Priceline.com CEO Discusses Q3 2010 Results - Earnings Call Transcript
Priceline.com Incorporated (
)
Q3 2010 Earnings Call
November 8, 2010 4:30 AM EST
Executives
Jeff Boyd – President and CEO
Dan Finnegan – CFO
Analysts
Ingrid Chung – Goldman Sachs
Imran Khan – JPMorgan
Herman Leung – Deutsche Bank
Douglas Anmuth – Barclays Capital
Ross Sandler – RBC Capital Markets
Justin Post – Bank of America
Mike Olson – Piper Jaffray
Sandeep Aggarwal – Caris & Company
Bill Lennan – Monness Crespi
Mark Mahaney – Citi
Presentation
Operator
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Welcome to Priceline Group’s Third Quarter 2010 Conference Call. Priceline would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are not guarantees of future performances and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.
For a list of factors that could cause Priceline’s actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor statements at the end of Priceline’s earnings press release, as well as Priceline’s most recent filings with the Securities and Exchange Commission. Unless required by law, Priceline undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.
A copy of Priceline’s earnings press release, together with an accompanying financial and statistical supplement, is available in the Investor Relations section of Priceline’s website located at
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And now I’d like to introduce the Priceline Group’s speakers for this afternoon, Jeff Boyd and Dan Finnegan. Go ahead, gentlemen.
Jeff Boyd
Thank you very much and welcome to the Priceline Group’s third quarter conference call. I’m here with Priceline’s CFO, Dan Finnegan.
I will make some opening remarks, Dan will give a detailed financial review, and then I will sum up.
After the prepared portion, we will take questions.
The Priceline Group consisting primarily of Booking.com, priceline.com, Agoda.com and TravelJigsaw reported consolidated gross bookings for the third quarter of approximately $4 billion, up 47% year-over-year. Non-GAAP net income was $272 million or $5.33 per share versus $3.45 the prior year.
Third quarter results surpassed First Call consensus estimates of $4.97 per share in the high end of our guidance for the quarter.
Worldwide hotel room night reservations were $27.5 million for the quarter, up 54% year-over-year. Growth in room night reservations for the international business exceeded our expectations, driving 78% international gross bookings growth on a local currency business, a sequential increase from 67% in the prior quarter. International gross bookings benefited from strong transaction growths in core Western European and North American markets and improvement in average daily rates and increasing contribution from high-growth new markets.
I want to provide on a one-time basis some data on our progress in new markets to help size their contribution to our international results. Booking.com and Agoda have made excellent progress in building the Group’s business in the Asia Pacific region. The combined business of Agoda plus Booking.com’s business for APAC destinations was approximately $780 million for the 12 months ended September 30, and the third quarter gross rate for that business was just shy of a 150%.
Booking.com has also made substantial progress in South America. Gross bookings for South American destinations were $96 million for the trailing 12 months and the third quarter growth rate was in excess of 300%. Further, in both markets, our brands are building point of sale businesses which are comparable size and growing in impressive rates as well.
For example, Booking.com’s point of sale business in South America for the same period was $265 million in gross bookings and growing at a 133% in Q3. When comparing these results to other online travel agents in the region, keep in mind these are only hotel reservations where others may have substantial lower margin airline ticket business in their gross bookings figures.
In addition to geographic expansion, growth in hotel inventory and adding results from TravelJigsaw also helped to drive strong top line growth in the third quarter.
Booking.com continues to build its supply platform worldwide with a hotel count of approximately 105,000 in 92 countries. Agoda continues to build its business in the Asian region and again reported triple digit year-over-year growth in gross bookings, contributing to the overall international and merchant growth we are reporting. The business has performed well following civil unrest in Thailand and is well positioned for its seasonally important fourth quarter.
TravelJigsaw delivered solid in rental car unit sales in the quarter and the sharing of best practices and integration steps are proceeding well.
priceline.com’s domestic gross bookings grew 12% in the third quarter, aided by strong hotel results and a turnaround in the OPAC rental car business. The US hotel business benefited from availability of promotional inventory and expansion of Booking.com inventory made available on priceline.com.
When this growth is combined with North American business booked directly on Booking.com which is a great side for domestic travelers to book international destinations, our North American business is one of the Group’s fastest growing core markets. Merchant gross bookings increased 41% as merchant hotel gross bookings both at Priceline and Agoda and the addition of merchant rental car bookings from TravelJigsaw offset year-over-year decreases in OPAC airline ticket sales, where reduced industry capacity continued to pressure inventory available for OPAC discounting.
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