Qunar Reports Unaudited Third Quarter 2013 Financial Results

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| Source: Qunar Cayman Islands Limited

BEIJING, Nov. 19, 2013 (GLOBE NEWSWIRE) -- Qunar Cayman Islands Limited (Nasdaq:QUNR) ("Qunar" or the "Company"), China's leading search-based travel commerce platform, today announced its unaudited financial results for the quarter ended September 30, 2013.

Highlights for the Third Quarter of 2013

  • Total revenues for the third quarter of 2013 were RMB241.1million (US$39.4 million), an increase of 57.5% year-on-year.
  • Mobile revenues for the third quarter of 2013 were RMB35.3 million (US$5.8 million), an increase of 386.0% year-on-year, representing 14.6% of total revenues.
  • Total number of web and mobile users for the 12-month period ended September 30, 2013 was 218.2 million and 46.7 million, compared to 173.8 million and 16.1 million, respectively, in the 12-month period ended September 30, 2012.
  • Qualified flight clicks from Qunar's proprietary SaaS system1 accounted for 85.9% of the Company's qualified flight clicks and led to bookings for 135,008 air tickets per day in the third quarter of 2013, compared to 65.0% and 59,996 in the same period in 2012.
  • Qualified hotel clicks from Qunar's proprietary SaaS system accounted for 58.6% of qualified hotel clicks and led to bookings for 34,564 room nights per day in the third quarter of 2013, compared to 31.2% and 8,598 in the same period in 2012.

"We delivered solid top-line growth in the third quarter as user numbers and GMV, Gross Merchandise Volume, continued to show impressive growth," said Chenchao (CC) Zhuang, chief executive officer and co-founder of Qunar. "Following our successful IPO on the Nasdaq, we'll continue to grow our GMV and will remain focused on delivering the best travel-search user experience across PC and mobile to enhance our franchise value and build upon our market-leading position."

"With more and more users making travel searches on the go, our market-leading mobile platform grew very strongly, already accounting for 53% of hotel search queries and 33% of hotel pay-for-performance revenue in the third quarter," said Sam Sun, chief financial officer of Qunar."We will continue to invest aggressively in product development to capitalize on the huge opportunities ahead."

1 SaaS is a proprietary software-as-a-service system through which we host web outlets for a large and growing number of travel service providers ("TSPs"). Our SaaS system helps provide a more consistent and high quality transaction experience for our users while helping TSPs with limited or no online presence to have online outlets and be connected to our large number of users, among other benefits.

Third Quarter 2013 Financial Results

Total revenues were RMB241.1 million (US$39.4 million) for the third quarter of 2013, an increase of 57.5% year-on-year and 36.9% quarter-on-quarter. Mobile revenues for the third quarter of 2013 were RMB35.3 million (US$5.8 million), an increase of 386.0% year-on-year, representing 14.6% of total revenues. Pay-for-performance ("P4P") revenues for the third quarter of 2013 were RMB210.9 million (US$34.5 million), an increase of 61.0% year-on-year and 37.6% quarter-on-quarter.

Among the P4P revenues, flight and flight related revenues for the third quarter of 2013 were RMB152.9 million (US$25.0 million), an increase of 70.6% year-on-year and 33.1% quarter-on-quarter. Year-on-year P4P flight revenue growth was primarily due to a 69.9% increase in flight search queries; quarter-on-quarter P4P flight revenue growth was primarily due to a 19.6% growth in revenue per thousand search queries and a 11.3% growth in flight search queries.

P4P hotel revenues were RMB50.1 million (US$8.2 million), an increase of 26.6% year-on-year and 48.2% quarter-on-quarter. Year-on-year P4P hotel revenue growth was primarily due to a 49.7% growth in hotel search queries and a 15.4% decrease in revenue per thousand search queries, mainly as a result of the hotel coupon program launched in January 2013; quarter-on-quarter P4P hotel revenue growth was primarily due to a 20.6% growth in hotel search queries and a 22.9% growth in revenue per thousand search queries.

Gross profit for the third quarter of 2013 was RMB191.4 million (US$31.3 million), an increase of 50.5% year-on-year and 39.0% quarter-on-quarter. The increase was primarily due to the significant increase in revenues and partially offset by the increase in sales tax and surcharges and the increase in short-message-service fees.

Product development expenses for the third quarter of 2013 were RMB90.7 million (US$14.8 million), an increase of 75.3% year-on-year and 40.7% quarter-on-quarter, primarily due to an increase in salary, welfare and other headcount-related expenses associated with the growth of the product development team. Excluding share-based compensation expenses, product development expenses accounted for 35.5% of total revenues, compared to 31.4% for the corresponding period of 2012 and 34.5% for the second quarter of 2013.

Sales and marketing expenses for the third quarter of 2013 were RMB108.0 million (US$17.7million), an increase of 53.6% year-on-year and 31.8% quarter-on-quarter, primarily due to increases in online marketing expenses and the number of sales and marketing personnel. Excluding share-based compensation expenses, sales and marketing expenses accounted for 44.2% of total revenues, compared to 45.3% for the corresponding period of 2012 and 45.9% for the second quarter of 2013.

General and administrative expenses for the third quarter of 2013 were RMB29.1 million (US$4.8 million), an increase of 119.3% year-on-year and 38.8% quarter-on-quarter, primarily due to an increase in headcount. Excluding share-based compensation expenses, general and administrative expenses accounted for 11.2% of total revenues, compared to 7.6% for the corresponding period of 2012 and 10.8% for the second quarter of 2013.

Operating loss for the third quarter of 2013 was RMB36.4 million (US$5.9 million), compared to RMB8.1 million in the corresponding period of 2012 and RMB29.7 million in the second quarter of 2013.

Net loss attributable to Qunar's shareholders for the third quarter of 2013 was RMB48.8 million (US$8.0million), compared to RMB8.4million in the corresponding period of 2012 and RMB41.2 million in the second quarter of 2013. The increased net loss attributable to Qunar's shareholders was primarily due to continued investment in product development, as well as sales and marketing efforts to drive business growth. Basic and diluted net loss per ADS for the third quarter of 2013 was RMB0.48 (US$0.08).

Adjusted net loss (non-GAAP), defined as net loss excluding share-based compensation expenses and non-cash expenses relating to free user traffic contributed by Baidu, Inc., was RMB38.7 million (US$6.3 million) for the third quarter of 2013, compared to RMB0.4 million in the corresponding period of 2012 and RMB33.0 million in the second quarter of 2013.

Adjusted EBITDA (non-GAAP), defined as net loss before income taxes, interest expenses, depreciation and amortization, further adjusted to exclude share-based compensation expenses and non-cash expenses relating to free user traffic contributed by Baidu, Inc., was negative RMB18.8million (US$3.1 million) for the third quarter of 2013, compared to positive RMB4.9 million in the corresponding period of 2012 and negative RMB14.8 million in the second quarter of 2013.

As of September 30, 2013, Qunar had cash and cash equivalents and short-term investments of RMB486.4million (US$79.5 million).

As of September 30, 2013, Qunar had 2,359 full-time employees, of which 49% were product development personnel.

Business Outlook

For the fourth quarter of 2013, the Company expects year-on-year revenue growth in the range of 60% to 65%. This forecast reflects Qunar's current and preliminary view, which is subject to change.

Recent Business Highlights

Upon completion of Qunar's initial public offering ("IPO") of its American depositary shares and the private placement concurrently with the IPO, Qunar raised total gross proceeds of US$194.2 million, representing 12,612,800 ADSs at the price of US$15.00 per ADS and 1,000,000 Class B ordinary shares at the price of US$5.00 per share. Immediately following the closing of the IPO, Qunar had 12,777,650 ADSs outstanding, each representing three Class B ordinary shares. The total number of ordinary shares outstanding is 342,183,204 ordinary shares, comprised of 302,850,254 Class A ordinary shares and 39,332,950 Class B ordinary shares.

Conference Call

Qunar's management team will host an earnings conference call at 8:00PM on November 19, 2013, U.S. Eastern Time (09:00AM on November 20, 2013, Beijing Time).

The dial-in details for the live conference call are as follows:
   
International: +65-6823-2299
U.S.: +1-631-514-2526
UK: +44-20-3078-7622
Hong Kong: +852-5808-3202
Mainland China: 400-120-0539
   
Passcode for all regions:  7895550

A replay of the conference call may be accessed by phone at the following number until November 27, 2013:

International: +61-2-9641-7900
Passcode: 7895550

Additionally, a live and archived webcast of this conference call will be available at http://investor.qunar.com.

Forward-looking Statements

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 "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, quotations from management and the Business Outlook section in this press release, as well as Qunar's strategic and operational plans, contain forward-looking statements. Qunar may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.  Statements that are not historical facts, including statements about Qunar's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's goals and strategies; its future business development, financial condition and results of operations; the expected growth of the online travel markets in China; the Company's expectations regarding demand for and market acceptance of its products and services; its expectations regarding our relationships with users and travel service providers; the execution of the business cooperation framework agreement with Baidu; its plans to invest in the technology platform; competition in our industry; fluctuations in general economic and business conditions in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our prospectus and other documents filed with the Securities and Exchange Commission.  All information provided in this press release and in the attachments is as of the date of the press release, and Qunar undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Qunar's consolidated financial results presented in accordance with United Statements Generally Accepted Accounting Principles ("GAAP"), Qunar also uses Adjusted net income/(loss) and Adjusted EBITDA as additional non-GAAP financial measures. These non-GAAP financial measures enable management to assess the Company's operating results without considering the impact of noncash charges, including share-based payments, depreciation and amortization, expenses relating to free user traffic contributed by Baidu, Inc. Furthermore, these non-GAAP financial measures eliminate the impact of items that Qunar does not consider indicative of the performance of its business.

Qunar presents these non-GAAP financial measures because they are used by management to evaluate its operating performance, formulate business plans, and make strategic decisions on capital allocation. Qunar also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating its operating performance and consolidated results of operations in the same manner as management and in comparing financial results across accounting periods and to those of its peer companies. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A limitation of using these non-GAAP financial measures is that these non-GAAP measures do not include all items that impact the Company's results of operations for the period. The table captioned "Reconciliations of GAAP and non-GAAP Measures" has more details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures.

Currency Convenience Translation

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. The conversion of Renminbi (RMB) into U.S. dollars is based on the exchange rate set forth in the H.10 statistical release of the Federal Reserve Bank of New York on September 30, 2013, which was RMB6.1200 to US$1.00. The Company makes no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all. The percentages stated are calculated based on the RMB amounts.

About Qunar

Qunar Cayman Islands Limited is the leading search-based commerce platform for the travel industry in China. Qunar's goal is to empower Chinese travelers to define their travel experience. Founded in May 2005 and headquartered in Beijing, Qunar is committed to providing travelers with a one-stop travel information source on both PC and mobile devices. The Company enables travelers to find the best-value deals by aggregating and processing highly fragmented travel product information from tens of thousands of travel service providers into an organized and user-friendly display through its proprietary technology. According to research firm iResearch, Qunar has ranked No. 1 among all non-state-owned online travel companies in China in terms of monthly unique visitors since November 2010. Qunar's mobile application "Qunar Travel" was ranked the most frequently used mobile travel application in China by China Internet Network Information Center in September 2012.

Leveraging its large user base and advanced technologies, the Company provides an attractive value proposition to its customers, which include travel service providers and display advertisers.

Qunar means "where to go" in Mandarin Chinese.

For more information, please contact:
 
China
Jenna Qian
Qunar 
Tel: 8610 5760 3609
ir@qunar.com / press@qunar.com
 
Nick Beswick
Brunswick Group
Tel: +86-10-5960-8600
Email: qunar@brunswickgroup.com
 
U.S.
Cindy Zheng
Brunswick Group
Tel: +1-212-333-3810
Email: qunar@brunswickgroup.com
       
Qunar Cayman Islands Limited
Condensed Consolidated Balance Sheets 
  December September September
    31  30 30
  2012 2013 2013
(In thousands except for number of shares and per share data) RMB RMB USD
   Audited   Unaudited   Unaudited 
ASSETS      
Current assets:      
Cash and cash equivalents 148,511 485,897 79,395
Restricted cash 49,047 9,161 1,497
Funds receivable 30,838 311,434 50,888
Short-term investments 521 534 87
Accounts receivable, net 45,631 87,949 14,371
Due from related parties 38,756 10,000 1,634
Prepayments and other current assets 46,174 68,799 11,242
       
Total current assets 359,478 973,774 159,114
       
Non-current assets:      
Property and equipment, net 32,298 38,967 6,367
Other non-current assets 576 12,558 2,052
Total non-current assets 32,874 51,525 8,419
       
Total assets 392,352 1,025,299 167,533
       
       
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' DEFICIT      
       
Current liabilities:      
Customer advances and deposits 69,081 134,491 21,976
Due to related parties 50,200 56,049 9,158
Accounts payable 2,284 3,184 520
Salaries and welfare payable 43,669 52,416 8,565
Income tax payable 1,166 2,849 465
Accrued expenses and other current liabilities 148,616 375,877 61,418
Total current liabilities 315,016 624,866 102,102
       
Non-current liabilities:      
Non-current liabilities 17,594 28,409 4,642
Total non-current liabilities 17,594 28,409 4,642
       
Total liabilities 332,610 653,275 106,744
       
Mezzanine equity      
Redeemable ordinary shares (US$ 0.001 of par value per share; 100,280,392 shares issued and outstanding with a redemption value of US$1.45533 per share as of December 31, 2012 and September 30, 2013) 998,666 998,666 163,181
Total mezzanine equity 998,666 998,666 163,181
       
Shareholders' deficit:      
Ordinary shares (US$ 0.001 of par value per share; 800,000,000 shares authorized; 181,402,116 and 203,064,412 shares issued and outstanding as of December 31, 2012 and September 30, 2013) 1,172 1,306 213
Additional paid-in capital (716,364) (333,620) (54,513)
Accumulated other comprehensive loss (11,603) (16,465) (2,690)
Accumulated deficit (212,129) (277,863) (45,402)
Total shareholders' deficit (938,924) (626,642) (102,392)
       
Total liabilities, mezzanine equity and shareholders' deficit 392,352 1,025,299 167,533
       
         
Qunar Cayman Islands Limited
Condensed Consolidated Statements of Operations 
   Three Months Ended 
         
  September 30 June 30 September 30 September 30
  2012 2013 2013 2013
(In thousands except for share, per share (or ADS) information) RMB RMB RMB USD
   Unaudited   Unaudited   Unaudited   Unaudited 
Revenues        
 Pay-for-performance services 131,034 153,330 210,909 34,462
 Display advertising services 13,074 14,183 18,147 2,965
 Other services 8,954 8,616 12,090 1,976
Total revenues 153,062 176,129 241,146 39,403
 Cost of Revenue (25,841) (38,455) (49,712) (8,123)
Gross profit 127,221 137,674 191,434 31,280
         
Operating expenses:        
 Product development(Note1) (51,741) (64,478) (90,700) (14,820)
 Sales and marketing(Note1) (70,337) (81,945) (108,026) (17,651)
 General and administrative(Note1) (13,278) (20,980) (29,117) (4,758)
         
Operating loss (8,135) (29,729) (36,409) (5,949)
         
 Interest income, net 198 305 1,087 178
 Foreign exchange gain/(loss), net 27 (344) 108 18
 Other income, net 39 295 463 75
         
Loss before income taxes (7,871) (29,473) (34,751) (5,678)
         
Income tax expense (537) (11,734) (14,058) (2,297)
         
Net loss attributable to ordinary shareholders (8,408) (41,207) (48,809) (7,975)
         
Loss per share for ordinary shares        
Net loss per ordinary share—basic (0.03) (0.14) (0.16) (0.03)
Net loss per ordinary share—diluted (0.03) (0.14) (0.16) (0.03)
         
Loss per ADS (Each ADS represents three ordinary shares):      
Net loss per ADS—basic (0.09) (0.41) (0.48) (0.08)
Net loss per ADS—diluted (0.09) (0.41) (0.48) (0.08)
         
Weighted average number of ordinary shares:        
Basic 281,682,508 303,344,804 303,344,804 303,344,804
Diluted 281,682,508 303,344,804 303,344,804 303,344,804
         
Note1: Includes share-based compensation expenses as follows:      
Product development (3,633) (3,726) (5,110) (835)
Sales and marketing (1,048) (1,122) (1,511) (247)
General and administrative (1,630) (1,913) (2,045) (334)
Total share-based compensation expenses (6,311) (6,761) (8,666) (1,416)
         
         
Reconciliations of GAAP and non-GAAP measures (in thousands, unaudited)
 
   Three Months Ended 
  September 30 June 30 September 30 September 30
  2012 2013 2013 2013
  RMB RMB RMB USD
Net loss attributable to ordinary shareholders  (8,408) (41,207) (48,809) (7,975)
 Add:         
 Share-based compensation expenses 6,311 6,761 8,666 1,416
 Non-cash expenses relating to free user traffic contributed by Baidu 1,663 1,480 1,480 242
 Adjusted net loss (non-GAAP)(*) (434) (32,966) (38,663) (6,317)
         
Add:        
Income tax expense 537 11,734 14,058 2,297
Depreciation 4,784 5,388 5,459 892
Interest expense  --  1,059 351 57
Adjusted EBITDA (non-GAAP)(**) 4,887 (14,785) (18,795) (3,071)
         
*Adjusted net loss (non-GAAP), defined as net loss excluding share-based compensation expenses and non-cash expenses relating to free user traffic contributed by Baidu, Inc.
** Adjusted EBITDA (non-GAAP), defined as net loss before income taxes, interest expenses, depreciation and amortization, further adjusted to exclude share-based compensation expense and non-cash expenses relating to free user traffic contributed by Baidu, Inc.