10-QPeriod: Q2 FY2011

Booking Holdings Inc. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:BKNG

Summary

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 billion, 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 million. 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 million. 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.

Financial Highlights

51 data points
Beta

Revenue

$1.10B

67.9% Gross Margin

Net Income

$256.28M

23.2% Net Margin

EPS (Diluted)

$0.20

Total Assets

$3.36B

Cash & Equivalents

$611.25M

Free Cash Flow

$213.49M

Financial Statements
Beta
Revenue$1.10B
Cost of Revenue$353.49M
Gross Profit$749.23M
Operating Expenses$424.52M
Operating Income$324.71M
Interest Expense$7.79M
Net Income$256.28M
EPS (Basic)$0.21
EPS (Diluted)$0.20
Shares Outstanding (Basic)1.24B
Shares Outstanding (Diluted)1.28B

Key Highlights

  • 1Total revenues increased by 41.3% to $1.91 billion for the six months ended June 30, 2011.
  • 2Gross profit grew by 64.2% to $1.26 billion, with gross margin improving to 65.6%.
  • 3Agency revenues saw a substantial increase of 73.5% to $920.6 million, driven by international operations.
  • 4Hotel room night reservations increased by 55.7% to 67.3 million for the six months.
  • 5International gross bookings experienced a significant rise of 89.2% to $8.0 billion.
  • 6Net income applicable to common stockholders more than doubled to $361.2 million.
  • 7Cash and cash equivalents grew substantially to $611.2 million as of June 30, 2011.

Frequently Asked Questions

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.

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.

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.

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.