01—Abstract
Summary
Summary of the 10-Q filed November 7, 2016. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (BKNG), formerly known as The Priceline Group Inc., reported strong top-line growth in its 10-Q filing for the period ending September 29, 2016.
Total revenues increased by 18.9% year-over-year for the third quarter and 16.2% for the first nine months, driven primarily by a significant 23.3% and 21.8% increase in agency revenues, respectively. This growth was largely fueled by a robust 29.4% and 28.1% increase in accommodation room night reservations for the respective periods, underscoring the continued consumer shift towards online travel bookings and the strength of Booking.com's platform. However, the company's profitability was significantly impacted by a substantial $940.7 milliona non-cash goodwill impairment charge related to its OpenTable acquisition.
This charge led to a significant increase in operating expenses and a higher effective tax rate for the period. Despite this one-time charge, the core business demonstrated resilience with healthy growth in gross bookings and room nights, indicating continued market leadership. Investors should note the company's significant cash reserves and ongoing share repurchase program, which suggest a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Total revenues grew by 18.9% in Q3 2016 and 16.2% for the first nine months of 2016, year-over-year.
- Agency revenues saw strong growth of 23.3% in Q3 and 21.8% for the nine months, driven by accommodation bookings.
- Accommodation room night reservations increased significantly by 29.4% in Q3 and 28.1% for the nine months.
- A substantial goodwill impairment charge of $940.7 million was recorded for the OpenTable acquisition, negatively impacting net income.
- Gross bookings increased by a healthy 24.9% in Q3 and 21.7% for the nine months, with international operations driving the majority of this growth.
- The company held $13.7 billion in cash, cash equivalents, short-term, and long-term investments as of September 30, 2016.
- The company's Board authorized a $3.0 billion stock repurchase program, with $2.4 billion remaining at the end of the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2016, Booking Holdings Inc. kept $0.14.
- Revenue$3.69B100.0%
- Cost of revenue−$101.5M2.7%
- Gross profit$3.59B97.3%
- Operating costs−$2.76B74.7%
- Operating income$833.2M22.6%
- Interest, other & tax−$327.2M8.9%
- Net income$506.0M13.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2016filed November 7, 2016Financial Statements
Q3 FY2016 against Q3 FY2015
| Line item | Q3 FY2016Q3 FY2015 | Change |
|---|---|---|
| Revenue | $3.69B$3.10B | +18.9% |
| Cost of Revenue | $101.49M$155.62M | −34.8% |
| Gross Profit | $3.59B$2.95B | +21.8% |
| Operating Expenses | $2.76B$1.46B | +88.9% |
| Operating Income | $833.23M$1.49B | −44.0% |
| Interest Expense | $55.48M$41.44M | +33.9% |
| Net Income | $506.02M$1.20B | −57.7% |
| EPS (Basic) | $0.41$0.95 | −56.7% |
| EPS (Diluted) | $0.41$0.94 | −56.7% |
| Shares Outstanding (Basic) | 1.24B1.26B | −2.2% |
| Shares Outstanding (Diluted) | 1.25B1.28B | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of Booking Holdings' revenue growth in this period?
The primary driver of Booking Holdings' revenue growth was the strong performance in agency revenues, which increased significantly year-over-year. This was largely attributable to a substantial increase in accommodation room night reservations, indicating continued strong consumer demand for online travel bookings, particularly through its Booking.com platform.
What is the impact of the OpenTable goodwill impairment on the company's financial results?
The company recorded a significant non-cash goodwill impairment charge of $940.7 million related to its OpenTable acquisition. This charge substantially increased operating expenses and negatively impacted net income for the period. It also led to a higher effective tax rate for the nine months ended September 30, 2016.
How is the company managing its liquidity and capital?
Booking Holdings maintained a strong liquidity position with $13.7 billion in cash, cash equivalents, short-term, and long-term investments as of September 30, 2016. A significant portion of this cash ($12.2 billion) is held by international subsidiaries. The company also has a $3.0 billion stock repurchase program authorized, with a substantial amount remaining, indicating a focus on returning capital to shareholders.
What are the key risks highlighted by the company in this filing?
Key risks highlighted include intense competition in the online travel market, potential adverse impacts from economic downturns and global events (like Brexit), fluctuations in currency exchange rates, reliance on performance advertising channels, and risks associated with rapid technological changes and data security. Regulatory scrutiny, particularly concerning price parity clauses in Europe, is also a significant concern.
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