Booking (NASDAQ:BKNG) Reports Bullish Q4, Shows User Growth

Jabin Bastian /
2022/02/23 4:22 pm EST
Add to Watchlist

Online travel agency Booking Holdings (NASDAQ:BKNG) reported results ahead of analyst expectations in the Q4 FY2021 quarter, with revenue up 140% year on year to $2.98 billion. Booking made a GAAP profit of $618 million, improving on its loss of $165 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) Q4 FY2021 Highlights:

  • Revenue: $2.98 billion vs analyst estimates of $2.85 billion (4.57% beat)
  • EPS (GAAP): $14.94
  • Free cash flow of $178 million, down 88.2% from previous quarter
  • Room Nights Booked: 151 million, up 75 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 mediocre, averaging 17.5% annually. Booking's revenue took a hit when the pandemic first hit, but it has since rebounded strongly, as you can see below.

Booking Total Revenue

This quarter, Booking beat analyst estimates and reported a very impressive 140% year on year revenue growth.

There are others doing even better than Booking. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.

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 104% annually to 151 million users. This is among the fastest growth of any consumer internet company, indicating that users were excited to come back after the pandemic.

Booking Room Nights Booked

In Q4 the company added 75 million nights booked, translating to a 98.6% growth year on year.

Key Takeaways from Booking's Q4 Results

Sporting a market capitalization of $103 billion, more than $11.1 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 were impressed by the exceptional revenue growth Booking delivered this quarter. And we were also glad to see the user growth. Zooming out, we think this was a solid quarter. The company is flat on the results and currently trades at $2,460 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.