The Q4 outlook masks the Q3 beat this afternoon as travel services provider Priceline (PCLN 1703.77, -199.23 -10.47%) makes multi-month lows in the face of a mixed broader market.
The stock seems to be trading lower today in reaction to the worse than expected Q4 earnings guidance, so let’s begin there. For Q4, PCLN sees worse than expected earnings of $13.40-14.00 per share. Further, management gave guidance for constant currency Q4 bookings growth in the range of 5.5-10.5% with adjusted EBITDA expected between $870-910 million. Management also noted that Q4 faces an exceptionally difficult comparable room night growth rate of 31% from last year; guidance for this year’s Q4 stands at 8-13% growth.
The Q3 results were a tad better as room nights grew 19%. Further, the top and bottom lines beat market expectations with Q3 EPS of $35.22 on revenues of $4.43 billion, or 20.1% growth. Advertising and other revenues, which mainly include non-intercompany revenues for KAYAK and OpenTable, were up 27% in the quarter, including revenue from Momondo.
Q3 bookings were healthy, growing 18% -- expressed in US Dollars to $21.76 billion – and growing about 16% on a constant currency basis compared to last year. Additionally, gross profit for the quarter was about $4.37 billion as gross profits from International operations contributing about $4.0 billion.
Additionally, rental car day reservations grew by 5% compared to 12% growth last quarter. However, average daily rates for accommodations were down about 1% versus the prior year on a constant currency basis, consistent with PCLN’s forecast.
The company’s Booking.com platform continued its momentum, growing properties 41% on the platform to about 1.5 million total.
You won’t have to travel far to discern why the stock trades lower today. The outlook is to blame, sending the stock to late-February lows yet still clutching onto 15% YTD gains.