Booking Holdings(US:BKNG)2023-08-02 16:00Financial Performance - Merchant gross bookings for Q2 2023 were $21.1 billion, a 39.9% increase from $15.1 billion in Q2 2022; total gross bookings increased by 14.9% to $39.7 billion[203]. - Total revenues for Q2 2023 reached $5.46 billion, a 27.2% increase from $4.29 billion in Q2 2022, with total revenues as a percentage of gross bookings rising to 13.8%[228]. - Airline ticket gross bookings surged by 58.3% in Q2 2023, driven by higher demand and ticket price increases[227]. - Rental car days increased by 24.0% in Q2 2023, reflecting a recovery in travel demand and lower average daily rental prices[224]. - Information technology revenue for the three months ended June 30, 2023, was $144 million, a 5.5% increase from $137 million in the same period of 2022[234]. - Interest and dividend income surged to $266 million for the three months ended June 30, 2023, representing a 1,024.2% increase from $24 million in the same period of 2022[239]. - Interest expense rose significantly to $241 million for the three months ended June 30, 2023, compared to $76 million in the same period of 2022, marking a 216.2% increase[258]. Operational Metrics - Room nights reserved through the services increased for Q2 2023 compared to Q2 2022, driven primarily by the continued recovery in Asia and Europe[201]. - The average daily rate (ADR) increased approximately 5% on a constant currency basis in Q2 2023 compared to Q2 2022, primarily driven by higher ADRs in Europe[192]. - The cancellation rate in Q2 2023 was lower than the comparable period in 2019, despite an increase compared to Q2 2022[190]. - The mix of room nights booked for alternative accommodations rose to approximately 34% in Q2 2023, up from 32% in Q2 2022, indicating growing consumer demand[216]. - The ongoing shift from agency revenues to merchant revenues at Booking.com contributed to the increase in merchant revenues for Q2 2023[208]. Expenses and Investments - Marketing expenses as a percentage of total gross bookings decreased in Q2 2023 compared to Q2 2022 due to higher performance marketing ROIs and an increase in direct traffic[210]. - Total marketing expenses for Q2 2023 were $1.8 billion, a 4% increase from Q2 2022, driven by improved demand and marketing investments[215]. - Personnel expenses, excluding stock-based compensation, increased by 18.7% year-over-year for Q2 2023, driven by an increase in salary and bonus expenses[212]. - Personnel expenses rose by 18.5% to $752 million in Q2 2023, reflecting increased staffing and related costs[232]. - General and administrative expenses increased by 47.6% to $304 million in Q2 2023, influenced by higher indirect taxes and professional fees[233]. - Sales and other expenses increased by 43.2% to $666 million in Q2 2023, primarily due to higher merchant transaction costs[231]. - The company plans to continue investing in marketing, technology, and personnel to improve long-term operating results, even if it pressures operating margins[197]. Cash Flow and Financing - Net cash provided by operating activities for the six months ended June 30, 2023, was $4.6 billion, driven by a net income of $1.6 billion and a favorable net change in working capital of $2.6 billion[249]. - Net cash used in financing activities for the six months ended June 30, 2023, was $3.8 billion, driven by common stock repurchases of $5.2 billion and debt repayments of $500 million[271]. - The company entered into a new five-year unsecured revolving credit facility of up to $2.0 billion in May 2023, replacing a previous facility[246]. - The company issued senior notes totaling €1.75 billion ($1.9 billion) in May 2023, with interest rates of 3.625% and 4.125%, to be used for general corporate purposes including share repurchases[267]. - Net cash used in financing activities for the six months ended June 30, 2022, was $3.4 billion, with common stock repurchases of $2.3 billion and debt repayments of $1.1 billion[271]. Regulatory and Compliance - The company anticipates that regulatory changes, such as the Digital Markets Act, may increase compliance costs and affect business operations[196]. - The company had a remaining transition tax liability of $692 million as of June 30, 2023, due to the U.S. Tax Cuts and Jobs Act[245]. - The effective tax rates for the three and six months ended June 30, 2023, were lower compared to the same periods in 2022, primarily due to a lower valuation allowance related to unrealized losses on equity securities[264]. - The company has commitments and contingencies that are detailed in the financial statements[269]. Future Outlook - The company expects room nights to grow at a low double digits percentage for Q3 2023 compared to Q3 2022, with gross bookings growth projected to be about seven percentage points higher than room nights growth[198]. - Deferred merchant bookings amounted to $6.0 billion as of June 30, 2023, primarily consisting of cash payments received from travelers in advance of performance obligations[266]. - A hypothetical 100 basis point decrease in interest rates would increase the estimated fair value of other debt by approximately $630 million as of June 30, 2023[274]. - The company anticipates that the fair value of convertible senior notes will be more sensitive to equity market price volatility than to changes in interest rates[274]. - The convertible senior notes due in May 2025 are currently classified as "Short-term debt" on the balance sheet as of June 30, 2023[267]. - The company has no obligation to update forward-looking statements unless required by law, emphasizing the importance of reviewing SEC filings for updated information[273].