Priceline's Results Soar Above Views On A Hot Summer

• Doug Tsuruoka
• On 7:16 pm EST, Monday November 9, 2009

That sound you hear might be William Shatner laughing at the economic downturn.

The original Capt. Kirk of "Star Trek" fame is nowadays the pitchman for online travel king Priceline.com (NasdaqGS:PCLN - News), which late Monday once again released quarterly results that soared far above analyst estimates, led by fast growth overseas.

The company said its business was unusually strong this past summer. This was during perhaps the biggest global economic downturn since the Great Depression. But name-your-price Priceline's thing is low prices. Or, as Shatner says, "no one deals like we do."

Norwalk, Conn.-based Priceline said it earned $3.45 a share, excluding special items, up 44% from third-quarter 2008. Sales surged 30.1% to $730.7 million.

The consensus estimate of 18 analysts polled by Thomson Reuters was for profit of $2.92 a share on revenue of $694 million. There were indications Priceline would beat. The consensus had risen from $2.89 the past 10 days. Still, the highest single estimate from any analyst was $3.13.

"Priceline is hitting all the right buttons," said Kaufman Bros. analyst Aaron Kessler. "Every facet of their business is executing well."

Shares were up more than 6% after hours to near 186, a nine-year high.

The company said gross travel bookings, the value of all travel services bought, soared 32.8% to $2.7 billion. Gross domestic bookings rose 24.9%, while international gross bookings jumped 37.8%.

"Priceline is keeping a good thing going," said Morningstar analyst Warren Miller. "They have been leading the online travel industry in executing their international expansion strategy."

The company said it expected fourth-quarter revenue to rise 24% to 28%, where analysts were projecting 25%. Priceline expects fourth-quarter pro forma profit of $1.52 to $1.62 a share, above the $1.49 estimated by analysts.

But analysts haven't been within 18 cents of correctly forecasting Priceline's per-share profit in the past five quarters.

"Despite a difficult economic environment, the summer travel season turned out to be an exceptionally strong one for Priceline.com, as third-quarter growth rates accelerated sequentially for our international and domestic business," CEO Jeffery Boyd said in a statement.

Boyd said global hotel room night reservations grew by 56% in the third quarter, with strong performance in the U.S., Europe and Asia. Airline tickets sales rose 30.2%. Rental car days booked rose 11.6%.

Priceline got a lift in the quarter from an improving global economy, which is encouraging consumers to book travel sooner and more frequently, says Morningstar's Miller.

Miller says the trend also benefited other online travel firms. Expedia (NasdaqGS:EXPE - News) said on Oct. 29 that its third-quarter gross bookings rose 9%, while per-share profit surged 23% to 48 cents. Sales, though, edged up just 2%, to 852.4 million.

Like Priceline, Expedia grew faster outside the U.S., with international sales rising 10%.

Online travel firm Orbitz (NYSE:OWW - News) on Thursday posted a third-quarter per-share profit of 8 cents vs. a loss of $3.44 a year earlier. Still, it lagged the 12 cents analysts expected.

Citigroup analyst Mark Mahaney said in a report last week that the number of unique U.S. visitors to Priceline.com surged 48% in the quarter compared with the year-earlier quarter and jumped 33% from the prior quarter. He says traffic to Priceline's Booking.com site, which books hotel rooms in Europe, jumped 52% from a year earlier and 29% from the prior quarter.

"This level of traffic growth is particularly impressive given the current economic environment," Mahaney wrote.

Mahaney says consumers led the surge. "Leisure travel -- unlike corporate travel -- is price elastic, and the recession has drawn more consumers to the Internet and to Priceline for the best deals," he wrote.

Buzz up!