What Does Priceline’s Outlook Look Like for 3Q15?

Strong quarter is expected

In its second quarter earnings webcast, Priceline (PCLN) expressed that it expects to have a strong third quarter. The company continues to see foreign currency headwinds because it attains about 70% of its revenue outside the US. This exposure continues to grow.

What Does Priceline’s Outlook Look Like for 3Q15?

The company’s key indicators for the coming quarter were:

  • Revenue growth to be 1%–8% YoY (year-over-year) as international markets continue to show better demand
  • Gross profits to be up by 3%–10% from the same quarter last year due to adverse foreign currency headwinds. On a constant currency basis, this would equal 19%–26% YoY.
  • Total gross travel bookings to range from a fall of 1% to a rise of ~6% YoY. This would be equal to 13%–20% YoY growth on a constant currency basis.
  • International market gross bookings are expected to grow at ~0%–7%. They would equal ~16%–23% on a constant currency basis. Domestic bookings are expected to remain flat.
  • The EBIDTA (earnings before interest, tax, depreciation, and amortization) is expected to be $1,425–$1,525 million. The net income per diluted share is expected to be $22.95–$24.45.

Conclusion

Priceline said that it’s focused on delivering the best selection, competitive pricing, and the best online and offline experience for its customers. The demand in the travel market is expected to be healthy during the next quarter as the summer season and year-end holidays would bring in big traffic demands. Priceline’s room night growth has also seen 24%–27% growth in the past four quarters. The company said that it’s set up to deliver the largest quarter in its history. Also, the currency effects would become less challenging after 3Q15.

Priceline competes with major online travel companies like Expedia (EXPE), Ctrip (CTRP), Orbitz (OWW), Travelzoo (TZOO), and TripAdvisor (TRIP). Priceline accounts for 2.77% of the Consumer Discretionary Select Sector SPDR (XLY).