Priceline’s Profit Rises 82%, Boosted by Strong Bookings
Priceline.com Inc. posted an 82% jump in first-quarter profit on solid growth in revenue and bookings, and it projected second-quarter results above analysts’ views.
The online travel industry has been hurt by the economic downturn as consumers cut back on travel to save money. But Priceline has been grabbing business from rivals because of its slightly different functions. In addition to the usual array of flights, hotels and car rentals its rivals offer, Priceline’s name-your-own-price method of booking allows consumers to bid for tickets at a significant discount. Plus, suppliers can decide how low a price they are willing to take to fill their inventory.
Expedia Inc. and other rivals have recently waived booking fees for flights and cut fees for other bookings. Priceline doesn’t charge a fee on flight bookings, but it could lose some edge over its competitors because of their initiatives.
Priceline projected second-quarter earnings of $1.65 to $1.75 a share on an 8% to 13% increase in revenue. Analysts polled by Thomson Reuters expected $1.65 a share and 5% revenue growth to $542 million. The view comes as Chief Executive Jeffery H. Boyd noted competition increased toward the end of the quarter on the rivals’ fee cuts and that the swine-flu outbreak will likely hurt travel demand.
The Norwalk, Conn.-based online travel-services provider posted earnings of $25 million, or 53 cents a share, compared with $13.8 million, or 28 cents a share, a year earlier. Excluding items such as stock-based compensation, earnings rose to $1.09 a share from 76 cents.
Revenue increased 15% to $462.1 million.
Analysts expected quarterly earnings of 91 cents on revenue of $441 million.
Gross margin edged up to 45.1% from 44.9%.
Gross bookings, or the value of all travel services bought online through Priceline’s sites, grew 11% to $1.9 billion, with the U.S. increasing 18%.
Standard & Poor’s Ratings Service last month raised its outlook on Priceline to positive, saying the company has had good operational performance in the difficult leisure-travel market.
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