Booking Holdings Inc (BKNG) 2006 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Priceline.com first quarter 2006 conference call.

Priceline.com would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provision 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 or 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.com'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.com's earnings press release, as well as Priceline.com's most recent filings with the Securities and Exchange Commission.

Unless required by law, Priceline.com 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.com's earnings press release together with an accompanying financial and statistical supplement is available in the Investor Relation section of Priceline.com's website located at www.priceline.com.

And now I would like to introduce Priceline's speakers for this afternoon, Jeff Boyd and Bob Mylod.

Go ahead, gentlemen.

Thank you very much.

And welcome to Priceline's first quarter conference call.

I'm here with Priceline's CFO, Bob Mylod.

Priceline's gross bookings growth exceeded our original expectations in the first quarter with accelerating organic growth rates for both our domestic and European operations.

Gross bookings of $747 million were up 47% year-over-year, pro forma gross profit of $72.6 million was up 25%, and pro forma net income was $7.6 million, or $0.19 per share, which is in-line with our previous guidance and First Call consensus estimates.

First quarter results include results from Bookings B.V., acquired in July of 2005.

Priceline's organic gross bookings growth rate, assuming the acquired businesses were owned for the full period in question and excluding the retail hotel business on Orbitz, for the first quarter was 33%, a sequential increase from 21% in Q4.

Priceline Europe had an excellent quarter, with $273 million of gross bookings and an organic growth rate of 102%, accelerating from 88% in Q4, and significantly in excess of that reported by our competitors.

Priceline's domestic organic growth rate was 10% in the first quarter, an increase from 5% in Q4.

Merchant gross bookings were down 1% in the first quarter, a slight improvement from negative 3% in Q4.

We experienced a continued year-over-year decrease in OPEC airline ticket sales, roughly consistent with the rate of decline experienced in the second half of last year.

Domestic results were helped by strong retail hotel sales and growth in rental cars and packages.

We believe our U.S. business is benefiting from the redesign of our website, and the new "More Ways To Save" advertising campaign, and increased contribution from online channels, including Orbitz, where our OPEC service is offered as a discount option.

With a full service lineup, improved content, a consistent web presentation, and diverse distribution channels, we believe Priceline is well-positioned in the United States to build on the improving trends we saw in the first quarter, and the second quarter is off to a good start in this regard.

With its market leadership as a value player, Priceline should be an important option for leisure travelers this summer looking for savings opportunities to bring relief from the impact of high gas prices on the cost of their summer vacation.

Priceline's airline ticket sales were down 3% in Q1, an improvement from negative 10% in Q4.

It bears mentioning, however, that gross profit contribution from sales of airline tickets trails that of last year's first quarter to a greater degree, due to pressure on margins from inventory constraints and pressure on GDS economics.

The financial difficulties of the airlines compounded by high fuel costs and high domestic loads as strong demand presses up against reduced domestic capacity will continue to present challenges for online travel players as airlines seek ways to reduce the cost of selling tickets through intermediary channels and ramp their investment in driving traffic to their own sites.

These forces will certainly be in play this summer as the outcome of the renegotiation of long-term airline GDS agreements, which impact the level of incentive income we receive, is far from clear.

Having repeated this cautionary remark on successive conference calls for over a year, I note that contribution from ticket sales is becoming a smaller and smaller percentage of our gross profit.

Due to the size and success of our other businesses, we have been able to grow our earnings during that period despite a significantly deteriorating ticket business.

Our growth in Europe stems from a number of sources.

Priceline Europe is focused on the continued expansion of its business in rapidly growing markets in continental Europe.

The success of our European management in penetrating the faster growing continental markets have resulted in an accelerating organic gross rate in Q1, and we believe, continued share gains against the competition.

We also started to see the benefits in the first quarter from the integration of hotel inventory of Bookings and Active, although a full combination of inventory has not yet been achieved.

Moreover, we have started to drive European demand for U.S.

Hotels and U.S. demand for European inventory, and both of those efforts are producing reservations.

We have seen very positive results from all of these initiatives, but each has plenty of running room ahead, in our opinion, and consequently, the outlook for growth in Europe seems promising.

Accordingly, as you can see in our press release and will hear from Bob in a moment, we are guiding towards significant growth in gross profit dollars in Q2 and beyond, and increased full year pro forma EPS.

Priceline's objective is to be the leading U.S. online destination for value-conscious leisure travelers and the number one online hotel reservation service in Europe.

The positive trends in the U.S. business are evidence that the savings we provide and the consumer support for Priceline's brand provide a solid foundation for our position as the leading value player, despite a macroenvironment, that with record high airline loads and hotel occupancy is challenging to say the least.

In Europe, the gross trajectory of Priceline Europe is supportive of the market leadership to which we aspire with a single-minded focus that represents a tangible advantage against competitors who face a number of significant distractions.

We believe Priceline is well-positioned to deliver solid pro forma earnings growth for 2006.

I will now turn the call over to Bob for the financial review.

Thanks, Jeff.

I'm going to give a brief review of our Q1 results and then I'm going to finish with some forward guidance.

As you can probably surmise from Jeff's comments, the theme for Q1 is all about accelerating gross bookings momentum.

Total Company gross bookings grew by 46.5% on a year-over-year basis.

Domestically, we were pleased to see our annualized gross bookings growth increase on a quarterly sequential basis.

And in Europe, we have a success story unfolding that is having and will continue to have an ever-increasing impact on our overall results.

As Jeff said, Priceline Europe performed significantly above and beyond our most optimistic expectations for the quarter.

In our last earnings call, we projected that Priceline Europe would generate approximately 180 to $200 million of gross bookings in Q1.

Actual gross bookings came in at $272.8 million.

For each of the last two consecutive quarters, we have expected year-over-year organic comparable growth rates to get more difficult as we comped against increasingly larger numbers from the prior year.

And yet, for the second consecutive quarter, our annualized organic bookings growth rates in Europe actually accelerated on a quarterly sequential basis.

The strong gross bookings performance allowed us to deliver gross profit dollars that came in at the high end of our guidance.

And keep in mind that our retail hotel services in general and our European hotel service, specifically, recognized revenue not when the customer books his or her reservation, but rather when the customer checks out of his or her hotel room.

I went over this in quite a bit of detail in our last earnings call, but to quickly recap: In Q1, customer room night checkouts are less than customer room night reservations, as leisure customers tend to travel less in Q1.

But they do book a meaningful amount of their expected spring and summer vacations during the quarter.

From a financial perspective, this means that a meaningful amount of the retail bookings that were made in Q1 will not be recognized as revenue until future quarters.

I'm going to put some numbers behind this thought when I get to guidance, but suffice it to say that we finished Q1 with a very strong backlog of booked reservations that have not yet been recognized as revenue, and this gives us confidence in projecting strong results for the remainder of 2006.

And that brings me to a discussion of Q1 operating expenses, and more specifically, our advertising expense.

Again, I would like to remind our investors of our accounting policy that dictates that we expensed the substantial majority of our advertising activities in the period in which we generate the gross bookings.

And that creates a mismatch in the timing between the accelerated recognition of advertising expense on the one hand, and the deferred recognition of revenue and gross profit on the other.

Accordingly, because our gross bookings were so strong in the quarter, our Q1 advertising expense of $31.3 million came in towards the high end of our previous guidance.

All of our other operating expenses for the quarter collectively came in roughly on top of the guidance that we gave on our last earnings call.

We reported pro forma net income of $0.19 per share, which came in right in the middle of our previous range of guidance and was right on top of First Call consensus estimates.

We reported GAAP loss of $0.02 per share for the quarter, also consistent with our guidance.

As we outlined to investors on our last earnings call, our GAAP results were negatively impacted primarily by approximately $6 million of acquisition-related amortization expenses, primarily associated with our acquisitions of Travelweb, Activehotels, and Bookings B.V.

And $3 million of stock-based compensation expense, which reflected the adoption of FAS 123R during the quarter.

All of these expenses were non-cash in nature.

As for cash and cash flow, we generated approximately $20.3 million of operating cash flow during the quarter.

We began the quarter with $175.4 million of cash and marketable securities, and we closed the quarter with $188.4 million of cash and marketable securities, representing an increase in cash of $13 million in the quarter.

During the quarter, we used our cash to acquire approximately $5.6 million worth of our common stock, pursuant to our share buyback program.

Total capital expenditures in the first quarter were approximately $2.1 million.

Now for a few comments on guidance.

We're looking for second quarter gross bookings to grow by approximately 45 to 50% on a year-over-year basis.

We expect Q2 gross bookings from Priceline Europe of approximately 300 to $320 million.

We expect revenue to grow by approximately 8 to 12% on a year-over-year basis.

We expect pro forma gross profit dollars to grow by approximately 45 to 50% on a year-over-year basis.

As for Q2 operating expenses, we're targeting consolidated advertising expenses of approximately 36 to $40 million with approximately 75% of that amount being spent on online advertising.

We expect sales and marketing expenses of between 11 and $12 million.

We expect personnel costs to come in between 14 and $14.5 million.

We expect G&A expenses of approximately 6.3 to $6.6 million.

Information technology costs of approximately 2.6 to $2.8 million.

And depreciation and amortization expense, excluding acquisition-related amortization of approximately $2.6 million.

We're targeting pro forma EPS of approximately $0.48 to $0.53 per share.

Our pro forma EPS forecast includes an estimated cash income tax expense of approximately $3 .5 million comprised of alternative minimum tax in the United States and income taxes in Europe.

As for expected GAAP results, we expect to report GAAP net income of approximately $0.21 to $0.26 per share.

The difference between our GAAP and pro forma results will be driven primarily by the inclusion of acquisition-related amortization, stock-based compensation, and certain income tax expenses, all of which are non-cash in nature.

GAAP results will also be negatively impacted by the inclusion of 5.76 million shares of unissued common stock associated with our two convertible note offerings that we were required to use in the calculation of our GAAP EPS.

These shares are no issuable unless our stock reaches a level of approximately $40 per share.

While we're not going to give detailed line item guidance for full year 2006, we are comfortable providing an update to the full year guidance that we gave on our last earnings call.

To recap where we were before today's update we had been forecasting total gross bookings of 2.7 to $2.9 million for full year 2006, with approximately 8 to $900 million of that amount coming from Priceline Europe.

We also had forecasted a pro forma EPS range of between $1.50 and $1.65 per share.

Because of our strong Q1 results and the visibility that those results give us with respect to the remainder of the year, we are now expecting to achieve full year gross bookings of approximately 2.9 to $3.1 billion of which approximately $1.1 billion is expected to be generated by our European operations.

Finally, we are now targeting pro forma EPS of approximately $1.60 to $1.70 per share.

GAAP EPS is expected to be approximately $0.62 to $0.70 per share, as a result of the same non-cash items that will impact Q1 and the inclusion of the additional 5.7 million shares of unissued common stock associated with our two convertible note offerings.

Before we take your questions, I wanted to make two additional points pertaining to Priceline Europe.

The first point relates to the full-year guidance that I just gave.

As I said at the beginning of my remarks, the gross bookings performance that Priceline Europe delivered in Q1 was substantially ahead of our most optimistic expectations.

It is primarily because of this performance that we have upped our full year bookings and EPS guidance.

Having said that, our forward guidance for Priceline Europe implies a deterioration in our gross bookings and that revenue growth rates that, frankly, we simply have not yet seen.

In fact, our April gross bookings were very strong, and our revenue and gross profit in April benefited from having the Easter holiday in April this year as opposed to March last year.

As a result, our revenue and gross profit in Europe for April grew by approximately 50% on a monthly sequential basis.

It is certainly possible that by the time we get to year end, the gross bookings guidance that we are giving for Europe today may end up looking conservative in retrospect, and if so, today's EPS guidance might also seem conservative.

However, we feel that it is prudent to not get too far ahead of ourselves when forecasting Priceline Europe because a disproportionately high percentage of full year gross profit and operating income is still to come in the second through fourth quarters.

We're also expecting some volatility in our European gross bookings and gross profit during Q2 and Q3 as a result of the World Cup Soccer Tournament that will take place in Germany this June and July.

A second point has to do with the profitability of our European operations.

Historically, we have not given specific profitability metrics for our European operations, and we do not expect to start doing so now or in the future, especially because it is our goal to continue to further integrate our websites and supply platforms on a worldwide basis so as to make geographic attribution less and less meaningful.

Having said that, I did want to point out that the strong growth in gross bookings that we are generating in Europe is translating into very strong bottom line results.

Specifically, we expect that Priceline Europe will account for more than half of our total Company pro forma operating income in 2006, up by well in excess of 50% on an organic year-over-year basis.

As Jeff mentioned in his remarks, our stated goal is to become the number one online hotel service provider in Europe.

And while our operating results in Europe are extremely promising they also reflect a significant amount of expense that we are incurring to build our business to support the achievement of that goal.

Specifically, we are in the process of building out significant data center infrastructure and server capacity to support our growth initiatives.

We have expanded and expect to continue to expand our existing offices in the Netherlands, the United Kingdom, France, Germany, Spain, and Italy.

We are also in the process of opening new offices in Ireland, Austria, and Portugal, and we have significant expectations for greater reach in Eastern Europe and beyond.

The full year EPS guidance that I'm giving today is reflective of the expenses associated with all of this development activity, yet the return on investment from this activity is not expected to be very visible until we get towards 2007.

Suffice it to say though that our rapid topline growth and strong profit profile in Europe combined with all the forward-looking development activity that we are currently engaged in makes us increasingly optimistic about our ability to deliver strong results in 2007 and beyond.

Finally, I want to point out as I've done on previous calls that all of the forecasts are based upon an assumption that we will continue operating on a consumer travel market that is roughly similar to the current one, and any geopolitical instability or terrorist event, particularly within the United States or Europe, would in all likelihood have a negative impact on the travel market, in general and our operating results, in particular.

And with that, we would be happy to answer your questions.

[OPERATOR INSTRUCTIONS].

Our first question comes from Mark Mahaney of Citigroup.

Hey, great.

Thank you very much.

If you could provide a little bit more detail on the significant outperformance you saw in Europe?

And I don't know is there any way you could break that down, maybe regionally, or were there certain travel segments or demographic segments that came on particularly strong, or were there particular market share gains versus any singled out competitors that led to that outperformance?

Thank you very much.

I think that we would be happy to describe that the fastest growing markets are on continental Europe versus the U.K.

The U.K. market is more mature.

And while still a growth market, is not growing at the same rates as the major Western European countries are.

I don't think we want to get into anymore detail about performance against specific competitors or particular channels, though.

Okay.

And then one, I'm switching over to the, just the GDS economics, and I know that's something that you've been discussing and talking about for quarters at length.

But when do you think you'll actually get pretty decent visibility into what the full impact could be on your economics?

Do you think it will be by this summer, or could this -- is it potentially something that visibility won't be clear until the end of the year?

Thanks.

I think that most of the renegotiations of contracts between the major GDSs and the airlines will be done by the end of the summer.

And I would expect that at or shortly after that time there should be some more visibility on what the impact, if any, of that is on our results.

As you know, Mark, we have had in our historical numbers the impact of increasing GDS economics and have been including impact in our forecast as well.

Thank you.

Our next question comes from Anthony Noto of Goldman Sachs.

Thank you very much.

Jeff and Bob, I apologize for any noise in the background.

A couple of questions.

The press release kind of eludes to the fact that the business could be potentially countercyclical, I was wondering if you could elaborate on that at all and if that's incorporated in your guidance?

Second question, acceleration and growth both domestically and internationally, I was wondering if you could break that down?

I think about the input to revenue from a from traffic standpoint, conversion rate standpoint, and then ASPs, and that could be based on mix or what have you.

Where are you seeing this rapidly acceleration as it relates to traffic conversion rates and average selling price or [inaudible] that's driving that influence or if you get more insight?

And the final question is, certain amounts of potential sale of its business as opposed to a public spinoff, are there assets there that you think could enhance your strategic positioning and that are not one as well as you may be able to run them given your execution in this challenging market and outperformance of a lot of your competitors?

Thanks.

The first question as to countercyclicality, I don't think it was our intention to imply that we were highly countercyclical, if I understand the words your focused on.

I think we believe that Priceline offers great value to customers and sometimes that value has a higher significance in times when other costs are going up.

And so we like to think that that's a benefit of our market positioning, but it's not something that we can demonstrate or would ask people to forecast for us.

As to accelerating growth, I think the -- we're getting significant benefits across a number of areas.

We have, as you know, a fully redesigned website that's now consistent across all products and an integrated marketing campaign, and we think that those changes in that advertising campaign are working well, and we have seen some improvements in our overall conversion in certain products, which we think are the result of those changes.

So I think we're getting that kind of benefit.

In Europe, they're in the course of building out a business on Continental Europe where they're consistently adding supply and distribution to the website and to their products.

And so I don't think that the growth is absolutely derivative of an increase in traffic to a particular property that they have, but rather a continued increase in hotel inventory, a continued increase in traffic across a number of different countries.

And as I mentioned in the prepared remarks, we are starting to see the benefit of combining inventory of Active and Bookings, and that translates to a conversion benefit.

Then how about the last question on [inaudible]?

Oh, I was hoping you would forget that you asked that question.

We really can't comment on that.

They've got a bookout and they're engaged in the process and I just don't think that's something that we really would comment on.

Jeff, did you look at the book? [Laughter].

That was a joke.

Thanks.

Sure.

Our next question comes from Scott Barry of Credit Suisse.

Thanks.

A couple of questions.

When you gave your last guidance midway through the quarter, just to go back to the gross bookings, did a faucet turn on or is there anything you could point to that would account for the acceleration you saw in the month of March?

And then secondly, that 1.1 billion of European volume, is it still safe to assume that's essentially all 100% merchant hotel inventory?

Thanks.

Well, actually, it's really agency.

The transactions in Europe are structured under the agency model.

But, yes, it's safe to assume that basically all that 1.1 billion is our hotel product in Europe.

As for the Q1 results, it really is a function of the second half of the quarter just being very substantially higher than we thought with obviously March being very, very substantially higher.

Although, there was a little bit of -- as I mentioned in my prepared remarks, Easter was a March holiday last year and Easter was an April holiday this year.

And I think, obviously, as March unfolded, we ended up getting a lot of bookings associated with the Easter holiday, which again, as I said, you will not see as revenue until April.

But that is partly why you saw such a -- I mentioned our monthly, sequentially, revenues in April were up 50% versus revenues in March.

And I think there's a little bit of an Easter phenomenon there.

Hey, just one last question, if I might, Bob.

You mentioned some of the profitability in Europe.

Is it safe to assume just plugging some of those numbers, it looks like it's safe to assume that your agency net revenue yield is going to continue to trend upward through the next couple of quarters?

I want to make sure I understand -- when you say agency net revenue, are you saying revenue divided by gross bookings?

Right.

Yes, absolutely.

And that's consistent with as we recognize more revenue, especially -- and that will become even more pronounced in Q3 as we actually have more consumption of vacation as opposed to bookings.

And so the trends that you saw last year, you should expect to see again this year.

Right.

But on a year-over-year basis as well?

On a year-over-year basis, there could be some movement in the specific timing of revenue recognition.

As I mentioned, we have one sort of small wild card in Europe, which is the World Cup Soccer Tournament.

We did see two years ago with the Europe Cup that the movement in the bookings and reservations actually -- it did have somewhat of an impact.

It didn't ultimately change what the full result was for the two quarters, but it could potentially have an impact.

I wouldn't expect that there should be a material difference between this year and last year.

I think our core margins are very steady, if not maybe slightly increasing.

Okay, great.

Thanks.

Our next question comes from Justin Post of CIBC.

This is James Sanford for Justin Post.

Just a couple of quick questions.

Most of the questions have been asked so far.

I wanted to know whether you thought the online travel strength that you guys are seeing is really indicative of the marketplace, or whether you really think it's more share gain?

And secondly, what's really the classic Atlantic opportunity?

If you could give us a little bit more color on that, that would be appreciated?

Thank you.

Sure.

I think that our results are reflective of attractive markets.

I think the market in the United States continues to offer the opportunity for growth for online travel agents.

The growth rates have come down over the last three or four years, but I think it still represents an attractive market.

And in Europe, the growth rates are significantly higher in general than in the United States.

So that market is even more attractive, particularly in Continental Europe, where internet penetration and e-commerce usage and e-travel usage is just at much lower levels than it is in the U.K. and here, obviously.

So I think the markets are very attractive, but I do believe that we have a winning product in Europe, a winning business model that's great for the hotels and great for the consumers.

And I think that's one of the reasons that we are growing at faster rates and I think taking share in hotel sales from our competition.

And your second question?

Yes, the second point on -- presumably, you're asking about the opportunity for Europeans traveling to the U.S. and U.S. citizens traveling to Europe.

I guess what I would say is inherent in the numbers and in the guidance for 2006 is very little transactions associated with either activity.

But yet we know that the United States is a very major travel destination for Europeans and we also -- our best intelligence is that some of our competitors have very big businesses for Europeans traveling to the U.S.

So we look at that as a very large opportunity.

I'm not necessarily going to define dollar-wise what it is, but we know it's a very big opportunity that is in front of us.

Because, again, as I said, it really doesn't represent much of any of our business right now.

Our European bookings are primarily Europeans traveling within Europe at this point and we know that there's a lot more to go after than just that.

Thank you.

Our next question comes from Aaron Kessler of Piper Jaffray.

Hi, guys.

Good quarter and a couple quick questions for you.

First, on some of that traffic data from third-party sources, we're showing actually a decline in the U.S. business.

I was wondering if you can comment on whether you are seeing declines in consumer traffic to this site?

Also, in terms of the travel environment in the U.S., I mean has it improved a little?

It looks like gross bookings were a little better on a sequential basis at least.

And where are you in terms of your marketing efforts on the international front?

Thanks.

I mean in terms of the published travel sources, I think we make a point not to comment on the relationship between our business and published travel just because -- published traffic information -- just because there's very often a complete disconnect between the two.

So I really don't have any comment specifically with respect to public traffic.

But in terms of the U.S. travel environment and our own business, I think you could see from the results that Cendant announced with respect to its U.S. business and as well as the results that we've announced, that there seems to be a healthy strength of demand for travel and for the products sold by online travel agents.

And I think the results that have been announced so far are positive.

And with respect to our product, in particular, because we've so significantly revamped our product line here over the last couple of years, capping it off with a complete change to the look and feel, and changes to the functionality on our hotel and rental car sites, we're very, very pleased to have completed the first quarter with those changes and to see really a positive impact on our business and our business trends.

It tells us that the consumers are responding well to those changes and it tells us that they're responding well to our new advertising.

So we think that those are all good signs for U.S. travel, in particular, but for Priceline's product here in the United States specifically.

As to international marketing, I think you can see from the results that we've announced today that we've been extremely successful in building really solid momentum in driving growth in international hotel sales.

We've been doing it -- the marketing spend is in our published numbers.

It's an online marketing program there and it's got great efficiencies.

As Bob mentioned, we're forecasting very significant profitability in Europe.

So I think that tells you that we've got a very, very solid momentum in Europe in our distribution channels and that we are acquiring business at a reasonable cost.

Great.

Are you still reporting the metrics?

I didn't see any metrics in this quarter's results.

Yes, we have unit metrics in the [multiple speakers] --.

Okay.

Yes, that's on our website, so all the metrics are there on our website.

Great, thank you.

[OPERATOR INSTRUCTIONS].

Our next question comes from Michael Millman of Millman Research.

Thank you.

I guess also starting with the last of -- you give your guidance in European bookings, but then you report on merchant and agency.

Could you give us the gross profit or the pro forma gross profit for Europe and the U.S.?

Secondly, are there other consolidators in Europe and Continental Europe that some of your competitors might be likely to have purchased considering the [inaudible] fee in your business?

And can you update us on what your timing is or whether there is any timing regarding starting to use Priceline as a Worldspan?

Do you mean -- I assume you mean Sabre instead of Worldspan?

Sorry, yes, Sabre.

Okay, I'll take the first one and maybe Jeff, you could take the next two.

I think the question was, could we breakout the revenue between U.S. and Europe.

And the answer is, yes.

Our revenues from Europe in the quarter were -- and I don't have the exact number in front of me.

It was approximately $22.5 million, 22.4, 22.5 million, so the remainder would be coming from the U.S.

And that's all [inaudible] revenue, so it would appear on the agency line item.

And then we will have all that disclosure in the Q that we file in a couple of days.

So that would also be the same as your gross profit there?

Pretty much, exactly right, yes.

As to the question whether there are other consolidators that are available in Europe to be purchased by our competitors.

There certainly are other businesses in Europe that sell hotel reservations online.

I think that there -- a number of them tend to be more focused on a single country.

And to the extent that others have businesses that reach out to other countries, they don't have the [pan] European presence that Priceline Europe does.

There are also businesses that are out there that have fundamentally different business models from that of Priceline Europe.

And, in fact, our competition, generally the big U.S. competitors that are operating businesses in Europe are prosecuting a different model on the hotel front than we are.

So I think that creates challenges in trying to either change their model or go into an acquisition in a big way of a business that has a fundamentally different model.

As to the timing of Sabre versus Worldspan, we said at the time of the announcement that we were working on implementation and that we felt that it would be a matter of months, not years.

And I think that there's -- that we're targeting being able to book on Sabre later on this year, but I don't want to get anymore specific than that, really.

When you say you'll be able to, does that suggest that you will?

We have a very significant degree of flexibility in what we choose to do and the arrangements around which these transactions are going to take place have a lot to do with negotiations yet to come between the airlines themselves and these GDSs.

And so I think the landscape is not concrete enough for us to predict exactly where we're going to be booking segments, but the important thing is that we have the flexibility to do so in a couple of different venues here, and we'll have the ability to do so later on this year.

And when you say different models -- different business model in Europe, you mean the big U.S. online agents have a merchant model?

That's right.

Thank you.

I'm not showing any further questions at this time.

Well, thank you all very much for participating.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes the program.

You may all disconnect.

Everyone, have a great day.