Ctrip.com (Nasdaq: CTRP) is becoming a shell of what it used to be.
Shares of China's leading travel website operator are trading near two-year lows after delivering another disappointing quarterly report.
Net revenue growth continues to decelerate, climbing a mere 18% to $147.1 million.
Oh, and that's the good news.
Gross margin, net margin, and earnings all actually declined during the period. It's not just that higher-margin hotel bookings aren't growing as quickly as the rest of Ctrip's business. The fallen dot-com darling isn't making the most of cyberspace. The Internet is supposed to make it easy to create a scalable model. Unfortunately, all three of the operating expense line items -- product development costs, general and administrative fees, and sales and marketing expenses -- have rise by 43% to 46% over the past year. Your bottom line isn't going to grow if expenses are growing more than twice as fast as revenue.
The bottom line for Ctrip is that earnings slipped 16% to $0.27 a share.
At least one analyst -- Brean Murray -- has already downgraded the shares, even though they're rapidly approaching lows last seen in the summer of 2009. After asking the company a few questions during last night's conference call about the company's recent couponing and group-buying initiatives, Brean Murray's Long Lin apparently didn't like what he heard. Brean Murray's new sell rating comes with a depressing $19 price target.
Ctrip's guidance for the current quarter calls for net revenue to inch 15% to 20% higher, matching its earlier outlook for the fourth quarter. Until the second half of last year, Ctrip was routinely conservative in its guidance. It issued targets that were laughably easy for it to topple three months later. Well, as we can see from the portal hitting the tarmac smack dab in the middle of its top-line guidance this time, there's no reason to expect anything other than a repeat performance next time around.
China was supposed to be the hot market for travel growth. As the country's middle class widened and companies prospered, the demand for leisure and business travel should have skyrocketed. Well, there are faster-growing entities elsewhere. India's MakeMyTrip (Nasdaq: MMYT) saw its revenue after service costs climb 37% during the same three months -- and soar 53% on a constant-currency basis.
Closer to home, priceline.com (Nasdaq: PCLN) doesn't post its results until next week, but analysts are banking on a 32% uptick in revenue. Travel deals publisher Travelzoo (Nasdaq: TZOO) came through with a 23% gain on the top line. Unlike Ctrip chomping away at its margins like Pacman, Travelzoo's net income actually skyrocketed 70% during the period.
Ctrip used to be the class act of travel portals, but now it may not even be good enough to fly coach.
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