Priceline.com (NASDAQ: PCLN), the second-biggest online travel agency, is scheduled to release its fourth-quarter earnings after the closing bell on Wednesday, February 23, 2011. Analysts, on average, expect the company to report earnings of $3.10 per share on revenue of $736.12 million. In the year ago period, the company reported earnings of $1.99 per share on revenue of $541.75 million.
Priceline.com Incorporated operates as an online travel company principally in the United States, Europe, and Asia. It provides various travel services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises, and reservation services. The travel industry is continuing to utilize online services to outsource the excess capacity and the company's profitability has expanded rather significantly. What distinguishes Priceline from the rest is its proprietary Name Your Own Price service. While it does sell travel services under the traditional price-disclosed model, the Name Your Own Price service allows customers (that are flexible on the date and time of travel and the choice of supplier) the option to bid for hotel stays and air tickets.
In the preceding third quarter, the Norwalk, Connecticut-based company's net income was $223 million, or $4.41 a share, compared with a profit of $319 million, or $6.42 a share, in the year-earlier quarter. On an adjusted basis, the company earned $5.33 a share in the latest quarter. Revenue rose to $1 billion from $730.7 million in the same quarter last year. Analysts, on average, expected the company to report earnings of $4.97 per share on revenue of $973.63 million.
At its last earnings call in November, the company said that it expects fourth quarter total gross bookings to grow 36-41% year over year, with international growing 54-59% (up 58-63% on local currency basis) and domestic growing 5-10%. This is expected to yield year-over-year revenue increase of 31-36% and a gross profit dollar increase of 49-54%. Pro forma EBITDA is expected to be $200-210 million, pro forma EPS to be $2.91-$3.06 (based on 51.4 million shares) and GAAP EPS $2.29 to $2.44. Total advertising spend is expected to be $141-146 million, of which roughly $6 million will be spent on offline advertising.
The company has benefited from cyclical improvements in the travel economy, including an easing of immediate fears relating to Eurozone sovereign debt, an increasing contribution from fast-growing new markets, particularly non-core Europe and Asia/Pacific. Priceline has a strong foothold in the high-margin hotel bookings segment outside the U.S., facilitated by the acquisition of Bookings.com (for European markets) and Agoda.com (for Asian markets). The company generates bulk of its revenues from Europe.
Among other developments, the company signed a new distribution pact AMR Corp.'s (NYSE: AMR) American Airlines. During the quarter in review, Priceline.com also entered into an agreement with BedandBreakfast.com to add and market the rooms of nearly 2,000 bookable bed-and-breakfast inns on priceline.com.
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