Earnings Call Nuggets: Penetration Rate and Mobile Usage Trends

On Thursday,, Inc. (NASDAQ:PCLN) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Penetration Rate

Justin Post – Bank of America Merrill Lynch: One big picture maybe for Jeff and quick one for Dan. Jeff, you’ve got 245,000 hotels on the platform executed really well there, and just you’re seeing some deceleration. Could you talk about where you are on the penetration as you look at your sales pipeline in hotels and then the deceleration this year, would you say macro is driving a big chunk of that or is that large of a lot numbers as you see it? Then Dan, you gave us pretty good commentary last quarter about deceleration built into guidance for 3Q. It sounds like this quarter maybe a little less conservatism maybe you could give us a little more color on the relative conservatism or the rate of macro decline you expect into the guidance this quarter versus last?

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Jeffery H. Boyd – President and CEO: Justin, I’ll try to address the first question. The 245,000 hotels refers to and I think they’ve done an excellent job of building on the hotel platform at a pretty fast cliff, 40% plus growth year-over-year. I’ve said in the previous calls that in a lot of cases we’re adding non-hotel accommodations and those properties often have lower room counts than some of the larger hotels and so, there is potentially a diminishing return as you continue to add hotels, but I think you can expect and Agoda as well to continue to add properties to their list. Growth rates are driven not just by adding new properties, although that’s last important but also by driving greater penetration of existing hotels and I think given the size of the business that’s equally important to the hotel count. So, when you look at the business and the trends in unit growth, I’d point to not just new hotel counts, but also to penetration of existing hotels and then just to driving fundamental underlying demand which is also an important driver of momentum in unit growth.

Daniel J. Finnegan – CFO and Chief Accounting Officer: In terms of our guidance, Q3 relative to Q2, we did say Justin, in Q2 that we had built a specific additional level of conservatism into our forecast which at the time we were hoping was going to be conservatism, but was really just based upon the fact that we had seen significant deceleration and we have seen the weakness that we have seen for a while in Southern Europe spreading to other markets across Europe, we highlighted the U.K. This quarter we were pleased that the back half of Q3 ended up being pretty solid and the results to date in Q4 I would say are solid and so we have built some deceleration in there which is more addressed on natural expectation that for a business this size is going to decelerate over time and reflects the difficult comp we have got in the latter half of the quarter, but we did not note any specific additional deceleration in relative to concerns over macro-economic conditions.

Mobile Usage Trends

Brian Fitzgerald – Jefferies: Wondering that you didn’t update on mobile usage trends you have seen around that for your mobile apps and maybe what percentage of mobile traffic is hence actionable versus just comparison shopping or browsing?

Jeffery H. Boyd – President and CEO: We are seeing rapid growth of business moving to mobile. We haven’t released any specific share percentages, but you’ve seen some of that in the marketplace by our competition and I think that give you a directional idea of where we are. In the United States in particular, there is some variability by region. Our teams around the world are working very hard to innovate on the new platforms with apps and upgrades to the mobile web. We’re also looking from the ground-up at our desktop functionality and user experience so that it’s optimized for browsing on tablets. It’s a very important channel shift that we’re seeing in this space and it’s giving us an opportunity to offer some new products to our customers. released an app recently that’s got some new features on it that we think are very interesting and attractive called Express Deals Pro. That’s the kind of testing you can do on mobile platforms and see what the consumer experience is. So, we continue to be very excited about it and it’s one of our primary areas for resources and investment because we think it gives us a great opportunity having the backend that we have to really lead the market and building the best front-end applications for the consumer.

A Closer Look: Earnings Cheat Sheet>>