Priceline's Europe Wary Outlook Disappoints Even As Sales Climb

Samantha Sharf

Forbes Staff

Summer travel was a boon for The Priceline Group which reported an earnings beat Tuesday. Yet the company is finally saying so long to sweet summer with fourth quarter guidance that failed to impress.

Priceline reported $2.8 billion in third quarter revenue, up 25% from the same period a year ago and ahead of Wall Street analysts’ consensus estimate. Net income came in at $1.1 billion or $20.03 per share. Adjusted to exclude certain onetime items the company says net income was $1.2 billion or $22.16 per share, beating Street estimates by $1.05.

“The Priceline Group finished the summer travel season with market leading growth and strong operating
performance,” said CEO Darren Huston in a statement on the results. Huston noted that the company’s hotel booking businesses — which include its namesake priceline.com and Booking.com which is widely used in Europe – helped customers reserve 95 million room nights in the third quarter, up 27% from a year ago. Booking.com, he noted, has vastly expanded its offerings and the company’s rental car business grew 18% year-over-year. The company’s gross travel bookings came to $13.8 billion, up 28% from a year ago.

Why then did shares of The Priceline Group  open down more than 7% near $1,112.10 Tuesday?

The problem seems to be lower than anticipated guidance due to concerns over Europe’s economy. Houston noted, “Our brands are performing well in a very competitive marketplace and against a mixed macro-economic backdrop, particularly in Europe. We intend to continue to make the smart investments for future growth, including broadening our offerings, building our brands and providing a superior experience to our customers, pre- and post-reservation, across all devices.”

For the fourth quarter Priceline says it is targeting year-over-year revenue growth between 11% and 18%, which would put sales below the Street’s $1.9 billion consensus estimate even at the high end of the range. The company anticipated adjusted earnings per share between $9.40 and $10.10, also below the Street’s estimate of $10.91.