By Karen Jacobs
(Reuters) - Online travel agency Priceline.com on Thursday gave a forecast for second-quarter profit that was below analysts' estimates, as it cited the effects of global expansion costs, and its shares slid 3 percent in after-hours trading.
Priceline made the comments as it reported a first-quarter profit that topped estimates on improved hotel and car-rental reservations.
Chief Executive Jeffery Boyd said the second-quarter outlook reflects an expected decline in operating margins as the company invests in global growth.
"We've got an opportunity to continue to build out the international franchise of our businesses and that requires investment in marketing and in people in a very competitive marketplace," Boyd said in a telephone interview.
"Most of our growth investors are very encouraging of that strategy to really make sure that we're not under-investing in the business," Boyd added.
Priceline owes much of its success to international bookings on its Booking.com travel site. It competes with Expedia and Orbitz Worldwide, which earlier on Thursday forecast revenue for the second quarter above current analyst estimates, citing growth in its hotel business.
In the first quarter, operating expenses at Priceline rose 39 percent to $699.8 million as it spent on advertising to support its international brands.
Hotel room-night reservations and booked rental car days increased about 38 percent and 43 percent, respectively, in the first quarter, while airline tickets booked rose 1.4 percent.
Net income was $244.3 million, or $4.76 a share, in the first quarter, compared with $181.8 million, or $3.54 a share, a year earlier.
Adjusted for items, first-quarter profit was $5.76 a share, compared with $5.27 a share expected by analysts on average, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose about 26 percent to $1.3 billion, compared with $1.28 billion expected by analysts.
Gross bookings, or the value of travel services customers bought, rose 36 percent to $9.2 billion in the first quarter.
Priceline forecast earnings of $8.87 to $9.45 a share for the current second quarter. Analysts have expected $9.58 a share.
Priceline also said it expects to close its $1.8 billion purchase of smaller rival Kayak Software Corp on May 21 now that regulatory approvals have been received. The acquisition will bolster Priceline's travel research and advertising capabilities.
Shares of Priceline fell to $714.50 in extended trading from their Nasdaq close of $737.50.
(Reporting by Karen Jacobs in Atlanta; Editing by Alden Bentley, Andrew Hay and Leslie Adler)