01—Abstract
Summary
Summary of the 10-Q filed August 8, 2013. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly priceline.com Incorporated) reported strong financial performance for the second quarter and first half of 2013, driven by significant growth in international operations, particularly through its Booking.com and Agoda.com brands.
Total revenues increased by 26.6% and 26.2% for the three and six months ended June 30, 2013, respectively, compared to the prior year. This growth was underpinned by a substantial increase in gross bookings, up 38.0% and 37.2% for the respective periods, fueled by strong performance in hotel room nights and rental car days. The company also completed the significant acquisition of KAYAK Software Corporation in May 2013 for approximately $2.1 billiona, integrating a leading travel meta-search service into its portfolio.
This strategic move is expected to enhance its competitive position in the online travel market. Despite increased operating expenses, including a significant rise in advertising spend, the company managed to improve its gross profit margin due to a favorable shift in revenue mix towards net revenue models and the strong performance of its international segments. The company also continued its share repurchase program, signaling confidence in its financial health and future prospects.
02—Key points
Key Highlights
- Total revenues increased by 26.6% and 26.2% for the three and six months ended June 30, 2013, compared to the same periods in 2012.
- Gross bookings showed robust growth, increasing by 38.0% and 37.2% for the three and six months ended June 30, 2013, respectively.
- The company successfully acquired KAYAK Software Corporation in May 2013 for approximately $2.1 billion, adding a significant meta-search platform.
- International operations, led by Booking.com and Agoda.com, were the primary drivers of growth, with international gross bookings up 44.1% and 43.5% for the respective periods.
- Gross profit increased by 37.8% and 37.0% for the three and six months ended June 30, 2013, compared to the prior year, with gross margin improving to 82.4% and 80.3%.
- Operating expenses, particularly online advertising, increased significantly to support growth and the KAYAK acquisition, with online advertising expenses up 47.3% and 46.4%.
- The company maintained a strong liquidity position with $5.9 billion in cash, cash equivalents, and short-term investments as of June 30, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Booking Holdings Inc. kept $0.26.
- Revenue$1.68B100.0%
- Cost of revenue−$296.4M17.6%
- Gross profit$1.38B82.4%
- Operating costs−$829.0M49.3%
- Operating income$554.8M33.0%
- Interest, other & tax−$117.5M7.0%
- Net income$437.3M26.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed August 8, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $1.68B$1.33B | +26.6% |
| Cost of Revenue | $296.38M$322.62M | −8.1% |
| Gross Profit | $1.38B$1.00B | +37.8% |
| Operating Expenses | $829.02M$545.79M | +51.9% |
| Operating Income | $554.83M$458.36M | +21.0% |
| Interest Expense | $19.63M$16.88M | +16.3% |
| Net Income | $437.33M$352.65M | +24.0% |
| EPS (Basic) | $0.34$0.28 | +21.9% |
| EPS (Diluted) | $0.34$0.28 | +21.9% |
| Shares Outstanding (Basic) | 1.27B1.25B | +1.9% |
| Shares Outstanding (Diluted) | 1.30B1.28B | +1.7% |
05—Questions
Frequently Asked Questions
What was the primary driver of Booking Holdings' revenue growth in Q2 2013?
The primary driver of Booking Holdings' revenue growth in the second quarter and first half of 2013 was the strong performance of its international operations, particularly through its Booking.com and Agoda.com brands. This was reflected in significant increases in gross bookings and hotel room night reservations.
What is the significance of the KAYAK acquisition?
The acquisition of KAYAK Software Corporation in May 2013 for approximately $2.1 billion is a significant strategic move. KAYAK is a leading travel meta-search service, and its integration into Booking Holdings is expected to strengthen the company's competitive position in the online travel market by expanding its service offerings and reach.
How did the company's operating expenses change during the period?
Operating expenses increased significantly, with online advertising expenses showing a substantial rise of 47.3% and 46.4% for the three and six months ended June 30, 2013, respectively. This increase was attributed to supporting higher gross bookings, the inclusion of KAYAK's expenses post-acquisition, and a decrease in online advertising ROI. Personnel expenses also rose due to increased headcount and the KAYAK acquisition.
What are the main risks and contingencies mentioned in the filing?
The company faces several risks and contingencies, including intense competition from online and traditional travel companies, potential declines in travel demand due to economic downturns, regulatory and legal challenges, particularly concerning travel transaction taxes and potential antitrust investigations in Europe. The company also noted the volatility of its stock price and risks associated with managing its international operations and currency exchange rate fluctuations.
06—Continue