Booking Holdings’ solid second quarter brought low by cautious guidance
Booking Holdings, the travel giant formerly known as Priceline, reported solid second quarter earnings last week. However, a more cautious than expected guidance sent the share price down over the week. However, investors should note that the company beat its own guidance for the quarter just gone with ease – and Booking Holdings has a habit of low-balling its own forecasts, and then blowing them out of the water.
The impact of weak guidance means Booking Holdings’ share price has only increased by 1%, year to date.
SOURCE: Yahoo Finance
Booking said that revenue for the quarter came in at $3.54 billion – a 17.2% increase against the same quarter in the previous year. Total gross travel bookings rose by 14.9% to $23.9 billion, and adjusted earnings rose by an even more impressive 36.5%, year on year, to $20.67 per share.
The company exercised discipline in advertising, cost control, and share buybacks, and the impact was definitely felt on earnings per share – which easily crushed the company’s own guidance of a 10% increase against the previous year. Despite this, the company’s share price declined due to weak guidance: for all the metrics that matter, Booking Holdings is forecasting mid single-digit growth – that’s pretty meager compared to its 20% and 30% deliverables for the last quarter.
Speaking to the future, the company’s president and CEO, Glenn Fogel, said: “Our strategy has not changed since then, and we remain open to leaning into channels that make themselves more attractive to us as an advertiser, work with us to improve the customer experience and help us build our brand. Regarding brand marketing. We have not been able to ramp the spend as quickly as we had hoped in the first half of the year. But we believe we are exercising appropriate prudence regarding new brand campaigns and channels.”
“And we remain confident that over time, we will build a strong brand marketing effort, which, in the long term, will produce a beneficial impact and increase our direct business. Overall, we are executing on our long-term strategies that we outlined at the end of last year, which is to provide a more holistic travel experience for our customers in order to further drive loyalty and build a larger direct brand.”
Dominion holds Booking Holdings in its Global Trends Ecommerce Fund.
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