01—Abstract
Summary
Summary of the 10-K filed February 27, 2013. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly Priceline.com Inc.) reported strong financial performance in its 2012 10-K filing, driven primarily by its international operations, particularly Booking.com, which accounted for a substantial majority of gross bookings and operating income.
The company highlighted robust growth across its brands, including Agoda.com and Rentalcars.com, and emphasized its strategy to maintain global leadership in online hotel and accommodation reservations. While the company experienced significant growth, it also faces increasing competition from established tech giants like Google and Apple, as well as emerging online travel companies.
The report details ongoing legal proceedings related to hotel occupancy taxes and the company's strategy to navigate these challenges. The company is also in the process of acquiring KAYAK Software Corporation, a significant strategic move expected to close in the first half of 2013.
02—Key points
Key Highlights
- International operations are the primary growth engine, contributing 82% of gross bookings and 92% of operating income in 2012.
- Booking.com is the world's largest hotel and accommodation reservation website, serving customers globally.
- The company is actively expanding its service offerings and geographic reach, with a focus on international markets.
- A significant pending acquisition of KAYAK Software Corporation for $1.8 billion was announced in November 2012, signaling strategic expansion into meta-search.
- The company faces intense competition from online travel agencies, meta-search sites, and technology giants.
- Ongoing legal proceedings related to hotel occupancy taxes represent a notable risk, with an accrual of $56 million as of December 31, 2012.
- Online advertising expenses continue to rise, driven by international brand growth and recent lower returns on investment, while the company aims to maintain brand awareness and traffic generation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Booking Holdings Inc. kept $0.27.
- Revenue$5.26B100.0%
- Cost of revenue−$1.18B22.4%
- Gross profit$4.08B77.6%
- Operating costs−$2.25B42.8%
- Operating income$1.83B34.8%
- Interest, other & tax−$405.8M7.7%
- Net income$1.42B27.1%
Where FY2012 revenue went
$5.26B- Operating costs: $2.25B, 43% of revenue
- Net income: $1.42B, 27% of revenue
- Cost of revenue: $1.18B, 22% of revenue
- Interest, other & tax: $405.8M, 7.7% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 27, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $5.26B$4.36B | +20.8% |
| Cost of Revenue | $1.18B$1.28B | −7.7% |
| Gross Profit | $4.08B$3.08B | +32.6% |
| Operating Expenses | $2.25B$1.68B | +34.1% |
| Operating Income | $1.83B$1.40B | +30.8% |
| Interest Expense | $62.06M$31.72M | +95.7% |
| Net Income | $1.42B$1.06B | +34.5% |
| EPS (Basic) | $1.14$0.85 | +33.9% |
| EPS (Diluted) | $1.11$0.83 | +34.1% |
| Shares Outstanding (Basic) | 1.25B1.24B | +0.4% |
| Shares Outstanding (Diluted) | 1.28B1.28B | +0.2% |
05—Questions
Frequently Asked Questions
What is the primary driver of Booking Holdings' revenue and profit?
Booking Holdings' (then Priceline.com Inc.) primary driver of revenue and profit in 2012 was its international operations, particularly through its Booking.com brand, which accounted for approximately 82% of gross bookings and 92% of consolidated operating income.
What are the key risks and challenges facing Booking Holdings?
Key risks and challenges include intense competition from established online travel agencies, meta-search engines, and large technology companies (like Google and Apple), fluctuations in the travel industry due to economic conditions and unforeseen events, increasing online advertising costs with potentially lower returns on investment, and significant ongoing legal proceedings related to hotel occupancy taxes.
What is the strategic significance of the KAYAK acquisition?
The acquisition of KAYAK Software Corporation, a leading meta-search service, for $1.8 billion, is a significant strategic move aimed at expanding Booking Holdings' presence in the travel search market. This acquisition, announced in November 2012 and expected to close in the first half of 2013, would enhance the company's offerings and competitive position.
How is the company addressing the growth of mobile travel?
The company recognizes the substantial shift of business to mobile platforms and is investing in developing new, user-friendly mobile offerings and optimizing its mobile websites. It views mobile bookings as a crucial opportunity for continued growth and necessary to maintain market share against competitors and new entrants.
06—Continue