Booking Holdings Q1 Results: Sustained Travel Demand And Improved Bookings Mix

seekingalpha05-03

Booking Holdings reported strong Q1 FY24 earnings, beating targets and extending its streak of earnings beats to seven quarters in a row.Direct bookings mix on the company's online properties ...

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Bookings Mix\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-03 10:47 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4688897-booking-holdings-q1-earnings-sustained-travel-demand-improved-bookings-mix><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Booking Holdings reported strong Q1 FY24 earnings, beating targets and extending its streak of earnings beats to seven quarters in a row.Direct bookings mix on the company's online properties ...</p>\n\n<a href=\"https://seekingalpha.com/article/4688897-booking-holdings-q1-earnings-sustained-travel-demand-improved-bookings-mix\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0082616367.USD","symbol_name":"摩根大通美国科技A（dist）","start_time":0,"source_url":"https://seekingalpha.com/article/4688897-booking-holdings-q1-earnings-sustained-travel-demand-improved-bookings-mix","article_id":"2432922519","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/458591883/image_458591883.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2432922519","pubTimestamp":1714704443,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Booking Holdings reported strong Q1 FY24 earnings, beating targets and extending its streak of earnings beats to seven quarters in a row.Direct bookings mix on the company's online properties 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INC"},"translate_title":"预订控股Q1结果：持续的旅行需求和改善的预订组合","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"UAL":1,"MAR":1,"ABNB":1,"HLT":1,"EXPE":1,"BKNG":1,"DAL":1},"content_text":"Booking Holdings reported strong Q1 FY24 earnings, beating targets and extending its streak of earnings beats to seven quarters in a row.Direct bookings mix on the company's online properties continues to drive higher bookings and revenue growth than anticipated.The company's strong performance in Q1 and sustained travel demand throughout the year make Booking Holdings a buy.   labsas/iStock Unreleased via Getty ImagesInvestment Thesis Booking Holdings (NASDAQ:BKNG) reported earnings results for the first quarter of 2024, which was, in my opinion, a strong earnings result for the Norwalk, CT-headquartered fintech company. The travel technology company beat targets set for its Q1 FY24 quarter and has now extended its earnings beat history to seven quarters in a row. On a trailing twelve-month basis, Booking Holdings beats the S&P 500, as can be seen below.   Booking Holdings outperforms the market on a trailing twelve month-basis (sa)Some key takeaways from Booking Holdings’ Q1 results were the trends in direct bookings with the company’s online properties that continue to grow, driving higher bookings and revenue growth than anticipated. The upcoming sporting events in the U.S. and Europe are only going to further help the revenue growth rates for travel in general, and I expect Booking Holdings to be a big beneficiary of sustained travel demands throughout the year. Based on my analysis of Booking Holdings results in Q1 and my outlook on travel demand being sustained, I believe Booking Holdings is a Buy here. Booking Holdings’s Q1 FY24 shows travel demand remains elevated In Q1, Booking Holdings continued to see its bookings grow in the double digits by 10.4% y/y. As can be seen in Exhibit A below, the majority of the booking volume continued to be driven by its merchant model of travel business. Similar to its peer Expedia (EXPE), Bookings also operates two business models. In the merchant-based model, Bookings facilitates the entire end-to-end travel transaction and collects fees and payments upfront from the customer on behalf of the travel merchant.   Exhibit A: Booking Holdings’ bookings dollar volume continues to grow better than anticipated despite strong comps in the previous quarters (Company sources)To maintain double-digit growth rates on the back of such strong travel demand the company has already seen in the same quarter in previous years, as highlighted in orange above, shows that travel demand remains strong. I believe these are good numbers, especially if I compare these growth rates to those seen on page 10 of a previous earnings report, where growth rates slowed to low to mid-single-digit growth. In the Q4 FY23 call, management was pointing to similar expectations when they mentioned they were projecting 4-6% booking growth in Q1. Given management’s prior expectations from a previous Q4 call, Q1 booking volume has significantly outpaced its own projections. To me, this is a strong indication of the demand that is to be seen as we move through the year. I note from management’s discussion on the Q1 earnings call that travelers were increasingly booking directly with the company’s online properties, such as Booking.com, Priceline, etc., which was positively impacting marketing spend incurred by the company. Since online accommodation services account for ~89% of the company’s total revenues, I will be looking at room nights booked as well. From Exhibit B below, I note that room nights continued to grow in the high single-digits to 297 million nights—again, a strong performance in my opinion. Its peer, Expedia, which also announced its own Q1 earnings at the same time, reported slower growth in bookings, rising just 7% y/y to 101 million. On the call, management mentioned that room nights booked across their platforms were driven by better-than-expected performance in Europe, while the headwinds originally accounted for by geopolitical tensions in the Middle East were less than anticipated.   Exhibit B: Booking Holdings’ saw room nights booked across its platforms grow 8.5% (Company sources)The strength of these top-funnel operational metrics for Bookings Holdings nicely sets up the company to outperform its own expectations as well as market expectations for sales in Q1. The company reported total sales worth $4.4 billion in the first quarter of FY24, up 16.9% y/y. Consensus estimates projected the company to grow Q1 sales by 12.5% y/y slightly higher than the 12% midpoint targets previously set by management.   Exhibit C: Booking Holdings revenue trends (Company sources)My conclusion from the observations of Booking Holdings’ growth metrics is that travel demand remains elevated. For most travel aggregator companies, such as Booking Holdings, the first two quarters are critical because most travelers plan ahead for their summer travel and make bookings in these quarters. Since bookings have already exceeded expectations, I believe Booking Holdings is set up for a good year. Plus, upcoming events such as the Olympics 2024 in Paris, Euro 2024 in Germany, and Copa America in the U.S. will spur travel demand even more, and I believe the strength will continue in Q2 as well. Robust profitability trends continue in Q1 Booking Holdings’ reported earnings per share of $20.39, up 76% from the same quarter last year and easily beating consensus estimates of $13.98. In Q1, EBITDA increased a massive 53% y/y to $898 million over the prior-year quarter as the company benefited from an increasing trend of bookings made directly on their platform. This resulted in lower marketing spends while increasing marketing ROI dollars. Based on the numbers that I was able to glean from the past earnings reports, I see that Booking Holdings has gotten much better at leveraging its sales and marketing budgets.   Exhibit D: Booking Holdings sales and marketing spend trends quarterly (Compiled from company sources)Management mentioned that the company was benefiting from an \"increasing direct mix, higher frequency, and more of our travelers moving into the upper Genius loyalty tiers.\" Travelers were using Booking Holdings’ apps more than ever, as noted, which, in my view, ties in with my observations on the lower sales and marketing spend that I see. Booking Holdings continues to offer upside for the year To estimate my target price for Booking Holdings, I will assume a few things:  Based on the previous guidance management set out in the Q4 earnings call, I believe revenue will grow at a >8% CAGR between FY23 and FY26, while operating income will grow by ~12% on a compound basis in the same period. This is slightly under the 15% adjusted EBITDA growth that management projects. A few growth drivers based on my analysis from earlier notes: An improved direct mix of travelers directly booking with the platform and sustained travel demand are some of the main drivers. Discount rates of 9.6% are based on micro-assumptions around discount rate items such as beta and risk premiums.    Booking Holdings has upside (Author)Based on my forecasts of ~12% compounded growth in income, the company should fetch a valuation premium of 22x–23x if I compare it to the S&P 500's long-term earnings growth of 8%. Taking a forward PE of 22x, I believe Booking Holdings could easily see 13–15% upside from current levels. Risks and other factors to look for If travel sentiment were to face headwinds due to higher occurrences of geopolitical conflicts or significant increases in inflation, travelers would be forced to alter or cancel their travel plans, which would impact Booking Holdings. In that case, the company would see low to no growth in bookings and elevated levels of cancellation rates as well. So far, demand remains high for travel, as per some reports from Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), and hotel chains Marriott International (NASDAQ:MAR) and Hilton Hotels (NYSE:HLT). Especially, some hotel chains like Mariott Hotels pointed to strong growth in the international segments. In Booking Holdings’ case, this is pertinent because the European region is a big revenue driver for the company. Plus, other research reports suggest demand will remain elevated by at least 7-8% in FY24. Takeaways Booking Holdings had a strong quarter and continues to position itself for strong demand as it enters the summer season. As pointed out earlier, the upcoming Olympics, Euro 2024, Copa America 2024, and general optimism in travel are expected to push the company higher, along with increased bookings occurring directly on its apps and platforms, benefiting the company’s top and bottom lines.  I rate Booking Holdings as a Buy here.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2432922519"}