01—Abstract
Summary
Summary of the 10-K filed February 27, 2018. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly The Priceline Group Inc.) reported strong financial performance for the year ending December 31, 2017, driven by its global online travel reservation services.
The company operates a diverse portfolio of brands including Booking.com, Priceline.com, KAYAK, Agoda.com, Rentalcars.com, and OpenTable, with a significant majority of its gross profit (approximately 89%a) generated from international operations, primarily Booking.com. Revenue growth was robust, and the company highlighted its strategic focus on providing consumers with optimal choices and prices, enhancing the user experience, and fostering mutually beneficial partnerships with service providers. Key financial highlights for 2017 include substantial growth in gross profit, a significant increase in advertising spend to drive brand awareness and customer acquisition, and a solid balance sheet.
The company also navigated evolving accounting standards, particularly regarding revenue recognition, and continued its strategic investments in technology and brand building. Despite facing intense competition and macroeconomic uncertainties, Booking Holdings demonstrated resilience and a clear strategy for continued expansion and market leadership in the online travel sector.
02—Key points
Key Highlights
- Company rebranded from The Priceline Group Inc. to Booking Holdings Inc. on February 21, 2018.
- International operations, primarily Booking.com, accounted for approximately 89% of consolidated gross profit in 2017.
- Total revenues grew 18.0% to $12.68 billion in 2017, with agency revenues showing strong growth of 21.7%.
- Gross profit increased by 20.5% to $12.43 billion in 2017, with gross margins improving to 98.0%.
- Significant investment in marketing, with performance advertising at $4.1 billion and brand advertising at $392 million in 2017.
- The company adopted a new revenue recognition accounting standard effective January 1, 2018, changing the presentation of revenue recognition from 'check-out' to 'check-in'.
- Acquisition of Momondo Group in July 2017 for $555.5 million, enhancing the KAYAK meta-search business.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Booking Holdings Inc. kept $0.18.
- Revenue$12.68B100.0%
- Cost of revenue−$242.1M1.9%
- Gross profit$12.44B98.1%
- Operating costs−$7.90B62.3%
- Operating income$4.54B35.8%
- Interest, other & tax−$2.20B17.3%
- Net income$2.34B18.5%
Where FY2017 revenue went
$12.68B- Operating costs: $7.90B, 62% of revenue
- Net income: $2.34B, 18% of revenue
- Interest, other & tax: $2.20B, 17% of revenue
- Cost of revenue: $242.0M, 1.9% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 27, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $12.68B$10.74B | +18.0% |
| Cost of Revenue | $242.00M$415.00M | −41.7% |
| Gross Profit | $12.44B$10.33B | +20.4% |
| Operating Expenses | $7.90B$7.42B | +6.5% |
| Operating Income | $4.54B$2.91B | +56.2% |
| Interest Expense | $254.00M$208.00M | +22.1% |
| Net Income | $2.34B$2.13B | +9.6% |
| EPS (Basic) | $1.91$1.73 | +10.8% |
| EPS (Diluted) | $1.87$1.71 | +9.9% |
| Shares Outstanding (Basic) | 1.22B1.24B | −1.0% |
| Shares Outstanding (Diluted) | 1.25B1.25B | −0.2% |
05—Questions
Frequently Asked Questions
What are Booking Holdings' primary revenue drivers?
Booking Holdings derives its revenue and gross profit from commissions earned on facilitating reservations (agency basis), transaction profits and customer processing fees on a merchant basis for accommodations, rental cars, and airline tickets, advertising revenues from KAYAK, reservation and subscription fees from OpenTable, and other ancillary fees like damage excess waivers and travel insurance.
How significantly does international business contribute to Booking Holdings' performance?
International operations are crucial for Booking Holdings, contributing approximately 89% of consolidated gross profit in 2017, primarily driven by Booking.com. This highlights the company's global reach and reliance on its non-US markets for profitability.
What are the key risks facing Booking Holdings according to the filing?
Key risks include intense competition from online and traditional players (including large tech companies like Google and Apple), declines or disruptions in the travel industry due to economic downturns or global events, exposure to fluctuations in currency exchange rates, the need to keep pace with rapid technological changes, and potential regulatory changes and legal proceedings, particularly concerning competition practices and taxes.
What is the company's approach to marketing and customer acquisition?
Booking Holdings invests heavily in both performance advertising (e.g., search engine marketing, affiliate programs) and brand advertising (e.g., television, online video) to drive traffic and build brand awareness. In 2017, performance advertising expenses were approximately $4.1 billion, and brand advertising expenses were approximately $392 million.
06—Continue