--First-quarter results top guidance, as per usual
--Outlook for current quarter is stable but below
expectations
--New Express Deals product, emerging markets fuel moderate
acceleration
(Updates adds executive comments from interview, further details
throughout)
By Joan E. Solsman
Priceline.com Inc.'s (PCLN) earnings grew 34% as the
online-travel agent delivered a typically better-than-predicted
quarter, supported by a new way of booking at its namesake brand
and expansion in emerging markets.
But the market was unsettled by Priceline's outlook, which
predicted stable growth but still fell short of expectations.
Shares were down 3.3% at $713.50 after hours.
Gross bookings rose 36% in the first quarter, accelerating both
in the U.S. and abroad. International bookings grew 43%, while
domestic bookings improved 8.7%.
In an interview, Chief Executive Jeff Boyd noted that growth in
emerging markets like Asia Pacific was holding up the international
rate while European demand stabilizes.
The domestic realm gained momentum, Mr. Boyd said, as
Priceline's Express Deals service ramped up. Similar to Hotwire at
rival Expedia Inc. (EXPE), Express Deals hindered Expedia's
car-rental business in the first quarter and crimped its earnings
view for the year.
Yet Priceline's own outlook for the second quarter was
restrained. Priceline predicted adjusted earnings of $8.87 to $9.45
a share on revenue growth of about 15% to 20%. Analysts polled by
Thomson Reuters recently projected per-share earnings of $9.58 on
revenue growth of 23%.
Gross bookings are expected to rise 30% to 37%, but that leaves
little room for acceleration from this latest period's 36%
rate.
Benchmark analyst Dan Kurnos said that in the online travel
sector, all the attention is on growth and its momentum.
"Competition is increasing but it doesn't seem to be impairing
anyone's growth rates really," he said, noting Priceline and other
online travel agents still have significant opportunity in places
such as the Middle East and Russia.
Priceline also set a close date later this month for its
takeover of Kayak Software Corp. (KYAK). The company agreed to buy
it in November in a deal valuing the online-travel aggregator at
$1.8 billion. It will give Priceline a leading source of
online-travel advertising and a large base of new site traffic,
which the company plans to add to its collection of brands in an
fairly autonomous way.
For the latest quarter, Priceline posted a profit of $244.3
million, or $4.76 a share, up from $182 million, or $3.54 a share,
a year earlier. Excluding a charge of $20.6 million on travel
transaction tax rulings in the latest quarter and other items,
earnings rose to $5.76 a share from $4.28. Revenue increased 26% to
$1.3 billion.
The company had projected adjusted earnings of $4.90 to $5.30 a
share on revenue growth of about 17% to 24%.
Gross margin widened to 77.5% from 71.7%.
Earlier Thursday, smaller rival Orbitz Worldwide Inc. (OWW)
reported a better-than-expected first quarter and raised its
revenue outlook for the year. Shares jumped, rising 21% to $7.82
and hitting their highest level since December 2009.
--Kristin Jones contributed to this article.
Write to Joan E. Solsman at joan.solsman@dowjones.com
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