Priceline Earnings Exceed Estimates on International BookingsJing Cao
Priceline Group Inc.’s second-quarter profit topped estimates as international bookings expanded on the travel website.
Profit, excluding some items, was $12.51 a share, the largest U.S. online travel agent said in a statement today. Analysts projected, on average, earnings of $12.02, according to estimates compiled by Bloomberg. Revenue climbed 26 percent to $2.12 billion, compared with analysts’ prediction for $2.15 billion. The company forecast third-quarter earnings of $19.60 to $21.10 a share, trailing the average estimate of $21.31.
Priceline is boosting its presence outside the U.S., seeking to maintain growth at a company that’s expanded revenue by at least 20 percent for seven straight years. Priceline announced last week a minority investment of $500 million in Ctrip.com International Ltd., China’s largest travel website, in order to capture business from people traveling to and from the world’s most populous nation.
“Priceline is the best executor in the online travel space,” said Tom White, an analyst at Macquarie Capital USA Inc., who rates the company an equivalent of a buy. “The secret to Priceline’s success is the way they approached the international hotel market.”
The shares of Norwalk, Connecticut-based Priceline declined less than 1 percent to close at $1,281.56 in New York on Aug. 8, leaving it up 10 percent this year.
Priceline has used acquisitions to spur growth and surpass Expedia Inc. in revenue, with the bulk of business coming from Priceline’s Amsterdam-based Booking.com unit. Last year’s purchase of Kayak Software Corp. helped Priceline capture revenue in hotel search. Priceline completed on July 25 its acquisition of Internet restaurant reservation company OpenTable Inc. for $2.6 billion in cash.
Chief Executive Officer Darren Huston has said Priceline is under-represented in China, a major growth market. The alliance with Ctrip, a commercial partner since 2012, will boost growth at both companies, allowing them to access each other’s portfolios, Huston said in an interview last week. As China’s middle class become wealthier, the number of travelers is climbing, while they increasingly turn to the Internet to book trips, he said.