BOOKING HOLDINGS NORWALK, CT - August 5, 2015. . . The Priceline Group Inc. (NASDAQ: PCLN) today reported its 2nd quarter 2015 financial results. Second 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 $15.0 billion, an increase of 11% over a year ago (approximately 26% on a constant currency basis).
The Group's gross profit for the 2nd quarter was $2.1 billion, an 11% increase from the prior year (approximately
26% on a constant currency basis). International operations contributed gross profit in the 2nd quarter of $1.8
billion, an 8% increase versus a year ago (approximately 26% on a constant currency basis). The Group had GAAP net income applicable to common shareholders for the 2nd quarter of $517 million, or $9.94 per diluted share, which compares to $576 million or $10.89 per diluted share, in the same period a year ago.
Non-GAAP net income in the 2nd quarter was $653 million, a 2% decrease versus the prior year. Non-GAAP net income was $12.45 per diluted share, compared to $12.51 per diluted share a year ago. FactSet consensus for the
2nd quarter 2015 was $11.85 per diluted share. Adjusted EBITDA for the 2nd quarter 2015 was $805 million, a
decrease of 1% versus 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 performed well in the quarter as the summer travel season got off to a strong start with a second consecutive quarter of accelerating growth in hotel room nights and rental car days booked," said Darren Huston, President and CEO of The Priceline Group. "Globally, our accommodation business booked 113 million room nights in the second quarter, up 26% over the same period last year. International gross bookings growth accelerated to 30% on a constant currency basis and the Group's total gross profit grew by about 26% on a constant currency basis."
Looking forward to the third quarter, Mr. Huston said, "We believe we are well set up to deliver the largest quarter in our company's history. Our teams are ready and are intensely focused on delivering the best selection, competitive pricing, and the best online and offline experience to our customers around the world."
The Priceline Group said it was targeting the following for 3rd quarter 2015:
• Total gross travel bookings ranging from a decrease of 1% to an increase of approximately 6% year-over- year (an increase of approximately 13% - 20% on a constant currency basis).
• Year-over-year increase in international gross travel bookings of approximately 0% - 7% (an increase of approximately 16% - 23% on a constant currency basis).
• U.S. gross travel bookings are expected to be about the same as 3rd quarter 2014.
• Year-over-year increase in revenue of approximately 1% - 8%.
• Year-over-year increase in gross profit of approximately 3% - 10% (an increase of approximately 19% -
26% on a constant currency basis).
• Adjusted EBITDA of approximately $1,425 million to $1,525 million.
• Non-GAAP net income per diluted share between $22.95 and $24.45. Non-GAAP guidance for the 3rd quarter 2015:
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• excludes non-cash amortization expense of intangibles,
• excludes non-cash stock-based employee compensation expense,
• excludes non-cash interest expense related to the amortization of debt discount 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 the impact, if any, of significant costs related to acquisitions,
• 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.
The Priceline Group highlighted that its forecast assumes currency exchange rates of $1.09 per Euro and $1.56 per
British Pound for the remainder of the quarter, which results in average exchange rates for the quarter that would be
18% weaker for the Euro and 7% weaker for the British Pound as compared to the prior year. Therefore, currency exchange rates are expected to significantly reduce the Company's growth rates expressed in U.S. dollars.
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 $382 million in the 3rd quarter 2015. In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $118 million in the 3rd quarter 2015. The Group estimates GAAP net income per diluted share between $20.84 and $22.34 for the 3rd quarter 2015.
Information About Forward-Looking StatementsThis 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;
-- fluctuations in foreign exchange rates and other risks associated with doing business in multiple currencies;
-- our ability to expand successfully in international markets;
-- our online advertising efficiency;
-- any change by a major search engine in how it presents travel search results or conducts its auction for search placement in a manner that is competitively disadvantageous to us;
-- adverse changes in the Group's relationships with travel service providers;
-- systems-related failures and/or security breaches;
-- the ability to attract and retain qualified personnel; and
-- tax, legal and regulatory risks.
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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 MeasuresThe Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. Adjusted EBITDA represents GAAP net income excluding depreciation and amortization expense, interest income, interest expense 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 (though competitors may calculate similar non-GAAP financial measures differently than those calculated by the Group). 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 six months ended June 30, 2015 and 2014 are 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 credits 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 reversal of previously accrued travel transaction taxes (including estimated interest and penalties) of
$16.4 million recorded in the 1st quarter of 2015 related to a favorable ruling in the State of Hawaii, are
excluded because the amount and timing of these items are unpredictable, are not driven by core
operating results and render comparisons with prior periods less meaningful. There were no such charges or credits in the six months ended June 30, 2014.
• 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.
• 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.
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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 GroupThe Priceline Group Inc. (NASDAQ: PCLN) is a leading provider of online travel and travel related reservation and search services, provided to consumers and local partners in over 200 countries through six primary
brands: Booking.com, priceline.com, KAYAK, agoda.com, rentalcars.com and OpenTable. For more information, visit pricelinegroup.com.
### For Press Information: Leslie Cafferty (203) 299-8128 leslie.cafferty@pricelinegroup.com For Investor Relations: Matthew Tynan (203) 299-8487 matt.tynan@pricelinegroup.com4 of 10
The Priceline Group Inc. UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) ASSETS
Current assets:
Cash and cash equivalents $ 1,888,949 $ 3,148,651
Restricted cash 1,052 843
Short-term investments 1,299,127 1,142,182
Accounts receivable, net of allowance for doubtful accounts of $22,186 and
$14,212, respectively 889,868 643,894
Prepaid expenses and other current assets 508,410 178,050
Deferred income taxes 106,065 153,754
Total current assets 4,693,471 5,267,374
Property and equipment, net 246,102 198,953
Intangible assets, net 2,246,629 2,334,761
Goodwill 3,366,396 3,326,474
Long-term investments 6,395,468 3,755,653
Other assets 79,280 57,348
Total assets $ 17,027,346 $ 14,940,563
Current liabilities:
Accounts payable $ 367,221 $ 281,480
Accrued expenses and other current liabilities 903,641 600,758
Deferred merchant bookings 660,272 460,558
Convertible debt - 37,195
Total current liabilities 1,931,134 1,379,991
Deferred income taxes 991,882 1,040,260
Other long-term liabilities 146,399 103,533
Long-term debt 5,399,966 3,849,756
Total liabilities 8,469,381 6,373,540
Convertible debt - 329
Stockholders' equity:
Common stock, $0.008 par value; authorized 1,000,000,000 shares, 61,995,793 and
61,821,097 shares issued, respectively 482 480
Treasury stock, 10,863,246 and 9,888,024 shares, respectively (3,900,011) (2,737,585) Additional paid-in capital 5,009,753 4,923,196
Accumulated earnings 7,490,864 6,640,505
Accumulated other comprehensive loss (43,123) (259,902) Total stockholders' equity 8,557,965 8,566,694
Total liabilities and stockholders' equity $ 17,027,346 $ 14,940,563
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Agency revenues $ 1,582,153 $ 1,474,396 $ 2,781,501 $ 2,515,540
Merchant revenues 546,013 567,253 1,040,688 1,094,251
Advertising and other revenues 152,231 81,926 298,902 155,586
Total revenues 2,280,397 2,123,575 4,121,091 3,765,377
Cost of revenues 187,491 240,579 355,949 475,910
Gross profit 2,092,906 1,882,996 3,765,142 3,289,467
Operating expenses:
Advertising - Online 770,818 639,655 1,414,034 1,160,503
Advertising - Offline 66,303 58,026 129,885 111,500
Sales and marketing 94,523 75,053 176,467 139,364
Personnel, including stock-based compensation of $60,164,
$35,168, $114,172 and $73,971, respectively 289,156 221,852 548,140 416,383
General and administrative 98,945 91,067 199,123 164,048
Information technology 27,156 24,042 52,517 47,266
Depreciation and amortization 67,674 40,287 132,676 78,663
Total operating expenses 1,414,575 1,149,982 2,652,842 2,117,727
Operating income 678,331 733,014 1,112,300 1,171,740
Other income (expense):
Interest income 13,037 1,634 24,633 2,675
Interest expense (41,547) (17,106) (75,026) (34,851) Foreign currency transactions and other (1,444) (1,777) (6,287) (7,746) Total other income (expense) (29,954) (17,249) (56,680) (39,922)
Earnings before income taxes 648,377 715,765 1,055,620 1,131,818
Income tax expense 131,345 139,314 205,261 224,149
Net income $ 517,032 $ 576,451 $ 850,359 $ 907,669
Net income applicable to common stockholders per basic
common share $ 10.02 $ 11.00 $ 16.43 $ 17.36
Weighted-average number of basic common shares outstanding 51,589 52,397 51,748 52,275
Net income applicable to common stockholders per diluted
common share $ 9.94 $ 10.89 $ 16.27 $ 17.12
Weighted-average number of diluted common shares outstanding 52,038 52,955 52,253 53,004
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OPERATING ACTIVITIES:
Six Months Ended June 30,
Net income $ 850,359 $ 907,669
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 46,695 32,889
Amortization 85,981 45,774
Provision for uncollectible accounts, net 13,233 8,122
Deferred income taxes (41,577) 26,070
Stock-based compensation expense and other stock-based payments 115,269 75,151
Amortization of debt issuance costs 4,218 2,585
Amortization of debt discount 33,211 24,259
Loss on early extinguishment of debt 3 6,129
Changes in assets and liabilities:
Accounts receivable (287,940) (312,959) Prepaid expenses and other current assets (300,482) (263,963) Accounts payable, accrued expenses and other current liabilities 405,818 312,925
Other (13,429) 2,334
Net cash provided by operating activities 911,359 866,985
INVESTING ACTIVITIES:
Purchase of investments (4,686,507) (4,305,033) Proceeds from sale of investments 2,231,926 6,078,411
Additions to property and equipment (84,351) (61,986) Acquisitions and other investments, net of cash acquired (45,937) (101,050) Proceeds from foreign currency contracts 453,818 9,029
Payments on foreign currency contracts (448,640) (78,866) Change in restricted cash (225) (5,194)
Net cash (used in) provided by investing activities (2,579,916) 1,535,311
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 1,619,951 - Payment of debt issuance costs (13,272) - Payments related to conversion of senior notes (147,629) (117,830) Repurchase of common stock (986,581) (97,326) Proceeds from exercise of stock options 12,825 9,686
Excess tax benefits on stock-based compensation 68,241 12,222
Net cash provided by (used in) financing activities 553,535 (193,248) Effect of exchange rate changes on cash and cash equivalents (144,680) 4,857
Net (decrease) increase in cash and cash equivalents (1,259,702) 2,213,905
Cash and cash equivalents, beginning of period 3,148,651 1,289,994
Cash and cash equivalents, end of period $ 1,888,949 $ 3,503,899
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ 472,350 $ 385,506
Cash paid during the period for interest $ 13,537 $ 8,080
Non-cash investing activity for contingent consideration $ 9,170 $ 24,377
Non-cash financing activity for acquisitions $ - $ 5,584
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GAAP Gross profit $ 2,092,906 $ 1,882,996 $ 3,765,142 $ 3,289,467
(a) Adjustment to exclude favorable impact of travel transaction taxjudgments, rulings and settlements - - (16,404) -
Non-GAAP Gross profit $ 2,092,906 $ 1,882,996 $ 3,748,738 $ 3,289,467
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014GAAP Operating income $ 678,331 $ 733,014 $ 1,112,300 $ 1,171,740
(a) Adjustment to exclude favorable impact of travel transaction taxjudgments, rulings and settlements - - (16,404) -
(b) Stock-based employee compensation 60,164 35,168 114,172 73,971 (c) Amortization of intangible assets 42,653 22,950 85,981 45,773Non-GAAP Operating income $ 781,148 $ 791,132 $ 1,296,049 $ 1,291,484
Non-GAAP Operating income as a % of Non-GAAP Gross profit 37.3% 42.0% 34.6% 39.3%
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014GAAP Net income applicable to common stockholders $ 517,032 $ 576,451 $ 850,359 $ 907,669
(a) Adjustment to exclude favorable impact of travel transaction taxjudgments, rulings and settlements - - (16,404) -
(b) Stock-based employee compensation 60,164 35,168 114,172 73,971 (d) Depreciation and amortization 67,674 40,287 132,676 78,663 (e) Interest income (13,037) (1,634) (24,633) (2,675) (e) Interest expense 41,547 17,106 75,026 34,851 (f) Loss on early extinguishment of convertible debt - 2,733 3 6,129 (g) Income tax expense 131,345 139,314 205,261 224,149
Adjusted EBITDA $ 804,725 $ 809,425 $ 1,336,460 $ 1,322,757
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The Priceline Group Inc. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands, except per share data) RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014GAAP Net income applicable to common stockholders $ 517,032 $ 576,451 $ 850,359 $ 907,669
(a) Adjustment to exclude favorable impact of travel transaction taxjudgments, rulings and settlements - - (16,404) -
adjustments and to exclude non-cash income taxes 17,558 18,609 16,048 27,088
Non-GAAP Net income applicable to common stockholders $ 652,982 $ 667,100 $ 1,081,509 $ 1,083,577
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED COMMON SHARE Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014GAAP weighted-average number of diluted common shares
outstanding 52,038 52,955 52,253 53,004
(i) Adjustment for unvested restricted stock units and performanceshare units 430 371 375 328
Non-GAAP weighted-average number of diluted common shares
outstanding 52,468 53,326 52,628 53,332
Net income applicable to common stockholders per diluted common share
GAAP $ 9.94 $ 10.89 $ 16.27 $ 17.12
Non-GAAP $ 12.45 $ 12.51 $ 20.55 $ 20.32
(a) Adjustment for travel transaction taxes (including estimated interest and penalties) related to a favorable ruling in the State of
Hawaii is recorded in Cost of revenues.
(b) Stock-based employee compensation is recorded in Personnel expense.
(c) Amortization of intangible assets is recorded in Depreciation and amortization.
(d) Depreciation and amortization are excluded from Net income to calculate Adjusted EBITDA.
(e) Interest income and Interest expense are excluded from Net income to calculate Adjusted EBITDA.
(f) Non-cash interest expense related to the amortization of debt discount and loss on early extinguishment of convertible debt are recorded in Interest expense and Foreign currency transactions and other, respectively.
(g) Income tax expense is excluded from Net income to calculate Adjusted EBITDA.
(h) Adjustments for the tax impact of certain of the non-GAAP adjustments and to exclude non-cash income taxes.
(i) Additional shares related to 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 employee stock-based compensation expense.
For a more detailed discussion of the adjustments described above, please see the section in our press release entitled "Non- GAAP Financial Measures" which provides a definition and information about the use of non-GAAP financial measures.
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The Priceline Group Inc.Statistical Data In millions (Unaudited)
Gross Bookings 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
International $ 8,579 $ 9,179 $ 7,758 $ 10,643 $ 11,682 $ 12,080 $ 9,233 $ 12,104 $ 13,092
U.S. 1,538 1,586 1,379 1,637 1,856 1,743 1,426 1,672 1,868
Total $ 10,118 $ 10,765 $ 9,138 $ 12,280 $ 13,538 $ 13,823 $ 10,659 $ 13,775 $ 14,960
Agency $ 8,425 $ 9,023 $ 7,576 $ 10,516 $ 11,581 $ 11,821 $ 8,974 $ 11,908 $ 12,867
Merchant 1,692 1,742 1,562 1,764 1,957 2,002 1,685 1,867 2,094
Total $ 10,118 $ 10,765 $ 9,138 $ 12,280 $ 13,538 $ 13,823 $ 10,659 $ 13,775 $ 14,960
Year/Year Growth
International 44.1% 41.8% 41.2% 36.8% 36.2% 31.6% 19.0 % 13.7 % 12.1%
excluding F/X
impact 44% 41% 42% 38% 35% 32% 27 % 29 % 30%
U.S. 11.7% 16.7% 26.5% 19.5% 20.6% 9.9% 3.4 % 2.1 % 0.7%
Agency 39.7% 40.5% 42.9% 37.5% 37.4% 31.0% 18.5 % 13.2 % 11.1% Merchant 30.3% 23.7% 21.8% 17.2% 15.7% 15.0% 7.9 % 5.8 % 7.0%
Total 38.0% 37.5% 38.8% 34.2% 33.8% 28.4% 16.7 % 12.2 % 10.5%
excluding F/X
impact 38% 36% 39% 35% 32% 29% 23 % 26 % 26%
Units Sold 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Hotel Room-
Nights 69.4 74.8 63.1 83.4 89.6 94.8 78.2 104.6 113.1
Year/Year Growth 38.2% 35.6% 36.5% 32.0% 29.2% 26.7% 24.0 % 25.4 % 26.2%
Rental Car Days 12.5 12.0 9.5 12.3 14.3 14.2 11.0 14.6 17.2
Year/Year Growth 46.3% 27.5% 32.3% 24.6% 14.4% 18.1% 16.1 % 18.0 % 20.1%
Airline Tickets 1.7 1.8 1.8 2.0 2.1 2.0 1.7 2.0 2.1
Year/Year Growth 1.8% 8.6% 28.1% 22.6% 22.3% 8.0% (4.0)% (3.2)% 0.3%
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Revenue $ 1,680.2 $ 2,269.9 $ 1,541.2 $ 1,641.8 $ 2,123.6 $ 2,836.5 $1,840.1 $1,840.7 $ 2,280.4
Year/Year Growth 26.6% 33.0% 29.4% 26.1% 26.4% 25.0% 19.4 % 12.1 % 7.4%
Gross Profit $ 1,383.9 $ 1,989.1 $ 1,333.3 $ 1,406.5 $ 1,883.0 $ 2,620.0 $1,674.7 $1,672.2 $ 2,092.9
Year/Year Growth 37.8% 42.4% 41.9% 39.3% 36.1% 31.7% 25.6 % 18.9 % 11.1%
Amounts may not total due to rounding.
Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked by our customers. International gross bookings consist of the gross bookings of Booking.com, agoda.com and rentalcars.com, in each case regardless of where the consumer is resident, from where the consumer makes a reservation or where the travel service is provided.
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