10-QPeriod: Q2 FY2018

Booking Holdings Inc. Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 9, 2018For Securities:BKNG

Summary

Booking Holdings Inc. reported strong financial performance for the six months ended June 30, 2018. Total revenues reached $6.5 billion, a significant increase of 22.1% compared to the same period in the prior year, driven by robust growth in accommodation reservation services, particularly through its Booking.com platform. The company also saw substantial growth in merchant revenues, a testament to its expanding merchant accommodation services. Despite increased operating expenses, notably in personnel and sales and other expenses, the company maintained healthy profitability. Key financial highlights include a significant increase in net income to $1.6 billion and strong operating cash flow of $2.3 billion. The company also continued its aggressive share repurchase program, returning substantial capital to shareholders. Investments in technology and property/equipment reflect a commitment to future growth, as does the acquisition of a local activities and experiences booking software provider. The company's financial position remains strong, with $3.2 billion in cash and cash equivalents and a well-managed debt portfolio, though it continues to monitor its substantial investments in long-term securities.

Financial Highlights

50 data points
Beta

Revenue

$3.54B

Net Income

$977.00M

27.6% Net Margin

EPS (Diluted)

$0.81

Total Assets

$25.30B

Cash & Equivalents

$3.21B

Free Cash Flow

$1.55B

Financial Statements
Beta
Revenue$3.54B
Operating Expenses$2.32B
Operating Income$1.22B
Interest Expense$65.00M
Net Income$977.00M
EPS (Basic)$0.81
EPS (Diluted)$0.81
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Total revenues increased by 22.1% year-over-year to $6.5 billion for the six months ended June 30, 2018.
  • 2Net income for the six months ended June 30, 2018, grew to $1.6 billion.
  • 3Net cash provided by operating activities was $2.3 billion for the six months ended June 30, 2018.
  • 4The company repurchased $1.9 billion of its common stock during the first six months of 2018.
  • 5Accommodation room nights increased by 12.6% year-over-year for the six months ended June 30, 2018.
  • 6The company adopted new revenue recognition standards (ASC 606) effective January 1, 2018, which changed the timing of revenue recognition for travel reservation services.
  • 7Cash and cash equivalents, along with short-term and long-term investments, totaled $16.3 billion at June 30, 2018.

Frequently Asked Questions

Revenue growth was primarily driven by a 12.0% increase in accommodation room night reservations, fueled by strong performance from Booking.com and the ongoing shift of travel bookings from offline to online channels. Merchant revenues also saw significant growth, particularly from accommodation reservation services.

The adoption of ASC 606 on January 1, 2018, changed the timing of revenue recognition for travel reservation services from when travel is completed (check-out) to when travel begins (check-in). This also led to priceline's Name Your Own Price® revenues being presented on a net basis, eliminating the 'Cost of revenues' line item and making 'Total revenues' comparable to prior periods' 'Gross profit'.

Booking Holdings maintains significant liquidity, with $16.3 billion in cash, cash equivalents, and investments as of June 30, 2018. The company continues to invest in its business, including technology and capital expenditures, and has a substantial authorization for share repurchases ($8.6 billion remaining as of June 30, 2018). They also pursue strategic acquisitions, such as the recent purchase of a local activities and experiences booking software provider and the planned acquisition of a hotel meta-search company.

Key risks include intense competition from online travel agencies and tech giants like Google, fluctuations in currency exchange rates (especially USD vs. EUR and GBP), potential declines or disruptions in the travel industry due to economic or political factors, reliance on performance and brand marketing, rapid technological changes, cybersecurity threats, and potential regulatory scrutiny and legal challenges, particularly concerning pricing parity and tax matters in various jurisdictions.