01—Abstract
Summary
Summary of the 10-Q filed August 5, 2011. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly priceline.com Incorporated) reported strong financial results for the six months ended June 30, 2011.
Total revenues surged by 41.3% year-over-year to $1.91 billiona, driven by a significant 73.5% increase in agency revenues, largely attributable to the strong performance of its international Booking.com brand. Merchant revenues also saw robust growth of 20.9%. The company's gross profit increased by 64.2% to $1.26 billion, with gross margin improving to 65.6% from 56.5% in the prior year period, reflecting a favorable shift in revenue mix towards higher-margin agency sales and international business.
Operationally, hotel room night reservations grew by an impressive 55.7%, with international markets showing exceptional strength, up 98.2% in gross bookings. The company's cash position strengthened considerably, with cash and cash equivalents rising to $611.2 millionb.
While operating expenses, particularly online advertising, increased to support this growth, the company's profitability surged, with net income applicable to common stockholders more than doubling to $361.2 millionc. Investors should note the ongoing legal proceedings related to hotel occupancy taxes, which have a reserve of $29 million, and the company's ongoing international expansion.
02—Key points
Key Highlights
- Total revenues increased by 41.3% to $1.91 billion for the six months ended June 30, 2011.
- Gross profit grew by 64.2% to $1.26 billion, with gross margin improving to 65.6%.
- Agency revenues saw a substantial increase of 73.5% to $920.6 million, driven by international operations.
- Hotel room night reservations increased by 55.7% to 67.3 million for the six months.
- International gross bookings experienced a significant rise of 89.2% to $8.0 billion.
- Net income applicable to common stockholders more than doubled to $361.2 million.
- Cash and cash equivalents grew substantially to $611.2 million as of June 30, 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Booking Holdings Inc. kept $0.23.
- Revenue$1.10B100.0%
- Cost of revenue−$353.5M32.1%
- Gross profit$749.2M67.9%
- Operating costs−$424.5M38.5%
- Operating income$324.7M29.4%
- Interest, other & tax−$68.4M6.2%
- Net income$256.3M23.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed August 5, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $1.10B$767.44M | +43.7% |
| Cost of Revenue | $353.49M$322.18M | +9.7% |
| Gross Profit | $749.23M$445.25M | +68.3% |
| Operating Expenses | $424.52M$272.10M | +56.0% |
| Operating Income | $324.71M$173.16M | +87.5% |
| Interest Expense | $7.79M$9.27M | −15.9% |
| Net Income | $256.28M$114.60M | +123.6% |
| EPS (Basic) | $0.21$0.10 | +114.1% |
| EPS (Diluted) | $0.20$0.09 | +122.1% |
| Shares Outstanding (Basic) | 1.24B1.19B | +4.0% |
| Shares Outstanding (Diluted) | 1.28B1.27B | +0.5% |
05—Questions
Frequently Asked Questions
How did the company's revenue performance fare in the first half of 2011 compared to the prior year?
The company reported a substantial 41.3% increase in total revenues for the six months ended June 30, 2011, reaching $1.91 billion. This growth was primarily fueled by a significant surge in agency revenues (up 73.5%) and solid growth in merchant revenues (up 20.9%), highlighting the strong performance of its international operations and the shift towards higher-margin revenue streams.
What is the company's current financial health and liquidity position?
The company's liquidity has significantly improved. As of June 30, 2011, cash and cash equivalents stood at $611.2 million, a substantial increase from $358.9 million at the end of 2010. This strong cash position, coupled with robust operating cash flow generation, provides ample financial flexibility.
Are there any significant legal or regulatory risks the company is facing?
Yes, the company is involved in numerous lawsuits and tax audit proceedings related to the payment of hotel occupancy and other taxes. While the company believes it does not owe these taxes, it has established a reserve of approximately $29 million for potential resolution of these issues. An unfavorable outcome in these matters could have a material adverse effect on the company's financial condition and results of operations.
How is the company's international growth contributing to its performance?
International operations are a major growth driver. For the six months ended June 30, 2011, international gross bookings increased by 89.2%, significantly outpacing domestic growth. This strong performance, particularly from the Booking.com brand, contributed substantially to the overall increase in revenues and gross profit.
06—Continue