$OWW
Could see another spike tomorrow! News after hours.
UPDATE: Priceline Growth Slows Less Than Feared as Europe Stabilizes
--Slowdown in Europe stabilized midway through quarter
--Company's conservatism about economic uncertainty lessens
--Shares rise after hours
(Updates with further details, comments from executives throughout
By Joan E. Solsman
Priceline.com Inc. (PCLN) third-quarter earnings rose 27% as a slowdown in Europe hotel business was not as bad as the online travel agent had feared.
Shares were up 9.3% at $640.56 after hours, as the online travel agent grew more serene about economic uncertainty's pressure on results and predicted a stable fourth quarter.
"We were pleasantly surprised to see conditions in Europe stabilize, at least for the time being," Chief Financial Officer Daniel Finnegan said on a conference call to discuss results. Executives said the unexpected strength surfaced in the second half of the period and momentum has carried into the current quarter.
The company--operator of its namesake website as well as Booking.com, Agoda.com and Rentalcars.com--said gross bookings rose 25% in the latest period, after it had predicted growth of 10% to 18% in a bleak August forecast.
Stock in Priceline and other online travel agencies slumped after that August report, which not only relayed markedly slowing growth at Priceline itself but also coincided with a weak showing from rival Orbitz Worldwide Inc. (OWW).
The fact that the chief damper on their outlooks was European hotels was a liability for Priceline in particular. Among online travel agencies, Priceline has the greatest international and hotel focus, which until recently had fueled its runaway growth.
However, in the latest period, international bookings growth was 30%. That's the slowest rate in more than three years. Yet it exceeds the 12% to 20% Priceline forecast and slowed only three percentage points from the second quarter.
Chief Executive Jeff Boyd said the latest period's better-than-expected performance underscored "resilience in the face of weak economic conditions in major markets.
"We did see pressure on operating margins in the third quarter, though not to the degree forecast," he said, adding the company nevertheless expects that pressure will continue into the fourth quarter as it hires more people and as more of its business comes from paid advertising channels.
Priceline conceded that some of the slowdown in its growth must stem from strong execution by competitors like Expedia Inc. (EXPE). Last week, Expedia reported a better-than-expected third quarter as technological restructuring drove acceleration in its hotel business.
"Expedia had a good quarter and their growth rate accelerated ... I think it will be disingenuous to say that there was no impact on us," Mr. Finnegan said, adding he thought both were competing aggressively and executing well.
Priceline posted a quarterly profit of $596.6 million, or $11.66 a share, up from $469.5 million, or $9.17 a share, a year earlier. Excluding restricted stock adjustments and other items, earnings rose to $12.40 a share from $9.95.
Revenue increased 17% to $1.71 billion.
In August, the company forecast $11.10 to $12.10 in per-share earnings and revenue growth of 9% to 15%, a downbeat outlook that caused Priceline shares to plummet.
Gross margin rose to 81.8% from 75.7%.
Hotel-room nights sold rose 36% from a year ago. Rental-car days were up 35%. Airline ticket volume was up 6.1%.
Priceline forecast fourth-quarter adjusted earnings of $6.12 to $6.57 a share on revenue growth of about 15% to 22%. Analysts polled by Thomson Reuters most recently expected $6.34 in per-share earnings and revenue growth of 15%.
Executives said the guidance doesn't incorporate the same conservatism about economic uncertainty that the dire third-quarter outlook did.
Mr. Boyd also noted that Hurricane Sandy was clearly going cause lasting disruptions to travel business in New York City, which he called an important destination for Booking.com and Priceline.com.
"Our best estimate at this time is that the negative effect of Hurricane Sandy would fall within the range of our guidance for the fourth quarter," he said.
-Write to Joan E. Solsman at joan.solsman@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
Could see another spike tomorrow! News after hours.
UPDATE: Priceline Growth Slows Less Than Feared as Europe Stabilizes
--Slowdown in Europe stabilized midway through quarter
--Company's conservatism about economic uncertainty lessens
--Shares rise after hours
(Updates with further details, comments from executives throughout
By Joan E. Solsman
Priceline.com Inc. (PCLN) third-quarter earnings rose 27% as a slowdown in Europe hotel business was not as bad as the online travel agent had feared.
Shares were up 9.3% at $640.56 after hours, as the online travel agent grew more serene about economic uncertainty's pressure on results and predicted a stable fourth quarter.
"We were pleasantly surprised to see conditions in Europe stabilize, at least for the time being," Chief Financial Officer Daniel Finnegan said on a conference call to discuss results. Executives said the unexpected strength surfaced in the second half of the period and momentum has carried into the current quarter.
The company--operator of its namesake website as well as Booking.com, Agoda.com and Rentalcars.com--said gross bookings rose 25% in the latest period, after it had predicted growth of 10% to 18% in a bleak August forecast.
Stock in Priceline and other online travel agencies slumped after that August report, which not only relayed markedly slowing growth at Priceline itself but also coincided with a weak showing from rival Orbitz Worldwide Inc. (OWW).
The fact that the chief damper on their outlooks was European hotels was a liability for Priceline in particular. Among online travel agencies, Priceline has the greatest international and hotel focus, which until recently had fueled its runaway growth.
However, in the latest period, international bookings growth was 30%. That's the slowest rate in more than three years. Yet it exceeds the 12% to 20% Priceline forecast and slowed only three percentage points from the second quarter.
Chief Executive Jeff Boyd said the latest period's better-than-expected performance underscored "resilience in the face of weak economic conditions in major markets.
"We did see pressure on operating margins in the third quarter, though not to the degree forecast," he said, adding the company nevertheless expects that pressure will continue into the fourth quarter as it hires more people and as more of its business comes from paid advertising channels.
Priceline conceded that some of the slowdown in its growth must stem from strong execution by competitors like Expedia Inc. (EXPE). Last week, Expedia reported a better-than-expected third quarter as technological restructuring drove acceleration in its hotel business.
"Expedia had a good quarter and their growth rate accelerated ... I think it will be disingenuous to say that there was no impact on us," Mr. Finnegan said, adding he thought both were competing aggressively and executing well.
Priceline posted a quarterly profit of $596.6 million, or $11.66 a share, up from $469.5 million, or $9.17 a share, a year earlier. Excluding restricted stock adjustments and other items, earnings rose to $12.40 a share from $9.95.
Revenue increased 17% to $1.71 billion.
In August, the company forecast $11.10 to $12.10 in per-share earnings and revenue growth of 9% to 15%, a downbeat outlook that caused Priceline shares to plummet.
Gross margin rose to 81.8% from 75.7%.
Hotel-room nights sold rose 36% from a year ago. Rental-car days were up 35%. Airline ticket volume was up 6.1%.
Priceline forecast fourth-quarter adjusted earnings of $6.12 to $6.57 a share on revenue growth of about 15% to 22%. Analysts polled by Thomson Reuters most recently expected $6.34 in per-share earnings and revenue growth of 15%.
Executives said the guidance doesn't incorporate the same conservatism about economic uncertainty that the dire third-quarter outlook did.
Mr. Boyd also noted that Hurricane Sandy was clearly going cause lasting disruptions to travel business in New York City, which he called an important destination for Booking.com and Priceline.com.
"Our best estimate at this time is that the negative effect of Hurricane Sandy would fall within the range of our guidance for the fourth quarter," he said.
-Write to Joan E. Solsman at joan.solsman@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
