Source: Priceline.

Priceline (NASDAQ:BKNG) stock was rising strongly early Thursday after the online travel leader delivered rock-solid financial performance for the quarter ended in December. Euro depreciation is a considerable drag on Priceline's European business, and the company is facing increased competitive pressure from rival Expedia (NASDAQ:EXPE)a reason for concern among Wall Street analysts lately. However, Priceline is proving that it has what it takes to continue thriving under all kinds of conditions.

Healthy top-line growth
Total gross travel bookings purchased by customers were $10.7 billion during the last quarter, an increase of 17% year over year and growing 23% on a local currency basis. International bookings were remarkably strong, growing 19% in U.S. dollars and 27% when excluding currency fluctuations. Domestic bookings, on the other hand, increased only 3.4% versus the same quarter in the prior year.

Nearly 87% of Priceline's gross travel bookings came from international markets during the quarter, so the company is doing remarkably well where it counts the most.

The hotel business was a major driver for Priceline; customers booked 78.2 million hotel nights during the quarter, a year-over-year increase of 24%. Rental car days grew 16% to 11 million, while plane tickets reservations declined 4% to 1.7 million.

Total sales increased 19.4% to $1.84 billion. The number was better than the $18 billion in revenues expected on average by Wall Street analysts, and also above the company's own guidance for a sales increase of between 11% and 18% during the quarter.

Expanding profit margins
The agency business model is when Priceline simply matches buyers and sellers, making a commission for every transaction. In the merchant segment, the company purchases inventory and then resells it to travelers. Most of the company's growth is coming from the agency model, growing 18.5% in the last quarter versus an increase of 7.9% in the merchant division. Fortunately for investors in Priceline stock, this has positive implications on profit margins.

Total gross profit for the quarter ended in December was $1.7 billion, an annual increase of 26% in U.S. dollars, and growing by an impressive 32% on a local currency basis. As a percentage of revenue, gross margin came in at a stratospheric 91%, a material increase versus 87% in the same quarter during the previous year.

Priceline is spending tons of money on marketing and advertising: Online advertising spending grew 25% to almost 500 million, and offline advertising increased 74% to $48.2 million. Sales and marketing expenditures grew 45% to $85.5 million during the last quarter.

Still, this didn't stop the company from delivering a big increase of 23% in adjusted EBITDA, reaching $712 million in the period. Adjusted net income grew 22% to $577 million.

At the end of the day, adjusted earnings per share came in at $10.85, an annual increase of 22.6%, and better than the $10.10 per share forecast on average by Wall Street.

Moving forward
For the first quarter of 2015, management is expecting a year-over-year increase of between 2% and 9% in gross travel bookings measured in U.S. dollars, and an increase in the range of 14% to 21% on a local currency basis. Revenues are forecast to grow between 4% and 11% during the coming quarter.

The numbers don't look particularly exciting, however -- Priceline tends to consistently under-promise and over-deliver. If past history is any valid guide, chances are the company will report financial figures considerably above its own guidance.

Priceline also announced that management got authorization from the board to repurchase up to $3 billion in common stock. This can be interpreted as a sign of confidence and optimism on the company's future, in the words of CEO Darren Houston: "We believe that buying our stock is a wise investment of our capital and demonstrates our confidence in the long-term outlook for our business."

In spite of operating in a challenging macroeconomic environment and facing increased competitive pressure, Priceline delivered impressive financial performance for the most recent quarter. Even a mediocre company can do well when the wind is at its back, but it takes a particularly solid business to outperform under difficult conditions. Investors in Priceline stock have valid reasons to applaud the company's latest earnings report.