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ELong's CEO Discusses Q2 2011 Results - Question & Answer Session Transcript

eLong, Inc. ( LONG)

Q2 2011 Earnings Call

August 8, 2011 8:00 PM ET

Executives

Mike Doyle – CFO

Guangfu Cui – CEO

Analysts

Eddie Leung

Question-and-Answer S e ssion

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Mr. Leung. Sir, you may proceed.

Eddie Leung

Hey, good morning Mike and Guangfu. Just a couple of questions. The first one is when I looked at the increase in marketing costs, I’m wondering that you know could you share with us how much is the recruitment cost going up on an year-to-year basis because we’ve heard a lot of stories about inflation especially on the online advertising side? And could you also provide us the outlook in terms of margins, let’s say for the upcoming quarter? Thanks.

Mike Doyle

Eddie, this is Mike. On sales and marketing expense we have continued to see an increase in cost per clicks, though the increases have moderated based on what we were seeing even a year ago. I think the expense – the increase in expense that you see on the sales and marketing line is due to just a more aggressive pursuit of acquiring customers online across all channels it includes traditional keyword hitting on search engines, our use of vertical search as well as a number of other marketing channels including our affiliate business.

Eddie Leung

Got that. And then the margin outlook?

Mike Doyle

We don’t provide guidance on margin. We saw a decent pick up in gross margin for the quarter based on two strong trends, which is mix shift to our higher-margin hotel business from air, and also to our online fulfillments channel. We expect both of those trends to continue. But we are also experiencing some increase in transaction cost due to increases in labor cost in the market.

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