Summary
This Form 8-K filing by The Priceline Group Inc. (now Booking Holdings Inc.) on October 6, 2016, primarily addresses a change in the company's non-GAAP financial reporting methodology. Beginning with guidance for the fourth quarter of 2016, the company will no longer adjust non-GAAP net income and adjusted EBITDA for stock-based employee compensation expense and will also cease excluding income tax benefits derived from net operating loss (NOL) carryforwards. The company views stock-based compensation as a regular business expense and believes the impact of NOLs is diminishing and that many NOLs are approaching expiration. The filing includes an exhibit (99.1) that recasts certain prior period non-GAAP results under the new methodology. This is intended to assist analysts in updating their models and help investors compare historical non-GAAP results under the new approach. The company stated that its earnings releases and commentary will focus primarily on GAAP results moving forward. This change impacts how investors will analyze the company's performance using non-GAAP metrics.
Key Highlights
- 1The Priceline Group is changing its non-GAAP financial reporting methodology starting with Q4 2016 guidance.
- 2Stock-based employee compensation expense will no longer be excluded from non-GAAP net income and adjusted EBITDA.
- 3The company will also stop excluding income tax benefits related to net operating loss (NOL) carryforwards from non-GAAP reporting.
- 4The rationale for the change includes treating stock-based compensation as a standard business expense.
- 5The diminishing contribution and approaching expiration of NOLs are cited as reasons for discontinuing their exclusion.
- 6An exhibit (99.1) is provided to recast prior period non-GAAP results under the new methodology for comparison.
- 7The company plans to focus primarily on GAAP results in future earnings releases and commentary.