The Priceline Group (PCLN, Financial) is the world’s leading provider of online travel and related services to consumers and local partners in over 200 countries through six primary brands: Booking.com, priceline.com, agoda.com, KAYAK, rentalcars.com and OpenTable.
It is an online travel company that offers its customers hotel room reservations at over 295,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, the company also offers its customers reservations for car rentals, airline tickets, vacation packages, destination services and cruises through the priceline.com brand. It offers car rental reservations worldwide through rentalcars.com. The Priceline Group provides online travel services in over 200 countries and territories in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.
Tourism is a trillion-dollar industry, and Priceline.com rules this space. Priceline's stock had a stunning performance over the last five years. It has been very successful in capturing the huge business opportunities presented by e-commerce in the last decade.
First Quarter Results
GP
GP for the first quarter increased by 19% from the prior year period and was $1.7 billion. $1.4 billion of GP was contributed by international operations. This contribution increased by 16% from the prior year period.
GAAP Net Income
The GAAP net income during the quarter was $333 million, or $6.36 per diluted share (an increase from prior year period’s $331 million or $6.25 per diluted share).
Non-GAAP Net Income
Non-GAAP net income during the quarter was $429 million or $8.12 per diluted share (an increase of 3% from prior year period’s $7.81 per diluted share).
Adjusted EBITDA
Adjusted EBITDA during the quarter was $532 million (marking an increase of 4% from the prior year period).
Brand Booking
For the first time in 2015, PCLN’s brands booked over 100 million room nights for the first time during a quarter. In the first quarter, International gross bookings growth accelerated to 29% on a constant currency basis.
Rental Car Business
The rental car business grew rental car days by 18% over the first quarter of last year, (an increase from 16% in the fourth quarter).
Targets for Second Quarter
The company expects the following for second quarter of 2015:
- Non-GAAP net income per diluted share to be in the range of $10.95- $11.75.
- Adjusted EBITDA to be in the range of $715 million-$765 million.
- Y-o-Y increase in gross profit of approximately 1% - 8%.
- Y-o-Y increase in U.S. gross travel bookings ranging from 0% - 5%.
- Y-o-Y increase in revenue to be in the range of 0%-7%.
- Non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $115 million in the 2nd quarter 2015.
(Source: Company’s Website)
Additional Investment in Ctrip
PCLN recently announced that it is going to invest an addition amount of $250 million in Ctrip.com International, Ltd. (CTRP, Financial). In the year 2012, these two companies entered into partnership. These two companies have decided to continue their existing commercial partnership. CTRP is an important partner of PCLN and is positioned well in China. With the help of this partnership, PCLN will be able to cater to China in a better way and will be able to realise its long-term plan of establishing its foothold in China.
Acquisition of PriceMatch
PCLN recently announced the acquisition of PriceMatch. PriceMatch is a leading cloud-based data and analytics solution for hotels. The terms of this deal have not been made public. The cloud-based platform of PriceMatch delivers real-time data to hotels, giving them a deeper understanding of current performance in order to drive improvements on their top and bottom lines. This partnership will further PCLN’s efforts to provide next generation technology services. This association will add value to Priceline’s 600,000+ accommodations partners worldwide.
Conclusion
The company continues to improve its leadership position in the online travel industry. The way things are going for the company, investors have solid reasons to expect sustained growth from Priceline. Financial discipline is an important strength that has helped Priceline thrive. The company is a proactive genius that knows how to surprise and delight customers with its offerings. Priceline has ruthlessly pursued every growth opportunity to stay ahead of its competitors.
The group marked a strong start in 2015 with its first quarter results. Priceline’s Booking.com continues to be the world’s largest brand for booking accommodations, with over 635,000 hotels and other accommodations on the platform, (an increase from 40% over last year).
The company reported strong growth in both the top and bottom line. It is making continual development to sustain future growth.
With a presence in over 200 countries, Priceline Group is the world’s most valued travel company. I am quite bullish about this company and believe that it is going to create greater shareholder returns.
