10-QPeriod: Q1 FY2019

Booking Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 9, 2019For Securities:BKNG

Summary

Booking Holdings Inc. reported its first-quarter 2019 financial results, showcasing a resilient performance despite some revenue headwinds. Total revenues for the quarter ended March 31, 2019, decreased by 3.1% year-over-year to $2.84 billion, primarily impacted by a shift in revenue recognition timing and foreign exchange fluctuations. However, the company demonstrated strong operational execution, with accommodation room nights increasing by a healthy 10.3%. Merchant revenues saw a notable increase of 14.6%, driven by the expansion of Booking.com's merchant accommodation reservation services, signaling a strategic shift towards greater payment flexibility for consumers and partners. Despite a decrease in net income from $765 million in Q1 2018 to $607 million in Q1 2019, diluted EPS remained strong at $16.85. The company maintained a robust liquidity position with $12.8 billion in cash, cash equivalents, and investments. A significant portion of cash ($5.8 billion) is held by international subsidiaries. Management's strategic focus remains on investing in growth initiatives, including expanding accommodation choices, enhancing customer experience, and continuing brand and performance marketing efforts, while navigating a competitive and evolving online travel landscape.

Financial Highlights

47 data points
Beta

Revenue

$2.84B

Net Income

$765.00M

27.0% Net Margin

EPS (Diluted)

$0.67

Total Assets

$22.37B

Cash & Equivalents

$2.35B

Free Cash Flow

$39.00M

Financial Statements
Beta
Revenue$2.84B
Operating Expenses$2.28B
Operating Income$556.00M
Interest Expense$66.00M
Net Income$765.00M
EPS (Basic)$0.68
EPS (Diluted)$0.67
Shares Outstanding (Basic)1.13B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Total revenues decreased by 3.1% to $2.84 billion, impacted by revenue recognition timing and FX, but constant currency growth was approximately 3%.
  • 2Accommodation room nights, a key volume metric, increased by a strong 10.3% year-over-year, demonstrating continued demand.
  • 3Merchant revenues grew significantly by 14.6% to $603 million, indicating a successful strategic shift towards merchant services.
  • 4Agency revenues declined by 7.8% due to a shift to merchant services and FX impacts.
  • 5Net income decreased to $607 million from $765 million in the prior year's quarter, largely influenced by operational and FX factors.
  • 6Diluted Earnings Per Share (EPS) stood at $16.85, down from $12.34 in Q1 2018.
  • 7The company maintained a strong liquidity position with $12.8 billion in cash, cash equivalents, and investments as of March 31, 2019.

Frequently Asked Questions

The decrease in total revenues was primarily due to a shift in revenue recognition timing, particularly the later timing of Easter in 2019 compared to 2018, which moved revenue recognition into the second quarter. Additionally, foreign exchange rate fluctuations negatively impacted reported revenues. The company also saw a strategic shift from agency revenues to merchant revenues, which have different revenue recognition profiles.

Booking Holdings is focusing on enhancing its brand awareness through marketing efforts, expanding its accommodation offerings (including alternative accommodations), improving the customer experience, and investing in technology. The company is also strategically expanding its merchant services to offer more payment options and is navigating competitive pressures from large tech companies and other online travel platforms.

As of March 31, 2019, Booking Holdings had $12.8 billion in cash, cash equivalents, and investments, with a significant portion ($5.8 billion) held by international subsidiaries. The company continues to actively repurchase its common stock under authorized programs and manages its capital through debt facilities and investments.

Yes, Booking Holdings is involved in ongoing tax audits and proceedings in several jurisdictions, notably a significant tax assessment from French tax authorities for which the company paid approximately €356 million ($403 million) to preserve its right to contest the assessment. The company believes it is in compliance with tax laws but acknowledges potential financial impact if adverse outcomes occur. Regulatory scrutiny regarding competition and consumer protection laws also continues globally.