Priceline.com Reports Financial Results for 3rd Quarter 2013

NORWALK, Conn., Nov. 7, 2013 /PRNewswire/ -- The Priceline Group (NASDAQ: PCLN) today reported its 3^rd quarter 2013 financial results.  Third quarter gross travel bookings for The Priceline Group (the "Group"), which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by its customers, were $10.8 billion, an increase of 37.5% over a year ago (approximately 36% on a local currency basis).

The Group's gross profit for the 3^rd quarter was $2.0 billion, a 42.4% increase from the prior year.  International operations contributed gross profit in the 3^rd quarter of $1.8 billion, a 42.1% increase versus a year ago (approximately 39% on a local currency basis).  The Group had GAAP net income applicable to common shareholders for the 3^rd quarter of $833 million, or $15.72 per diluted share, which compares to $597 million or $11.66 per diluted share, in the same period a year ago.

Non-GAAP net income in the 3^rd quarter was $920 million, a 44.2% increase versus the prior year.  Non-GAAP net income was $17.30 per diluted share, compared to $12.40 per diluted share a year ago. FactSet consensus for the 3^rd quarter 2013 was $16.23 per diluted share.  Adjusted EBITDA for the 3^rd quarter 2013 was $1.1 billion, an increase of 42.6% over a year ago.  The section below entitled "Non-GAAP Financial Measures" provides definitions and information about the use of non-GAAP financial measures in this press release, and the attached financial and statistical supplement reconciles non-GAAP financial information with the Group's financial results under GAAP.

"The Priceline Group finished the summer travel season with strong growth and operating performance," said Jeffery H. Boyd, Chairman and Chief Executive Officer of The Priceline Group.  "Booking.com and Agoda posted solid third quarter results leading to 36% room night growth for the Group, and the U.S. business of priceline.com showed positive momentum with accelerating bookings growth."

Looking forward, Mr. Boyd said: "Our brands are performing well in a very competitive environment.  We believe the Group is well positioned to drive future growth through investments in geographic expansion, supply and content, product and marketing."

The Priceline Group said it was targeting the following for 4^th quarter 2013:

• Year-over-year increase in total gross travel bookings of approximately 27% - 34% (an increase of approximately 26% - 33% on a local currency basis).
• Year-over-year increase in international gross travel bookings of approximately 29% - 36% (an increase of approximately 28% - 35% on a local currency basis).
• Year-over-year increase in domestic gross travel bookings of approximately 17% - 24%.
• Year-over-year increase in revenue of approximately 19% - 26%.
• Year-over-year increase in gross profit of approximately 30% - 37%.
• Adjusted EBITDA of approximately $510 million to $540 million.
• Non-GAAP net income per diluted share between $7.80 and $8.30.

Non-GAAP guidance for the 4^th quarter 2013:

• excludes non-cash amortization expense of intangibles,
• excludes non-cash stock-based employee compensation expense,
• excludes non-cash interest expense and gains or losses on early debt extinguishment, if any, related to cash settled convertible debt,
• excludes the impact, if any, of significant charges or benefits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings,
• excludes non-cash income tax expense and reflects the impact on income taxes of certain of the non-GAAP adjustments, and
• includes the dilutive impact of unvested restricted stock units and performance share units because non-GAAP net income has been adjusted to exclude stock-based employee compensation.

In addition to the adjustments above, adjusted EBITDA excludes depreciation and amortization expense, interest income, interest expense and income taxes and includes the impact of foreign currency transactions and other expenses.

When aggregated, the non-GAAP adjustments are expected to increase adjusted EBITDA over GAAP net income by approximately $177 million in the 4^th quarter 2013.  In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $75 million in the 4^th quarter 2013.  The Group estimates GAAP net income per diluted share between $6.40 and $6.90 for the 4^th quarter 2013.

Information About Forward-Looking Statements

This press release contains forward-looking statements.  These forward-looking statements reflect the views of the Group's management regarding current expectations and projections about future events and are based on currently available information and current foreign currency exchange rates.  These forward-looking statements are not guarantees of future performance and are subject to 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 including, "may," "will," "should," "could," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," or "continue," reflecting something other than historical fact are intended to identify forward-looking statements.

The following factors, among others, could cause the Group's actual results to differ materially from those described in the forward-looking statements:

• adverse changes in general market conditions for leisure and other travel services;
• the effects of increased competition;
• our ability to expand successfully in international markets;
• our online advertising efficiency;
• fluctuations in foreign exchange rates and other risks associated with doing business in multiple currencies;
• the ability to attract and retain qualified personnel;
• adverse changes in the Group's relationships with travel service providers;
• a change by a major search engine to its search engine algorithms that negatively affects our placement in search results;
• systems-related failures and/or security breaches;
• an adverse outcome in one or more travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings in which we are involved; and
• legal and regulatory risks.

For a detailed discussion of these and other factors that could cause the Group's actual results to differ materially from those described in the forward-looking statements, please refer to the Group's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the Securities and Exchange Commission.  Unless required by law, the Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Adjusted EBITDA represents GAAP net income excluding depreciation and amortization expense, interest income, interest expense, net income (loss) attributable to noncontrolling interests and income taxes and is adjusted to exclude stock-based employee compensation expense, gains and losses on early debt extinguishment, significant charges or benefits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings and significant acquisition costs. 

Non-GAAP gross profit, adjusted EBITDA, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies.  The Group believes that non-GAAP gross profit, adjusted EBITDA, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate the Group's on-going performance because they provide a useful comparison of the Group's projected cash earnings and performance with its historical results from prior periods and to those of its competitors.  These non-GAAP metrics, in particular adjusted EBITDA, non-GAAP operating income, and non-GAAP net income are not intended to represent funds available for the Group's discretionary use and are not intended to represent or to be used as a substitute for operating income, net income or cash flows from operations data as measured under GAAP.  The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance.

Non-GAAP financial information for the three and nine months ended September 30, 2013 is adjusted for the following items:

• Amortization expense of intangibles is excluded because it does not impact cash earnings.
• Stock-based employee compensation expense is excluded because it does not impact cash earnings and is reflected in earnings per share through increased share count.
• Interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment related to convertible debt are excluded because they are non-cash in nature.
• Significant charges or benefits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings, including the $20.5 million charge (including estimated interest and penalties) recorded in the 1^st quarter 2013, principally related to unfavorable rulings in the State of Hawaii and the District of Columbia, are excluded because the amount and timing of these items are unpredictable, not driven by core operating results and render comparisons with prior periods less meaningful.
• Significant costs related to acquisitions are excluded because the expense is not driven by core operating results and renders comparisons with prior periods less meaningful.
• Income tax expense is adjusted for the tax impact of certain of the non-GAAP adjustments described above and to exclude tax expense recorded where no actual tax payments are owed because of available net operating loss carryforwards.  
• Net income (loss) attributable to noncontrolling interests is adjusted for the impact of certain of the non-GAAP adjustments described above.
• For calculating non-GAAP net income per share:
  • net income is adjusted for the impact of the non-GAAP adjustments described above; and
  • additional unvested restricted stock units and performance share units are included in the calculation of non-GAAP net income per share because non-GAAP net income has been adjusted to exclude stock-based employee compensation expense.

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States. The attached financial and statistical supplement reconciles non-GAAP financial information with the Group's financial results under GAAP.

About The Priceline Group

The Priceline Group (NASDAQ: PCLN) is a leader in global online travel reservations.  The Group is composed of five primary brands - Booking.com, priceline.com, Agoda.com, KAYAK and rentalcars.com and several ancillary brands. The Priceline Group provides online travel services in over 180 countries and territories in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.

Booking.com is the number one online hotel reservation service in the world, offering over 355,000 hotels and accommodations (as of November 4, 2013), and is available in 42 languages.  More recent counts are available on the Booking.com website.  Priceline.com gives leisure travelers multiple ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises.  In addition to getting compelling published prices, travelers can take advantage of priceline.com's famous Name Your Own Price® service, which can deliver the lowest prices available, or the recently launched Express Deals^SM, where travelers can take advantage of hotel discounts without bidding.  Agoda.com is an Asia-based online hotel reservation service that is available in 38 languages.  KAYAK is a leading travel meta-search service that allows consumers to easily compare airline ticket, hotel room reservation and rental car reservation information from hundreds of travel websites at once through its websites and mobile apps.  Rentalcars.com is a multinational rental car reservation service, offering its services in over 6,000 locations and providing customer support in 40 languages.

SOURCE The Priceline Group

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