Booking Holdings: The Traveler Stays Strong and On the Move
Q3'24 Earnings Review
Booking Holdings reported its earnings on October 30th, surpassing expectations and driving its share price up by over 4.5% on the same day. By November 6th, its share price crossed the $5,000 mark (now trading around $4,940). We've held Booking in our portfolio for some time, and it has delivered outstanding results since our July 2022 pitch, when it was trading around $1,700, marking a 191% return.
If you'd like to explore Booking in more detail, check out our January article where we compare it directly with its peers.
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1. Financial results
Revenue came in at $8.0 billion versus the expected $7.63 billion, representing year-over-year (YoY) growth of 9% and exceeding expectations by $366.6 million, or 4.8%. For Q4’24, management expects a 7%-9% YoY growth.
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Adjusted EBITDA for Q3 2024 was $3.7 billion, up 12% from the prior-year quarter and beating estimates of $3.34 billion by over 9%, with a margin of 45.8%, an increase of 110 basis points. The increase in margin was due to marketing and fixed expenses leverage. Adjusted EBITDA for Q4 is projected to grow by 13%-14%, reaching approximately $1.625 billion at the midpoint, with an anticipated margin of around 31.4%.
Operating profit for Q3 2024 came in at $3.18 billion, up 2.4% from the prior-year quarter but slightly below estimates of $3.21 billion. The operating margin was 39.8%, down from 42.3% in the prior year, primarily due to a one-time $365 million accrual related to Italian indirect tax matters.
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Adjusted EPS for Q3 2024 was $83.89, up 16% from the prior-year quarter and exceeding estimates of $77.38 by over 8%.
Free Cash Flow for Q3 2024 came in at $2.3 billion, reflecting 76.5% growth from the prior year and a margin of 39.7%. Approximately $2 billion was returned to shareholders through share buybacks and dividends.
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Cash and investments totaled $16.3 billion, compared to debt and lease liabilities of $16.7 billion.
2. KPIs
a. Nights Booked
Nights booked for the quarter reached 299 million, up 8.3% YoY and exceeding guidance of 3%-5% growth, driven by high single-digit growth in Europe and double-digit growth in Asia. Notably, Asia now represents 24% of bookings, an even higher mix than pre-pandemic. Looking ahead, 6%-8% growth is projected for Q4 2024.
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Asia’s growth impacted ADR, which declined by 1% in constant currency. Had the regional mix remained stable, ADR would have risen 1%, reflecting strong pricing despite cooling inflation and consumer travel concerns. For comparison, Airbnb reported 8% growth in nights booked and a modest 1% ADR increase, further suggesting stable consumer demand.
b. Gross Bookings
Gross Bookings in Q3 2024 reached $43.4 billion, a 9% increase that exceeded the guidance of 2%-4%, driven by strong growth in room nights and a gain in air ticket market share, with a 39% increase compared to Expedia’s 8%. For comparison, Airbnb reported $20.1 billion in gross bookings, up 10% year-over-year, and Expedia reported $27.5 billion, growing by 7%.
Looking ahead, Booking projects 7%-9% growth for Q4, underscoring continued resilience in travel demand.
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c. Alternative Accommodation
Alternative accommodation nights once again