Booking Holdings Earnings 2019-09-30

BKNG 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
PYPL	138,402	48,391	32,252	16,342	0	2,510	3,839	126,428	0%	32.9	5%
ACN	120,998	28,156	14,013	42,802	13,103	4,678	6,929	116,249	31%	16.8	17%
BKNG	82,136	21,494	16,187	14,749	0	0	2,361	84,631	0%	35.8	0%
FIS	39,678	32,859	22,867	8,420	2,894	765	2,449	46,657	34%	19.1	2%
WP	38,371	27,097	16,552	4,111	2,934	302	1,754	42,766	71%	24.4	1%
EBAY	35,223	21,169	17,063	10,856	8,399	2,401	3,628	43,002	77%	11.9	11%
MELI	30,046	4,595	2,351	1,802	951	16	65	28,918	53%	441.9	0%
FDC	26,217	51,031	43,518	9,569	0	1,213	2,437	41,631	0%	17.1	2%
GPN	25,180	14,584	10,409	3,556	2,371	519	1,171	29,283	67%	25.0	4%
FLT	24,977	11,976	8,132	2,532	0	893	1,344	28,097	0%	20.9	7%

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-36691

Booking Holdings Inc.

(Exact name of Registrant as specified in its charter)



Delaware	06-1528493
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

800 Connecticut Avenue

Norwalk, Connecticut 06854

(address of principal executive offices)

Registrant's telephone number, including area code: (203) 299-8000

Former name, former address and former fiscal year, if changed, since last report: N/A

_____________________________________________________________________________________________

Securities Registered Pursuant to Section 12(b) of the Act:



Title of Each Class:	Trading Symbol	Name of Each Exchange on which Registered:
Common Stock par value $0.008 per share	BKNG	The NASDAQ Global Select Market
0.800% Senior Notes Due 2022	BKNG 22A	New York Stock Exchange
2.150% Senior Notes Due 2022	BKNG 22	New York Stock Exchange
2.375% Senior Notes Due 2024	BKNG 24	New York Stock Exchange
1.800% Senior Notes Due 2027	BKNG 27	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding at October 31, 2019:



Common Stock, par value $0.008 per share		41,855,700
(Class)		(Number of Shares)

Booking Holdings Inc.

Form 10-Q

For the Three Months Ended September 30, 2019



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	3

Consolidated Balance Sheets at September 30, 2019 (Unaudited) and December 31, 2018	3
Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2019 and 2018	4
Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Nine Months Ended September 30, 2019 and 2018	5
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) For the Three and Nine Months Ended September 30, 2019 and 2018	6
Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2019 and 2018	8
Notes to Unaudited Consolidated Financial Statements	9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	48

Item 4. Controls and Procedures	49

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	50

Item 1A. Risk Factors	50

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	73

Item 6. Exhibits	74

SIGNATURES	75

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Booking Holdings Inc.

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)



	September 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,466		$	2,624
Short-term investments in marketable securities	973			3,660
Accounts receivable, net of allowance for doubtful accounts of $52 and $61, respectively	1,788			1,523
Prepaid expenses and other current assets	829			600
Total current assets	10,056			8,407
Property and equipment, net	706			656
Operating lease assets	610			—
Intangible assets, net	1,985			2,125
Goodwill	2,885			2,910
Long-term investments	4,319			8,408
Other assets	885			181
Total assets	$	21,446		$	22,687

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,275		$	1,134
Accrued expenses and other current liabilities	1,704			1,399
Deferred merchant bookings	1,567			1,022
Convertible debt	982			—
Total current liabilities	5,528			3,555
Deferred income taxes	868			370
Operating lease liabilities	466			—
Long-term U.S. transition tax liability	1,027			1,166
Other long-term liabilities	94			162
Long-term debt	7,512			8,649
Total liabilities	15,495			13,902

Commitments and Contingencies (See Note 13)

Stockholders' equity:
Common stock, $0.008 par value; authorized 1,000,000,000 shares, 63,162,135 and 62,948,762 shares issued, respectively	—			—
Treasury stock, 21,077,128 and 17,317,126 shares, respectively	(21,523		)	(14,711		)
Additional paid-in capital	5,678			5,445
Retained earnings	22,061			18,367
Accumulated other comprehensive loss	(265		)	(316		)
Total stockholders' equity	5,951			8,785
Total liabilities and stockholders' equity	$	21,446		$	22,687

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Agency revenues	$	3,435		$	3,541		$	7,991		$	8,221
Merchant revenues	1,313			1,050			2,875			2,286
Advertising and other revenues	292			258			861			807
Total revenues	5,040			4,849			11,727			11,314
Operating expenses:
Performance marketing	1,291			1,314			3,513			3,562
Brand marketing	124			160			462			385
Sales and other expenses	276			243			739			612
Personnel, including stock-based compensation of $79, $70, $232 and $216, respectively	566			537			1,686			1,558
General and administrative	225			183			596			505
Information technology	71			58			206			177
Depreciation and amortization	117			107			352			317
Total operating expenses	2,670			2,602			7,554			7,116
Operating income	2,370			2,247			4,173			4,198
Other income (expense):
Interest income	44			48			113			141
Interest expense	(70		)	(68		)	(204		)	(203		)
Net unrealized (losses) gains on marketable equity securities	(49		)	31			419			107
Foreign currency transactions and other	68			(18		)	37			(40		)
Total other (expense) income	(7		)	(7		)	365			5
Earnings before income taxes	2,363			2,240			4,538			4,203
Income tax expense	413			473			844			851
Net income	$	1,950		$	1,767		$	3,694		$	3,352
Net income applicable to common stockholders per basic common share	$	46.01		$	37.39		$	84.84		$	70.00
Weighted-average number of basic common shares outstanding (in 000's)	42,389			47,268			43,540			47,887
Net income applicable to common stockholders per diluted common share	$	45.54		$	37.02		$	84.06		$	69.07
Weighted-average number of diluted common shares outstanding (in 000's)	42,831			47,751			43,947			48,530

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income ⁽¹⁾	$	1,950		$	1,767		$	3,694		$	3,352
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments, net of tax⁽²⁾	(35		)	(23		)	(63		)	(91		)
Net unrealized (losses) gains on debt securities, net of tax^{(1) (3)}	—			(134		)	114			(139		)

Comprehensive income	$	1,915		$	1,610		$	3,745		$	3,122

(1) The Company reclassified from accumulated other comprehensive income a net gain of $10 million ($11 million before tax) and a net loss of $1 million ($1 million before tax) for the nine months ended September 30, 2019 and 2018, respectively, from sales of investments in debt securities.

In addition, for both the three and nine months ended September 30, 2019, the Company reclassified from accumulated other comprehensive income a tax charge of $21 million related to the maturity in August 2019 of the Company's investment of $500 million in Trip.com Group (formerly known as Ctrip.com International Ltd.) convertible notes (see Note 5).

The reclassified net gain and loss before tax are included in "Foreign currency transactions and other" and the reclassified tax charges are included in "Income tax expense" in the Unaudited Consolidated Statements of Operations.

(2) Foreign currency translation adjustments result from currency fluctuations on the translation of the Company's non-U.S. Dollar functional currency subsidiaries' net assets, net of the impact of net investment hedges.

Foreign currency translation adjustments, net of tax, includes foreign currency transaction gains of $85 million ($111 million before tax) and $112 million ($146 million before tax) for the three and nine months ended September 30, 2019, respectively, and foreign currency transaction gains of $17 million ($23 million before tax) and $111 million ($148 million before tax) for the three and nine months ended September 30, 2018, respectively, associated with the Company's Euro-denominated debt that is designated as a hedge against the impact of currency fluctuations on the net assets of a Euro functional currency subsidiary (see Note 9).

The Company recorded tax benefits of $8 million and $23 million for the three and nine months ended September 30, 2019, respectively, and tax benefits of $5 million and $16 million for the three and nine months ended September 30, 2018, respectively, related to foreign currency translation adjustments to its one-time deemed repatriation tax liability recorded at December 31, 2017 and foreign earnings for periods after December 31, 2017 that are subject to U.S. federal and state income tax, resulting from the enactment of the U.S. Tax Cuts and Jobs Act (the "Tax Act").

(3) Net unrealized gains on debt securities, net of tax, includes a tax benefit of $7 million and a tax charge of $30 million for the three and nine months ended September 30, 2019, respectively, in addition to the reclassified tax charges for both periods as disclosed in footnote (1) above. Net unrealized losses on debt securities, net of tax, for the nine months ended September 30, 2018, includes a tax benefit of $1 million.

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions except share data)



	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shares (in 000's)	Amount		Shares (in 000's)		Amount			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, June 30, 2019	63,144	$	—	(20,378	)	$	(20,173	)	$	5,599	$	20,111	$	(230	)	$	5,307
Net income	—	—		—		—			—		1,950		—			1,950
Foreign currency translation adjustments	—	—		—		—			—		—		(35		)	(35		)
Exercise of stock options and vesting of restricted stock units and performance share units	18	—		—		—			—		—		—			—
Repurchase of common stock	—	—		(699	)	(1,350		)	—		—		—			(1,350		)
Stock-based compensation and other stock-based payments	—	—		—		—			79		—		—			79
Balance, September 30, 2019	63,162	$	—	(21,077	)	$	(21,523	)	$	5,678	$	22,061	$	(265	)	$	5,951



	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shares (in 000's)	Amount		Shares (in 000's)		Amount			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2018	62,949	$	—	(17,317	)	$	(14,711	)	$	5,445	$	18,367	$	(316	)	$	8,785
Net income	—	—		—		—			—		3,694		—			3,694
Foreign currency translation adjustments	—	—		—		—			—		—		(63		)	(63		)
Net unrealized gains on debt securities	—	—		—		—			—		—		114			114
Exercise of stock options and vesting of restricted stock units and performance share units	213	—		—		—			1		—		—			1
Repurchase of common stock	—	—		(3,760	)	(6,812		)	—		—		—			(6,812		)
Stock-based compensation and other stock-based payments	—	—		—		—			232		—		—			232
Balance, September 30, 2019	63,162	$	—	(21,077	)	$	(21,523	)	$	5,678	$	22,061	$	(265	)	$	5,951

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

(In millions except share data)



	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shares (in 000's)	Amount		Shares (in 000's)		Amount			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, June 30, 2018	62,927	$	—	(15,163	)	$	(10,630	)	$	5,225	$	15,954	$	(76	)	$	10,473
Net income	—	—		—		—			—		1,767		—			1,767
Foreign currency translation adjustments	—	—		—		—			—		—		(23		)	(23		)
Net unrealized losses on debt securities	—	—		—		—			—		—		(134		)	(134		)
Reclassification adjustment for convertible debt in mezzanine	—	—		—		—			46		—		—			46
Exercise of stock options and vesting of restricted stock units and performance share units	12	—		—		—			—		—		—			—
Repurchase of common stock	—	—		(1,149	)	(2,250		)	—		—		—			(2,250		)
Stock-based compensation and other stock-based payments	—	—		—		—			73		—		—			73
Balance, September 30, 2018	62,939	$	—	(16,312	)	$	(12,880	)	$	5,344	$	17,721	$	(233	)	$	9,952



	Common Stock			Treasury Stock					Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shares (in 000's)	Amount		Shares (in 000's)		Amount			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2017	62,689	$	—	(14,217	)	$	(8,699	)	$	5,783		$	13,939	$	238		$	11,261
Cumulative effect of adoption of accounting standards updates	—	—		—		—			—			430		(241		)	189
Net income	—	—		—		—			—			3,352		—			3,352
Foreign currency translation adjustments	—	—		—		—			—			—		(91		)	(91		)
Net unrealized losses on debt securities	—	—		—		—			—			—		(139		)	(139		)
Reclassification adjustment for convertible debt in mezzanine	—	—		—		—			3			—		—			3
Exercise of stock options and vesting of restricted stock units and performance share units	198	—		—		—			1			—		—			1
Repurchase of common stock	—	—		(2,095	)	(4,181		)	—			—		—			(4,181		)
Stock-based compensation and other stock-based payments	—	—		—		—			220			—		—			220
Conversion of debt	—	—		—		—			(773		)	—		—			(773		)
Common stock issued in an acquisition	52	—		—		—			110			—		—			110
Balance, September 30, 2018	62,939	$	—	(16,312	)	$	(12,880	)	$	5,344		$	17,721	$	(233	)	$	9,952

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Nine Months Ended September 30,
	2019	2018
OPERATING ACTIVITIES:

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	45	$82,136

10-Q	2019-11-07	Quarter: 2019-09-30
10-Q	2019-08-07	Quarter: 2019-06-30
10-Q	2019-05-09	Quarter: 2019-03-31
10-K	2019-02-27	Annual: 2018-12-31
10-Q	2018-11-05	Quarter: 2018-09-30
10-Q	2018-08-09	Quarter: 2018-06-30
10-Q	2018-05-09	Quarter: 2018-03-31
10-K	2018-02-27	Annual: 2017-12-31
10-Q	2017-11-07	Quarter: 2017-09-30
10-Q	2017-08-08	Quarter: 2017-06-30
10-Q	2017-05-09	Quarter: 2017-03-31
10-K	2017-02-27	Annual: 2016-12-31
10-Q	2016-11-07	Quarter: 2016-09-30
10-Q	2016-08-04	Quarter: 2016-06-30
10-Q	2016-05-04	Quarter: 2016-03-31
10-K	2016-02-17	Annual: 2015-12-31
10-Q	2015-11-09	Quarter: 2015-09-30
10-Q	2015-08-05	Quarter: 2015-06-30
10-Q	2015-05-07	Quarter: 2015-03-31
10-K	2015-02-19	Annual: 2014-12-31
10-Q	2014-11-04	Quarter: 2014-09-30
10-Q	2014-08-11	Quarter: 2014-06-30
10-Q	2014-05-08	Quarter: 2014-03-31
10-K	2014-02-20	Annual: 2013-12-31
10-Q	2013-11-07	Quarter: 2013-09-30
10-Q	2013-08-08	Quarter: 2013-06-30
10-Q	2013-05-09	Quarter: 2013-03-31
10-K	2013-02-27	Annual: 2012-12-31
10-Q	2012-11-01	Quarter: 2012-09-30
10-Q	2012-08-07	Quarter: 2012-06-30
10-Q	2012-05-09	Quarter: 2012-03-31
10-K	2012-02-27	Annual: 2011-12-31
10-Q	2011-11-07	Quarter: 2011-09-30
10-Q	2011-08-05	Quarter: 2011-06-30
10-Q	2011-05-06	Quarter: 2011-03-31
10-K	2011-02-25	Annual: 2010-12-31
10-Q	2010-11-09	Quarter: 2010-09-30
10-Q	2010-08-04	Quarter: 2010-06-30
10-Q	2010-05-10	Quarter: 2010-03-31
10-K	2010-02-19	Annual: 2009-12-31

8-K	2019-11-07	Earnings, Exhibits
8-K	2019-10-24	Officers, Amend Bylaw, Exhibits
8-K	2019-08-14	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2019-08-07	Earnings, Exhibits
8-K	2019-06-28	Officers, Exhibits
8-K	2019-06-07	Shareholder Vote
8-K	2019-05-14	Officers, Regulation FD, Exhibits
8-K	2019-05-09	Earnings, Exhibits
8-K	2019-03-28	Regulation FD, Exhibits
8-K	2019-03-01	Officers, Exhibits
8-K	2019-02-27	Earnings, Exhibits
8-K	2018-11-05	Earnings, Exhibits
8-K	2018-08-09	Earnings, Exhibits
8-K	2018-08-08	Regulation FD, Exhibits
8-K	2018-07-17	Regulation FD, Exhibits
8-K	2018-07-09	Regulation FD, Exhibits
8-K	2018-06-07	Officers, Shareholder Vote, Exhibits
8-K	2018-05-09	Earnings, Exhibits
8-K	2018-04-19	Regulation FD, Exhibits
8-K	2018-04-10	Regulation FD, Exhibits
8-K	2018-03-02	Officers, Regulation FD, Exhibits
8-K	2018-03-02	Officers, Exhibits
8-K	2018-02-27	Earnings, Exhibits
8-K	2018-02-21	Amend Bylaw, Regulation FD, Exhibits
8-K	2018-01-19	Officers, Regulation FD, Exhibits

EX-31.1	bkng93019ex311.htm
EX-31.2	bkng93019ex312.htm
EX-32.1	bkng93019ex321.htm
EX-32.2	bkng93019ex322.htm