10-QPeriod: Q1 FY2016

Booking Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 4, 2016For Securities:BKNG

Summary

Booking Holdings Inc. (formerly The Priceline Group Inc.) reported strong top-line growth in the first quarter of 2016, with total revenues increasing 16.7% year-over-year to $2.15 billion. This growth was primarily driven by a significant 25.1% increase in agency revenues, largely from its Booking.com platform, while merchant revenues saw a slight decline. Gross profit also saw a healthy increase of 20.8% to $2.02 billion, indicating improved margins. The company's financial performance was bolstered by strong accommodation room night reservations, up 30.5%, and rental car day reservations, up 10.9%. Despite a stronger U.S. dollar impacting reported international results, the company demonstrated solid underlying performance on a constant currency basis. Net income for the quarter was $374.4 million, a 12.3% increase from the prior year, resulting in diluted earnings per share of $7.47. The company maintained a strong liquidity position with $1.86 billion in cash and cash equivalents. However, investors should note the significant impairment charge of $50 million related to a cost-method investment in Hotel Urbano and ongoing legal and tax matters, particularly the substantial tax assessment from French authorities for approximately 356 million Euros. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

54 data points
Beta

Revenue

$2.15B

94.0% Gross Margin

Net Income

$374.42M

17.4% Net Margin

EPS (Diluted)

$0.30

Total Assets

$18.33B

Cash & Equivalents

$1.86B

Free Cash Flow

$291.50M

Financial Statements
Beta
Revenue$2.15B
Cost of Revenue$128.67M
Gross Profit$2.02B
Operating Expenses$1.47B
Operating Income$550.32M
Interest Expense$46.89M
Net Income$374.42M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)1.24B
Shares Outstanding (Diluted)1.25B

Key Highlights

  • 1Total revenues increased by 16.7% to $2.15 billion.
  • 2Gross profit increased by 20.8% to $2.02 billion, with gross margin improving to 94.0%.
  • 3Accommodation room night reservations grew by 30.5% year-over-year.
  • 4Net income rose by 12.3% to $374.4 million, with diluted EPS at $7.47.
  • 5The company holds a strong cash position of $1.86 billion.
  • 6A significant impairment charge of $50 million was recognized for an investment in Hotel Urbano.
  • 7Significant tax assessments from French authorities related to Booking.com remain a notable risk.

Frequently Asked Questions

Revenue growth was primarily driven by a 25.1% increase in agency revenues, largely attributed to the performance of Booking.com and its hotel reservation services, as well as growth in agoda.com and priceline.com's hotel businesses. Rental car day reservations also contributed positively.

The U.S. Dollar was stronger against the Euro and other major currencies in Q1 2016 compared to Q1 2015. This stronger dollar negatively impacted reported revenues and gross profit growth when expressed in U.S. Dollars. On a constant currency basis, growth was higher, indicating stronger underlying business performance.

Key risks include intense competition in the online travel market, fluctuations in currency exchange rates, potential for additional tax liabilities (notably a substantial assessment from French tax authorities for approximately 356 million Euros related to Booking.com), and ongoing litigation concerning travel transaction taxes. The company also faces risks associated with its investment portfolio, including a recent $50 million impairment charge on its investment in Hotel Urbano.

The company continued its share repurchase program, with authorization for up to $3.0 billion. In Q1 2016, it repurchased approximately $259.4 million of its common stock. The company may continue these repurchases depending on market conditions and alternative capital uses, and intends to use cash on hand and operational cash flow to fund them.