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Priceline Earnings Crush Views, But Q2 Outlook Light

Priceline (PCLN) crushed first-quarter earnings forecasts, but shares fell 3% late Thursday after the online travel agency gave weak Q2 sales and profit guidance.

The Norwalk, Conn.-based company, which trailblazed a name-your-price service, earned $5.76 a share minus special items, up 35% from the year-earlier quarter. That beat the consensus of analysts polled by Thomson Reuters by 49 cents. Priceline beat by 23 cents in Q4 2012.

Revenue surged 26% to $1.3 billion, narrowly topping analyst views of $1.28 billion on strong international bookings. It was the second straight quarter of accelerating growth.

Not So Fast But for the current quarter Priceline expects revenue growth to slow to 15%-22%, with adjusted earnings per share of $8.87-$9.45. Those are below analyst expectations for 23.3% revenue growth on EPS of $9.58.

"We continue to see economic uncertainty in certain regions, and competition in the online travel sector remains intense," Priceline CEO Jeffery Boyd said in a statement.

"Q1 was better than expected with (gross) bookings, revenue, EPS and EBITDA coming in well ahead of Street expectations, driven by strong performance in international," Cantor Fitzgerald analyst Naved Khan wrote in a post-earnings note. "(But Priceline's) Q2 view for gross profit/EPS/EBITDA and international bookings growth of 33-40% (on a foreign exchange neutral basis) is slightly below Street expectations at the mid-point.

S&P Capital IQ equity analyst Scott Kessler said, "Priceline seems to be able to cultivate and execute on opportunities as well if not better than the competition.

CFO Dan Finnegan said on the call that increased U.S. TV ads and other higher marketing costs will hit Priceline's Q2 margins.

Gross bookings, the dollar value of all travel services bought by consumers, surged 36.4% from the year earlier period to $9.2 billion. They were up 42.8% internationally. U.S. bookings rose 8.7%, picking up from 4.4%, as its New Express Deals offering put pressure on Expedia's (EXPE) Hotwire service.

Global hotel room reservations jumped 37.7%. "Our growth in hotel room nights was better than expected," Boyd said on the call.

Airline ticket bookings leapt 1.4%. Car rental days rose 43.3%.

JPMorgan analyst Doug Anmuth said in a May 6 pre-earnings note that Priceline is the "best-positioned company in the online travel space and will continue to gain share in international markets.

He sees strong overseas bookings growth throughout 2013, with the possibility of accelerating growth in the first half driven by Europe-based Booking.com, its Asian website Agoda, Rentalcars.com and a more stable European macro environment. Anmuth also said that Priceline can grab more European hotel share gains and generate more business through initiatives in Latin America and Asia-Pacific.

Priceline said it's received all regulatory approvals for its Kayak Software (KYAK) acquisition, which will close May 21.

Orbitz Worldwide (OWW) reported better-than-expected Q1 results before Thursday's open, sending shares of the smaller online travel site soaring 21% to their best level since late 2009.

Expedia, which has fallen 14% since its April 25 earnings report, dipped slightly after hours.