EX-99.1 2 v394053_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

eLong Reports Third Quarter 2014 Unaudited Financial Results

Quarterly room nights exceed 9 million for the first time in eLong’s history

BEIJING, November 12, 2014 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading mobile and online travel service provider in China, today reported unaudited financial results for the third quarter ended September 30, 2014.

Highlights

Hotel room nights stayed in the third quarter increased 22% to 9.4 million room nights compared to 7.7 million in the prior year period.

Hotel commission revenue for the third quarter increased 6% to RMB269.8 million (US$44.0 million), compared to RMB255.2 million (US$41.7 million) in the third quarter of 2013.

Net revenues for the third quarter increased 2% to RMB301.5 million (US$49.1 million), compared to RMB296.9 million (US$48.5 million) in the third quarter of 2013. Total revenues for the third quarter increased to RMB323.5 million (US$52.7 million).

Mobile bookings comprised 48% of eLong brand room nights^*, and cumulative downloads of eLong mobile apps reached the 100 million milestone, in the third quarter.

More than 20,000 properties have contracted to use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies, compared to over 10,000 in the second quarter.

“Our mobile lodging transactions have now surpassed 100,000 per day on peak days during holiday periods; and our lodging network has grown to more than 155,000 properties in China and over 365,000 properties worldwide. Every day our mobile applications provide real savings to our customers with tens of thousands of discounted lodging products, including pre-paid, flash sale and last minute products,” said Guangfu Cui, Chief Executive Officer of eLong.

Business Results

Revenues

Total revenues by product for the third quarter of 2014 as compared to the same period in 2013 were as follows (in RMB million):

	Q3 2014		% Total			Q3 2013		%			Y/Y

Hotel reservations		269.8		84	%		255.2		81	%		6	%
Air ticketing		26.6		8	%		35.2		11	%		(24	%)
Other		27.1		8	%		25.6		8	%		6	%
Total revenues		323.5		100	%		316.0		100	%		2	%

Hotel Reservations

Hotel commission revenue increased 6% in the third quarter of 2014 compared to the same period in 2013, primarily due to higher volume, partially offset by lower commission per room night. Room nights stayed in the third quarter increased 22% year-on-year to 9.4 million; a slower rate of room night growth than in recent quarters. Commission per room night decreased 13% year-on-year, primarily due to growth of lower commission rate and lower average daily rate hotel room nights, and growth of our coupon program. Hotel commission revenue grew to 84% of total revenues from 81% in the prior year quarter.

^* eLong brand room nights, excludes room nights from non-eLong brand distribution partners and resellers.

Air Ticketing

Air ticketing commission revenue decreased 24% in the third quarter of 2014 compared to the prior year quarter, due to a 21% decrease in commission per segment and a 4% decrease in air segments. Decline in commission per segment was primarily due to the lowering by major Chinese airlines of the base air commission rate from 3% to 2% in July 2014. Air ticketing commission revenue decreased to 8% of total revenues from 11% in the prior year quarter.

Other

Other revenue is primarily derived from advertising and travel insurance. Other revenue increased 6% year-on-year in the third quarter of 2014, mainly driven by increased travel insurance revenues. Other revenue was 8% of total revenues, consistent with the prior year quarter.

Profitability

Gross margin in the third quarter of 2014 was 70%, compared to 75% in the third quarter of 2013. Gross margin decline was primarily due to a decrease in hotel commission revenue per room night.

Operating expenses for the third quarter of 2014 as compared to the same period in 2013 were as follows (in RMB million):

	Q3 2014		% of Net Revenue			Q3 2013		% of Net Revenue			Y/Y Growth
Service development		73.7		25	%		48.3		16	%		53	%
Sales and marketing		178.9		59	%		211.7		72	%		(16	%)
General and administrative		37.4		12	%		20.5		7	%		82	%
Amortization of intangible assets		1.5		-			0.9		-			61	%
Total operating expenses		291.5		96	%		281.4		95	%		4	%

Total operating expenses increased 4% for the third quarter of 2014 compared to the third quarter of 2013. Total operating expenses increased to 96% of net revenues in the third quarter of 2014 from 95% in the prior year quarter. Operating loss was RMB79.5 million in the third quarter of 2014 compared to operating loss of RMB57.9 million in the prior year quarter.

Service development expenses are expenses related to technology and our product offering, including our mobile applications, websites and other systems, as well as our supplier relations function. Service development expenses increased 53% compared to the prior year quarter, mainly driven by higher personnel expenses. Service development expenses increased to 25% of net revenues in the third quarter of 2014, compared to 16% in the same quarter of 2013.

Sales and marketing expenses for the third quarter of 2014 decreased 16% over the prior year quarter, driven by decreased advertising expenses. Sales and marketing expenses decreased to 59% of net revenues in the third quarter of 2014 from 72% in the same quarter of 2013.

General and administrative expenses for the third quarter of 2014 increased 82% compared to the prior year quarter, primarily due to higher share-based compensation charges. General and administrative expenses increased to 12% of net revenues in the third quarter of 2014 from 7% in the same quarter of 2013.

Other income was RMB19.1 million in the third quarter of 2014 compared to RMB16.5 million in the third quarter of 2013, primarily due to increased government subsidies.

Income tax benefit for the third quarter of 2014 was RMB4.9 million, compared to income tax expense of RMB9.6 million during the prior year quarter.

Net loss for the third quarter of 2014 was RMB58.3 million, compared to net loss of RMB50.4 million during the prior year quarter.

Basic net loss per ADS and diluted net loss per ADS for the third quarter of 2014 were each RMB1.64 (US$0.26), compared to basic net loss per ADS and diluted net loss per ADS of RMB1.44 (US$0.24) in the prior year quarter.

As of September 30, 2014, eLong held cash and cash equivalents, short-term investments and restricted cash of RMB1.9 billion (US$315 million), of which 90% was held in Renminbi and 10% was held in US dollars.

Business Outlook

eLong currently expects net revenues for the fourth quarter of 2014 to be within the range of a decline of 20% to an increase of 10% compared to the fourth quarter of 2013. This outlook reflects eLong’s current and preliminary view, which is subject to change.

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, 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,” “future,” “is/are likely to,” “should” and “will” and similar expressions as they relate to eLong 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. Forward-looking statements include, but are not limited to, statements about our anticipated growth strategies, our future business development, results of operations and financial condition, our ability to control costs, limit losses and/or return to profitability, our ability to attract customers and leverage our brand, and trends and competition in the travel industry in China and globally. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause our actual performance and results to differ materially from those discussed in the forward-looking statements. Factors that could affect our actual results and cause our actual results to differ materially from those referred in any forward-looking statement include, but are not limited to, declines or disruptions in the travel industry, international financial, political or economic crises, a slowdown in the PRC economy, an outbreak of bird flu or other disease, eLong’s reliance on maintaining good relationships with, and stable air and hotel inventory from, hotel suppliers and airline ticket suppliers, and on establishing new relationships with suppliers on similar terms, our reliance on the TravelSky GDS system for our air business, Baidu (and its subsidiary Qunar) and Qihoo for our search engine marketing, our reliance on maintaining commercial cooperation with online hotel inventory distribution partners, the risk that eLong will not be able to increase its brand recognition, the possibility that eLong will be unable to continue timely compliance with the Sarbanes-Oxley Act or other regulatory requirements, the risk that eLong will not be successful in competing against new and existing competitors, the risk that our infrastructure and technology are damaged, fail or become obsolete, risks associated with Expedia, Inc.’s (Nasdaq: EXPE) majority ownership interest and Tencent’s shareholding in eLong, risks relating to eLong’s investments in, and acquisitions of, other businesses and assets, fluctuations in the value of the Renminbi, inflation in China, changes in eLong’s management team and other personnel, risks relating to uncertainties in the PRC legal system, including but not limited to, risks relating to our affiliated Chinese operating entities, risks and uncertainties relating to litigation and arbitration in China, risks relating to the application of preferential tax policies, the risk that eLong will continue to incur losses, and other risks mentioned in eLong’s filings with the U.S. Securities and Exchange Commission, including eLong’s Annual Report on Form 20-F.

If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward looking-statements. Investors should not rely upon forward-looking statements as predictions of future events. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in this press release are qualified by reference to this cautionary statement.

Conference Call

eLong will host a conference call to discuss its third quarter 2014 unaudited financial results on November 13, 2014 at 8:30 am Beijing time (November 12, 2014, 7:30 pm ET). The dial-in number is +1-866-844-9413 for U.S. participants; +852-3001-3802 for Hong Kong participants; and 86-400-810-4731 for participants in mainland China. International participants can dial +1-210-795-0512. Pass code: eLong. An archived web cast of this call will be available for one year on the Investor Relations section of the eLong web site at http://elong.investorroom.com/.

About eLong, Inc.

eLong, Inc. (Nasdaq: LONG - News) is a leader in mobile and online accomodations reservations in China offering consumers a network of more than 365,000 properties worldwide. eLong technology enables travelers to book hotels, guesthouses, apartments and other accommodations, as well as air and train tickets, through convenient mobile and tablet applications (m.eLong.com), websites (www.eLong.com), 24 hour customer service, and easy to use tools such as destination guides, maps and user reviews. eLong’s largest shareholders are Expedia, Inc. (Nasdaq: EXPE) and Tencent Holdings Ltd. (HKSE: 0700).

For further information, please contact:

eLong, Inc.

Investor Relations

ir@corp.elong.com

+86-10-6436-7570

eLong, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)

	Three Months Ended												Nine Months Ended
	Sep. 30, 2013			Jun. 30, 2014			Sep. 30, 2014			Sep. 30, 2014			Sep. 30, 2013			Sep. 30, 2014			Sep. 30, 2014
	RMB			RMB			RMB			USD⁽¹⁾			RMB			RMB			USD⁽¹⁾
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Hotel reservations		255,182			254,065			269,822			43,959			633,879			728,727			118,724
Air ticketing		35,198			35,122			26,604			4,334			102,496			97,227			15,840
Other		25,599			23,237			27,104			4,416			62,329			72,704			11,845
Total revenues		315,979			312,424			323,530			52,709			798,704			898,658			146,409
Business tax, VAT and surcharges		(19,030	)		(20,063	)		(22,036	)		(3,590	)		(50,039	)		(58,680	)		(9,560	)
Net revenues		296,949			292,361			301,494			49,119			748,665			839,978			136,849
Cost of services		(73,441	)		(70,888	)		(89,445	)		(14,572	)		(188,130	)		(227,155	)		(37,008	)
Gross profit		223,508			221,473			212,049			34,547			560,535			612,823			99,841

Operating expenses:
Service development		(48,299	)		(62,421	)		(73,726	)		(12,011	)		(125,178	)		(191,217	)		(31,153	)
Sales and marketing		(211,682	)		(149,074	)		(178,866	)		(29,141	)		(489,249	)		(464,032	)		(75,600	)
General and administrative		(20,472	)		(36,636	)		(37,454	)		(6,102	)		(58,148	)		(107,420	)		(17,501	)
Amortization of intangible assets		(911	)		(1,467	)		(1,465	)		(239	)		(2,735	)		(4,668	)		(760	)
Charges related to property and equipment and intangible assets		-			-			-			-			(177	)		-			-
Total operating expenses		(281,364	)		(249,598	)		(291,511	)		(47,493	)		(675,487	)		(767,337	)		(125,014	)
Other operating income		-			30,000			-			-			-			30,000			4,887
Income/(loss) from operations		(57,856	)		1,875			(79,462	)		(12,946	)		(114,952	)		(124,514	)		(20,286	)

Other income/(expense):
Interest income		15,643			15,496			15,139			2,466			45,129			46,403			7,560
Government subsidy		1,034			8,776			2,684			437			1,420			14,279			2,326
Foreign exchange gain/(losses)		(377	)		(2,544	)		207			34			(1,399	)		(3,267	)		(532	)
Other		190			228			1,035			169			(625	)		1,919			313
Total other income		16,490			21,956			19,065			3,106			44,525			59,334			9,667
Income/(loss) before income tax benefit/(expense)		(41,366	)		23,831			(60,397	)		(9,840	)		(70,427	)		(65,180	)		(10,619	)
Income tax benefit/(expense)		(9,603	)		6,230			4,915			801			(55,948	)		3,443			561
Share of net income/(loss) in non-consolidated affiliates		575			310			(3,326	)		(542	)		2,646			(3,065	)		(499	)
Net income/(loss)		(50,394	)		30,371			(58,808	)		(9,581	)		(123,729	)		(64,802	)		(10,557	)
Net loss attributable to noncontrolling interests		-			1,091			502			82			-			2,590			421
Net income/(loss) attributable to eLong, Inc.		(50,394	)		31,462			(58,306	)		(9,499	)		(123,729	)		(62,212	)		(10,136	)
Other comprehensive income		-			-			-			-			-			-			-
Total comprehensive income		(50,394	)		31,462			(58,306	)		(9,499	)		(123,729	)		(62,212	)		(10,136	)

Basic net income/(loss) per share		(0.72	)		0.45			(0.82	)		(0.13	)		(1.79	)		(0.88	)		(0.14	)
Diluted net income/(loss) per share		(0.72	)		0.44			(0.82	)		(0.13	)		(1.79	)		(0.88	)		(0.14	)

Basic net income/(loss) per ADS⁽²⁾⁽³⁾		(1.44	)		0.90			(1.64	)		(0.26	)		(3.58	)		(1.76	)		(0.28	)
Diluted net income/(loss) per ADS⁽²⁾⁽³⁾		(1.44	)		0.88			(1.64	)		(0.26	)		(3.58	)		(1.76	)		(0.28	)

Shares used in computing net income/ (loss) per share_:
Basic		69,668			70,657			70,943			70,943			69,293			70,697			70,697
Diluted		69,668			71,392			70,943			70,943			69,293			70,697			70,697

Share-based compensation charges included in:		15,396			33,633			29,877			4,868			32,350			92,368			15,048
Cost of services		552			896			1,012			165			1,729			2,744			447
Service development		6,836			7,178			9,330			1,520			13,580			23,043			3,754
Sales and marketing		1,441			3,976			(2,611	)		(425	)		3,693			4,697			765
General and administrative		6,567			21,583			22,146			3,608			13,348			61,884			10,082

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.1380 on September 30, 2014 in the City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve. No representation is made that the RMB amounts could have been, or could be, converted or settled into USD at the rates stated herein on the reporting dates, at any other rates or at all.

Note 2: 1 ADS = 2 shares.

Note 3: Non-GAAP financial measures

eLong, Inc.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	Dec. 31, 2013			Sep. 30, 2014			Sep. 30, 2014
	RMB			RMB			USD
	(Audited)			(Unaudited)			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		367,061			342,080			55,732
Short-term investments		1,485,800			1,488,043			242,431
Restricted cash		103,440			103,440			16,852
Accounts receivable, net		168,093			241,254			39,305
Amounts due from related parties		66,143			95,099			15,494
Prepaid expenses		33,652			57,176			9,315
Deferred tax assets, current		6,604			9,429			1,536
Other current assets		75,880			141,241			23,011
Total current assets		2,306,673			2,477,762			403,676
Property and equipment, net		87,980			101,082			16,468
Investment in non-consolidated affiliates		52,067			157,083			25,592
Goodwill		96,256			96,256			15,682
Intangible assets, net		16,366			11,967			1,950
Deferred tax assets, non-current		11,140			14,641			2,385
Other non-current assets		58,194			48,372			7,881
Total non-current assets		322,003			429,401			69,958
Total assets		2,628,676			2,907,163			473,634


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		176,769			279,395			45,519
Income taxes payable		22,633			1,650			269
Amounts due to related parties		97,010			82,491			13,439
Deferred revenue		21,198			59,484			9,691
Accrued expenses and other current liabilities		337,903			485,913			79,165
Total current liabilities		655,513			908,933			148,083
Deferred tax liabilities, non-current		2,034			2,282			372
Other liabilities		45			45			7
Total non-current liabilities		2,079			2,327			379
Total liabilities		657,592			911,260			148,462

Shareholders’ equity
Ordinary shares		2,864			2,887			470
High-vote ordinary shares		2,691			2,691			438
Treasury stock, at cost		(30,930	)		(20,669	)		(3,367	)
Additional paid-in capital		2,298,133			2,388,558			389,143
Statutory reserves		20,123			20,123			3,278
Accumulated deficit		(340,892	)		(414,691	)		(67,561	)
Total eLong Inc. shareholders’ equity		1,951,989			1,978,899			322,401
Noncontrolling interest		19,095			17,004			2,771
Total shareholders’ equity		1,971,084			1,995,903			325,172
Total liabilities and shareholders’ equity		2,628,676			2,907,163			473,634

eLong, Inc.

TRENDED OPERATIONAL METRICS

(IN THOUSANDS)

The metrics below are intended as a supplement to the financial statements found in this press release and in our filings with the SEC. In the event of discrepancies between amounts in these tables and our historical financial statements, readers should rely on our filings with the SEC and financial statements in our most recent press release.

We intend to periodically review and refine the definition, methodology and appropriateness of each of our supplemental metrics. As a result, metrics are subject to removal and/or change, and such changes could be material.

	2013 (Unaudited)															2014 (Unaudited)
	Q1			Q2			Q3			Q4			2013			Q1			Q2			Q3

Hotel Reservations
Room Nights		4,877			5,803			7,725			7,413			25,818			6,980			8,348			9,436
Room Nights Y/Y		71	%		58	%		68	%		48	%		60	%		43	%		44	%		22	%
Average Daily Rate Y/Y		(4	%)		(5	%)		(3	%)		2	%		(2	%)		(2	%)		(4	%)		(2	%)
Commission/Room Night Y/Y		(15	%)		(18	%)		(3	%)		(13	%)		(12	%)		(21	%)		(11	%)		(13	%)
Hotel Commissions Y/Y		47	%		29	%		63	%		28	%		41	%		14	%		28	%		6	%

Air Ticketing
Air Segments		672			671			863			828			3,034			724			699			829
Air Segments Y/Y		21	%		28	%		30	%		30	%		28	%		8	%		4	%		(4	%)
Average Ticket Price Y/Y		(1	%)		(10	%)		(7	%)		(2	%)		(5	%)		1	%		(1	%)		(1	%)
Commission/Segment Y/Y		(4	%)		(7	%)		(23	%)		(21	%)		(15	%)		4	%		(5	%)		(21	%)
Air Commissions Y/Y		17	%		19	%		(0	%)		3	%		9	%		12	%		(1	%)		(24	%)

Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with generally accepted accounting principles in the United States, or GAAP, this press release includes certain non-GAAP financial measures including basic net income/(loss) per ADS, diluted net income/(loss) per ADS, Adjusted Earnings Before Interests, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Adjusted Net Income/(Loss) (“ANI”) and Adjusted Net Income/(Loss) Per Share. We believe these non-GAAP financial measures may help investors understand eLong’s current financial performance and compare business trends among different reporting periods. 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. We seek to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measures.

Adjusted EBITDA is defined as net income/(loss) plus (1) interest expense (income); (2) income tax expense (benefit); (3) depreciation; (4) amortization of intangible assets; (5) share-based compensation charges; (6) foreign exchange losses (gains); (7) acquisition-related impacts, including (i) goodwill and intangible asset impairment, and (ii) losses (gains) recognized on non-controlling investment basis adjustments when we acquire controlling interests; and (8) certain other items, including restructuring charges, impairment loss on equity method investment and equity in net loss/(income) of affiliates. We believe Adjusted EBITDA is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, if any, and income tax expense (benefit). Since share-based compensation charges are non-cash expenses, we believe excluding them from our calculation of Adjusted EBITDA allows us to provide investors with a more useful tool for assessing our operating and financial performance. In addition, we believe that Adjusted EBITDA is used by other companies and may be used by investors as a measure of our financial performance. The presentation of Adjusted EBITDA should not be construed as an indication that eLong’s future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business. The use of Adjusted EBITDA has certain limitations. Amortization and depreciation expenses for various non-current assets, share-based compensation charges, other income/(expenses), and income tax expense (benefit) have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of eLong’s liquidity. We seek to compensate for these limitations by providing the relevant disclosure of our amortization and depreciation expenses, and share-based compensation charges in the reconciliations to the GAAP financial measure. The term Adjusted EBITDA is not defined under GAAP, and Adjusted EBITDA is not a measure of net income/(loss), income/(loss) from operations, operating performance or liquidity presented in accordance with GAAP. In addition, eLong’s Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA in the same manner as we do.

Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP measures. We present a reconciliation of this non-GAAP financial measure to GAAP below.

eLong, Inc.

TABULAR RECONCILIATION FOR NON-GAAP MEASURE

Adjusted EBITDA

(IN THOUSANDS)

	2013 (Unaudited)															2014 (Unaudited)
	Q1			Q2			Q3			Q4			2013			Q1			Q2			Q3
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB

Net income/(loss) attributable to eLong, Inc.		2,773			(76,108	)		(50,394	)		(44,001	)		(167,730	)		(35,369	)		31,462			(58,306	)
Net loss attributable to noncontrolling interests		-			-			-			(475	)		(475	)		(996	)		(1,091	)		(502	)
Interest income		(14,629	)		(14,857	)		(15,643	)		(15,061	)		(60,190	)		(15,768	)		(15,496	)		(15,139	)
Government subsidy		(387	)		-			(1,034	)		(5,948	)		(7,369	)		(2,819	)		(8,776	)		(2,684	)
Income tax expense/(benefit)		3,276			43,069			9,603			3,532			59,480			7,702			(6,230	)		(4,915	)
Depreciation		7,759			8,420			8,467			8,531			33,177			9,123			10,064			10,665
Amortization of intangible assets		913			911			911			1,230			3,965			1,735			1,467			1,465
Share-based compensation charges		10,439			6,516			15,396			30,987			63,338			28,858			33,633			29,877
Foreign exchange gain/(losses)		539			483			377			532			1,931			931			2,544			(207	)
Other		(602	)		(476	)		(765	)		(114	)		(1,957	)		(510	)		(539	)		2,291
Adjusted EBITDA		10,081			(32,042	)		(33,081	)		(20,787	)		(75,830	)		(7,113	)		47,038			(37,455	)

Adjusted Net Income/(Loss) generally captures all items on the statements of operations that occur in normal course operations and have been, or ultimately will be, settled in cash, and is defined as net income/(loss) plus net of tax: (1) share-based compensation charges; (2) acquisition-related impacts, including (i) amortization of intangible assets, including as part of equity-method investments, and goodwill and intangible asset impairment, (ii) losses (gains) recognized on changes in the value of contingent consideration arrangements, and (iii) losses (gains) recognized on non-controlling investment basis adjustments when we acquire controlling interests; (3) foreign exchange losses; (4) certain other items, including restructuring charges; and (5) discontinued operations. We believe Adjusted Net Income/(Loss) is useful to investors because it represents eLong’s results, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of other non-cash expenses, infrequently occurring items and items not directly tied to the core operations of our businesses.

Adjusted Net Income/(Loss) Per Share is defined as Adjusted Net Income/(Loss) divided by adjusted weighted average shares outstanding, which includes dilution from options and warrants per the treasury stock method and includes all shares relating to Performance Units in shares outstanding for Adjusted Net Income/(Loss) Per Share. This differs from the GAAP method for including Performance Units, which treats them on a treasury stock method basis. Shares outstanding for Adjusted Net Income/(Loss) Per Share purposes are therefore higher than shares outstanding for GAAP Net Income/(Loss) Per Share purposes. We believe Adjusted Net Income/(Loss) Per Share is useful to investors because it represents, on a per share basis, eLong’s consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest income and income tax expense/(benefit), but excluding the effects of non-cash expenses not directly tied to the core operations of our businesses. Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) Per Share have similar limitations as Adjusted EBITDA. In addition, Adjusted Net Income/(Loss) does not include all items that affect our net income/(loss) and net income/(loss) per share for the period. Therefore, we think it is important to evaluate these measures along with our consolidated statements of operations.

Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) Per Share should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP measures. We present a reconciliation of these non-GAAP financial measures to GAAP below.

eLong, Inc.

TABULAR RECONCILIATION FOR NON-GAAP MEASURE

Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) Per Share

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

	2013 (Unaudited)															2014 (Unaudited)
	Q1			Q2			Q3			Q4			2013			Q1			Q2			Q3
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB

Net income/(loss) attributable to eLong, Inc.		2,773			(76,108	)		(50,394	)		(44,001	)		(167,730	)		(35,369	)		31,462			(58,306	)
Net loss attributable to noncontrolling interests		-			-			-			(475	)		(475	)		(996	)		(1,091	)		(502	)
Share-based compensation charges		10,439			6,516			15,396			30,987			63,338			28,858			33,633			29,877
Amortization of intangible assets		913			911			911			1,230			3,965			1,735			1,467			1,465
Foreign exchange gain/(losses)		539			483			377			532			1,931			931			2,544			(207	)
Other		(80	)		608			(185	)		1,187			1,530			(390	)		(150	)		809
Adjusted net income/(loss)		14,584			(67,590	)		(33,895	)		(10,540	)		(97,441	)		(5,231	)		67,865			(26,864	)

Shares used in computing adjusted net income/(loss) per share:
GAAP diluted weighted average shares outstanding		69,733			69,201			69,668			69,934			69,455			70,486			71,392			70,943
Additional performance units		1,640			1,687			2,878			7,590			3,503			7,428			7,423			7,409
Adjusted weighted average shares outstanding		71,373			70,888			72,546			77,524			72,958			77,914			78,815			78,352

Adjusted net income/(loss) per share		0.20			(0.95	)		(0.47	)		(0.14	)		(1.34	)		(0.07	)		0.86			(0.34	)