Priceline profit up on bookings; outlook weakens
(Reuters) - Online travel agency Priceline.com Inc (PCLN.O) posted a larger quarterly profit on Wednesday on an increase in travel bookings, but the company forecast slower bookings growth in the second quarter.
The company, which competes with Expedia Inc (EXPE.O) and Orbitz Worldwide Inc (OWW.N), has long been a star in the online travel sector, owing much of its success to international bookings on its popular European travel site Booking.com.
But the weakness of the euro against the dollar is likely to erode the value of Priceline's international bookings - which are expressed in U.S. dollars - in the second quarter, the company said. Its shares were down some 3 percent in after-hours trading at $695.
"Guidance looks a little weak ... and seems to suggest more currency headwinds," said Morningstar analyst Dan Su. But she noted "impressive growth in international hotel bookings and car rentals."
Priceline, best known for its name-your-own-price auction, posted a first-quarter profit of $182 million, or $3.54 per share, up from $104.8 million, or $2.05 per share, a year ago.
Excluding one-time items, the company earned $4.28 per share, which beat the Wall Street consensus forecast of $3.95 per share, according to Thomson Reuters I/B/E/S.
Priceline said the total value of its bookings increased by 43.9 percent to $6.7 billion, including an increase of 54 percent in the value of international bookings.
"I think the top line growth was strong, better than expected for the international hotel business," Priceline Chief Executive Jeffery Boyd told Reuters. "All in all, a pretty good quarter."
The company, however, forecast second-quarter growth in travel bookings of 26 percent to 31 percent and said it sees international travel bookings up 32 percent to 37 percent.
Priceline reported revenue of $1.04 billion, up from $809.3 million in the year-ago quarter.
The shares of Priceline - a perennial favorite among investors - have gained about 50 percent this year and traded above $730 on Wednesday. The stock was near $67 at the start of 2009.
The company's core strength lies in its international expansion, primarily into European markets, said Aaron Kessler, an analyst at Raymond James.
European travel markets typically lag U.S. markets, where internet and credit card use to book travel is more common. As the European market matures, Priceline is set to capture the lion's share of bookings.
"At this point, roughly 80 percent of their profits are international and that's been driving most of their growth the last few years," Kessler said.
Priceline also has made inroads into Asian travel markets with its Agoda.com site.
The company's closest competitor, Expedia, said in its first-quarter earnings report last month that its international bookings accounted for only 39 percent of its total bookings.
Priceline also has positioned itself to claim more hotel bookings in Europe, where the market is more fragmented, said Morningstar's Su.
"Priceline has a much higher concentration of bookings and revenues from international markets where the travel suppliers are less concentrated, especially in the hotel space," she said.
"In the U.S., there are a lot of hotel chains. But if you're looking at Europe, there's a lot of stand-alone boutique hotels that really need a platform like Priceline to help them distribute their inventory."
The company has a market capitalization of about $36 billion compared with $5 billion for Expedia and $406 million for Orbitz Worldwide, according to data from Thomson Reuters.
(Reporting by Kyle Peterson; editing by David Gregorio and Andre Grenon)
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