The March quarter proved mixed foronline travel agencies as PricelineGroup Inc. and ExpediaInc. saw at least some improvement in their financials while continued to takea beating.
The results benefited from an earlierEaster holiday this year, but executives noted that this just shifts some revenuefrom the June quarter, pulling ahead an estimated $20 million in adjusted EBITDAfor Expedia and $40 million for Priceline. Changes in holidays and other one-timeevents will result in continued deceleration in the June quarter, they added.
Meanwhile, TripAdvisor continued tosee pressure as a result of higher expenses as it executes on a long-term growthplan that includes improvingits end-to-end user experience and making investments in mobile. The company sawnegative growth in net operating revenue and net income in the quarter as well asa large deceleration in its hotel segment due to the launch of Instant Booking,which negatively impacted EBITDA. Looking ahead to thesecond half of the year, all three companies are expecting to see stronger numbersin line with seasonal patterns, executives said.
TripAdvisor's reported net incomecame in at $27 million, a 57.1% year-over-year decline from the $63 million reportedin the year-ago period. Net operating revenue clocked in at $352 million, down 3%year over year.
"As we have discussed, 2016 isan important transition year," TripAdvisor CFO Ernst Teunissen said duringa May 5 earnings conference call. "We are executing on a long-term strategy,and in the near-term we expect decelerating growth in the first half and improvinggrowth rates in the back half."
Priceline, the largest of the threecompanies, saw double-digit increases in net income and net operating revenue. Itreported net operating revenue of $2.15 billion for the quarter, up 16.7% year overyear, a jump from the single-digit percentage growth rates seen in the previousthree quarters. Gross Bookings came in at $16.65 billion, higher than that reportedin the last two years.
Priceline CFO Dan Finnegan duringa May 4 earnings call noted expected headwinds from the Euro Cup soccer tournamentand the earlier timing of Ramadan, which falls 10 days earlier this year than in2015. Executives assured analysts that it was one-time calendar and event changesrather than any competitive weakness that was weighing on its number in the secondquarter.
"As we look at the share of thebusiness we're getting from major distribution channels, we feel very comfortablethat we're holding or gaining share," Priceline Group CEO Jeffery Boyd said during the earningscall.
Expedia's earnings were more of amixed bag. The company's net operating revenue saw strong growth, up 38% to $1.90billion. However, the company reported a first-quarter net loss of $121.8 million,down from net income of $32.6 million in the year-ago quarter and its second quarterlyloss in a row. The company reported a net loss of $12.9 million in the fourth quarterof 2015. Expedia closed several deals in 2015 — buying Orbitz Worldwide, Travelocityand HomeAway — which had a big impact on its financials for the year and into 2016.
"The usual seasonality of theorganic business will be amplified by recent acquisitions with integration and transitioninvestments for both Orbitz and HomeAway in the first half of the year expectedto make way for synergy realization in the second half," CFO Mark Okerstromsaid during an April 28 earnings conference call.
Gross bookings continued to see asteady rise, climbing to $18.88 billion for the quarter and marking a 26.1% year-over-yearincrease. Domestic bookings led the way with a 38% year-over-year increase whileinternational bookings saw a 22% year-over-year increase. The international grossbookings number accounted for 35% of worldwide bookings, down year over year fromthe 38% in the 2015 first quarter. Executives chalked up the decrease to the acquisitionof Orbitz, which gave a boost to domestic bookings.