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The Priceline Group, Inc. Earnings: Smooth Sailing

Image source: Getty Images.

Travel services giant Priceline Group (NASDAQ: PCLN) reported second-quarter results on Thursday night. The next day, investors reacted to the report by lifting share prices as much as 5.5% higher. The stock closed Friday up 4% from Thursday's close.

Let's have a look at this market-moving business update.

Priceline's Q2 results: The raw numbers

 

Q2 2016 Actuals

Q2 2015 Actuals

Growth (year-over-year)

Revenue

$2.56 billion

$2.28 billion

12.3%

Net Income

$580.6 million

$517.0 million

12.3%

GAAP EPS (diluted)

$11.60

$9.94

16.7%

Source: Priceline.

What happened with Priceline this quarter?

  • Priceline's revenue reflected $17.8 billion in gross travel bookings, a 19% increase over the year-ago period. 86% of these bookings were of the agency type, meaning that Priceline acted as an intermediary service and did not actually charge the customer's credit card. Business growth was equally brisk across the agency and merchant categories.
  • The company sold 140.7 million hotel room nights in the second quarter, a 24% year-over-year gain. Rental car days increased by 8% to 18.5 million, while the airline ticket volume fell 7% to land at 2.0 million tickets sold.
  • Over the last four quarters, Priceline has bought back $2.5 billion worth of its own shares

For the third quarter, which is the busiest season for travel businesses, Priceline's management offered the following guidance:

  • Travel bookings should increase by roughly 17% year-over-year, driving revenue 15% higher.
  • Net income should stop at $1.34 billion, yielding adjusted earnings near $29 per diluted share.

What management had to say

In a prepared statement, Priceline's interim CEO, Jeffery Boyd, highlighted the booking of 141 million hotel rooms as a proof of his business model's value.

"We believe this consistent growth demonstrates the strength of our brands, the value of a diversified global footprint and solid execution by our brand management teams," Boyd said.

Looking ahead

Priceline's hotel bookings have become the star of the show, growing at least 22% year-over-year in each of the last nine earnings reports. Meanwhile, rental car activity has increased by an average of 14% and airline ticket sales have often declined.

Management does not seem terribly worried about these shifting sales. Total sales and earnings have been skyrocketing quite smoothly, either way -- and share prices followed suit:

PCLN data by YCharts

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Anders Bylund has no position in any stocks mentioned. The Motley Fool both owns shares of and recommends Priceline Group. Try any of our Foolish newsletter services free for 30 days.

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