Orbitz lower after mixed results; marketing spend in focus

|About: Orbitz Worldwide, Inc. (OWW)|By:, SA News Editor

Up premarket after beating Q1 revenue estimates and missing on EPS, Orbitz (OWW -3.5%) has turned negative. With the recent acquisition of Travelocity Partner Network (TPN) providing a top-line boost, Orbitz now expects high-single digit 2014 revenue growth, above prior guidance for low-to-mid single-digit growth. But the company is reiterating guidance for high-single digit adjusted EBITDA growth.

Orbitz expects Q2 revenue of $239M-$245M, above a $233.3M consensus, and Q2 adjusted EBITDA of $42M-$47M. The company notes TPN provided a 4% boost to Q1 bookings, even though the deal only closed on Feb. 28.

On the CC (transcript), Orbitz faced multiple questions regarding its marketing spend (36.5% of Q1 revenue), and whether it would see leverage as revenue grew. CEO Barney Harford noted the growth of Orbitz's private label ops (inc. TPN) as a percentage of revenue "would have a deleveraging impact on overall margin."

Orbitz is far from alone among online travel agencies in spending heavily on marketing - a large chunk of this spending ends up going to Google.

With TPN in tow, Q1 groos bookings rose 3% Y/Y to $3.18B. Hotel room nights rose 12%, and standalone hotel revenue 7% to $67.2M. But standalone air revenue only rose 1% to $70.2M. Vacation packages +4% to $32.9M, ads/media +12% to $14.6M, everything else -2% to $25.3M.

Q1 results, PR