10-QPeriod: Q1 FY2009

Booking Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 11, 2009For Securities:BKNG

Summary

Booking Holdings Inc. (formerly Priceline.com Inc.) reported a 14.6% increase in total revenues for the first quarter of 2009 compared to the same period in 2008, reaching $462.1 million. This growth was driven by a 16.6% increase in merchant revenues and a 9.4% rise in agency revenues. Despite facing macroeconomic headwinds from the global recession, the company demonstrated resilience with a 15.0% increase in gross profit to $208.3 million, and a gross margin of 45.1%. The company's international operations continue to be a significant growth driver, contributing substantially to both revenue and gross profit. Gross bookings increased by 10.5% year-over-year, with domestic bookings up 18.1% and international bookings up 5.3% (23.5% excluding currency impacts). The company also saw a substantial increase in hotel room nights sold, up 36.4%. Net income for the quarter was $25.0 million, or $0.53 per diluted share.

Financial Highlights

5 data points
Beta

Revenue

$462.06M

45.1% Gross Margin

Net Income

$25.02M

5.4% Net Margin

EPS (Diluted)

$0.02

Financial Statements
Beta
Revenue$462.06M
Gross Profit$208.33M
Net Income$25.02M
EPS (Basic)$0.02
EPS (Diluted)$0.02

Key Highlights

  • 1Total revenues increased by 14.6% to $462.1 million in Q1 2009 compared to Q1 2008.
  • 2Gross profit grew by 15.0% to $208.3 million, with a slight improvement in gross margin to 45.1%.
  • 3Gross bookings saw a 10.5% increase, driven by strong domestic growth (18.1%) and continued international expansion (5.3% as reported, 23.5% excluding FX impacts).
  • 4Hotel room nights sold increased significantly by 36.4%, indicating strong demand for accommodation services.
  • 5Net income applicable to common stockholders was $25.0 million, resulting in diluted EPS of $0.53.
  • 6The company continues to navigate the global recession, with international operations being a key contributor to performance despite the challenging economic environment.
  • 7Significant legal proceedings related to hotel occupancy taxes remain a material disclosure, with ongoing developments and potential for substantial liabilities.

Frequently Asked Questions

The global recession presented challenges, impacting the broad travel market. While the company experienced some negative effects such as increased cancellations and pressure on Average Daily Rates (ADRs), its overall revenue and gross profit still saw significant year-over-year increases. The company noted that its international operations, particularly in Europe and Asia, were impacted, but these segments also contributed to overall growth when excluding foreign currency impacts.

International operations, primarily driven by Booking.com in Europe and Agoda in Asia, are increasingly important to Booking Holdings. For the first quarter of 2009, international operations contributed substantially to revenues and gross profit. The company noted that international gross bookings increased by 5.3% (or 23.5% excluding currency impacts), and international revenue increased by 30% excluding currency impacts, highlighting its role as a key growth driver.

Booking Holdings is involved in numerous lawsuits and audit proceedings with cities and counties concerning the payment of hotel occupancy taxes. The company states that it intends to defend itself vigorously against these claims. It acknowledges that an unfavorable outcome could result in substantial liabilities and potentially impact its business and results of operations. The company also notes that some jurisdictions require 'pay to play' payments before contesting assessments, which could be substantial.

The adoption of FSP APB 14-1, related to convertible debt instruments, requires the separation of convertible debt into debt and equity components, leading to the recognition of non-cash interest expense as a debt discount is amortized. This FSP, applied retrospectively, impacts the presentation of financial statements, particularly interest expense and net income, though it does not affect cash flows. The company also adopted SFAS 160 regarding noncontrolling interests, which had minimal impact due to prior share repurchases.