So what: The company on March 19 announced earnings results that easily beat Wall Street's, and management's, expectations for the fourth quarter. The key driver was a surprising 102% year-over-year gain in transportation ticketing volume, compared to the 60% spike management had forecast. Hotel bookings also rose at a faster pace than expected, up 53% from the prior-year period. Altogether, fourth-quarter sales jumped higher by 33%.
Profitability fell, however, with gross margin shrinking to 69% of sales from 73%. Expenses rose across the board, particularly on product development. Investments in its mobile app and website totaled $127 million, or more than double 2013's amount. Still, despite the heavier spending Ctrip booked a much smaller loss than analysts were bracing for.
Now what: Ctrip.com's new 2015 outlook calls for more accelerating growth. Sales are projected to rise by as much as 50% over 2014's total of $1.2 billion. That would represent a significant increase over last year's impressive 36% sales gain, and it explains why investors were tripping over themselves to jump into the stock last month.