Online travel booking service Priceline (PCLN 1815.85, -95.28) trades about 5.0% lower this afternoon in light of the company’s mixed Q1 report and worse than expected Q2 earnings guidance from last night.
The travel company cracked fresh all-time highs not two sessions ago, and today the stock is in a modest retreat from those levels following the results. Specifically, PCLN reported better than expected Q1 earnings of $9.88 per share. Revenues however came in below market expectations despite growing 12.6% compared to last year to $2.42 billion.
Looking a bit more into the metrics, the Group's gross profit for Q1 was $2.3 billion, a 16% increase from the prior year. International operations contributed gross profit in Q1 of $2.0 billion, a 17% increase versus a year ago while net income in Q1 was $456 million, a 22% increase versus the prior year.
Consolidated gross bookings for Q1 were about $20.7B, up about 24% year-over-year or about 27% on a constant currency basis.
By brand, PCLN noted strength in Booking.com as total property count ended at more than 1.2 million, a 36% increase. The company highlighted that the growth rate on bookable vacations (51%) demonstrated the growing non-hotel accommodation inventory.
Rentalcars.com and improving trends at priceline.com saw an acceleration in rental car days for the quarter as the Group grew rental car days 15% in the quarter.
Kayak saw attractive profit margins in Q1, Agoda posted another quarter of strong gross bookings and OpenTable, while still in its early days at PCLN, is displaying progress on the top and bottom lines.
Despite all this progress, however, it’s the Q2 guidance that seems to be dragging shares lower today. PCLN guided for worse than expected Q2 EPS of $13.30-14.00 based upon recent foreign exchange rates and assuming that the company’s growth rates in U.S. dollars will be negatively impacted by foreign exchange rate fluctuations. Commenting further on expectations for Q2, management estimates that the shift of Easter into Q2 had a slightly beneficial impact on Q1 gross bookings growth with an offsetting negative impact to Q2 gross bookings growth. Further, PCLN is forecasting booked room nights to grow by 16-21% and total gross bookings to grow by 12-17% in U.S. dollars and by 15-20% on a constant currency basis. The company also forecasts gross profit to grow by 14-19% in U.S. dollars and by 17-22% on a constant currency basis.
In sum, the mixed Q1 which was clouded by an Easter timing shift doesn’t seem to be boding well with investors, and with worse than expected earnings guidance for next quarter to boot, PCLN trading underperforms industry peer TripAdvisor (TRIP 47.40, +0.48 +1.02%) today.