Online travel company Priceline.com Inc. (PCLN), Tuesday reported a 56.5% growth in second-quarter profit as revenues grew over 44%, helped by a 71% increase in booking. The company provided its forecast for the third quarter and raised its outlook for fiscal 2008. Priceline, however, warned of major capacity reductions in the future, sending the stock down by more than 15% in the extended trading session.
Net income applicable to common shareholders for the quarter increased 56.5% to $54.10 million from $34.57 million in the comparable quarter of 2007. Earnings per share increased to $1.08 from 0.79 last year.
Excluding special items, pro-forma net income for the quarter was $78.47 million or $1.55 per share, compared to $47.34 million or $1.11 per share in the prior-year quarter. Twelve analysts surveyed by First Call/Thomson Financial had a consensus earnings estimate of $1.41 per share for the quarter.
Amongst Priceline's peers, Expedia Inc. (EXPE) reported lower second-quarter net income, hurt by higher minority interest in loss of consolidated subsidiaries. On an adjusted basis, Expedia reported higher profit, boosted by a 16% growth in bookings. Another online travel company, Orbitz Worldwide Inc. (OWW) is scheduled to release its second-quarter results on August 7, 2008, with analysts expecting a loss of $0.03 per share.
Norwalk, Connecticut-based Priceline reported total revenues of $513.98 million for the quarter, up 44.4% from $355.88 million in the same quarter last year. Analysts expected revenues of $495.74 million for the second quarter.
Gross profit for the quarter increased 61.4% to $253.73 million from $157.21 million in the second quarter of 2007. Operating income advanced 70.16% to $80.95 million from $47.57 million in the prior-year quarter.
Total merchant revenue for the recent quarter increased to $336.23 million from $254.91 million, while agency revenue advanced to $173.25 million from $98.34 million in the second quarter of 2007.
The company reported a 71% growth in its second-quarter gross travel bookings, with an 80% increase in international bookings and a 59% rise in domestic bookings. The increase in bookings is attributable to geographic expansion, effective marketing and favorable foreign exchange rates.
On July 10, analysts at Stanford Financial Group initiated coverage of Priceline with a 'buy' rating and set the target to $140.
Net income applicable to common stockholders for the first half of 2008 surged to $72.25 million or $1.46 per share from $18.30 million or $0.43 per share in the corresponding period last year. Pro-forma net income for the period was $115.82 million or $2.32 per share, up from $64.73 million or $1.56 per share in the same period last year. Year-to-date revenues increased 39.54% to $917.16 million.
Looking ahead to the third quarter, the company expects to report pro forma earnings in the range of $2.00 per share to $2.15 per share. Net income on a GAAP basis for the third quarter is estimated to be in the range of $1.50 per share to $1.65 per share. Analysts currently expect the company to report earnings of $2.05 per share for the quarter.
Third-quarter revenue is expected to increase 30% - 35% and pro forma gross profit is estimated to grow between 52% and 57%. Gross travel bookings for the third quarter are expected to increase in the range of 44% to 54%.
Priceline increased its pro-forma earnings guidance for fiscal 2008 to $5.50 - $5.85 per share from the previously issued outlook ranging from $5.25 per share to $5.65 per share. GAAP earnings outlook has been raised to the range of $3.75 per share to $4.10 per share from the earlier guidance of $3.50 - 3.90 per share. The Street expects full year earnings of $5.54 per share.
Gross travel bookings for 2008 are estimated to be between $7.55 billion and $7.90 billion.
Jeffery Boyd, Priceline CEO commented, "Economic uncertainty and high fuel prices are affecting the broad travel market and significant airline capacity reductions in the fall will also have a negative impact. Through the first half of the year, we believe that the positive trends impacting our domestic and international businesses have overshadowed these negative influences."
PCLN closed Tuesday's trading up 4.91% at $117.20 on a volume of about 3.96 million shares. During the extended session, the stock dropped $17.65 or 15.06% to $99.55. The stock has been moving in a range of $59.50 to $144.34 for the past twelve months, with a three-month average volume of about 1.71 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.