Online travel agency Booking Holdings (NASDAQ:BKNG) reported results ahead of analyst expectations in the Q3 FY2022 quarter, with revenue up 29.4% year on year to $6.05 billion. Booking made a GAAP profit of $1.66 billion, improving on its profit of $769 million, in the same quarter last year.
Is now the time to buy Booking? Access our full analysis of the earnings results here, it's free.
Booking (BKNG) Q3 FY2022 Highlights:
- Revenue: $6.05 billion vs analyst estimates of $5.91 billion (2.25% beat)
- EPS (non-GAAP): $53.03 vs analyst estimates of $49.85 (6.37% beat)
- Free cash flow was negative $95 million, down from positive free cash flow of $2.59 billion in previous quarter
- Room Nights Booked: 240 million, up 57 million year on year
Formerly known as The Priceline Group, Booking Holdings (NASDAQ: BKNG) is the world’s largest online travel agency.
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition. Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Phocuswright estimated that the annual global travel market will reach $1.4 trillion of bookings in 2022 and online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead. Covid lockdowns in 2020 halted global travel for months on end, and may have fundamentally reduced the market for business travel, a long term threat for the profitability of online travel platforms.
Sales Growth
Booking's revenue growth over the last three years has been very strong, averaging 38.7% annually.
This quarter, Booking beat analyst estimates and reported solid 29.4% year on year revenue growth.
Ahead of the earnings results the analysts covering the company were estimating sales to grow 18.7% over the next twelve months.
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Usage Growth
As an online travel company, Booking generates revenue growth by a combination of increasing the number of stays (or experiences) booked, as well as the level of commission charged on those bookings.
Over the last two years the number of Booking's nights booked, a key usage metric for the company, grew 88.8% annually to 240 million users. This is among the fastest growth of any consumer internet company, indicating that users are excited about the offering.
In Q3 the company added 57 million nights booked, translating to a 31.1% growth year on year.
Key Takeaways from Booking's Q3 Results
Sporting a market capitalization of $75 billion, more than $9.13 billion in cash and with positive free cash flow over the last twelve months, we're confident that Booking has the resources it needs to pursue a high growth business strategy.
We enjoyed seeing Booking’s strong user growth this quarter. And we were also glad to see good revenue growth. Overall, we think this was a strong quarter, that should leave shareholders feeling positive. The company is up 5.46% on the results and currently trades at $1,870 per share.
Booking may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.
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The author has no position in any of the stocks mentioned.