10-QPeriod: Q3 FY2014

Booking Holdings Inc. Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 4, 2014For Securities:BKNG

Summary

Booking Holdings Inc. (then The Priceline Group Inc.) reported strong financial performance for the nine months ended September 30, 2014, with total revenues reaching $6.6 billion, a 25.7% increase year-over-year. This growth was primarily driven by a significant 35.3% increase in agency revenues, largely attributable to the robust performance of Booking.com, and a 150.2% surge in advertising and other revenues, boosted by the recent acquisition of OpenTable and KAYAK. While merchant revenues saw a slight decrease, the overall increase in gross profit to $5.9 billion, up 34.8%, highlights the company's operational leverage and improved gross margin to 89.5%. The company significantly expanded its asset base, with total assets growing to $15.2 billion from $10.4 billion at year-end 2013. This expansion was largely fueled by strategic acquisitions, including OpenTable for approximately $2.5 billion and KAYAK in the prior year, which contributed significantly to the increase in goodwill and intangible assets. Liquidity remains strong, with cash and cash equivalents at $5.0 billion, and the company actively managed its capital structure through debt issuances and share repurchases.

Financial Highlights

53 data points
Beta

Revenue

$2.84B

92.4% Gross Margin

Net Income

$1.06B

37.4% Net Margin

EPS (Diluted)

$0.80

Total Assets

$15.18B

Cash & Equivalents

$5.04B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$2.84B
Cost of Revenue$216.52M
Gross Profit$2.62B
Operating Expenses$1.30B
Operating Income$1.32B
Interest Expense$22.95M
Net Income$1.06B
EPS (Basic)$0.81
EPS (Diluted)$0.80
Shares Outstanding (Basic)1.31B
Shares Outstanding (Diluted)1.33B

Key Highlights

  • 1Total revenues increased by 25.7% to $6.6 billion for the nine months ended September 30, 2014, compared to the same period in 2013.
  • 2Agency revenues grew by 35.3% to $4.6 billion, primarily driven by Booking.com's strong performance.
  • 3Advertising and other revenues saw a substantial increase of 150.2% to $278.9 million, bolstered by the acquisitions of OpenTable and KAYAK.
  • 4Gross profit increased by 34.8% to $5.9 billion, with gross margin improving to 89.5%.
  • 5Total assets grew significantly to $15.2 billion, reflecting strategic acquisitions and investments.
  • 6The company acquired OpenTable for approximately $2.5 billion and KAYAK for approximately $2.1 billion (in the prior year), substantially increasing goodwill and intangible assets.
  • 7Cash and cash equivalents stood at a robust $5.0 billion as of September 30, 2014, providing ample liquidity.

Frequently Asked Questions

The primary drivers of revenue growth were a 35.3% increase in agency revenues, largely due to strong performance from Booking.com, and a significant 150.2% surge in advertising and other revenues, which benefited from the recent acquisitions of OpenTable and KAYAK. International operations, particularly from Booking.com, continued to be the main contributors to overall growth.

The company's balance sheet experienced substantial growth, with total assets increasing to $15.2 billion as of September 30, 2014, up from $10.4 billion at the end of 2013. This growth was primarily driven by the acquisition of OpenTable for approximately $2.5 billion and KAYAK in the prior year. Consequently, goodwill and intangible assets increased significantly on the balance sheet.

Booking Holdings maintained a strong liquidity position, with cash and cash equivalents totaling $5.0 billion as of September 30, 2014. The company also had substantial short-term and long-term investments, bringing total liquid assets to $8.2 billion. The company managed its capital structure by issuing new debt, including Convertible Senior Notes and Euro-denominated Senior Notes, and also continued its share repurchase program.

The company highlighted several key risks, including intense competition from online travel agencies, search engines, and meta-search services; potential disruptions in the travel industry due to economic downturns, geopolitical events, or health concerns; significant exposure to currency exchange rate fluctuations due to its substantial international operations; and ongoing litigation and regulatory scrutiny, particularly concerning travel transaction taxes and competition law investigations in various jurisdictions.