10-QPeriod: Q1 FY2013

Booking Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 9, 2013For Securities:BKNG

Summary

Booking Holdings Inc. (then priceline.com Incorporated) reported a strong first quarter for 2013, with net income applicable to common stockholders increasing by 34.2% to $244.3 million, or $4.89 per basic share, up from $182.0 million, or $3.65 per basic share, in the prior year's quarter. Total revenues grew 25.5% to $1.3 billion, driven by a significant 43.2% increase in agency revenues, largely from the performance of its international Booking.com segment. The company also saw a 36.4% increase in gross bookings to $9.15 billion, with international gross bookings growing by 42.8% and domestic gross bookings by 8.7%. The company continues to invest heavily in advertising, with online advertising expenses up 45.5% year-over-year, reflecting a strategic shift and investment in international brands. Despite increasing operating expenses, particularly in advertising and personnel, the company maintained robust gross profit growth of 35.8%, leading to an improved gross margin of 77.5%. The company also announced its definitive agreement to acquire KAYAK Software Corporation for approximately $1.8 billion, expected to close in May 2013, indicating a strong focus on expanding its meta-search capabilities.

Financial Highlights

51 data points
Beta

Revenue

$1.30B

77.5% Gross Margin

Net Income

$244.27M

18.8% Net Margin

EPS (Diluted)

$0.19

Total Assets

$6.86B

Cash & Equivalents

$1.61B

Free Cash Flow

$168.07M

Financial Statements
Beta
Revenue$1.30B
Cost of Revenue$292.35M
Gross Profit$1.01B
Operating Expenses$699.83M
Operating Income$309.84M
Interest Expense$17.33M
Net Income$244.27M
EPS (Basic)$0.20
EPS (Diluted)$0.19
Shares Outstanding (Basic)1.25B
Shares Outstanding (Diluted)1.28B

Key Highlights

  • 1Net income applicable to common stockholders increased 34.2% to $244.3 million ($4.89/share) from $182.0 million ($3.65/share) in Q1 2012.
  • 2Total revenues grew 25.5% to $1.3 billion, with agency revenues up 43.2% and merchant revenues up 6.5%.
  • 3Gross bookings increased 36.4% to $9.15 billion, driven by a 42.8% surge in international gross bookings.
  • 4Hotel room night reservations increased by 37.7% to 63.2 million.
  • 5Online advertising expenses rose 45.5% to $403.2 million, reflecting increased investment, particularly in international markets and for the Booking.com brand.
  • 6The company entered into a definitive agreement to acquire KAYAK Software Corporation for approximately $1.8 billion, subject to closing conditions.
  • 7Cash, cash equivalents, and short-term investments totaled $5.2 billion as of March 31, 2013.

Frequently Asked Questions

In Q1 2013, Booking Holdings reported a significant increase in net income applicable to common stockholders, which rose by 34.2% to $244.3 million, or $4.89 per basic share, compared to $182.0 million, or $3.65 per basic share, in Q1 2012. Total revenues grew by 25.5% to $1.3 billion. This strong performance was driven by robust growth in gross bookings, which increased by 36.4% to $9.15 billion, largely fueled by its international operations.

Revenue growth was primarily driven by a substantial increase in agency revenues, which surged by 43.2% year-over-year. This growth was largely attributable to the performance of the company's international segment, particularly the Booking.com brand. Hotel room night reservations also saw a significant increase of 37.7%.

Booking Holdings entered into a definitive agreement to acquire KAYAK Software Corporation for approximately $1.8 billion. This acquisition, expected to close around May 21, 2013, signals a strategic move to enhance the company's meta-search capabilities and expand its market presence in the online travel sector. If completed, it will integrate KAYAK's operations into Booking Holdings' consolidated financial statements.

Online advertising expenses increased by 45.5% in Q1 2013 compared to the prior year. This increase reflects the company's strategy to invest heavily in advertising, particularly to support the growth of its international brands and the Booking.com platform, as well as to address lower return on investment (ROI) from certain online advertising channels and a shift in brand and channel mix. Despite the rising costs, the company managed to increase its gross margin to 77.5%.