Priceline Reports Increased Revenues Despite Net Loss

Name-your-price retailer priceline.com (Nasdaq: PCLN) reported a more than 15-fold increase in third-quarter revenue and a net loss that beat analysts’ estimates on Thursday, but its stock price still fell in early trading today.

After the markets closed yesterday, priceline.com reported third-quarter revenue of $152.2 million (US$), a 1,551 percent increase over the $9.2 million for the third quarter of 1998. Excluding the $88.4 million cost of issuing Continental Airlines a warrant for one million shares of stock, priceline.com’s net loss for the quarter was $11.9 million, or eight cents per share, two cents better than the estimates of analysts.

Priceline.com lost $19.8 million in the third quarter of 1998 and $13.9 million in the second quarter in 1999.

“Revenues grew as we built a strong base of first-time and repeat customers through customer satisfaction, advertising and word-of-mouth,” said Richard S. Braddock, priceline.com’s chairman and CEO. “In addition to attracting 908,000 new customers in the third quarter, repeat users during the quarter made up 31 percent of all net unique offers.

Increasing Competition

Despite the positive signs, shares of priceline.com were down3-11/16 to 64-11/16 in early trading today. Priceline.com, which has patented several of its business models, faces increasing competition on multiple fronts.

While companies like Budget Rent A Car have licensed one of priceline.com’s business models, Microsoft has launched a name-your-price service for hotel rooms on its Expedia site. Priceline.com has filed a lawsuit against Microsoft.

In addition to worrying about protecting its business model, the consolidation of the online travel market could lead to increased competition for priceline.com. The upcoming merger of Preview Travel and Travelocity.com will create an online travel powerhouse, whose allies include America Online and Yahoo!. Both industry giants will have a stake in the new venture.

Revenues Dominated By Travel Sales

Priceline.com’s revenues still largely consist of travel sales. The company says that it sold approximately 624,000 airline tickets in the third quarter, a 1,632 percent increase over the 36,000 tickets sold in the third quarter of 1998. In addition, the company booked approximately 180,000 hotel rooms, a 95 percent rise from the second quarter.

Priceline.com has also announced plans to launch a name-your-price service for automobile rentals. In September, Budget Rent A Car became the first participant in the new rental service.

In addition, priceline.com is focusing upon licensing its business models to other companies in other industries. For example, Alliance Mortgage will license the name-your-price business model and team up with priceline.com to launch an online mortgage service known as PricelineMortgage.