5 Things Priceline's Management Wants You to Know

Priceline has recently delivered a strong financial performance, and the company looks positioned for growth in the years ahead. Let’s look at Priceline’s latest earnings conference call and a few important takeaways for investors.

Aug 11, 2014 at 9:30PM

Priceline Image

Source: Priceline.com.

Priceline (NASDAQ:PCLN) reported fairly strong earnings for the second quarter of 2014 on Monday. Let's go through the company's earnings conference call to highlight a few important quotes from Priceline's management team and their implications for investors.

1. Priceline's Booking.com platform is stronger than ever

From Priceline:

Booking.com's platform now has over 525,000 hotels and other accommodations in 205 countries, up 58% over last year, reflecting Booking.com's continued aggressive push to extend its lead as the world's largest brand for booking accommodations. 

Booking.com is a major driver for Priceline, as it provides a leading market position in the profitable European hotel market. The fact that Booking.com is growing its hotel count at such an impressive speed shows that Priceline provides a convenient alternative for hotels to increase sales and join the online revolution via a proven and successful platform.

In addition, a growing hotel count means more options and better deals for travelers.

2. The company is gaining market share across the board

We believe the healthy balance we have between a strong direct business and first-time customers acquired online are critical to sustained and profitable growth and are helping us increase market share in every market we operate in.

Online travel is a remarkably exciting business, providing plenty of opportunities for growth. By outgrowing the competition, Priceline continues consolidating its position as the growth leader in the industry, and this bodes remarkably well for investors in the years ahead.

3. Advertising spending is on the rise

We estimate that the group will spend roughly $130 million for offline advertising over the back half of the year, with more than half the spend coming in the third quarter, which puts us near the high end of the full-year range we previously provided.

Both Priceline and its main competitor, Expedia, have increased their spending on advertising in recent quarters, and it looks as if investors should expect sustained spending in that area.

Although Priceline has more than enough financial resources to invest in marketing and advertising, this could have a negative impact on profit margins over the coming quarters, so it's a risk worth watching.

4. Priceline's broadened partnership with Ctrip (NASDAQ:CTRP) looks promising

By getting closer together, both we and Ctrip see ways that we can offer our customers the absolute best choice of accommodations and experiences. This collaboration will bring more guests to China, and more Chinese to the rest of the world, in the coming months, quarters and years.

Priceline has recently expanded its partnership with Chinese online travel platform Ctrip.com. Priceline has invested $500 million via convertible bonds in Ctrip, and the company was also granted authorization to purchase common stock in the Chinese business, so that Priceline may hold up to 10% of Ctrip when including both convertible bonds and common shares.

Priceline and Ctrip are also broadening their commercial agreement, first struck in 2012, to offer more hotel inventory and other services to each other's customers.

China is clearly an exciting growth market, offering tremendous opportunities for expansion in the long term. By partnering with a well-established local player such as Ctrip, Priceline is strengthening its presence in a key market while generating plenty of opportunities for cross-promotion and cross-selling.

5. Priceline is accelerating the rollout of Pay With OpenTable

Priceline isn't wasting any time after the recent acquisition of online restaurant reservation platform OpenTable. The company is accelerating the rollout of its digital payments application Pay With OpenTable:

Today, we are announcing that Pay With OpenTable is now launching in New York. We are also confirming our plans to roll it out to 20 other cities across the U.S. before year-end. Early results show that everyone wins with Pay With OpenTable. The restaurant gets faster table turns, the servers get better tips, and the guests leave far more satisfied.

Management seems quite enthusiastic about the initial response from both customers and restaurants, and this is another area showing that Priceline is a remarkably vibrant business when it comes to innovation and growth opportunities. 

Leaked: Apple's next smart device can make you rich
Investing in innovative growth companies such as Priceline can be your passport to outsized returns. Keeping this in mind, you may be interested in Apple's new revolutionary product. Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Andrés Cardenal owns shares of Apple and Priceline Group. The Motley Fool recommends Apple, Ctrip.com, International and Priceline Group and owns shares of Apple and Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers