current assets


45,911,441,840


63,241,354,944


9,505,261,291








Long-term deposits and prepayments


1,147,279,197


847,546,564


127,387,396

Land use rights


99,544,772


97,457,215


14,647,951

Property, equipment and software


5,591,960,081


5,631,471,625


846,417,811

Investment


20,532,822,365


22,609,358,318


3,398,217,173

Goodwill


56,015,185,590


56,265,595,482


8,456,795,197

Intangible assets


13,924,769,931


13,790,776,378


2,072,772,365

Other long-term receivable


815,586,298


325,487,591


48,921,226

Deferred tax assets, non-current


375,311,594


418,407,590


62,887,227








Total assets


144,413,901,668


163,227,455,707


24,533,307,637








LIABILITIES







Current liabilities:







Short-term debt


6,887,309,589


14,838,803,823


2,230,292,310

Accounts payable


7,278,791,082


8,314,060,992


1,249,614,626

Salary and welfare payable


2,508,430,757


2,975,629,445


447,241,135

Taxes payable


1,084,241,429


833,788,065


125,319,475

Advances from customers


8,190,840,057


8,771,501,445


1,318,368,546

Accrued liability for customer reward program


658,170,680


625,387,271


93,996,554

Other payables and accruals


3,687,242,592


5,613,309,434


843,688,008








Total current liabilities


30,295,026,186


41,972,480,475


6,308,520,654








Deferred tax liabilities, non-current


3,607,882,808


3,510,637,426


527,653,559

Long-term debt


34,650,673,553


33,597,170,400


5,049,700,209

Other long-term liabilities


339,566,619


481,780,815


72,412,309








Total liabilities


68,893,149,166


79,562,069,116


11,958,286,731








SHAREHOLDERS' EQUITY







Share capital


4,960,354


5,163,296


776,050

Additional paid-in capital


65,819,998,701


70,905,962,076


10,657,262,122

Statutory reserves


237,495,820


237,473,826


35,692,638

Accumulated other comprehensive income


1,010,373,732


4,354,529,115


654,491,623

Retained Earnings


6,699,580,613


8,338,018,450


1,253,215,465

Treasury stock


(2,235,574,510)


(2,110,820,623)


(317,259,198)








Total Ctrip's shareholders' equity


71,536,834,710


81,730,326,140


12,284,178,700








Noncontrolling interests


3,983,917,792


1,935,060,451


290,842,206








Total shareholders' equity


75,520,752,502


83,665,386,591


12,575,020,906








Total liabilities and shareholders' equity


144,413,901,668


163,227,455,707


24,533,307,637

Ctrip.com International, Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income





















Quarter Ended


Quarter Ended


Quarter Ended


Quarter Ended



Septemter 30, 2016


June 30, 2017


September 30, 2017


September 30, 2017



RMB


RMB


RMB


USD












(unaudited)


(unaudited)


(unaudited)


(unaudited)










Revenue:









Accommodation reservation


2,071,608,431


2,311,142,987


2,820,384,460


423,907,604

Transportation ticketing


2,427,736,429


2,992,330,356


3,428,194,609


515,262,292

Packaged-tour


813,260,976


612,297,777


1,033,088,540


155,274,607

Corporate travel


166,337,791


199,352,936


202,879,041


30,492,995

Others


188,851,094


346,439,294


472,404,223


71,002,994










Total revenue


5,667,794,721


6,461,563,350


7,956,950,873


1,195,940,492










Less: Sales tax and surcharges


(95,928,079)


(45,794,149)


(57,274,816)


(8,608,482)










Net revenue


5,571,866,642


6,415,769,201


7,899,676,057


1,187,332,010










Cost of revenue


(1,234,297,161)


(1,124,094,146)


(1,303,483,658)


(195,915,359)










Gross profit


4,337,569,481


5,291,675,055


6,596,192,399


991,416,651










Operating expenses:









Product development *


(1,844,406,031)


(2,036,738,021)


(2,185,439,369)


(328,474,497)

Sales and marketing *


(1,506,558,491)


(2,001,471,557)


(2,377,850,924)


(357,394,214)

General and administrative *


(539,181,215)


(608,203,223)


(673,903,837)


(101,288,659)










Total operating expenses


(3,890,145,737)


(4,646,412,801)


(5,237,194,130)


(787,157,370)










Income from operations


447,423,744


645,262,254


1,358,998,269


204,259,281










Interest income


99,167,513


249,426,782


271,592,321


40,820,694

Interest expense


(191,169,801)


(383,446,788)


(318,779,226)


(47,912,949)

Other (expense)/income


(27,905,573)


397,102,679


233,444,936


35,087,090










Income before income tax expense and equity in income


327,515,883


908,344,927


1,545,256,300


232,254,116










Income tax expense


(221,246,469)


(529,202,309)


(313,405,180)


(47,105,223)

Equity in (loss)/ income of affiliates


(63,833,906)


(26,696,373)


32,357,293


4,863,345










Net income


42,435,508


352,446,245


1,264,208,413


190,012,238










Less: net income attributable to noncontrolling interests


(18,518,066)


(25,574,176)


(35,090,626)


(5,274,169)










Net income attributable to Ctrip's shareholders


23,917,442


326,872,069


1,229,117,787


184,738,069










Comprehensive income attributable to Ctrip's shareholders


229,522,806


912,668,705


2,836,812,328


426,376,735










Earnings per ordinary share









- Basic


0.40


4.97


18.35


2.76

- Diluted


0.38


4.72


16.76


2.52










Earnings per ADS









- Basic


0.05


0.62


2.29


0.34

- Diluted


0.05


0.59


2.10


0.32










Weighted average ordinary shares outstanding









- Basic


59,120,188


65,743,078


66,988,804


66,988,804

- Diluted


63,410,273


69,361,680


78,630,110


78,630,110










* Share-based compensation charges included are as follows:









Product development


324,427,727


305,271,403


210,505,836


31,639,312

Sales and marketing


70,609,154


58,994,568


37,738,032


5,672,077

General and administrative


161,796,351


163,592,798


135,789,753


20,409,384

Ctrip.com International, Ltd.

Reconciliation of GAAP and Non-GAAP Results

(In RMB, except % and per share information)




















Quarter Ended September 30, 2017


GAAP Result

% of Net
revenue


Share-based
Compensation

% of Net
revenue


Non-GAAP Result

% of Net
revenue










Product development

(2,185,439,369)

28%


210,505,836

3%


(1,974,933,533)

25%

Sales and marketing

(2,377,850,924)

30%


37,738,032

0%


(2,340,112,892)

30%

General and administrative

(673,903,837)

9%


135,789,753

2%


(538,114,084)

7%

Total operating expenses

(5,237,194,130)

66%


384,033,621

5%


(4,853,160,509)

61%










Income from operations

1,358,998,269

17%


384,033,621

5%


1,743,031,890

22%










Net income attributable to Ctrip's shareholders

1,229,117,787

16%


384,033,621

5%


1,613,151,408

20%










Diluted earnings per ordinary share (RMB)

16.76



4.82



21.58











Diluted earnings per ADS (RMB)

2.10



0.60



2.70











Diluted earnings per ADS (USD)

0.32



0.09



0.41





















Quarter Ended June 30, 2017


GAAP Result

% of Net
revenue


Share-based
Compensation

% of Net
revenue


Non-GAAP Result

% of Net
revenue










Product development

(2,036,738,021)

32%


305,271,403

5%


(1,731,466,618)

27%

Sales and marketing

(2,001,471,557)

31%


58,994,568

1%


(1,942,476,989)

30%

General and administrative

(608,203,223)

9%


163,592,798

3%


(444,610,425)

7%

Total operating expenses

(4,646,412,801)

72%


527,858,769

8%


(4,118,554,032)

64%










Income from operations

645,262,254

10%


527,858,769

8%


1,173,121,023

18%










Net income attributable to Ctrip's shareholders

326,872,069

5%


527,858,769

8%


854,730,838

13%










Diluted earnings per ordinary share (RMB)

4.72



7.24



11.96











Diluted earnings per ADS (RMB)

0.59



0.90



1.49











Diluted earnings per ADS (USD)

0.09



0.13



0.22





















Quarter Ended September 30, 2016


GAAP Result

% of Net
revenue


Share-based
Compensation

% of Net

revenue


Non-GAAP Result

% of Net
revenue










Product development

(1,844,406,031)

33%


324,427,727

6%


(1,519,978,304)

27%

Sales and marketing

(1,506,558,491)

27%


70,609,154

1%


(1,435,949,337)

26%

General and administrative

(539,181,215)

10%


161,796,351

3%


(377,384,864)

7%

Total operating expenses

(3,890,145,737)

70%


556,833,232

10%


(3,333,312,505)

60%










Income from operations

447,423,744

8%


556,833,232

10%


1,004,256,976

18%










Net income attributable to Ctrip's shareholders

23,917,442

0%


556,833,232

10%


580,750,674

10%










Diluted earnings per ordinary share (RMB)

0.38



8.78



9.16











Diluted earnings per ADS (RMB)

0.05



1.10



1.15











Diluted earnings per ADS (USD)

0.01



0.16



0.17




















Notes for all the condensed consolidated financial schedules presented:










Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the certified exchange rate of USD1.00=RMB6.6533 on September 29 2017 published by the Federal Reserve Board.

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SOURCE Ctrip.com International, Ltd.