01—Abstract
Summary
Summary of the 10-Q filed May 7, 2015. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly The Priceline Group Inc.) reported solid financial results for the first quarter of 2015, demonstrating continued growth driven by its international operations, particularly Booking.com.
Total revenues increased by 12.1% year-over-year to $1.84 billiona, with agency revenues showing strong growth of 15.2%. Merchant revenues saw a decline of 6.1%, largely due to a shift away from the priceline.com Name Your Own Price® model towards net revenue recognition models.
Gross profit increased by a robust 18.9% to $1.67 billionb, with gross margin improving significantly to 90.8% from 85.7% in the prior year, reflecting the favorable revenue mix shift and a decrease in cost of revenues. The company maintained a strong liquidity position with $9.6 billion in cash, cash equivalents, and investments, while also actively engaging in share repurchases and issuing new debt.
02—Key points
Key Highlights
- Total revenues increased by 12.1% to $1.84 billion, primarily driven by strong performance in agency revenues.
- Gross profit grew by 18.9% to $1.67 billion, and gross margin expanded to 90.8%, indicating improved profitability due to a favorable revenue mix and cost management.
- International operations continue to be the primary growth engine, with international gross bookings increasing by 13.7% (29% on a constant currency basis).
- Accommodation room night reservations saw significant growth of 25.4%, highlighting the continued strength in the core accommodation booking business.
- The company reported a net income of $333.3 million, with diluted EPS of $6.36, representing slight growth compared to the prior year.
- Significant increase in advertising expenses (23.5% for online) reflects ongoing investment in brand awareness and customer acquisition.
- The company ended the quarter with a strong liquidity position, holding $9.6 billion in cash, cash equivalents, and investments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2015, Booking Holdings Inc. kept $0.18.
- Revenue$1.84B100.0%
- Cost of revenue−$168.5M9.2%
- Gross profit$1.67B90.8%
- Operating costs−$1.24B67.3%
- Operating income$434.0M23.6%
- Interest, other & tax−$100.6M5.5%
- Net income$333.3M18.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed May 7, 2015Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $1.84B$1.64B | +12.1% |
| Cost of Revenue | $168.46M$235.33M | −28.4% |
| Gross Profit | $1.67B$1.41B | +18.9% |
| Operating Expenses | $1.24B$967.75M | +28.0% |
| Operating Income | $433.97M$438.73M | −1.1% |
| Interest Expense | $33.48M$17.75M | +88.7% |
| Net Income | $333.33M$331.22M | +0.6% |
| EPS (Basic) | $0.26$0.25 | +1.1% |
| EPS (Diluted) | $0.25$0.25 | +1.8% |
| Shares Outstanding (Basic) | 1.30B1.30B | −0.5% |
| Shares Outstanding (Diluted) | 1.31B1.33B | −1.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in Q1 2015?
The primary driver of revenue growth was the strong performance in agency revenues, which increased by 15.2% year-over-year. This was primarily due to the growth in Booking.com's business, as well as priceline.com's retail rental car business, rentalcars.com's agency rental car business, and priceline.com's agency hotel reservation business.
How did the company's gross profit and margin perform in Q1 2015?
Gross profit increased by a significant 18.9% to $1.67 billion, and the gross margin improved to 90.8% from 85.7% in the prior year. This improvement was largely driven by a shift in revenue mix towards net revenue recognition models and a decrease in cost of revenues, partly due to a reversal of previously accrued travel transaction taxes.
What is the company's stance on international operations and currency fluctuations?
International operations remain the core growth driver, with international gross bookings growing by 13.7% (29% on a constant currency basis). However, the strengthening U.S. dollar against the Euro and other currencies negatively impacted reported U.S. dollar figures for gross bookings, revenues, and gross profit. The company emphasizes that growth rates on a local currency basis are important to understand fundamental performance.
What were the key changes in operating expenses?
Online advertising expenses increased by 23.5%, reflecting continued investment in customer acquisition and brand awareness. Personnel expenses also increased significantly (33.1%) due to higher headcount and the inclusion of OpenTable results. Depreciation and amortization expenses rose by 69.4%, largely due to increased intangible amortization from the OpenTable acquisition and capital expenditures.
06—Continue