10-KPeriod: FY2017

Booking Holdings Inc. Annual Report, Year Ended Dec 31, 2017

Filed February 27, 2018For Securities:BKNG

Summary

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%) 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.

Financial Highlights

53 data points
Beta

Revenue

$12.68B

98.1% Gross Margin

Net Income

$2.34B

18.5% Net Margin

EPS (Diluted)

$1.87

Total Assets

$25.45B

Cash & Equivalents

$2.56B

Free Cash Flow

$4.37B

Financial Statements
Beta
Revenue$12.68B
Cost of Revenue$242.00M
Gross Profit$12.44B
Operating Expenses$7.90B
Operating Income$4.54B
Interest Expense$254.00M
Net Income$2.34B
EPS (Basic)$1.91
EPS (Diluted)$1.87
Shares Outstanding (Basic)1.22B
Shares Outstanding (Diluted)1.25B

Key Highlights

  • 1Company rebranded from The Priceline Group Inc. to Booking Holdings Inc. on February 21, 2018.
  • 2International operations, primarily Booking.com, accounted for approximately 89% of consolidated gross profit in 2017.
  • 3Total revenues grew 18.0% to $12.68 billion in 2017, with agency revenues showing strong growth of 21.7%.
  • 4Gross profit increased by 20.5% to $12.43 billion in 2017, with gross margins improving to 98.0%.
  • 5Significant investment in marketing, with performance advertising at $4.1 billion and brand advertising at $392 million in 2017.
  • 6The company adopted a new revenue recognition accounting standard effective January 1, 2018, changing the presentation of revenue recognition from 'check-out' to 'check-in'.
  • 7Acquisition of Momondo Group in July 2017 for $555.5 million, enhancing the KAYAK meta-search business.

Frequently Asked Questions

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.

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.

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.

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.