01—Abstract
Summary
Summary of the 10-Q filed August 5, 2015. Cited figures are marked; the original filing is the authoritative source.
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%a 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 billionb in cash, cash equivalents, short-term and long-term investments.
02—Key points
Key Highlights
- Total revenues increased by 7.4% for Q2 2015 and 9.4% for the first half of 2015 compared to the prior year periods.
- Agency 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.
- Gross 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.
- Online advertising expenses increased significantly by 20.5% for the quarter and 21.8% for the half-year, reflecting ongoing investment in growth.
- Accommodation room night reservations saw a substantial increase of 26.2% for the quarter and 25.8% for the half-year.
- The company ended the period with $9.6 billion in cash, cash equivalents, short-term and long-term investments, indicating a strong liquidity position.
- The U.S. dollar's strengthening against the Euro negatively impacted reported international results, though constant currency growth remained strong.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2015, Booking Holdings Inc. kept $0.23.
- Revenue$2.28B100.0%
- Cost of revenue−$187.5M8.2%
- Gross profit$2.09B91.8%
- Operating costs−$1.41B62.0%
- Operating income$678.3M29.7%
- Interest, other & tax−$161.3M7.1%
- Net income$517.0M22.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2015filed August 5, 2015Financial Statements
Q2 FY2015 against Q2 FY2014
| Line item | Q2 FY2015Q2 FY2014 | Change |
|---|---|---|
| Revenue | $2.28B$2.12B | +7.4% |
| Cost of Revenue | $187.49M$240.58M | −22.1% |
| Gross Profit | $2.09B$1.88B | +11.1% |
| Operating Expenses | $1.41B$1.15B | +23.0% |
| Operating Income | $678.33M$733.01M | −7.5% |
| Interest Expense | $41.55M$17.11M | +142.9% |
| Net Income | $517.03M$576.45M | −10.3% |
| EPS (Basic) | $0.40$0.44 | −8.9% |
| EPS (Diluted) | $0.40$0.44 | −8.7% |
| Shares Outstanding (Basic) | 1.29B1.31B | −1.5% |
| Shares Outstanding (Diluted) | 1.30B1.32B | −1.7% |
05—Questions
Frequently Asked Questions
What was the overall financial performance for Booking Holdings in Q2 2015?
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.
How did currency fluctuations impact the company's reported results?
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.
What is the company's strategy regarding investments and capital allocation?
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.
Are there any significant legal or regulatory matters that investors should be aware of?
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.
06—Continue