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Why Is Booking Holdings (BKNG) Up 4.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Booking Holdings (BKNG). Shares have added about 4.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Booking Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Booking Holdings Report Loss in Q2

Booking Holdings reported a non-GAAP loss of $2.55 per share in second-quarter 2021, which was narrower than the Zacks Consensus Estimate for a loss of $2.69 per share. Further, the figure compares favorably with the loss per share of $10.81 and $5.26 in the year-ago quarter and the previous quarter, respectively.

Revenues of $2.16 billion surpassed the Zacks Consensus Estimate of $1.92 billion. Further, the top line improved 243% year over year and 89.3% sequentially.

The pandemic persisted as the biggest headwind in the reported quarter. The resulting economic downturn, and government and travel restrictions were major negatives.

Nevertheless, the ongoing vaccination drive remained positive. The company witnessed sequential as well as year-over-year growth in its metrics.

Strong improvement in its booking trends was a tailwind. The company experienced solid momentum in the United States and Europe in the reported quarter.

Booking Holdings witnessed growth of 558.8% and 30%inrental car on a year-over-yearand sequential basis, respectively.

Booked room night number, which was 157 million in the second quarter, surged 457.5% from the prior-year quarter and 58.6% from the previous quarter.

The company experienced year-over-year and sequential improvements of 626.7% and 33.4% in the airline tickets unit in the reported quarter.

It witnessed strong growth across its agency, merchant, and advertising and other businesses in the reported quarter.

We note that the company’s deepening focus to bolster its core accommodation business and growing momentum across Connected Trip vision are expected to aid Booking Holdings’ business growth in the days ahead.

Top Line in Detail

The company generates the bulk of revenues from international markets, wherein, the agency model is more popular. This is reflected in the merchant/agency split of revenues, which was 30.6/61.5% in the second quarter (the previous quarter’s split was 32.7/62.8%).

Merchant revenues were $661 million, up 169.8% year over year and 77.2% from the prior quarter. Agency revenues were $1.33 billion, up 271.9% on a year-over-year basis and 85.2% sequentially.

Advertising & Other revenues were $171 million (7.9% of total revenues), increasing 510.7% from the year-ago quarter and 235.3% from the previous quarter. These are non-inter-company revenues from Kayak and OpenTable.

Bookings

Booking Holdings’ overall gross bookings totaled $21.9 billion, which jumped significantly from $2.3 billion inthe year-ago quarter. The figure was up 83.9% from the last quarter.

Total gross bookings surpassed the Zacks Consensus Estimate of $16.2 billion.

Merchant bookings were $6.7 billion, up from $771 million in the prior-year quarter. The figure surged 106.2% sequentially.

Agency bookings came in at $15.3 billion, rising from $1.5 billion in the prior-year quarter. The figure also grew 75.6% from the previous quarter.

Operating Results

Adjusted EBITDA in the second quarter was $48 million against a negative of $376 million in the prior-year quarter.

Per management, operating expenses were $2.2 billion, up 98.9% on a year-over-year basis.

Notably, the company generated an operating loss of $56 million compared with aloss of $484 million in the year-ago period.

Balance Sheet

As of Jun 30, 2021, cash and cash equivalents were $11.2 billion, down from $12.2 billion as of Mar 31, 2021.

Short-term investments amounted to $501 million in the reported quarter compared with $500 million in the previous quarter. At the end of the second quarter, Booking Holdings had $9.99 billion of long-term debt compared with $9.93 billion at the end of the first quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 20.65% due to these changes.

VGM Scores

At this time, Booking Holdings has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Booking Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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