OREANDA-NEWS. Qunar Cayman Islands Limited, China’s leading mobile and online travel platform, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Highlights for the Second Quarter of 2016

  • Total revenues for the second quarter of 2016 were RMB1,030.8 million (US$155.1 million), an increase of 17.0% year-on-year.
     
  • Gross profit for the second quarter of 2016 was RMB765.4 million (US$115.2 million), an increase of 20.7% year-on-year.
     
  • Mobile revenues for the second quarter of 2016 were RMB774.0 million (US$116.5 million), an increase of 29.0% year-on-year, representing 75.1% of total revenues, compared to 68.1% in the corresponding period of 2015.

Second Quarter 2016 Financial Results

Total revenues for the second quarter of 2016 were RMB1,030.8 million (US$155.1 million), an increase of 17.0% year-on-year.

Mobile revenues for the second quarter of 2016 were RMB774.0 million (US$116.5 million), an increase of 29.0% year-on-year, representing 75.1% of total revenues.

Flight and flight related revenues for the second quarter of 2016 were RMB478.3 million (US$72.0 million), a decrease of 7.5% year-on-year and a decrease of 14.3% quarter-on-quarter. The year-on-year flight and flight related revenue decrease was primarily due to a decrease in Total Estimated Flight Ticket volume (TEFT) and slightly offset by an increase in revenue per ticket. The quarter-on-quarter flight and flight related revenue decrease was primarily due to decreases in TEFT.

Accommodation reservation revenues were RMB392.3 million (US$59.0 million), an increase of 51.6% year-on-year and an increase of 30.9% quarter-on-quarter. The year-on-year and quarter-on-quarter accommodation reservation revenue growth were primarily due to increases in revenue per room night and in Total Estimated Hotel Room-night volume (TEHR).

Gross profit for the second quarter of 2016 was RMB765.4 million (US$115.2 million), an increase of 20.7% year-on-year. Gross margin for the second quarter of 2016 was 74.2%, compared to 72.0% for the corresponding period of 2015 and 75.2% for the first quarter of 2016. The year-on-year increase in profit margin was driven by operational efficiencies. The year-on-year increase in gross profit was primarily due to increase in total revenues and the change in gross profit margin.

Product development expenses for the second quarter of 2016 were RMB516.6 million (US$77.7 million), an increase of 47.3% year-on-year, primarily due to a significant increase in non-cash share-based compensation expenses resulting from new options granted under our new 2015 share incentive plan (the “2015 Incentive Program”) in the fourth quarter of 2015, which have higher fair values compared with the outstanding options under our past incentive programs. The increase was partially offset by decreases in salary and welfare expenses associated with headcount decreases. Excluding share-based compensation expenses, product development expenses were RMB309.6 million (US$46.6 million), a decrease of 6.3% year-on-year, and accounted for 30.0% of total revenues, compared to 37.5% for the corresponding period in 2015 and 28.5% for the first quarter of 2016.

Product sourcing expenses for the second quarter of 2016 were RMB118.2 million (US$17.8 million), a decrease of 12.2% year-on-year, primarily due to decreases in salary, welfare and other expenses associated with headcount decreases, which were partially offset by a significant increase in share-based compensation expenses resulting from new options granted under our 2015 Incentive Program. Excluding share-based compensation expenses, product sourcing expenses were RMB105.7 million (US$15.9 million), a decrease of 20.1% year-on-year, and accounted for 10.3% of total revenues, compared to 15.0% for the corresponding period in 2015 and 12.3% for the first quarter of 2016.

Sales and marketing expenses for the second quarter of 2016 were RMB580.6 million (US$87.4 million), a decrease of 17.4% year-on-year, primarily due to a decrease in online marketing expenses as a result of controlled expenditure and improvement in operational efficiencies, which was partially offset by an increase in salary and welfare expenses as a result of increased headcount and, to a lesser degree, by an increase in share-based compensation expenses resulting from new options granted under our 2015 Incentive Program. Excluding share-based compensation expenses, sales and marketing expenses were RMB534.0 million (US$80.4 million), a decrease of 23.1% year-on-year, and accounted for 51.8% of total revenues, compared to 78.9% for the corresponding period in 2015 and 51.0% for the first quarter of 2016.

General and administrative expenses for the second quarter of 2016 were RMB149.1 million (US$22.4 million), an increase of 10.9% year-on-year. Excluding share-based compensation expenses, general and administrative expenses were RMB89.1 million (US$13.4 million), an increase of 1.2% year-on-year, and accounted for 8.6% of total revenues, compared to 10.0% for the corresponding period in 2015 and 7.3% for the first quarter of 2016.

Operating loss for the second quarter of 2016 was RMB599.0 million (US$90.1 million), compared to RMB695.2 million for the corresponding period in 2015 and RMB1,039.4 million for the first quarter of 2016.

Operating loss on a non-GAAP basis, which excludes share-based compensation expenses of RMB326.0 million (US$49.1 million), was RMB273.0 million (US$41.1 million) for the second quarter of 2016, compared to RMB611.5 million for the corresponding period in 2015 and RMB237.0 million for the first quarter of 2016.

Operating margin (non-GAAP) for the second quarter of 2016 was negative 26.5%, compared to negative 69.4% for the corresponding period in 2015 and negative 23.9% for the first quarter of 2016. The year-on-year decrease in operating loss was primarily due to strong revenue and controlled operating expenditures.

Net loss attributable to Qunar’s shareholders for the second quarter of 2016 was RMB698.8 million (US$105.1 million), compared to RMB815.7 million for the corresponding period in 2015 and RMB1,076.5 million for the first quarter of 2016. The quarter-on-quarter decrease in net loss was primarily due to a decrease in one-time charges of share-based compensation expenses resulting from our previously announced employee share exchange program that became effective starting on December 14, 2015 (“Employee Share Exchange Program”).  Basic and diluted net loss per ADS for the second quarter of 2016 was RMB4.80 (US$0.72).

Adjusted net loss (non-GAAP), defined as net loss excluding share-based compensation expenses of RMB326.0 million (US$49.1 million), was RMB373.3 million (US$56.2 million) for the second quarter of 2016, compared to adjusted net loss of RMB623.8 million for the corresponding period in 2015 and adjusted net loss of RMB274.5 million for the first quarter of 2016.

Adjusted EBITDA (non-GAAP), defined as net loss before income tax expense, depreciation and amortization, interest expense, further adjusted to exclude share-based compensation expenses of RMB326.0 million (US$49.1 million), was negative RMB279.3 million (US$42.0 million) for the second quarter of 2016, compared to negative RMB575.3 million for the corresponding period in 2015 and negative RMB174.8 million for the first quarter of 2016. 

As of June 30, 2016, Qunar had total cash and cash equivalents, restricted cash and funds receivable of RMB4,554.1 million (US$685.3 million). The restricted cash decreased by RMB1,037.4 million from December 31, 2015 since a portion of the restricted cash was no longer considered as restricted.

As of June 30, 2016, Qunar had 6 Class A ordinary shares and 437,150,861 Class B ordinary shares outstanding.

Recent Developments

On June 23, 2016, the Company announced that its board of directors (the “Board”) had received a preliminary non-binding "going-private" proposal (the “Proposal”) from Ocean Management Limited (“Ocean”).

On June 23, 2016, the Company's board of directors formed a special committee (the “Special Committee”) comprised of three independent, disinterested directors, Mr. Jimmy Lai, Mr. Jianmin Zhu and Ms. Ying Shi, to consider the Proposal, with Mr. Jimmy Lai as the special committee chair.  The special committee has retained Duff & Phelps (Duff & Phelps Securities, LLC and Duff & Phelps, LLC) as its financial advisor and Kirkland & Ellis as its U.S. legal counsel in connection with its review and evaluation of the Proposal.

The Board cautions the Company's shareholders and others considering trading the Company's securities that the Special Committee is continuing its evaluation of the Proposal and that, at this time, no decisions have been made by the Special Committee with respect to the Company's response to the Proposal. There can be no assurance that any definitive offer will be made by Ocean, that any agreement will be executed with Ocean or that the Proposal or any comparable transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to the Proposal or any other transaction, except as required under applicable law.

Qunar is China’s leading mobile and online travel platform. With a commitment to building a travel ecosystem serving the entire travel industry value chain, Qunar is evolving the way people travel in a world increasingly enabled by technology. Qunar addresses the needs of Chinese travelers and travel service providers by efficiently matching industry supply and demand through its proprietary technologies. By providing technology infrastructure for travel service providers on mobile and online platforms, Qunar integrates and offers the most comprehensive selection of travel products and the most convenient means to complete desired transactions for Chinese travelers.