Expedia lower on conservative outlook; Priceline near breakeven

Though Expedia (EXPE -2.7%) beat Q1 estimates on the back of solid bookings growth, the company reiterated guidance for 13-16% full-year adjusted EBITDA growth on its CC (transcript), while adding "the vast majority" of the growth will happen in 2H14.

Moreover, when asked by Deutsche's Ross Sandler whether hotel room night growth (24% Y/Y in Q1 and 25% in Q4) could accelerate to 30%+ in Q2 given an "easy comp" for Hotwire (the business struggled in Q2 last year) and a shift in Easter's timing from Q1 to Q2, CFO Mark Okerstrom chose to punt. "Well, I would say that Hotwire is actually a headwind for us until Q3 ... we don't expect that Q2 is a particularly easy comp for us on the bottom line."

Priceline (PCLN -0.1%), which is near breakeven in spite of Expedia's decline, has been providing tough competition for Hotwire in the opaque travel bookings space. Its Q1 report arrives on May 8.

Expedia's gross bookings rose 29% Y/Y in Q1 to $12.6B, an improvement from Q4's 21% clip and Q3's 15%. U.S. bookings rose 35% to $7.43B, and international bookings 21% to $5.2B. Room nights +24% with a 10% drop in revenue/night, air tickets sold +30% with a 1% increase in airfare.

Heavy online ad spend led sales/marketing expenses to grow 26% to $624.7M (52% of revenue). The Travelocity deal boosted room night growth by 3%, and air ticket growth by 18%.

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