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Booking Holdings (BKNG) Q3 Earnings Beat, Revenues Rise Y/Y

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Booking Holdings Inc. (BKNG - Free Report) reported third-quarter 2019 non-GAAP earnings of $45.36 per share beating the Zacks Consensus Estimate by 1.1%. Further, the figure improved 20.1% from the year-ago quarter and 92.3% on a sequential basis.

Revenues of $5.04 billion improved 4% year over year and 30.9% from the previous quarter.

Solid momentum across merchant, and advertising and other businesses drove the top line year over year. Additionally, robust accommodation business drove the booked room nights number, which came in at 223 million during the reported quarter, up 11% from the prior-year quarter.

However, revenues missed the Zacks Consensus Estimate of $5.07 billion.

Continued softness in agency business remained a headwind. Further, the company faced sluggishness in airline tickets unit, which was down 2.5% year over year during the reported quarter.

Nevertheless, Booking Holdings witnessed robust improvement in rental car days that rose 8.5% from the year-ago quarter.

Coming to price performance, Booking Holdings has returned 9.1% on a year-to-date basis, underperforming the industry’s rally of 26.8%.

Nevertheless, secular growth trend in the online travel booking market and growing usage of mobile by travelers for their travel planning remain tailwinds.

Moreover, the company’s strong position in the international markets, growth opportunities in the domestic market, solid momentum across the global accommodation space and proper execution of its marketing strategies are major positives.



Top-Line in Detail

Booking Holdings generates bulk of revenues from the international markets, wherein the agency model is more popular. This is reflected in the merchant/agency split of revenues, which was 26.1/68.1% in the third quarter (previous quarter’s split was 24.9/67.7%).

Merchant revenues came in $1.3 billion, up 25% year over year. The company’s continued efforts toward improving of merchant business remains a positive.

Further, Agency revenues were $3.4 billion, down 2.9% on a year-over-year basis.

Advertising & Other revenues were $292 million (5.8% of total revenues), improving 13.2% from the year-ago quarter. These are basically non-inter company revenues from Kayak and OpenTable.

Bookings

Booking Holdings’ overall gross bookings came in $25.28 billion were up 4.1% year over year. Further, the figure was up 7% at constant currency from the year-ago quarter, which exceeded management’s guided range.

Additionally, gross bookings topped the Zacks Consensus Estimate of $25.26 billion.

Merchant bookings were $7.2 billion, up 36.5% from the prior-year quarter. However, agency bookings declined 4.8% year over year to $18.1 billion.

Booking Holdings Inc. Price, Consensus and EPS Surprise

 

Booking Holdings Inc. Price, Consensus and EPS Surprise

Booking Holdings Inc. price-consensus-eps-surprise-chart | Booking Holdings Inc. Quote

Operating Results

Adjusted EBITDA in the third quarter was $2.5 billion, up 5.2% from the year-ago quarter. As a percentage of revenues, the figure expanded 60 bps to 49.3%.

Per management, operating expenses were $2.7 billion, up 2.6% year over year. However, as a percentage of revenues, the figure contracted 80 bps from the year-ago quarter to 52.9%.

Operating income was $2.4 billion, increasing 5.5% year over year. Moreover, operating margin of 47% expanded 70 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2019, cash and short-term investments balance was $7.4 billion, up from $6.8 billion as of Jun 30, 2019.

At the end of the third quarter, Booking Holdings had $7.5 billion of long-term debt, down from $7.7 billion in the previous quarter.

During the reported quarter, the company generated $1.9 billion of cash from operations, increasing from $1.8 billion in the previous quarter.

Further, free cash flow was $1.8 billion in the third quarter. The company repurchased shares worth $1.3 billion during the reported quarter.

Guidance

For fourth-quarter 2019, Booking Holdings expects room nights booked to improve 6-8%.

Further, total gross bookings are anticipated to reflect year-over-year growth in the range of 0.5-2.5%. On a constant-currency basis, gross bookings are expected in the range of 2-4%.

The company anticipates adjusted EBITDA in the range of $1.21-$1.23 billion.

Non-GAAP earnings are expected in the range of $21.50-$22.00 per share. The Zacks Consensus Estimate for earnings is pegged at $23.62 per share.

Zacks Rank & Key Picks

Booking Holdings currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the retail-wholesale sector are Stamps.com (STMP - Free Report) , Qurate Retail Group (QRTEA - Free Report) and Carvana (CVNA - Free Report) . While Stamps.com sports a Zacks Rank #1 (Strong Buy), Qurate Retail and Carvana carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Stamps.com, Qurate Retail Group and Carvana is currently pegged at 15%, 11.81% and 9%, respectively.

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