Priceline gains after bookings/EPS beat and in-line guidance
Investors were on edge going into Priceline's (PCLN) earnings thanks to worries about weak travel demand for its core European market, and because of the second-quarter miss posted by TripAdvisor (TRIP) - Get TripAdvisor, Inc. Report on Wednesday afternoon.
The online travel giant put those concerns to rest by reporting gross travel bookings rose 19% annually to $17.9 billion, better than guidance for 11% to 18% growth.
In addition, EPS of $13.93 trounced a consensus estimate of $12.69, even as revenue of $2.56 billion (up 12%) slightly missed a $2.58 billion consensus due to a lower take rate on bookings. A 33% drop in cost of revenue to $126.1 million boosted EPS, offsetting a 20% increase in operating expenses (lifted by heavy Google ad spend) to $1.7 billion. Shares are up over 5% after hours.
Third-quarter guidance is for 14% to 19% bookings growth, 12% to 17% revenue growth and EPS of $28.30 to $29.80. The revenue and EPS ranges are in-line with analyst estimates, but Priceline has a history of guiding conservatively.
Hotel room nights booked grew 24.4% annually, a slower rate of growth than the first quarter's 30.5% but similar to the rates recorded during 2015 and evidence Priceline is still taking considerable share from online and offline booking alternatives.
And a weak euro is now a much smaller headwind than it was last year: Forex had only a 2 percentage point impact on bookings growth, down from 5 points in the first quarter and 11 points in the fourth quarter.
Shares of Priceline were up 5.6% to $1,436.00 in pre-market trading on Friday.
Rackspace is reportedly close to selling itself to a private-equity firm
The Wall Street Journalreports web hosting and cloud infrastructure services provider Rackspace (RAX) is "in advanced talks with one or more private-equity firms" regarding a sale, and could announce a deal as soon as this week.
Shares closed up 14.6% to $26.55 Thursday on the report, and were surging an additional 17% to $31 in pre-market trading on Friday.
Rackspace is two years removed from ending a sale process without a deal. With shares having fallen over 30% since that decision was announced, management has apparently had a change of heart.
Adoption of public cloud platforms from the likes of Amazon, Microsoft and Google has stung Rackspace's hosting business, and the company's own public cloud business lacked the scale and feature set to effectively compete against the giants.
Rackspace has responded by striking deals with cloud giants to provide consulting and support services for their platforms, but this hasn't stopped sales growth from falling into the single digits.
The report is yet one more sign that PE interest in moderately-valued enterprise tech companies and assets remains intense. PE firms are also reportedly eyeing networking/security hardware vendor F5 Networks (FFIV) - Get F5 Networks, Inc. Report and HP Enterprise's struggling software business. Security software firm Imperva (IMPV) - Get Imperva, Inc. Report, under pressure from activist Elliott Management, just confirmed it's exploring "strategic alternatives."
FireEye plunges on sales/billings miss and weak guidance; job cuts announced
A week after security tech firms Fortinet (FTNT) - Get Fortinet, Inc. (FTNT) Report and Check Point (CHKP) - Get Check Point Software Technologies Ltd. Report posted disappointing second-quarter reports, FireEye (FEYE) - Get FireEye, Inc. Report has done the same.
While controlled spending allowed the company to post adjusted EPS of a 33-cent loss (above a 39-cent loss consensus estimate), revenue of $175 million (up 19% annually) missed a $181.7 million consensus, and billings of $196.4 million (up 10%) missed guidance of $200 million to $215 million.
Perhaps more importantly, FireEye respectively cut its full-year revenue guidance to $716 million to $728 million from $780 million to $810 million, and its billings guidance to $835 million to $855 million from $975 million to $1.055 billion. In spite of a pair of early-2016 acquisitions, billings are now expected to be up just modestly from 2015's $797.4 million. Shares have tumbled towards $14 after-hours.
Given the numbers, it's not surprising that new CEO Kevin Mandia has signed off on a restructuring expected to lower fourth-quarter expenses by at least $20 million.
It's possible the company might now be willing to sell at a lower price. Bloomberg reported in June FireEye "turned down at least two suitors that made offers below its expectations of $30 or more per share."
FireEye's product (hardware and software) revenue remained a weak spot, dropping 18% to $40.8 million. Though often still viewed as best-in-class, the company's threat-prevention solutions have been facing stiff competition from cheaper bundled offerings from Cisco (CSCO) - Get Cisco Systems, Inc. Report and Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report .
In what may have been a reference to Cisco, both Fortinetand Check Point reported last week they're seeing incumbents engage in price discounting.