Operator: Welcome to the Priceline Group's Fourth Quarter and Full Year 2012 Conference Call. Priceline would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied, forecasted in any such forward-looking statements. Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.
For a list of factors that could cause Priceline's actual results to differ materially from those described in the forward-looking statements please refer to the Safe Harbor statements at the end of Priceline's earnings press release as well as Priceline's most recent filings with the Securities and Exchange Commission. Unless required by law, Priceline undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. A copy of Priceline's earnings press release together with an accompanying financial and statistical supplement is available in the Investor Relations section of Priceline's website located at www.priceline.com.
And now, I'd like to introduce the Priceline Group's speakers for this afternoon; Jeffery Boyd and Daniel Finnegan. Go ahead gentlemen.
Jeffery H. Boyd - President and CEO: Thank you very much. Welcome to Priceline's fourth quarter conference call. I'm here with Priceline's CFO, Dan Finnegan. I will make some opening remarks and Dan will give a detailed financial review. After the prepared portion, we'll take questions.
Priceline reported consolidated gross bookings for the fourth quarter of approximately $6.6 billion, up 33% year-over-year. Gross bookings growth accelerated sequentially due to a slight acceleration in room night growth and a diminished foreign exchange headwind as the euro strengthened during the quarter. Non-GAAP net income was $349 million or $6.77 per share, up 26% versus prior year.
Fourth quarter results surpassed FactSet consensus estimates of $6.53 per share and our guidance for the quarter. Worldwide hotel room-night reservations were 46.2 million for the quarter, up 38% year-over-year. For the full year Priceline reported gross booking of $28.5 billion, up 31% from 2011 and non-GAAP net income per share of $31.28, up 33% increase over 2011.
2012 full year U.S. dollar denominated gross bookings and earnings growth rates were significantly reduced by a weaker euro throughout the year.
Growth rates for our international business increased slightly on a local currency basis during the quarter, with 43% gross bookings growth. Room night growth rates in Europe held up better than forecast and seasonal strength in our faster growing APAC and South American markets are helping as they become a larger portion of the global business.
Booking.com continued to build its worldwide hotel supply platform with now over 275,000 hotels and other accommodations in 180 countries and territories, up 41% over last year. Booking.com growth in Europe has shown resilience given continued economic weakness and worry in the Eurozone. We believe our market leadership in European countries currently experiencing weak economic conditions is an important part of our franchise. However, it does expose the business to cyclical weakness, but also to economic recovery and a strengthening euro during upcycles.
As you know our long-term strategy has been to build greater geographic diversity in our international hotel business by investing in markets outside Booking.com's core European market. Over the course of 2012 those newer markets grew faster and each quarter they become a larger part of the whole. These investments in the growing mix of new market business have a negative impact on operating leverage since the new markets are almost by definition less profitable than core markets. But in our view the long-term opportunity is too important to approach timidly.
Booking.com's new offline marketing experiment in United States is part and parcel of this long term strategy. We believe that the continuing strong growth we are seeing in book room nights shows we are on the right track.
Agoda delivered strong room night growth in the quarter and is establishing a leadership position in the fast-growing APAC market. We believe economic development and growth in international travel will be continued tailwinds for this business.
Priceline's domestic gross bookings grew 4% in the fourth quarter due primarily to growth in retail rental car reservations and in retail hotel room night bookings. Disruption from Hurricane Sandy had a modest negative impact on results due to cancellations and loss of reservations. Priceline.com is making good progress building the Express Deals business and reach of its mobile services. We are also excited about the new ad campaign featuring Kaley Cuoco of the Big Bang Theory, as a way to break through with our Express Deals message.
Accelerating merchant gross bookings growth of 32% continues to reflect growth at Agoda and rentalcars.com which are comprising a larger part of the merchant mix. Growth in rental car days increased sequentially from 35% to 36% driven by improved results of both products Priceline.com and rentalcars.com.
Rentalcars.com achieved consistently impressive unit growth in 2012, showing a successful transition to the unified rentalcars.com brand and good progress on the expansion of the business globally which we believe is in the early innings. With respect to Kayak, we're in the process of obtaining the remaining approvals needed in Europe and Kayak stockholder meeting to consider the transaction is slated for early March. We will have no further comment on the transaction or Kayak's results until we announce the closing date.
The Group's international businesses performed well in 2012 showing resilience in the face of weak economic conditions in major markets. Competitive pressures continue with major players ramping marketing spend and in some regions pushing discounts and promotions. As I've said for some time now, we intend to make investments in marketing and people to drive growth even if those expenditures create pressure on operating leverage. Fourth quarter results demonstrate that the business continues to support this type of investment and the achievement of strong operating margins and we believe our top-line momentum shows return on those investments.
Our aim to continue building our brands by investing in geographic expansion and supply, product and service innovation and customer acquisition.
I want to thank our employees around the world for their hard work and dedication in delivering a terrific year for their brands and for the Group.
I will now turn the call over to Dan for the detailed financial review.
Daniel J. Finnegan - CFO and Chief Accounting Officer: Thank you, Jeff. I'll discuss some of the highlights and operating results and cash flows for the quarter and then provide guidance for the first quarter of 2013. Growth rates mentioned in my remarks are in relation to the prior year comparable period unless otherwise indicated.
Q4 was a strong quarter from a top-line perspective. Hotel room night booked grew by 38% in the fourth quarter, slightly accelerating compared to the 36% growth rate achieved in Q3. Solid growth rates were posted in all of our key markets. Unit growth rate also benefits from the fact that our fast growing Asia-Pacific and South American regions represent a larger proportion of our business for the quarter due to seasonality.
Gross booking performance was strong in the back half of the quarter, which will partly benefit Q1 gross profit as our customers complete their travel. Average daily rates or ADRs for Q4 2012 were down on a local currency basis by about 1% for our international hotel service and were up by about 1% for our U.S. hotel service. Our Q4 forecast for our U.S. hotel service ADRs to be up by about 5% turned out to be too high. ADRs for the U.S. hotel service were impacted by hotel mix and Hurricane Sandy which essentially closed the high ADR New York City market for a period of time.
Rental car days booked were up by 37% also accelerating compared to the Q3 growth rate of 35%. The performance was driven by accelerating growth to both our rentalcars.com and Priceline U.S. rental car businesses.
For the fourth quarter compared to the prior year, the FX rate for the euro to the U.S. was unfavorable by about 4% and the FX rate for the British Pound to the U.S. dollar was favorable by about 2%. As a result currency exchange rate slightly depressed our year-over-year growth rate expressed in U.S. dollars for gross bookings, revenue, gross profit, adjusted EBITDA and net income.
In summary, strong unit growth rates drove Q4 gross bookings growth of 33% or 35% on local currency basis. Our Q4 international gross bookings grew by 40% and by 43% on a local currency basis. Gross bookings grew by our 4% for our priceline.com brand business in the U.S.
Good performance in retail hotel room, airline ticket and rental car reservations contributed to year-over-year growth. However, our name around price hotel service posted year-over-year decreases in gross bookings and revenue as a result of the continued pressure from competitive discount hotel initiatives. Opaque hotel did see improving gross trends as we progressed through the quarter which is carried over into Q1.
Non-GAAP gross profit for the quarter was $956 million and grew 32% as compared to prior year. Our international operation generated gross profit of $836 million which constitute an increase of 37% as compared to the prior year and an increase of 39% on a local basis. Non-GAAP gross profit for our U.S. business amounted to $120 million which represented 4%growth versus prior year. Non-GAAP operating income as a percentage of non-GAAP gross profit amount to 43.8% for Q4 2012 compared to 46.5% for the prior year quarter Q4. The operating margin declined by 270 bps compared to prior year, but was better than our guidance forecast. Margins were impacted mainly by deleverage in online advertising and personnel expense.
Online advertising grew faster than gross profit due to the continued mix shift in our business to pay channels and to our international brands which drive their business through a greater degree through online advertising. In addition, as forecasted in our guidance, we experienced lower advertising ROIs compared to Q4 2011, a trend we have seen for a couple of quarters now and which was forecasted to continue in our Q4 guidance as we will discuss in a moment.
Personnel expense in Q4 reflects the impact of people we've added to support our growing business and to help fuel future growth. G&A expense includes about $3 million in professional fees related to the Kayak acquisition.
I would like to highlight GAAP to non-GAAP adjustment we made in the quarter. Non-GAAP gross profit, non-GAAP operating income, adjusted EBITDA and non-GAAP net income are adjusted to exclude the $16.1 million charge we reported in Q4 related primarily to an unfavorable ruling in the State of Hawaii regarding hotel general exercise taxes.
Consistent with past practice, we exclude significant charges and credits for judgments, rulings and settlements related to hotel occupancy and other related taxes because the amount and timing of these items are unpredictable not driven by quarter core operating results and render comparisons with prior periods less meaningful.
Adjusted EBITDA for Q4 amounted to $426 million, which exceeded our guidance range of $381 million to $421 million and represents 24% growth versus prior year. Non-GAAP net income grew by 26%, including our lower year-over-year cash tax rate due to the Innovation Box Tax benefit in the Netherlands and a lower statutory rate in U.K.
In terms of cash flow, we generated approximately $497 million of cash from operations during fourth quarter 2012 which represents a 76% increase versus prior year. We spent about $16 million on CapEx in the quarter. For full year 2012 we generated approximately $1.8 billion of cash from operations which represents a 33% increases versus prior year. Our cash and investments of $5.2 billion as of December 31, 2012 with about $2.1 billion of that balance in the U.S. are available for general corporate purposes including share repurchases, acquisitions and debt repayment.
Now for first quarter 2013 guidance. Our forecast reflects a continuation of the strong top-line performance we saw in Q4. In addition, gross bookings for the first quarter as helped to an extent by an earlier Easter this year which causes a greater proportion of Easter booking to occur in first quarter this year compared to last year. We are forecasting total gross booking to grow by 30% to 37% and to grow on a local currency basis by approximately 29% to 36% with U.S. gross bookings growing by 5% to 10%.
We expect international gross booking expressed in U.S. dollars to grow by 36% to 43% and to grow on a local currency basis by approximately 35% to 42%. Our Q1 forecast assumes that local currency ADRs for the consolidated group will be roughly flat with the prior year. Our Q1 forecast assumes that foreign exchange rates remain at the same $1.31 per EUR1 and $1.52 per GBP1 is yesterday's closing rates, which would result in average exchange rates that would be stronger by about 1% for the euro and weaker by 2% around for the British pound as compared to the prior year. We have hedge contracts in place to substantially shield our first quarter EBITDA and net earnings from any fluctuation in the euro or pound versus the dollar between now and the end of the quarter, but these hedges do not offset the impact of translation on our gross bookings, revenue, gross profit and operating income and do not hedge our earnings beyond the first quarter.
We expect Q1 revenue to grow year-over-year by approximately 17% to 24% and gross profit dollars to grow by approximately 30% to 37%. We expect 300 to 400 bps of deleverage in non-GAAP operating income as a percentage of gross profit compared to prior year. We assume that margins in Q4 will again be impacted by deleverage in online advertising expense due to business mix continuing to shift to pay channels, as well as continuing pressure on ROIs.
We also launched our first TV advertising campaign supporting our Booking.com brand in the U.S. which contributes to the pressure on operating margins for the quarter. Although we are not giving guidance on the amount of spending for the Booking.com brand in campaign, the spending will likely spread over the quarters of the year similarly to help price on top line ad spend has historically. Operating leverage in Q1 can also be impacted by seasonal factors regarding timing difference between the recognition of revenue and certain expenses. We typically spent advertising costs as incurred but generally don't recognize revenue and gross profit until check out. A significant amount of bookings and related advertising costs typically occur in Q1 as customers make travel reservations for Spring and Easter holidays in Q2 and summer holidays in Q3 and the effect on advertising expense is more pronounced when the business sustained high levels of gross bookings growth.
Adjusted EBITDA is expected to range between $316 million and $346 million, which at the midpoint represents 22% growth versus prior year. We are targeting non-GAAP fully diluted EPS of approximately $4.90 to $5.30 per share, which at the midpoint represents 20% growth over the prior year. Our EPS forecast reflects about $2 million of additional year-over-year cash interest expense for Q1 related to the convertible bonds we issued in March last year.
Our non-GAAP EPS forecast includes an estimated cash income tax rate of approximately 15.5% comprised of international income taxes and alternative minimum tax and state income taxes in the U.S. Our non-GAAP EPS guidance assumes a fully diluted share count of 51.6 million shares based upon yesterday's closing stock price of $671.54. We forecast GAAP EPS of $4.12 to $4.52 per share for Q1. The difference between our GAAP and non-GAAP results is driven by non-GAAP adjustments that are detailed in our earnings release.
Our forecast for Q1 does not include Kayak and does not that include any related deal costs. We believe that the impact of the Kayak acquisition on our non-GAAP EPS for 2013 will be the (minimal).
Our guidance reflects actual results to-date in our forecast for the remainder of the quarter. Although, we're almost two months into the quarter due to normal seasonality, a meaningful portion of our gross bookings for the quarter are expected to be generated in March. Our guidance reflect our expectation for sequentially decelerating growth rates for a very large business comparing against high transaction growth rates. Although we have seen variability in our growth trajectory over past quarters, with some quarter decelerating fairly significantly and others accelerating sequentially, the business has generally experienced deceleration in its unit growth rates over the long-term.
That said, we're pleased with the resilience of unit growth rate for the business generally and that is inherent in our forecast for Q1. Although we still have very real concerns about economic conditions on a worldwide basis and in Europe in particular, our forecast does not reflect any potential worsening in macroeconomic conditions, our forecast does not assume any material change in macroeconomic conditions in general and conditions in the consumer travel market in particular. Given the uncertainty surrounding worldwide economic conditions, particularly in Europe where much of our business is concentrated, we believe the variability around our guidance is elevated.
We will now take your questions.
Operator: Brian Fitzgerald, Jefferies.
Brian Fitzgerald - Jefferies: Wanted a quick update on mobile, what kind of usage trends you are seeing there for your mobile apps and maybe what percentage of the mobile traffic is transactional versus just kind of browsing your competitors on shopping?
Jeffery H. Boyd - President and CEO: We're seeing very significant adoption in growth in most of the major mobile platforms, the iOS operating system, apps for the iPhone, Android, so very substantial business on mobile website brands around the world and very, very substantial business done on our www.websites on tablets. You heard some of our competition announced make shares. We don't give those numbers out, but we feel like we are doing very well in terms of the share of the business on mobile platforms and it continues to grow very rapidly and we continue to invest aggressively in apps and in mobile functionality and those investments will continue this year. We believe that there is a significant shopping behavior on mobile devices some of which translates into reservation behavior later on potentially on desktops and I think that that something that everybody is looking into to try to understand that better, but I don't have any data for you in terms of shopping versus buying.
Operator: Thomas White, Macquarie.
Thomas White - Macquarie: My question is on the guidance, specifically the international gross bookings guidance. I guess to what extent is the acceleration that you guys are guiding to relatively to how you guided 4Q coming from these newer international markets, and should we think about that effect sort of ebbing as we get into the middle kind of two quarters of this year? And then just a second follow-up on the mobile shift, how should we think about how this kind of shift to mobile and now that usage is potentially impacting or not impacting the competitive landscape in some of your key markets, do you think it sort of favors existing incumbents or favors people who are trying take share in a given market?
Jeffery H. Boyd - President and CEO: Dan, why don't you do the first one on the guidance and I will do the mobile.
Daniel J. Finnegan - CFO and Chief Accounting Officer: For Q4 Tom, Asia Pacific and South America do have the most pronounced impact as a percentage of the business, and therefore most pronounced impact on our overall growth rate and they definitely contributed to the acceleration that we delivered for Q4. We are not going to give guidance for Q2 and Q3, but typically those are less impactful quarters for those two regions. For Q1, our forecast is not for acceleration, but for some modest deceleration versus the growth rate that we posted for Q4, if you look at the midpoint of our guidance range, and performance continues to be strong across all regions.
Jeffery H. Boyd - President and CEO: On the mobile front, I think that large incumbent brands get a benefit, if they execute well, because it allows you – you have the resources to invest in building the functionality, you have the back-end to drive transaction and commerce on your mobile sites. Whereas newer smaller players basically either have to rely on advertising revenue which is not great especially on smaller devices or on third-parties for fulfillment. I think well recognized brands if they have excellent apps tend to do well in the app store because people are more likely to download apps from a recognized brand. So, I think, there are some inherent advantages and hopefully over time if our brands can execute well, mobile can become an important source of direct business and therefore very efficient for us.
Operator: Heath Terry, Goldman Sachs.
Heath Terry - Goldman Sachs: I was hoping you could kind of separate out for us even just in general terms, the degree that the increase in advertising costs that we are seeing is driven by higher transaction specific costs versus investment in brands, so say the difference between keyword prices going up versus the decision to increase spending on something like this, the Booking.com brand building that you are doing in the U.S.?
Daniel J. Finnegan - CFO and Chief Accounting Officer: We are specifically not giving out detail. We've shown the trend now for couple of quarter with worse performance when we look at online advertising efficiency expressed as a percentage of gross profit and our forecast assumes that that trend will continue. It's partly due to mix of the business, it's also due to lower year-over-year ROIs and then the offline campaign, the TV campaign for Booking.com does contribute to the pressure, but we're disclosing it now at this point in time.
Operator: Anthony DiClemente, Barclays Capital.
Anthony DiClemente - Barclays Capital: I guess just as a follow-up to that, you know I think investors are wondering on this trend of lower average ROIs. How persistent could this be and what are the factor that you look out maybe on a multiple quarter basis that could grant release to this or cause it to continue to be persistent. And that's one question and Dan I just had a couple of others. You know you mentioned Asia-Pac specifically becoming a bigger percentage of international booking, I'm just wondering if you could quantify exactly what percentage and then finally I noticed that you guys did not include international revenue either on a reported of ex-FX basis in your release, I'm wondering if you could disclose that as well?
Jeffery H. Boyd - President and CEO: Maybe Anthony I'll hit the first one with respect to lower ROIs. Our disclosure is pretty years have been very consistent that there are aspects of the market here that we don't control and that ROI is going down is a risk and I think that continues to be our disclosure. We cannot predict and we are not giving any guidance as to what we expect beyond the guidance that we gave for the first quarter. There are a lot of factors that go into ROIs that if you are trying to think about it trends and hotel average daily rates and unit economics can have an impact on ROIs general trends and cost per click specific advertiser behavior and regional mix of the business. And as I mentioned in my opening remarks, the absolute profitability of some of the newer markets that we are investing in and growing nicely in and very happy with are markets that tend to put pressure on operating margins and so mix of business over time can have an impact too.
Daniel J. Finnegan - CFO and Chief Accounting Officer: And we don't disclose what percentage of the business Asia Pac represents. As Jeff pointed out in his comments, it continues to grow as a percentage of the business because it is growing at a higher rate typically than the rest of the business. We don't disclose the specific percentage. International revenue is going to be in our 10-K, it is essentially the number as international gross profit which we do disclose so which I really disclose.
Operator: Douglas Anmuth, JPMorgan.
Douglas Anmuth - JPMorgan: I just wanted to ask I know you are not guiding here to anything beyond 1Q but is it generally reasonable to think about similar levels of margin compression here going forward, I mean you have talked a lot about the mix shift in the lower ROIs of the continued investments and the big market opportunity. Can we think about this extending over a period of time? And then also just, can you give us a sense of how you're thinking about share buybacks currently?
Jeffery H. Boyd - President and CEO: Yeah, sorry, but we're just not going to give any guidance or forecast beyond the first quarter. One statement, I will make though is, later on in the year and early next year, we're going to be comping against periods where we've experienced some margin pressure and there is a mathematical consequence to that. But in terms of how the absolute business is going to operate, we’re not going to make any comment. With respect to share buybacks, as you all know, we have an outstanding authorization that remains and that remains a use of our cash on an opportunistic basis and we don’t have anything new to say on that from what we've said before.
Operator: Naved Khan, Cantor Fitzgerald.
Naved Khan - Cantor Fitzgerald: So, just on the sales and marketing or advertising deleverage, Jeff, if we exclude sort of the regional mix shift and just look the performance and existing geographies there versus earlier periods. Can you talk about, if you are seeing similar marketing efficiency as you were previously or are you basically seeing any impact of competition even in those geographies?
Jeffery H. Boyd - President and CEO: Yeah, we're not going to get into any further regional detail than what we've said already. We have said that we've seen some deterioration in the ROIs and have guided to it for the next quarter and that's as far as we're going to go. And one comment I'll make on this and I tried to make this point in my prepared remarks, our approach to billing this business is to invest in it where we think there is an opportunity to maintain high levels of growth. We think that's what best for our customers and for our suppliers and ultimately we think that's what special for our shareholders, so we are not looking at the business with a primary intention of trying to squeeze every last dollar of operating margin from the businesses that exist today. We have a very small market share and some incredibly attractive markets that are growing at fundamentally growing at very high rates, and it just would not be right business strategy for us to be reluctant to spend there. We've got great product and a great user interface and we should be spending aggressively there. So, we're just very, very comfortable with the state of play particularly when you look at the comparative levels of our absolute margins with not just the other people, other companies in the e-travel space but e-commerce in general we've got a very robust business model here that gives us the resources to invest aggressively to try to grow as quickly as we can.
Naved Khan - Cantor Fitzgerald: Can you comment on TripAdvisor's move to towards more of a meta offering and how you view it affecting your business?
Jeffery H. Boyd - President and CEO: I think we understand why TripAdvisor is doing it and we are significant customer of TripAdvisor. They send us a lot of business and we pay them for advertising. Ultimately, we believe that the user experience of TripAdvisor is distinct from that of primarily metasearch business and certainly distinct from that of an OTA and that distinctive brand experience for us is positive in terms our advertising relationship with them and I don't have any educated insight on this, but my guess is that TripAdvisor will try to maintain that distinctive user experience and that the metasearch will just be one feature of what is a unique experience that are offering today.
Operator: Mark Mahaney, RBC Capital Markets.
Mark Mahaney - RBC Capital Markets: Two questions please. One, could you comment a little bit on the rental car markets and specifically are those all for the most part standalone sales or are you trying and are you having any success in having those being cross sell opportunities. Secondly, when you think about your marketing spend historically in Asia Pacific and Latin America part of that is obviously been for building out the brands go to Booking.com. Can you feel at all that after a couple of years of this that you reached a point just in those markets where you are starting to see greater efficiency as those brands names have been built out or is this still too early for something like that?
Jeffery H. Boyd - President and CEO: Mark, with respect to the rental car business, while the substantial preponderance of those are standalone sales we do have pretty good cross sell in the rental car business. We do a pretty good job of attaching rental car sale here in the United States to an airline ticket and to a vacation package that works well for us, we like it. Some of our hotel brands send customers to rentalcars.com and we do print a reasonable number of rental car reservations for those customers that marketing cross-sell is in its very early stages and hopefully over time it will get better, but most of that businesses is standalone, but the cross-sell is an opportunity, but most of the business is standalone. With respect to markets like Asia and Latin America, where those markets are growing rapidly, we're absolutely investing in supply in people on the ground and in marketing in those markets. I can't give you an outlook as to whether and when we'll get to greater efficiencies there certainly over time the investment in people in hotel supply should scale and give us some operating leverage on the marketing front remains to be seen.
Operator: Aaron Kessler, Raymond James.
Aaron Kessler - Raymond James: Couple questions. First, Dan, can you help us maybe quantify if possible the Easter shift, just how significant that is? Then secondly, you talked a little bit about the competitive pressures on the Opaque Hotel side, if you can expand on that a little that would be helpful.
Daniel J. Finnegan - CFO and Chief Accounting Officer: On the Easter shift, we didn’t quantify anything there Aaron. It's just logical to assume that with Easter happening on March 31 this year all the bookings related to Easter will take place in Q1, even though still a fair amount of those check-outs will actually take place in the early part of Q2.
Jeffery H. Boyd - President and CEO: With respect to the competitive pressures on opaque hotels, you know we said for a couple of quarters now that that's been a point of pressure for the U.S. business and for those who follow this closely over the last couple of years, couple of things driving that. One is competition in the marketplace from Expedia unpublished rates from some of the deals of the day sites and also some business decisions on our part for the last couple of years for advertising to focus much more on retail hotels rather than opaque hotels. If you look at the campaign that we launched at the beginning of this year, it's very significantly focused on Express Deals which is published price opaque hotel offering and so we're putting some marketing muscle behind express deals. We think it's a great product. It provides great savings for the consumer and it's a little easier to use. We published the price, you pick it and you get it. You can see a little more, net of the information with Express Deals and that is growing as a share of the total opaque business and we're happy with the results we've seen to-date and so while we still have a long way to go to get that business to where we wanted to be, we're happy with the progress that the team at Priceline.com has made in that regard over the last several months.
Operator: Justin Post, Bank of America Merrill Lynch.
Justin Post - Bank of America Merrill Lynch: Most of my questions have been answered, but just maybe a quick one on geographic progression, Jeff maybe you could just tell us how you feel about the European markets and might be U.K., France, and Germany, are you seeing any signs on saturation, as far as adding new hotels or room-nights per hotel? Then as you've seen the rollout in Latin America and Asia, how would you compare that to Europe, you've got seven years' experience. Is it progressing on that curve? And do you feel very good about those markets as three to five year growth outlook for Priceline?
Jeffery H. Boyd - President and CEO: With respect to the more established markets in Western Europe. The results that we've printed in the last couple of quarters, I think are demonstrative of some still pretty solid growth trends in those markets. I think that they provide some evidence that we haven't yet reached a point where the market is saturated. If you look at the share of total potential room-nights that we're booking, we still feel like we've got headroom there. We continue to add hotels in those markets although as I have said on previous calls there is a diminishing return and the new properties hotels and other accommodations that you had typically have fewer rooms than your existing base of supply, sometimes there are properties that are not as widely appealing to our customer base as a hotel might be, but we are still adding properties. If you look at the progress of the business in Asia and in Latin America, I think it's very impressive what the teams have done in those markets, I feel like we've made really good progress not just building supply and destination business, but we're starting to see real point-of-sale in those markets and I'm really very pleased with the progress that we've made there. But I want to caution folks and I've said this before in conferences, you shouldn't expect those markets to progress as quickly to a size that the European market has progressed to just because while the population is huge the absolute size of sort of the affluent middle-class that's in a position to take a trip and stay in a hotel is still quite a bit smaller than that population in Europe or in North America. There is good news and bad news there. The bad news is that it's not going to get as the European business did as fast as the European business did, but I think it bodes well for a very attractive long-term opportunity to drive gross to businesses even as Internet penetration grows and grows just the number of people travelling and the general travel economy should grow for a long time to come and that's particularly true in Asian markets and particularly true with respect to international travel in those markets which is growing very rapidly. So, a great long-term opportunity, but it's probably not going to get as big as fast as the businesses did in the industry in Europe.
Justin Post - Bank of America Merrill Lynch: Maybe one follow-up, you've taken a little different approach with the offline campaign here in the U.S. Is that just because the U.S. market is more mature and it's just the different approach or is that something that we might see globally?
Jeffery H. Boyd - President and CEO: I won't comment on what we might do globally. I think in the United States, there is some unique circumstances; number one is the size of the market. We've got a very, very big market that speaks the same language and a market that you can talk to with the single ad campaign and I think that's an important efficiency. The Priceline group has a lot of experience in dealing with the U.S. offline market, so that gives us some comfort that we've got a chance of executing well. Other players in the industry have very high share of voice in offline channels and that gives other players including Priceline.com for that matter an advantage in many different distribution channels when you have a well-recognized brand and so we think it's a very interesting and hopefully a profitable experiment to see what the impact of having an advertising campaign for Booking.com in the United States and how it impacts the business across the Board and we're going to be looking at that very carefully obviously over the course of the year.
Operator: Stephen Ju, Credit Suisse.
Stephen Ju - Credit Suisse: So, it's been a couple of quarter since you signed the agreement with Ctrip.com will you give us a sense of what has been one and how on a practical perspective this will play out over what time frame starting with the greater placement of your inventory on the Ctrip platform? And our second, I think on Booking.com it seems like you've added some functionality on the site for your customers to do more granular searches in terms of non-hotel types of accommodations, and if you can share in terms of how this inventory converts versus hotel and further what your view is and continue to add this type of inventory to the platform?
Jeffery H. Boyd - President and CEO: So with respect to Ctrip, that transaction has been in effect for many months now. Ctrip is sending customers to Booking.com hotels outside of China. We are happy with the relationship and the business is small, it is not something that would be visible in our results at this point in time given the size of the business but we think the long-term opportunity is attractive and we are happy with where that is at this point in time, principally Ctrip's customers travelling internationally outside of China. With respect to non-hotels Booking.com has a substantial amount of non-hotel accommodation on its website. Wouldn't make any comment on conversion specifically, but I have said including just few minutes ago that these accommodations tend to have smaller room counts and potentially narrower addressable market than the hotel market. Having said that, we think that it is a great service to offer to our customers and we will continue to invest in bringing that kind of inventory on to the website and working on the user experience both on the website and at the property to make sure that it is top notch and we have greatly satisfied customers as a result of it. So, we are going to keep at it.
Operator: Brian Nowak, Nomura.
Brian Nowak - Nomura: One more on incremental detail on APAC. Did non-APAC international content currency bookings accelerate in the quarter or was all the acceleration really driven by Asia. Then the second one, on the mobile spending side, are you finding search marketing spending on mobile to be materially less efficient from an ROI perspective than desktop. The mobile cost per click and search pricing trends adjusting appropriately for the lower conversion.
Daniel J. Finnegan - CFO and Chief Accounting Officer: So, the first one Brian, we're not disclosing the growth rates region-by-region. What we did see was we were pleased with the performance pool of our key markets and then just having the high growing market like Asia Pacific and South America constituting a larger percentage of the total led to overall helpful to consolidated growth rate as well.
Jeffery H. Boyd - President and CEO: With respect to mobile search spend efficiencies, I think we still are in such an early phase of marketing on those platforms that it’s anything that somebody would say about the long-term efficiency of marketing and mobile would be speculation or visionary or both. I just think people are experimenting their spending probably in places that they might not otherwise spend, but for the attractiveness and growth in the channel and just trying to make sure, they are not missing something. So, I just think it's too early to categorize that with any certainty.
Operator: Michael Olson, Piper Jaffray.
Michael Olson - Piper Jaffray: Just a quick one for me. You mentioned staying aggressive on advertising in new and emerging markets. You aren’t giving specific numbers around U.S. Booking.com marketing. But will the increase spend on booking in the U.S. steal from marketing spend that would have otherwise potentially been done in international market or is it completely incremental to that spend? In other words, does Booking.com U.S. brands spent either way at any of the portion of international marketing spend that would have been in place without it?
Jeffery H. Boyd - President and CEO: Absolutely not. There is no limitation on any spending by Booking.com outside of the United States as a consequence, so the off-line marketing campaign in the United States.
Operator: Kevin Kopelman, Cowen & Company.
Kevin Kopelman - Cowen & Company: Just a quick follow up on that. Can you tell us what the initial response has been to the booking – your ad campaign from customers? Does that campaign fully rolled out in terms of different ad channels that you mentioned like movie theaters and online?
Jeffery H. Boyd - President and CEO: So, the campaign is still in its very early days. There certainly have been several weeks of TV run. I think there has been some cinema as well, but only a fraction of the media that's ultimately going to be spent has been spent here in the first couple of weeks of the quarter, so a lot more to come. It's too early to give any insight into the operational impact of the advertising, it's just too early days. I will say however that when you look at the PR response to the campaign and the very highest level brand research that's available, we are very pleased with the consumer reaction to the campaign, the reaction to the creative. I think we've got a lot of nice earned media in newspapers, online, television when the campaign launched and we’re very happy with the start that we’re off to with this campaign.
Operator: Michael Millman, Millman Associates.
Michael Millman - Millman Associates: Could you tell us or describe the differences between Hotwire and Express Deals and also on the car rental where you indicated, it was strong. Currently, the Company is telling us that our opaque business is way down because of I guess consolidation and that prices at least in January and February are way up and could you comment on what you’re seeing regarding those two items?
Jeffery H. Boyd - President and CEO: So, maybe I'll do the Hotwire versus Express Deals, Dan and then you can address the car rental question. The Express Deals is similar to Hotwire in the sense that they both use the published price, but the hotel inventory can be different. The prices themselves can be different. The margin structures can be different. The way that we classify hotels in terms of star levels, the zones and the number of hotels participating, so they can be and are very significant differences in terms of the actual product as presented to the consumer.
Daniel J. Finnegan - CFO and Chief Accounting Officer: Performance for the business has been strong, Michael, both internationally and in the U.S. for our retail products and – maybe your own price product had a better quarter in Q4 and it’s having a good quarter in Q1 with better access to discounted inventory. Pricing for us was down about 2% in Q4 for both internationally and in the U.S. for our retail products.
Operator: Thank you. That does conclude the Q&A portion of our call. At this time, I would like to turn the call back over to management for any closing remarks.
Jeffery H. Boyd - President and CEO: Thank you all very much for participating in the call.
Operator: Thank you. Ladies and gentlemen, that does conclude your program. You may disconnect your lines at this time. Have a great day.