10-QPeriod: Q2 FY2015

Booking Holdings Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:BKNG

Summary

Booking Holdings Inc. (formerly The Priceline Group Inc.) reported its financial results for the second quarter and first half of 2015. The company demonstrated solid top-line growth, with total revenues increasing by 7.4% year-over-year for the quarter and 9.4% for the half-year. This growth was primarily driven by a strong performance in agency revenues, which rose 7.3% and 10.6% for the respective periods, largely due to the continued strength of its Booking.com and rentalcars.com brands. Despite a reported decline in merchant revenues, overall gross profit saw a healthy increase of 11.1% for the quarter and 14.5% for the half-year, accompanied by an expansion in gross margin. The company also experienced a significant increase in advertising expenses, particularly online advertising, which grew over 20% year-over-year, reflecting continued investment in customer acquisition and brand awareness. Management highlighted that currency fluctuations, specifically a strengthening U.S. dollar against the Euro, negatively impacted reported U.S. dollar figures for international operations, though constant currency growth remained robust. The company maintained a strong liquidity position, ending the period with approximately $9.6 billion in cash, cash equivalents, short-term and long-term investments.

Financial Highlights

53 data points
Beta

Revenue

$2.28B

91.8% Gross Margin

Net Income

$517.03M

22.7% Net Margin

EPS (Diluted)

$0.40

Total Assets

$17.03B

Cash & Equivalents

$1.89B

Free Cash Flow

$649.29M

Financial Statements
Beta
Revenue$2.28B
Cost of Revenue$187.49M
Gross Profit$2.09B
Operating Expenses$1.41B
Operating Income$678.33M
Interest Expense$41.55M
Net Income$517.03M
EPS (Basic)$0.40
EPS (Diluted)$0.40
Shares Outstanding (Basic)1.29B
Shares Outstanding (Diluted)1.30B

Key Highlights

  • 1Total revenues increased by 7.4% for Q2 2015 and 9.4% for the first half of 2015 compared to the prior year periods.
  • 2Agency revenues showed a robust increase of 7.3% for the quarter and 10.6% for the half-year, driven by Booking.com and rentalcars.com.
  • 3Gross profit grew by 11.1% for Q2 2015 and 14.5% for the first half of 2015, with gross margin improving to 91.8% and 91.4% respectively.
  • 4Online advertising expenses increased significantly by 20.5% for the quarter and 21.8% for the half-year, reflecting ongoing investment in growth.
  • 5Accommodation room night reservations saw a substantial increase of 26.2% for the quarter and 25.8% for the half-year.
  • 6The company ended the period with $9.6 billion in cash, cash equivalents, short-term and long-term investments, indicating a strong liquidity position.
  • 7The U.S. dollar's strengthening against the Euro negatively impacted reported international results, though constant currency growth remained strong.

Frequently Asked Questions

Booking Holdings reported solid financial performance, with total revenues increasing by 7.4% to $2.28 billion for the second quarter of 2015. Gross profit also showed strong growth, up 11.1% to $2.09 billion, with an improved gross margin of 91.8%. Net income for the quarter was $517 million, resulting in a basic earnings per share of $10.02.

The significant strengthening of the U.S. dollar against the Euro and other foreign currencies negatively impacted the reported U.S. dollar values of the company's international operations. While constant currency growth rates for gross profit were robust at approximately 26% for the quarter, the reported U.S. dollar growth was lower due to these exchange rate movements.

The company continues to invest in its brands and technology, including significant spending on online advertising to drive customer acquisition and brand awareness. During the first half of 2015, Booking Holdings repurchased $1.1 billion of its common stock and had approximately $1.9 billion remaining under its authorized share repurchase program. The company also has a strong liquidity position with $9.6 billion in cash and investments, a substantial portion of which is held internationally.

Yes, the company is involved in several legal and regulatory matters. These include ongoing investigations by competition authorities in Europe regarding contractual parity arrangements, and numerous lawsuits related to the payment of travel transaction taxes in the U.S. While the company believes it complies with relevant laws, adverse outcomes in these matters could materially affect its business and results of operations. An accrual of approximately $33 million was recorded for travel transaction taxes as of June 30, 2015.