Priceline.com today reported 3rd quarter 2003 net income of $9.7 million, or $0.24 per share, on revenues of $243.4 million. Net income applicable to common stockholders was $0.21 per share inclusive of a non-cash preferred stock dividend of $1.2 million. Priceline.com’s net income of $0.24 per share exceeded First Call analyst consensus of $0.21 per share and came in ahead of priceline.com’s previously announced target range of $0.20 to $0.22 per share. Gross travel bookings were $300.5 million for the 3rd quarter, up 9% compared to 3rd quarter 2002.
By comparison, in the 3rd quarter 2002, priceline.com had a net loss applicable to common stockholders of $24.3 million, or $0.64 per share, adjusted for priceline.com’s recent reverse stock split, on revenues of $240 million. The 3rd quarter 2002 net loss included $24.2 million in non-cash impairment charges. Gross travel bookings for the 3rd quarter 2002 were $275.3 million.
“Priceline.com achieved several product sales records in the 3rd quarter 2003 and recorded year-over-year increases in gross travel bookings, revenues, gross profit and earnings per share,” said Jeffery H. Boyd, priceline.com’s President and Chief Executive Officer. “The company achieved solid bottom line results in the 3rd quarter as continued strong hotel and rental car results and expense control offset softening air results.”
Priceline.com reported that, during the 3rd quarter 2003 it sold a record 1.6 million hotel room nights, representing a 41 percent increase over the same period a year ago and a record 1.1 million rental car days, representing a 43 percent year-over-year increase.
Priceline.com’s gross profit for the 3rd quarter 2003 was $40.6 million, compared to $37.7 million a year ago. Gross margin for the quarter was 16.7 percent, compared to 15.7 percent a year ago. Priceline.com finished the 3rd quarter 2003 with a base of 18.7 million customers, which represents a growth of 22 percent over the last year. The 3rd quarter 2003 also benefited from $1.6 million of other income, which was primarily composed of contribution from pricelinemortgage.
Priceline.com also reported that, in the 3rd quarter 2003, it successfully redesigned and began testing a new airline tickets service that gives customers a choice between naming their own price for a ticket and picking from a wide selection of flight times, airlines and low fares. Regardless of the option the customer chooses, search results are delivered in real-time, making ticket purchases fast and easy.
Other product developments included:
— During the 3rd quarter, priceline.com expanded its U.S. hotel
business to offer hotel rooms in Australia, Japan, South
Korea, Indonesia, Malaysia and Taiwan.
— During the 3rd quarter, priceline.com began offering hotel
rooms supplied by TravelWeb LLC through priceline.com’s
Lowestfare.com retail travel service. Travelweb is the hotel
service jointly owned by Marriott, Hyatt, Hilton, Starwood,
Intercontinental, priceline.com and Pegasus Systems.
— Priceline.com introduced an enhanced rental cars product with
faster response times, improved user guidance, a new retail
option and a best-price guarantee. Under the guarantee,
priceline.com will credit the difference if a customer finds a
better published price for their rental car purchase.
Looking forward, Mr. Boyd
said, “Third quarter results were negatively affected by weakening demand for airline tickets in September, which has continued in the 4th quarter. With the deployment of our new airline ticket service, which was designed to address low bind rates and expand our addressable market, we expect 4th quarter results to be affected by a shift in the mix of our business, with more retail and fewer opaque tickets being sold. We also intend to add an additional $3 million to our advertising budget across the 4th quarter and 1st quarter next year to support the relaunch of our airline ticket product. October revenues were approximately $68 million, down 6% from year-ago levels, and we expect monthly sequential decreases in revenues in November and December, consistent with normal seasonality and the ongoing shift in the mix of our business towards retail airline tickets in which revenue is reported on a net basis. We are also projecting the following operational and financial metrics for the fourth quarter:
— Gross Bookings up by more than 10% year-over-year.
— Gross Margins between 17% - 17.5%.
— Opaque hotel room nights sold up 25% - 30% year-over-year.
— Rental car days sold up 35% - 45% year-over-year.
— GAAP earnings per share of $0.02 - $0.08 cents. (compared to a
$0.20 loss in 4th quarter of 2002)
Mr. Boyd continued, “We believe the recent weakness in air demand is addressable. After a nearly full year hiatus, we are beginning to advertise our airline product again and will continue that effort in the 1st quarter 2004. Customer response to our new airline tickets service and its increased choice has been encouraging. For example, while the sale of opaque airline tickets decreased approximately 15% on the new service versus pre-launch levels, retail tickets sold in the latter part of October increased approximately 125% versus pre-launch levels. With continued growth in hotels and rental cars and the repositioning of our airline ticket service, we believe that priceline.com is positioned to sustain growth in gross bookings, gross profit and earnings per share into 2004.”