10-KPeriod: FY2013

Booking Holdings Inc. Annual Report, Year Ended Dec 31, 2013

Filed February 20, 2014For Securities:BKNG

Summary

Booking Holdings Inc. (then The Priceline Group) presented its 2013 annual report, highlighting robust growth primarily driven by its international operations, especially Booking.com. The company emphasized its diversified business model, which includes accommodations, rental cars, and meta-search services, with international segments contributing approximately 85% of gross bookings and 94% of operating income. Strategic acquisitions like KAYAK further expanded its market reach and service offerings. Financially, the company demonstrated strong top-line growth, with a significant increase in gross bookings and revenues. A key focus for investors is the company's increasing reliance on and investment in online advertising, which outpaced gross profit growth, impacting return on investment. The company also highlighted ongoing investments in technology and mobile platforms to maintain its competitive edge in the rapidly evolving online travel industry. Potential risks include intense competition, currency fluctuations, and significant ongoing litigation related to travel transaction taxes.

Financial Highlights

53 data points
Beta

Revenue

$6.79B

84.1% Gross Margin

Net Income

$1.89B

27.9% Net Margin

EPS (Diluted)

$1.44

Total Assets

$10.44B

Cash & Equivalents

$1.29B

Free Cash Flow

$2.22B

Financial Statements
Beta
Revenue$6.79B
Cost of Revenue$1.08B
Gross Profit$5.72B
Operating Expenses$3.30B
Operating Income$2.41B
Interest Expense$83.29M
Net Income$1.89B
EPS (Basic)$1.49
EPS (Diluted)$1.44
Shares Outstanding (Basic)1.27B
Shares Outstanding (Diluted)1.31B

Key Highlights

  • 1International operations, led by Booking.com, were the primary growth engine, accounting for approximately 85% of gross bookings and 94% of operating income in 2013.
  • 2The company successfully integrated its acquisition of KAYAK in May 2013, expanding its meta-search capabilities and market presence.
  • 3Gross bookings increased by 37.7% year-over-year, driven by strong performance in accommodation room nights and rental car days.
  • 4Online advertising expenses grew by 41.2%, outpacing gross profit growth, leading to lower online advertising ROIs.
  • 5The company faces ongoing litigation and regulatory scrutiny concerning travel transaction taxes in various U.S. jurisdictions, with an accrual of $55 million established for potential resolution.
  • 6International cash balances totaled approximately $4.9 billion, with the company intending to reinvest them in foreign operations rather than repatriating them to the U.S. due to tax implications.
  • 7The company's stock symbol was PCLN during this period.

Frequently Asked Questions

The primary driver of Booking Holdings' growth in 2013 was its international operations, particularly the Booking.com brand, which contributed the substantial majority of gross bookings and operating income.

The company continues to invest heavily in online advertising to drive traffic and brand awareness, primarily through search engines, meta-search services, and affiliate marketing. However, it noted that online advertising expenses grew faster than gross profit, leading to lower return on investment (ROI) in 2013.

The company is involved in numerous lawsuits and inquiries related to the collection and remittance of travel transaction taxes (e.g., hotel occupancy taxes) in various U.S. jurisdictions. It has established an accrual of $55 million for potential resolutions.

The acquisition of KAYAK in May 2013 expanded the company's service offerings into meta-search, allowing consumers to compare travel options from various websites. It also contributed to advertising revenues and influenced the company's online advertising expense ratio.