01—Abstract
Summary
Summary of the 10-Q filed August 8, 2017. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly The Priceline Group Inc.) reported strong financial results for the second quarter and first half of 2017, demonstrating robust growth across its key segments.
The company saw a significant increase in total revenues, driven primarily by a 25.9%a year-over-year rise in agency revenues, largely attributed to the strong performance of Booking.com's accommodation reservation services. Gross bookings also experienced a healthy increase of 16.4% for the quarter and 20.2% for the first half, with accommodation room nights booked up 21.0% and 24.1% respectively. This growth was primarily fueled by international operations, particularly Booking.com, which continues to expand its property listings.
The company also highlighted positive momentum in its KAYAK and OpenTable businesses. Despite increased operating expenses, notably in performance advertising, the company managed to improve its gross profit margin.
The company's balance sheet remains strong, with substantial cash and investments, and it continues to actively engage in share repurchases. Management expressed confidence in continued growth, driven by ongoing trends in online travel adoption and expansion in international markets, while also acknowledging potential headwinds from economic uncertainties and increased competition.
02—Key points
Key Highlights
- Total revenues grew by 18.3% year-over-year to $3.02 billion for the second quarter of 2017.
- Gross bookings increased by 16.4% year-over-year to $20.8 billion for the second quarter of 2017, with accommodation room nights up 21.0%.
- Agency revenues saw a significant increase of 25.9% to $2.33 billion, primarily driven by Booking.com.
- Merchant revenues decreased slightly by 3.8% to $498.1 million, mainly due to lower Name Your Own Price® reservation services.
- Gross profit increased by 21.5% to $2.95 billion, with a gross margin of 97.6%, up from 95.1% in the prior year period.
- Performance advertising expenses increased by 24.6% year-over-year, reflecting continued investment in customer acquisition.
- The company repurchased $467.6 million of its common stock in the first half of 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2017, Booking Holdings Inc. kept $0.24.
- Revenue$3.02B100.0%
- Cost of revenue−$67.6M2.2%
- Gross profit$2.96B97.8%
- Operating costs−$2.06B68.2%
- Operating income$893.3M29.5%
- Interest, other & tax−$173.3M5.7%
- Net income$720.0M23.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2017filed August 8, 2017Financial Statements
Q2 FY2017 against Q2 FY2016
| Line item | Q2 FY2017Q2 FY2016 | Change |
|---|---|---|
| Revenue | $3.02B$2.56B | +18.3% |
| Cost of Revenue | $67.42M$126.08M | −46.5% |
| Gross Profit | $2.96B$2.43B | +21.7% |
| Operating Expenses | $2.06B$1.70B | +21.6% |
| Operating Income | $893.26M$732.41M | +22.0% |
| Interest Expense | $60.94M$50.29M | +21.2% |
| Net Income | $720.00M$580.64M | +24.0% |
| EPS (Basic) | $0.59$0.47 | +25.2% |
| EPS (Diluted) | $0.58$0.46 | +24.1% |
| Shares Outstanding (Basic) | 1.23B1.24B | −1.0% |
| Shares Outstanding (Diluted) | 1.25B1.25B | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in Q2 2017?
The primary driver of revenue growth was a significant increase in agency revenues, up 25.9% year-over-year, largely attributable to the strong performance of Booking.com's accommodation reservation services and an increase in booked room nights.
How did the company's international operations perform in comparison to its U.S. operations?
International operations significantly outperformed U.S. operations. International gross profit grew by 23.7% year-over-year, while U.S. gross profit grew by 7.4%. This trend highlights the continued global expansion and strength of brands like Booking.com.
What is the company's strategy regarding share repurchases?
The company has an active share repurchase program. In the first half of 2017, it repurchased $467.6 million of its common stock and had a remaining authorization of $3.7 billion, indicating a continued commitment to returning capital to shareholders.
Are there any significant legal or regulatory issues impacting the company?
Yes, the company is involved in several legal and regulatory matters. These include ongoing investigations by competition authorities in Europe regarding rate parity clauses and litigation in the U.S. related to travel transaction taxes. The company is also subject to a French tax audit. While the company believes it is in compliance, these matters could potentially impact future results.
06—Continue