Summary
Priceline.com Incorporated (now Booking Holdings Inc.) filed this Form 8-K on May 11, 2010, to report its financial results for the first quarter ended March 31, 2010. The company announced positive year-over-year growth, which was partially boosted by favorable foreign currency exchange rates and easier comparisons to the first quarter of 2009, a period significantly impacted by the economic downturn. However, the report also highlighted significant headwinds for the second quarter of 2010. These included a substantial devaluation of the Euro and British Pound against the U.S. Dollar and major travel disruptions caused by the Icelandic volcanic eruption in April 2010, which was estimated to impact gross travel bookings by approximately $50 million. The company also noted a deceleration in sequential growth rates and provided guidance that assumed these negative factors, along with general economic conditions, would persist.
Key Highlights
- 1Priceline.com reported Q1 2010 financial results, showing year-over-year growth driven partly by favorable currency exchange rates and a weaker comparable period in Q1 2009.
- 2Average daily rates (ADR) for hotel room nights saw a modest increase of approximately 2% internationally but a decrease of approximately 2% domestically in Q1 2010.
- 3The company disclosed that $17 million in principal amount of its convertible debt had been converted as of early Q2 2010.
- 4Q2 2010 guidance was significantly impacted by two negative external factors: the devaluation of the Euro and British Pound, and travel disruptions from the Icelandic volcanic eruption.
- 5The volcanic eruption was estimated to negatively impact Q2 2010 gross travel bookings by approximately $50 million due to cancellations and no-shows.
- 6Online advertising expenses as a percentage of gross profit were noted to have increased in Q1 2010 and were expected to rise further in Q2 2010 due to international business growth and the impact of the volcano disruption.
- 7The company's Q2 2010 guidance assumed specific exchange rates (EUR/USD at 1.275, GBP/USD at 1.48) and projected a continued deceleration in sequential growth rates.