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priceline.com Incorporated (PCLN)
Q2 2011 Earnings Call
August 04, 2011 4:30 pm ET
Daniel Finnegan - Chief Financial Officer, Chief Accounting Officer and Senior Vice President
Previous Statements by PCLN
» priceline.com Incorporated's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» priceline.com Incorporated's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Priceline.com CEO Discusses Q3 2010 Results - Earnings Call Transcript
William Lennan - Gleacher & Company, Inc.
Michael Millman - Millman Research Associates
Ingrid Chung - Goldman Sachs Group Inc.
Aaron Kessler - ThinkEquity LLC
Douglas Anmuth - JP Morgan Chase & Co
Justin Post - BofA Merrill Lynch
Herman Leung - Susquehanna Financial Group, LLLP
Jeetil Patel - Deutsche Bank AG
Ross Sandler - RBC Capital Markets, LLC
Mark Mahaney - Citigroup Inc
Welcome to the Priceline Group's Second Quarter 2011 Conference Call. Priceline would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements.
Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. For a list of factors that could cause Priceline's actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor statements at the end of Priceline's earnings press release, as well as Priceline's most recent filings with the Securities and Exchange Commission.
Unless required by law, Priceline undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. A copy of Priceline's earnings press release, together with an accompanying financial and statistical supplement, is available in the Investor Relations section of Priceline's website located at www.priceline.com.
And now, I'd like to introduce the Priceline Group speakers for this afternoon, Jeff Boyd and Dan Finnegan. Go ahead, gentlemen.
Thank you very much, and welcome to Priceline's Second Quarter Conference Call. I'm here with Priceline's CFO, Dan Finnegan. I will make some opening remarks, and Dan will give a detailed financial review. After the prepared portion, we will take questions.
Priceline reported consolidated gross bookings for the second quarter of approximately $5.8 billion, up 70% year-over-year. Non-GAAP net income was $283 million, or $5.49 per share, up 78% versus prior year. Second quarter results surpassed First Call consensus estimates of $4.91 per share and in our guidance for the quarter. Worldwide hotel room night reservations were $36.1 million for the quarter, up 56% year-over-year.
Growth rates for our international business held firm during the quarter with 79% gross bookings growth on a local currency basis. Growth rates benefited generally from increased ADRs, impressive growth in new markets for Booking.com and high excellent growth rates for Agoda and TravelJigsaw.
International hotel gross bookings also benefited generally from growth in hotel supply, with hotels now in over 110 countries worldwide. Booking.com grew its supply platform of 155,000 hotels at the fastest pace in over 3 years.
Booking.com continues to build inventory and sales around the world, delivering growth in reservations to new destinations and growing demand in those destinations for hotels around the world. Bookings has also continued to execute well into its high season, not only expanding geographically but also in securing availability in high-demand destinations, helping achieve high international growth rates this quarter.
Priceline's domestic gross bookings grew 13% in the second quarter, due primarily to growth in retail hotel room night gross bookings aided by improved ADRs and continued growth in airline ticket sales and higher airfares. Growth in opaque air tickets again helped the domestic top and bottom line as airlines used the opaque channel as a revenue management tool while they increased fares.
Merchant gross bookings growth of 45% continues to reflect growth in the domestic merchant businesses. That was primarily driven by growth from Agoda and TravelJigsaw, which now represent a significant share of merchant bookings. Agoda reported higher year-over-year growth rates in gross bookings as it comped last year's civil strife in Thailand, contributing to the overall international and merchant growth we are reporting. TravelJigsaw delivered better than anticipated growth in rental car unit sales in the quarter through solid execution in building toward the high season.
In summary, the growth in the group's international hotel business exceeded our forecast in the second quarter, and we are pleased with the progress of our brand's expansion in new markets and their hard work in preparing for high-season travel. I commend my colleagues around the world for their focus and execution.
I will now turn the call over to Dan for the detailed financial review.
Thanks, Jeff. I'll discuss some of the highlights and operating results and cash flows for the quarter, and then provide guidance for the third quarter of 2011. Q2 operating performance was exceptional, led by year-over-year gross bookings growth of 70%. Hotel room nights booked grew year-over-year by 56% in the second quarter, maintaining the same strong level of growth that was generated in the first quarter.
Average daily rates, or ADRs, were up on a local currency basis by approximately 4% for our international hotel service and by almost 8% for our U.S. hotel service for Q2 2011 compared to the prior year second quarter. These increases were favorable to our assumptions for Q2 guidance.