The group’s gross profit for the 4th quarter was $2.3 billion, a 21% increase from the prior year (approximately 24% on a constant-currency basis).
NORWALK, CT – The Priceline Group Inc. reported its 4th quarter and full-year 2016 financial results. Fourth quarter gross travel bookings for The Priceline Group, which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by its customers, net of cancellations, were $15.1 billion, an increase of 26% over a year ago (approximately 28% on a constant-currency basis).
The group's gross profit for the 4th quarter was $2.3 billion, a 21% increase from the prior year (approximately 24% on a constant-currency basis). International operations contributed gross profit in the 4th quarter of $2.0 billion, a 23% increase versus a year ago (approximately 26% on a constant-currency basis). Net income in the 4th quarter was $674 million, a 34% increase versus the prior year.
Net income was $13.47 per diluted share, a 35% increase as compared to the prior year. Non-GAAP net income in the 4th quarter was $711 million, a 31% increase versus the prior year.
Non-GAAP net income was $14.21 per diluted share, a 32% increase compared to $10.73 per diluted share a year ago. Adjusted EBITDA for the 4th quarter 2016 was $869 million, an increase of 22% versus a year ago.
The section below entitled "Non-GAAP Financial Measures" provides definitions and information about the use of non-GAAP financial measures in this press release, and the attached financial and statistical supplement reconciles non-GAAP financial information with the Group's financial results under GAAP.
For the full-year 2016, the Group had gross travel bookings of $68.1 billion, a 23% increase compared to 2015 (approximately 25% on a constant-currency basis). The Group's gross profit in 2016 was $10.3 billion, a 20% increase from the prior year (approximately 23% on a constant-currency basis). International operations contributed full-year gross profit of $9.1 billion, a 22% increase versus the prior year (approximately 25% on a constant-currency basis).
The group had GAAP net income for full-year 2016 of $2.1 billion, a 16% decrease versus the prior year. Net income was $42.65 per diluted share, a 14% decrease as compared to prior year. Net income for full-year 2016 was negatively impacted by a non-cash charge of $941 million recorded in the 3rd quarter of 2016 related to an impairment of goodwill, which reduced net income per diluted share by $18.79.
Non-GAAP net income for full year 2016 was $3.3 billion, a 23% increase versus the prior year. Non-GAAP net income was $65.63 per diluted share, a 26% increase compared to $51.92 per diluted share a year ago. Adjusted EBITDA for 2016 was $4.1 billion, an increase of 19% over the prior year.
"The Priceline Group finished 2016 with a strong 4th quarter, reporting accelerating growth in hotel room nights booked, with solid organic growth and attractive profit margins," said Glenn Fogel, Chief Executive Officer of The Priceline Group. "We also recorded accelerating growth in room nights booked for the full year 2016 over 2015, which reflects the benefits of our scaled accommodations platform and strong execution by our global teams."
Looking forward to 2017, Mr. Fogel said, "We will continue to focus on growing our supply base to drive customer choice, innovating around the customer experience and investing efficiently in marketing to deliver profitable top-line growth."
Non-GAAP Financial Measures
The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. To supplement the Consolidated Financial Statements, the Group uses the following non-GAAP financial measures:
Adjusted EBITDA, non-GAAP gross profit, non-GAAP net income, non-GAAP net income per share and free cash flow. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States.
The group uses non-GAAP financial measures for financial and operational decision-making and as a basis to evaluate performance and set targets for employee compensation programs. The group believes that these non-GAAP financial measures are useful for analysts and investors to evaluate the Group’s ongoing operating performance because they facilitate comparison of the Group’s results for the current period and projected next-period results to those of prior periods and to those of its competitors (though other companies may calculate similar non-GAAP financial measures differently than those calculated by the Group).
These non-GAAP financial measures, in particular adjusted EBITDA and non-GAAP net income are not intended to represent funds available for the Group's discretionary use and are not intended to represent or to be used as a substitute for operating income, net income or cash flow from operations as measured under GAAP. The items excluded from these non-GAAP measures, but included in the calculation of their closest GAAP equivalent, are significant components of our consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance.
Non-GAAP net income is net income with the following adjustments:
- excludes the impact, if any, of significant charges or benefits associated with judgments, rulings and/or
- settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.)
- proceedings,
- excludes amortization expense of intangibles,
- excludes the impact, if any, of significant charges related to the impairment of goodwill,
- excludes non-cash interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment, if any, related to our convertible debt,
- excludes the impact, if any, of significant gains or losses on the sale of cost-method investments and significant charges related to other-than-temporary impairments of such investments, and
- the tax impact of these non-GAAP adjustments mentioned above.
In addition to the adjustments listed above regarding non-GAAP net income, adjusted EBITDA excludes depreciation expense, interest income, interest expense and income tax expense and includes the impact of foreign currency transactions and other expenses.
"We evaluate certain operating and financial measures on both an as-reported and constant-currency basis. We calculate constant currency by converting our current-year period financial results for transactions recorded in currencies other than U.S. Dollars using the corresponding prior-year period monthly average exchange rates rather than the current-year period monthly average exchange rates."
The attached financial and statistical supplement includes reconciliations of the group's financial results under GAAP to non-GAAP financial information for the three and twelve months ended December 31, 2016 and 2015.
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