Booking Holdings Inc.

Holy shit at over $1000 per share, this must be an expensive company and hard to buy shares but you don’t have to buy in blocks of 100 shares. Booking Holdings, formerly known as Priceline.com, is a leading global provider of online travel-related services with brands Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable.  They have a strong balance sheet (net cash is approximately 9% of their market cap) and they have very solid operating cash flow and free cash flow.  The company is the Amazon of the travel industry except that it’s very profitable and it has a reasonable valuation!

Ests:     4Q19   1Q20   FY19    FY20

Revs    3.3bn   3.0       15b      15.9b

EPS      22.04   11.74   101.4   112.71

P=1678.20, 11.8bn gross cash, $282/sh, $38.30/sh net of $37.42/sh in deferred bookings, TTM EPS 102.57, P/E=16X, FY20 P/E=15X

4Q19   23.30 vs 22.49 +3.6%, est 22.04 down from 23.49, FY19 EPS +11% 102.57

• Feb 26, 2019, P=1678.20, TTM EPS=102.57, P/E=16X, FY20 P/E=15X

• Revs +4% to 3.3bn, Agency 64% of total, Merchant 29%

• Gross travel bookings +6% to 20.7bn, Agency -6.6%, Merchant +50.3%, Room nights booked +12% (much better than guidance)

• Have 6.3m alternative accommodation listings, Revs for FY19 were +14% and ~21% of total

• Deferred Merchant bookings +50% y/y to 1.56bn, flat q/q vs -7% q/q last year, reflecting transition from Agency to Merchant.  

• Expanding flight capabilities, FY20 goal is to be able to offer flights to 50% of total customers

• Mgmt to be managing the companies on a more integrated basis for cost efficiencies.

• 1Q Guidance: Seeing significant disruption from COVID19, very fluid situation, expecting Revs -3-7%, Room nights -5-10%, GTB -10-15%, -14-19% to EPS 9.05-9.65, est 11.74

• Expect FY EPS growth to be back-end weighted 

• Guidance should not be surprising to anyone and certainly isn’t indicative of their normalized results AND the overall opportunity remains to continue to capture share.  Stock has corrected 20% from mid-January vs 4.5% for S&P500 which has corrected 8.5% from its more recent highs.  

3Q19   45.36 vs 37.78 +20%, est 44.57 up from 43.97

• Nov 7, 2019, P=1849.93, TTM EPS=102.26, P/E=18X

• Revs +4% to 5bn, adj EBITDA +5% to 2.5bn, NI +8%, EPS +20% on lower share count, 

• Gross travel bookings +4% to 25.3bn (+7% ex fx), Agency -4.8% to 18.1bn, Merchant +36.5% to 7.2bn, Room nights booked +11% to 223m, ADRs -3% ex fx

• 4Q Guidance: Room nights booked +6-8%, Gross travel bookings +0.5% to 2.5%, Revs -0.5% to +1.5% (+1-3% ex fx), EPS $21.50-22.00 (-4% to -2%, est 23.49) with higher tax rate otherwise EPS would be up approx. 7%

• Decent results and better than EXPE, softness in 4Q isn’t great but still looks better than EXPE, being impacted by Asia which is seasonally larger in a seasonally softer quarter overall.  Travel to the US bring impacted by strong dollar, also seeing pressure on travel to China and H, EU exceeded their expectations 

• Mgmt indicated Google issues affecting EXPE are smaller for them

• During the quarter Thomas Cook went into liquidation which should be an eventual benefit to companies like BKNG 

• Recently launched flight offering for some EU cities, still early days, enhances their capabilities with the connected trip, having better information about customer’s entire trip.

EXPE getting hit 23% back to Feb 2018 levels

• Revs were +9% to 3.6bn, Gross bookings were +9% to 26.9bn, adj EPS -5% to 3.37, est was 3.80

• ADRs slowed most in North America, Asia was also a bit light

• Lowering guidance for FY19 adj EBITDA +5-8% (YTD +10%) reflecting mix shift into high-cost channels affecting them for at least the next few quarters

• BKNG reports this afternoon, my guess is they would be less affected by these pressures given their higher focus on Europe and they have been de-emphasizing higher cost channels for over a year. 

2Q19   23.59 vs 20.67 +14%, est 22.71 

• Aug 7, 2019, P=1821.56, TTM EPS 94.68, ex cash P/E=19X, FY20 P/E ex cash=16X

• Gross travel bookings +5% to 25bn (+10% ex fx), Revs +9% to 3.9bn (+14% ex fx), adj EBITDA +5% to 1.4bn, Room nights booked +12%, ~6m alternative accommodations

• Solid performance laps last year’s softness due to World Cup and unfavourable weather in EU.

• Repurchased $2.7bn in stock, 

• 3Q Guidance: Room nights booked +6-8%, Gross Travel Bookings +1.5-3.5% (+3-5% ex fx), Revs +2-4% (+4-6% ex fx), EPS 43.60-44.60 (+15-18%, est 43.97), 3Q and FY EBITDA to be impacted by French digital services tax, 25m and 35m respectively.  

• Solid profit growth and guidance despite fx headwinds.

• Pleased with continued rollout of payments platform, continuing to expand experiences/attractions, also developing capabilities to target business travelers and destination travelers like ski or beach

• Short-term return on brand marketing spend running below their expectations, refining spending levels, it’s still going well, they just want it to do better. 

1Q19   11.17 vs 12.00 -7%, est 11.26 down from 12.78

• May 9, 2019, P=1736.03, TTM EPS 91.76, ex cash P/E=18X, FY19 P/E ex cash=17X

• Gross travel bookings +2% to 25.4bn (+8% ex fx), Revs -3% to 2.8bn (+3% ex fx), adj EBITDA -10% to 718m, Room nights booked +10% to 217m

• Ex Easter shift and fx, adj EBITDA would have been up 6%

• Repurchased 1.619m shares for 2.77n ($1712/share)

• 2Q Guidance: Room nights booked +6-8%, Gross Travel Bookings -1% to +1% but +4-6% ex fx, Revs +5-7% (+10-12% ex fx), EPS 22.15-22.60 (+7-9%, est 22.44), still expect FY19 EPS ex fx to grow low double digits (likely mid-high single digits after fx but also benefited by share repurchases and negatively impacted by investment spending).

• Similar to 1Q, investments will impact EBITDA margins in 2Q, mgmt. expects a greater impact during the 1H.

4Q18   22.49 vs 16.86, +33%, est 19.42 up from 18.69, FY18 EPS 92.59 vs 77.03, +20%

• Feb 27, 2019, P=1906, TTM EPS 92.59, ex cash P/E=19X, FY19 P/E ex cash=18X

• Gross travel bookings +9% to 19.6bn (+13% ex fx), Revs +16% to 3.2bn (+21% ex fx)

• Adj EBITDA +17% to 1.3bn, TR 11% vs 17%

• Revs in 4Q18 were 5% higher than what GP would have been under the previous reporting standard.  

• In FY18, Alternative accommodation was ~20% of revs, growing faster than overall company.  

• Investing in payment platform which will facilitate local attractions where mgmt. wants to reduce frictions (similar to integrating rentalcars.com driving growth and loyalty). 

• Guidance: 1Q19 Room nights booked +6-8%, Gross travel bookings -1% to +1% but +5-7% ex fx, Revs -1% to +1% but +5-7% ex fx, EPS 10.90-11.20, -9 to -7%, est 12.78,

• FY19 EPS ex fx to grow low double digits (current estimate +9.2%)

• Massive beat, 1Q guidance is weak, factors weakness primarily in core European markets as well as timing of Easter, and OpEx deleverage due to continued investments in seasonally slowest quarter.  FY19 guidance is ok, stock is not expensive at 19X earnings.

3Q18   37.78 vs 35.22, +7%, est 38.21

• Nov 5, 2018, P=1871.12, TTM EPS 87.24, ex cash P/E=20X, FY19 P/E ex cash=17X

  Gross travel bookings +12% to 24.3bn (+14% ex fx), Revs +11% to 4.8bn (+13% ex fx)

  Adj EBITDA +7.9% to 2.4bn, CFO +4% to 1.89bn, FCF +1.8% to 1.8bn

  Deferred Bookings +33% to 1.1bn

  Bookings and EPS better than their guidance despite missing estimates

  >5.7m alternative listings, +21% y/y, total listing ~29m

  4Q Guidance: Gross Travel Bookings +6-9% (+10-13% ex fx), Revs +13-16% (+17-20% ex fx), EPS 18.90-19.40 (+12-15%, est 18.69)

2Q18   20.67 vs 15.14, +36%, est 17.34 up from 16.70

• August 9, 2018, P=$2,045,

• Gross travel bookings +15% to 23.9bn, +11% ex fx, Revs +20% to 3.5bn (+16% ex fx)

• And EBITDA +35% to 1.3bn, 37.1% vs 32.9%, CFO +35% to 1.6bn, FCF +35% to 1.5bn

• Deferred Bookings +52% to 1.8bn

• 3Q18 Guidance: Gross Travel Bookings +3-6%, +5-8% ex fx, EPS 36.70-37.70 (+4-7%, est 39.79) as they expect growth rates to decelerate through the quarter

• Saw slower room night growth towards the end of the quarter which they think is due to the World Cup and hot weather in some European markets which extended into 3Q, also feel they are prioritizing not buying unprofitable growth (with partner websites) as they have discussed prioritizing their direct business.

• Mgmt continues to invest for growth and competitiveness, lots of runway in Traditional and Alternative, mgmt. feels they are still gaining share in a growing market

• Stayed room nights grew faster than booked room nights.

• Stock responded negatively and is roughly flat over the past year, valuation has come down to 23X trailing EPS ex cash as investor fret over slowing growth for various reasons such as the company choosing to prioritize in direct bookings rather than indirect "search engine" type travel-related websites such as Trip Advisor, Trivago, etc. Management's guidance for 3Q is for slowing growth (as it has been all year) and their guidance has tended to be conservative and they have continued to deliver solid results. While I wouldn't say it's screaming cheap because things can always get cheaper, if the stock continues to get cheaper despite decent results, I'd likely be getting more aggressive on my position.

1Q18   12.00 vs 9.88, est 10.67 up from 10.28

• Gross travel bookings +21% to 25bn, +12% ex fx, Revs +24% to 2.9bn (+18% ex fx)

• GP +25% to 2.9bn, EBITDA +26% to 798m 27.5% vs 27.1%, CFO 640.4m vs 380.6m,

• Deferred Bookings +59% y/y to 1.4bn

• 2Q18 Guidance: Gross Travel Bookings +10-14%, +5-9% ex fx, EPS 16.35-17.00 (+8-12%, est 16.70), deleverage of non-marketing OpEx will diminish in 2H which should benefit OMs

• Solid results and guidance, stock is weak after hours after hitting new highs, valuation still attractive given results and growth opportunity.

4Q17   16.86 vs 14.21, est 14.12 down from 15.57, FY EPS 77.03 vs 65.63 (+17%)

• Gross travel bookings +19%, +14% ex fx, GP +21% to 2.8bn, EBITDA +23.3% to 1.07bn

• Room nights booked +16.8% to 151.5

• EPS +18.6% vs estimates -1%, bookings growth and performance advertising efficiency initiatives better than they expected.

• Now categorizing Traditional Accommodation (hotels, motels, resorts) and Alternative Accommodation (apartments, homes, other unique places to stay). ~1.2m Alternative accommodation, +53% y/y

• Effective Jan 1, 2018 changing revenue recognition to check-in rather than check-out, do not expect material impact for FY but could swing quarterly results (1Q likely impacted >2% lower, 2Q <1% lower, while 3Q and 4Q >4% higher than previous revenue recognition method). Also previous “Name Your Own Price” was reported on a Gross Basis, will now be reported on a Net Basis.

• 1Q18 Guidance: Gross travel bookings +14.5-18.5% (+6-10% ex fx), Revs +17.5-21.5% (+9-13% ex fx), EPS 10-10.40 (vs 9.88, est 10.28), if Guidance was under old accounting standards, Revs +20.5-24.5% (+12-16% ex fx), EPS 11-11.40

• 1Q slightly impacted by Easter shift, guidance is still solid. These are fantastic results especially considering the disappointing results from Expedia which are weaker (their 4Q EPS was -28% and FY17 EPS was -4%) yet it’s at a similar valuation. I’ll stick with BKNG.

3Q17   35.22 vs 29.69, est 34.25

• Gross travel bookings +18% to 21.8bn, Revs +22% to 4.4bn

• Room nights booked +19% to 178m nights, Booking.com has ~1.5m properties, +41%, represents 26.9m potential room bookings, 816k vacation rentals, +58% y/y

• Spending on expanding advertising markets from 12 countries to ~30, will pressure margins in short term, some advertising conflicts are arising in performance-based channels where an increasing share of profitability is going to their partners (like TripAdvisor, Trivago, etc), managing this will likely create some headwinds on revenue growth as they shift advertising spend. Also growth in non-hotel accommodation is pressuring margins due to hiring additional services and support.

• 4Q Guidance: Gross travel bookings +9.5-14.5%, +5.5-10.5% ex fx, EPS 13.40-14.00 (vs 14.21, est 15.57), reflects difficult comps last year and headwinds above.

• Solid quarter that came ahead of guidance and estimates, stock once again selling off after hours due to guidance. In comparison, Expedia Gross travel bookings were +11%, Revs +15%, EPS +4%, prior to their report they were at 32X TTM EPS and now are 26X, action afterhours for PCLN puts them at 23X for results that continue to be superior. Headwinds are challenging but they still have lots of growth opportunity given small share of the overall market.

2Q17   15.14 vs 12.59, est 14.20 down from 15.02

• Gross travel bookings +16% to 20.8bn (+19% ex fx), Revs +18.4% to 3.0bn

• Room nights booked +21%, growing share

• Booking.com growth of inventory of vacation rental properties accelerating, +54% y/y (presents hotels and vacation rentals on same search results), closed acquisition of KAYAK.

• 3Q Guidance: Gross travel bookings +11-16% (+9-14% ex fx, last year was +26% ex fx), EPS 32.40-34.10 (vs 29.69, est 34.2)

• Solid quarter, EPS handily beat estimate where it was 3 months ago, stock selling off ~6% in the aftermarket as guidance is viewed as weak, 2Q results again were superior to EXPE which is still trading at a bit of a premium to PCLN

1Q17   9.88 vs 9.20, est 8.89, guidance was 8.25-8.65

• Gross travel bookings +24% to 20.7bn, Revs +12.6% to 2.42bn

• 2Q Guidance: Gross travel bookings +12-17% (+15-20% ex fx), Revs +14-19% (+17-22% ex fx), EPS 13.30-14.00 (est 15.02)

• Decent quarter, results compare favourable to Expedia (and PCLN has a much strong balance sheet), given they have a similar forward P/E, I still prefer PCLN. Stock is off about 3% in the after market,

• Easter shift into 2Q had a slight beneficial impact on gross order bookings growth, will have an offsetting negative impact on 2Q bookings growth.

• Still have single digit market share in a very big market, lots of opportunity.