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After Booking Holdings reported its November results, we cut our quality score to 4.0 out of 5. We lowered our ratings for how fast the company is growing, how much room it has to grow, and how well it is protected from competitors. We added the share price and per-share earnings impact from the April 25-for-1 stock split to our projections. We also added the $900 million revenue reduction from a legal charge to what we track, to better monitor the underlying growth of the travel business.
Booking reported a strong quarter with room nights growing 7 percent and total bookings reaching about $54.5 billion. While reported revenue fell slightly, this was due to a one-time $900 million charge related to a legal matter with the FTC, a government agency that protects consumers. Excluding that specific cost, revenue actually grew 9 percent.
The results show that travelers are still booking trips despite worries about a slowing economy. The company is also getting more efficient at turning those bookings into profit, with adjusted earnings per share rising 17 percent compared to last year. This suggests that Booking's scale and its push to get more people to book directly through its app are helping it maintain high profit levels even as the post-pandemic travel boom levels off.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Booking recorded a $900 million hit to its revenue this quarter linked to an action by the Federal Trade Commission (FTC). While the company did not provide specific details on the nature of the dispute, these types of charges usually relate to settlements or expected fines regarding business practices.
For long-term owners, the size of the charge is significant but appears to be a one-time event rather than a permanent change to how the company makes money. Because the underlying business grew during the quarter, this looks like a hurdle the company has already accounted for in its latest financial results.
Source: Reuters
Booking Holdings is set to report its latest quarterly results later today. Analysts expect the company to report revenue of about 9.55 billion dollars and profit of roughly 4.49 dollars per share. Beyond the headline numbers, the most important thing to watch is the progress of the "Connected Trip" strategy. We are looking for evidence that more travelers are booking flights and stays together through the app, which helps the company rely less on paying for expensive ads on Google.
A court in Amsterdam ruled that it is reasonable for Booking.com to require staff to work from the office at least 40 percent of the time. The decision comes after some employees challenged the policy, which is part of a broader trend of tech companies pulling staff back into physical workspaces. This is a minor internal matter and does not change the company's ability to sell travel or generate profit. While it helps management maintain their preferred culture, it has no direct impact on the stock's value for long-term owners.
Source: Reuters
Management has cleared the bar eight quarters in a row, showing they are experts at setting expectations they can reliably beat even as travel demand shifts.
| Expectation | |
|---|---|
| EPS | $2.18 |
| Revenue | $6.55B |
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