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Qunar Reports First Quarter 2016 Financial Results
Total revenues increased 48% year-on-year

BEIJING, June 16, 2016 (GLOBE NEWSWIRE) -- Qunar Cayman Islands Limited (NASDAQ:QUNR) (“Qunar” or the “Company”), China’s leading mobile and online travel platform, today announced its unaudited financial results for the first quarter ended March 31, 2016.

Highlights for the First Quarter of 2016

  • Total revenues for the first quarter of 2016 were RMB993.1 million (US$154.0 million), an increase of 48.0% year-on-year.
     
  • Gross profit for the first quarter of 2016 was RMB747.3 million (US$115.9 million), an increase of 52.3% year-on-year.
     
  • Mobile revenues for the first quarter of 2016 were RMB752.5 million (US$116.7 million), an increase of 88.8% year-on-year, representing 75.8% of total revenues, compared to 59.4% in the corresponding period of 2015.


“Our mobile business continued to expand rapidly on top of a very strong 2015,” said Zhenyu Chen, chief executive officer of Qunar. “We are proud of the progress the team made in the first quarter despite the headwinds we faced in our flight business.”

First Quarter 2016 Financial Results

Total revenues for the first quarter of 2016 were RMB993.1 million (US$154.0 million), an increase of 48.0% year-on-year.

Mobile revenues for the first quarter of 2016 were RMB752.5 million (US$116.7 million), an increase of 88.8% year-on-year, representing 75.8% of total revenues.

Flight and flight related revenues for the first quarter of 2016 were RMB558.2 million (US$86.6 million), an increase of 22.1% year-on-year and a decrease of 12.3% quarter-on-quarter. Year-on-year flight and flight related revenue growth was primarily due to an increase in revenue per ticket and a slight increase in Total Estimated Flight Ticket volume (TEFT). Quarter-on-quarter flight and flight related revenue decrease was primarily due to a decrease in TEFT, which was partially offset by an increase in revenue per ticket.

Accommodation reservation revenues were RMB299.7 million (US$46.5 million), an increase of 133.6% year-on-year and a decrease of 44.0% quarter-on-quarter. Excluding revenues generated from the merchant model program, where revenues are booked on a gross basis, accommodation reservation revenues were RMB293.1 million (US$45.5 million). Year-on-year accommodation reservation revenue growth was primarily due to an increase in revenue per room night and an increase in Total Estimated Hotel Room-night volume (TEHR). Quarter-on-quarter accommodation reservation revenue decrease was primarily due to a decrease in business volume from the merchant model program.

Gross profit for the first quarter of 2016 was RMB747.3 million (US$115.9 million), an increase of 52.3% year-on-year. Gross margin for the first quarter of 2016 was 75.2%, compared to 73.1% for the corresponding period of 2015 and 60.8% for the fourth quarter of 2015. The year-on-year and quarter-on-quarter increases in gross margin were primarily due to the decrease in business volume from the merchant model program which has a lower gross margin. The year-on-year increase in gross profit was primarily due to the significant increase in total revenues and the change in gross profit margin.

Product development expenses for the first quarter of 2016 were RMB812.2 million (US$126.0 million), an increase of 182.9% 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 last quarter, which have higher fair values compared with the outstanding options under our past incentive programs. This increase was also due to higher salary, welfare and other expenses associated with increases in average headcount and average salary. Excluding share-based compensation expenses, product development expenses were RMB283.2 million (US$43.9 million), an increase of 5.9% year-on-year, and accounted for 28.5% of total revenues, compared to 39.9% for the corresponding period in 2015 and 25.0% for the fourth quarter of 2015.

Product sourcing expenses for the first quarter of 2016 were RMB172.2 million (US$26.7 million), an increase of 38.5% year-on-year, primarily due to 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 RMB122.3 million (US$19.0 million), a decrease of 0.8% year-on-year, and accounted for 12.3% of total revenues, compared to 18.4% for the corresponding period in 2015 and 15.0% for the fourth quarter of 2015.

Sales and marketing expenses for the first quarter of 2016 were RMB620.9 million (US$96.3 million), an increase of 89.4% year-on-year, primarily due to stepped up discretionary expenditures to acquire new mobile users through offline channels, an increase in share-based compensation expenses resulting from new options granted under our 2015 Incentive Program and, to a lesser degree, an increase in salary and welfare expenses as a result of increased headcount, which were slightly offset by a decrease in online marketing expense as a result of  controlled expenditure. The headcount expenses under sales and marketing were primarily expenses related to personnel with operational functions, including our customer service staff, photographers, editors, and staff responsible for data analysis. Excluding share-based compensation expenses, sales and marketing expenses were RMB506.3 million (US$78.5 million), an increase of 58.1% year-on-year, and accounted for 51.0% of total revenues, compared to 47.7% for the corresponding period in 2015 and 45.5% for the fourth quarter of 2015.

General and administrative expenses for the first quarter of 2016 were RMB181.4 million (US$28.1 million), an increase of 37.4% year-on-year, primarily due to a significant increase in share-based compensation expenses resulting from new options granted under our 2015 Incentive Program. Excluding share-based compensation expenses, general and administrative expenses were RMB72.5 million (US$11.2 million), an increase of 2.8% year-on-year, and accounted for 7.3% of total revenues, compared to 10.5% for the corresponding period in 2015 and 10.3% for the fourth quarter of 2015.

Operating loss for the first quarter of 2016 was RMB1,039.4 million (US$161.2 million), compared to RMB411.2 million for the corresponding period in 2015 and RMB4,955.8 million for the fourth quarter of 2015.

Operating loss on a non-GAAP basis, which excludes share-based compensation expenses of RMB802.3 million (US$124.4 million), was RMB237.0 million (US$36.8 million) for the first quarter of 2016, compared to RMB291.0 million for the corresponding period in 2015 and RMB453.3 million for the fourth quarter of 2015.

Operating margin (non-GAAP) for the first quarter of 2016 was negative 23.9%, compared to negative 43.4% for the corresponding period in 2015 and negative 35.0% for the fourth quarter of 2015. The year-on-year and quarter-on-quarter decreases in operating loss were primarily due to strong revenue and controlled operating expenditures.

Net loss attributable to Qunar’s shareholders for the first quarter of 2016 was RMB1,076.5 million (US$166.9 million), compared to RMB701.2 million for the corresponding period in 2015 and RMB5,091.0 million for the fourth quarter of 2015. 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 first quarter of 2016 was RMB7.44 (US$1.14).

Adjusted net loss (non-GAAP), defined as net loss excluding share-based compensation expenses of RMB802.3 million (US$124.4 million), was RMB274.5 million (US$42.6 million) for the first quarter of 2016, compared to adjusted net loss of RMB293.4 million for the corresponding period in 2015 and adjusted net loss of RMB550.9 million for the fourth quarter of 2015.

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 RMB802.3 million (US$124.4 million), was negative RMB174.8 million (US$27.1 million) for the first quarter of 2016, compared to negative RMB262.5 million for the corresponding period in 2015 and negative RMB443.5 million for the fourth quarter of 2015. 

As of March 31, 2016, Qunar had total cash and cash equivalents, restricted cash and funds receivable of RMB4,583.8 million (US$710.9 million). The restricted cash decreased by RMB1,050.5 million from December 31, 2015 since a portion of the restricted cash was no longer considered as restricted.

As of March 31, 2016, Qunar had 7,345,925 Class A ordinary shares and 427,001,247 Class B ordinary shares outstanding.

Conference Call

Qunar's management will hold an earnings conference call at 8:00 PM on June 15, 2016, U.S. Eastern Time (8:00 AM on June 16, 2016, Beijing/Hong Kong Time).

Dial-in details for the earnings 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: 9329360 

A replay of the conference call may be accessed by phone at the following number until June 22, 2016:

International: +61-2-9641-7900
Passcode: 9329360

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 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 relationships with users and travel service providers; its plans to invest in the technology platform; competition in the industry; fluctuations in general economic and business conditions in China; and relevant government policies and regulations relating to the industry. Further information regarding these and other risks is included in the documents filed 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 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 States Generally Accepted Accounting Principles ("GAAP"), Qunar also uses adjusted net income (loss), adjusted EBITDA and adjusted operating income (loss) 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 compensation expenses, depreciation and amortization, online marketing expenses from Zhixin Cooperation Agreement, fair value change in warrant liability and impairment loss of the long-term investments. 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 March 31, 2016, which was RMB6.4480 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 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.

Qunar means “where to go” in Mandarin Chinese.

For more information, please visit http://ir.qunar.com.


Qunar Cayman Islands Limited            
Condensed Consolidated Balance Sheets             
    December 31,   March 31,   March 31,
      2015       2016       2016  
(In thousands except for number of shares and per share data)   RMB   RMB   USD
    Audited   Unaudited   Unaudited
ASSETS            
  Current assets:            
  Cash and cash equivalents     4,115,650       3,327,251       516,013  
  Restricted cash     1,747,603       697,055       108,104  
  Funds receivable     715,365       559,475       86,767  
  Short-term investments     351,189         -          -   
  Accounts receivable, net     278,382       205,870       31,928  
  Due from related parties     813,123       397,406       61,632  
  Prepayments and other current assets     1,320,492       822,180       127,509  
  Total current assets     9,341,804       6,009,237       931,953  
             
  Non-current assets:            
  Due from related parties, non-current       -        1,783,706       276,629  
  Property and equipment, net     232,085       229,010       35,516  
  Intangible assets,net     12,689       12,361       1,917  
  Goodwill     10,755       10,755       1,668  
  Long-term investments,net     712,967       748,016       116,007  
  Deferred tax assets, non-current(*)     80,624         86,296         13,383  
  Other non-current assets     114,621       136,928       21,236  
  Total non-current assets     1,163,741       3,007,072       466,356  
             
Total assets     10,505,545       9,016,309       1,398,309  
             
             
LIABILITIES AND EQUITY            
             
  Current liabilities:            
  Short-term loans       643,500         643,500       99,798  
  Customer advances and deposits       280,962         265,108       41,115  
  Due to related parties       1,961,500         169,939       26,355  
  Accounts payable       31,720         34,367       5,330  
  Salaries and welfare payable       418,431         318,055       49,326  
  Income tax payable       79,736         87,515       13,572  
  Accrued expenses and other current liabilities       3,134,951         2,080,139       322,602  
  Total current liabilities     6,550,800       3,598,623       558,098  
             
  Non-current liabilities:            
  Due to related parties, non-current       -          4,237,732       657,216  
  Deferred tax liability, non-current(*)       1,318         1,273       197  
  Long-term Debt       2,658,357         -          -   
  Non-current liabilities       91,702         94,737       14,693  
  Total non-current liabilities     2,751,377       4,333,742       672,106  
             
Total liabilities     9,302,177       7,932,365       1,230,204  
             
Equity:            
  Class A ordinary shares       87         46       7  
  Class B ordinary shares       2,638         2,690       417  
  Additional paid-in capital       10,647,579         11,624,670       1,802,833  
  Accumulated other comprehensive income       136,810         120,436       18,678  
  Statutory reserves       3,011         3,011       467  
  Accumulated deficit     (9,592,039 )     (10,668,502 )     (1,654,544 )
  Total Qunar Cayman Islands Limited's shareholders' equity       1,198,086         1,082,351       167,858  
             
  Noncontrolling Interests       5,282         1,593       247  
             
  Total equity       1,203,368       1,083,944       168,105  
             
Total liabilities and equity     10,505,545       9,016,309       1,398,309  
             
*On November 20, 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. This accounting standard requires deferred tax assets and liabilities, along with related valuation allowances, to be classified as noncurrent on the balance sheet. As a result, each tax jurisdiction will now only have one net noncurrent deferred tax asset or liability. This guidance has been adopted from 2016 and applied retrospectively by the Company to the prior period presented herein.
 

 

Qunar Cayman Islands Limited                    
Condensed Consolidated Statements of Operations                    
       Three Months Ended   
      March 31,   December 31,   March 31,   March 31,  
        2015       2015       2016       2016    
(In thousands except for number of shares and per share(ADS) data)   RMB   RMB   RMB   USD  
       Unaudited     Unaudited     Unaudited     Unaudited   
Revenues                    
Flight and flight related       457,266       636,153       558,217       86,572    
Accommodation reservation       128,288       535,099       299,715       46,482    
Display advertising services       21,135       31,139       24,045       3,729    
Other services       64,387       91,646       111,143       17,237    
Total revenues       671,076       1,294,037       993,120       154,020    
Cost of Revenues       (180,547 )     (507,424 )     (245,831 )     (38,125 )  
Gross profit       490,529       786,613       747,289       115,895    
Operating expenses:                    
Product developments (Note 1)       (287,117 )     (1,531,773 )     (812,185 )     (125,959 )  
Product sourcing (Note 1)       (124,352 )     (339,422 )     (172,198 )     (26,706 )  
Sales and marketing (Note 1)       (327,855 )     (872,803 )     (620,900 )     (96,293 )  
General and administrative  (Note 1)       (132,061 )     (2,998,420 )     (181,388 )     (28,131 )  
Online marketing expense for Baidu Zhixin Cooperation       (30,295 )     -       -       -    
Operating loss       (411,151 )     (4,955,805 )     (1,039,382 )     (161,194 )  
Interest income(expenses), net       521       (55,924 )     (49,465 )     (7,671 )  
Foreign exchange (loss) gain, net       (958 )     (32,203 )     20,724       3,214    
Other income (loss), net       1,943       (33,583 )     2,052       318    
Fair value change in warrant liability       (288,226 )     -       -       -    
Loss before income taxes       (697,871 )     (5,077,515 )     (1,066,071 )     (165,333 )  
Income tax expense       (3,878 )     (11,547 )     (7,774 )     (1,206 )  
Equity in loss of affiliated companies,net of tax       -       (3,719 )     (3,018 )     (468 )  
Net loss       (701,749 )     (5,092,781 )     (1,076,863 )     (167,007 )  
                     
Net loss attributable to noncontrolling interests       516       1,813       400       62    
                     
Net loss attributable to Qunar Cayman Islands Limited       (701,233 )     (5,090,968 )     (1,076,463 )     (166,945 )  
                     
                     
                     
                     
Loss per share for ordinary shares:                     
Net loss per ordinary share—basic       (1.95 )     (12.30 )     (2.48 )     (0.38 )  
Net loss per ordinary share—diluted       (1.95 )     (12.30 )     (2.48 )     (0.38 )  
                     
Loss per ADS (each ADS represents three class B ordinary shares):                   
Net loss per ADS—basic       (5.85 )     (36.90 )     (7.44 )     (1.14 )  
Net loss per ADS—diluted       (5.85 )     (36.90 )     (7.44 )     (1.14 )  
                     
Weighted average number of ordinary shares:                     
Class A ordinary shares                    
Basic       224,299,179       64,640,123       8,159,782       8,159,782    
Diluted       224,299,179       64,640,123       8,159,782       8,159,782    
                     
Class B ordinary shares                    
Basic       134,557,237       349,136,105       425,742,428       425,742,428    
Diluted       358,856,416       413,776,228       433,902,210       433,902,210    
                     
Note 1: Includes share-based compensation expenses as follows:
               
Product developments       19,620       1,207,853       528,974       82,037    
Product sourcing       1,044       145,821       49,861       7,733    
Sales and marketing       7,699       283,567       114,647       17,780    
General and administrative       61,510       2,865,229       108,853       16,882    
Total share-based compensation expenses       89,873       4,502,470         802,335         124,432    
                     

 

Reconciliations of GAAP and non-GAAP measures (in thousands)                  
     Three Months Ended   
    March 31,   December 31,   March 31,   March 31,  
      2015       2015       2016       2016    
    RMB   RMB   RMB   USD  
    Unaudited   Unaudited   Unaudited   Unaudited  
Net loss      (701,749 )     (5,092,781 )     (1,076,863 )     (167,007 )  
Add:                  
Share-based compensation expenses     89,873       4,502,470       802,335       124,432    
Impairment loss of the long-term investments     -       39,425       -       -    
Online marketing expense for Baidu Zhixin Cooperation     30,295       -       -       -    
Fair Value change in warrant liability     288,226       -       -       -    
 Adjusted net loss (non-GAAP)(*)      (293,355 )     (550,886 )     (274,528 )     (42,575 )  
Add:                  
Income tax expense     3,878       11,547       7,774       1,206    
Depreciation and amortization     25,516       29,378       32,329       5,014    
Interest expense     1,420       66,473       59,660       9,252    
Adjusted EBITDA (non-GAAP)  (**)     (262,541 )     (443,488 )     (174,765 )     (27,103 )  
                   
Operating loss     (411,151 )     (4,955,805 )     (1,039,382 )     (161,194 )  
Add:                  
Share-based compensation expenses     89,873       4,502,470       802,335       124,432    
Online marketing expense for Baidu Zhixin Cooperation     30,295       -       -       -    
Adjusted operating loss(non-GAAP)(***)     (290,983 )     (453,335 )     (237,047 )     (36,762 )  
                   
*Adjusted net loss (non-GAAP), defined as net loss excluding share-based compensation expenses,impairment loss of the long-term investments, online marketing expenses for Baidu Zhixin Cooperation and fair value change in warrant liability.
** Adjusted EBITDA (non-GAAP), defined as net loss before income taxes, interest expenses, depreciation and amortization, further adjusted to exclude share-based compensation expenses,impairment loss of the long-term investments, online marketing expenses for Baidu Zhixin Cooperation and fair value change in warrant liability.
*** Adjusted operating loss(non-GAAP), defined as operating loss excluding share-based compensation expenses and online marketing expenses for Baidu Zhixin Cooperation .


For investor inquiries, please contact:

Investor Relations
Qunar Cayman Islands Limited
Tel: +86-10-8967-6966
Email: ir@qunar.com   

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