Priceline quarterly profits up but second half forecast disappoints

Priceline quarterly profits up but second half forecast disappoints parent Priceline Group warned of two challenging quarters to come after beating earnings expectations in the second quarter of this year.

Following a trading update yesterday shares in the travel giant fell 7% as it warned future quarterly result will fall short of city analyst expectations.

Second quarter gross travel bookings were $20.8 billion, an increase of 16% year on year.

Gross profit for the three months to June 30 was $3.0 billion, a 21% increase on the same period last year

International operations contributed gross profit of $2.6 billion, a 24% increase on a year ago. Net income for the quarter was $720 million, a 24% increase.

Adjusted EBITDA for the quarter stood at $974 million, a 20% increase year on year.

Glenn Fogel, chief executive of the Priceline Group, said: “The Priceline Group achieved strong results for the second quarter.

“Globally, our accommodation business booked 170 million room nights in the quarter, up
21% over the same period last year.”

Looking forward, Fogel said: “We are pleased with the performance of the business and will continue to build our franchise by adding properties to the platform and by investing in technology, customer experience and content expansion.”

The firm told investors it expects to earn between $32.40 and $34.10 in the third quarter, short of Wall Street’s guidance for $34.14 per share. “The deceleration is consistent with long-term trends and our size,” said Fogel.

The picture for the next two quarters is expected to be skewed by Priceline’s strong performance in the second half of last year making year on year comparisons unfavourable.

Nights booked grew 29.4% and 31% in the third- and fourth quarters of 2016 while revenues were up 18.9% and 17.42%.

Fogel said the continuing shift to online bookings and opportunities in Asia, and particularly China, the firm’s most important market, still represented large market opportunities for Priceline.

“Asia is a great opportunity in the travel industry because a lot of people are becoming first-time travelers,” Fogel said. “When you have very strong growth opportunities, you have a lot of players come in and the players come in with a lot of capital.”

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