Priceline Group (PCLN) is up 3.94% in pre-market trading after posting strong results for the third quarter. Despite a write-down related to OpenTable, investors were pleased with the results. Here are three key takeaways from Monday’s report.
1. Revenue Climbs 19%, Net Income Jumps 20%
Revenue for the third quarter was up 19% to $3.69 billion, beating projections of $3.62 billion. Adjusted net income soared 20% to $1.57 billion.
GAAP net income was lower due to an impairment charge.
Earnings per share came in at $31.18, surpassing expectations of $29.32 per share.
Merchant revenues were up by 4%, while agency revenues climbed to $2.89 billion.
Priceline said it plans to scale back its expansion plans for OpenTable, which led to a $941 million write-down. The company purchased the dining service for $2.6 billion in 2014. The acquisition was meant to help Priceline expand its foothold overseas. OpenTable has struggled to reach this goal. At the time of its purchase, 80% of OpenTable’s revenue came from the U.S.
2. Bookings Continue to Rise
Gross travel bookings in the quarter were up by 25% to reach $18.5 billion. A stronger dollar did not have a major impact on bookings, and gross international profit was also up.
Hotel room bookings were up 29% compared to the third quarter of 2015. Rental car bookings were up 12.5% to 18 million.
Airline ticket sales were weaker, however, falling 2.5% to 1.9 million.
3. Fourth-Quarter Guidance is Pessimistic
Priceline reiterated pessimistic guidance for the fourth quarter, which investors shrugged off.
The travel company expects total gross travel bookings to increase by 16-21%. Non-GAAP net income is projected to come in between $610 million and $640 million. The company expects adjusted earnings of $12.2 and $12.8. per share.
Despite the disappointing outlook, investors were happy with the results. Shares for Priceline jumped over 5% in after-hours trading on Monday following the announcement.
