priceline.com Incorporated (PCLN)
Q4 2010 Earnings Call
February 23, 2011 4:30 pm ET
Jeffery Boyd - Chief Executive Officer, President, Director, Chief Executive Officer of Lowestfare.com and Director of Lowestfare.com
Daniel Finnegan - Chief Financial Officer, Chief Accounting Officer and Senior Vice President
Sandeep Aggarwal - Caris & Company
Michael Millman - Millman Research Associates
Justin Patterson - Morgan Keegan & Company, Inc.
Ingrid Chung - Goldman Sachs Group Inc.
Bill Lennon - Inaudible
Justin Post - BofA Merrill Lynch
Michael Olson - Piper Jaffray Companies
Herman Leung - Deutsche Bank AG
Heath Terry - Canaccord Genuity
Ross Sandler - RBC Capital Markets, LLC
Mark Mahaney - Citigroup Inc
Previous Statements by PCLN
» Priceline.com CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Priceline.com Inc. Q4 2009 Earnings Call Transcript
» Priceline.com Incorporated Q3 2009 Earnings Call Transcript
Welcome to the Priceline Group's Fourth Quarter and Full Year 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 performance 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 www.priceline.com.
And now I'd like to introduce the Priceline Group's speakers for this afternoon, Jeff Boyd and Dan Finnegan. Go ahead, gentlemen.
Thank you very much, and welcome to Priceline's fourth 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.
Priceline reported consolidated gross bookings for the fourth quarter of approximately $3.3 billion, up 44% year-over-year. Non-GAAP net income was $175 million or $3.40 per share, up 71% versus prior year. Fourth quarter results surpassed First Call consensus estimates of $3.09 per share and our guidance for the quarter. Worldwide hotel room night reservations were $22 million for the quarter, up 51% year-over-year. For the full year, Priceline reported gross bookings of $13.6 billion, up 47% from 2009 and non-GAAP net income per share of $13.49, a 58% increase over 2009.
Growth rates for our International business decreased slightly during the quarter with 71% gross bookings growth on a local-currency basis. Growth rates benefited from increased ADRs. International gross bookings also benefited from growth in new markets, growth in hotel supply, strong growth from Agoda and inclusion of TravelJigsaw results. Booking.com continued to make impressive strides in building its business, and its worldwide hotel supply platform is now approximately 120,000 hotels in 99 countries.
Booking.com's focus on new markets in Asia, South America and North America is paying off with rapidly growing reservations to those destinations and growing demand in those regions for hotels around the world. Booking is making substantial investment in people to promote and manage expansion of its hotel and geographic base, which is evident in the company's growing hotel count and geographic footprint. Priceline's domestic gross bookings grew 9% in the fourth quarter due primarily to growth in sales of opaque and retail hotel room night reservations and rental car reservations. Opaque and retail hotel room night booking growth benefited from higher ADRs, and our hotel partners continued to use promotional pricing to drive demand in retail channels and use our opaque services to bolster occupancy.
Merchant gross bookings growth of 42% reflects growth in the domestic retail and opaque hotel business and growing contributions from Agoda and TravelJigsaw. Agoda continues to build its business in the Asian region and continues to report impressive year-over-year growth in gross bookings, contributing to the overall International and merchant growth we are reporting. TravelJigsaw delivered solid growth in rental car unit sales in the quarter and is making good progress with platform and website enhancements and other integration steps.
The growth in the Group's International hotel business has exceeded our forecast for the last few quarters, and both Booking.com and Agoda are building staff to accommodate this growth. The expense associated with this investment, as well as the payoff in terms of top line growth, are visible in our reported results and forward guidance.
In summary, the business performed well in the fourth quarter, and I commend my colleagues around the world for their focus on execution. I will now turn the call over to Dan for the detailed financial review.
Thanks, Jeff. I'll discuss some of the highlights and operating results and cash flows for the quarter and then provide guidance for the first quarter of 2011. Q4 top line performance was strong, reflecting only modest deceleration in unit growth rates. Hotel room nights booked grew year-over-year by 51% in the fourth quarter as compared to the unit growth rate of 54% we posted in the third quarter. Average daily rates or ADRs dropped by about 3% for our international hotel service and by over 5% for our domestic hotel service for Q4 2010 compared to the prior year fourth quarter.