The after-hours selling suggests investors care more about how much revenue Booking earns from its bookings than about volume. Strong gross bookings did not make up for the shortfall. The miss lands on a stock already down about 30% this year, which leaves little room for disappointment and could weigh on online travel peers in early trade. Oil is part of the backdrop: the company has linked higher flight prices and weaker long-haul demand to the Middle East conflict, so energy-driven airfare costs remain a risk to travel revenue.
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Booking’s customers booked more travel than expected, but less of it turned into revenue, and that gap is what investors sold.
Summary:
Q3 revenue was around $8.9bn, short of expectations near $9.6bn
Adjusted EPS was about $4.70, ahead of forecasts near $4.50
Gross bookings were roughly $54.5bn, above estimates of about $52.7bn
Shares fell in after-hours trade
Management had guided Q3 revenue growth of 4% to 6%, citing Middle East conflict effects on flights and long-haul travel
Per-share figures reflect April’s 25-for-1 stock split
Booking Holdings shares fell in after-hours trade after the online travel group reported third-quarter revenue well short of expectations, overshadowing a beat on both adjusted earnings and gross bookings.
According to the company’s earnings release, revenue came in at around $8.9bn, against analyst expectations of about $9.6bn. Adjusted earnings per share were roughly $4.70, ahead of forecasts near $4.50. Gross bookings, which measure the total value of travel booked through the group’s platforms, reached around $54.5bn and topped estimates of about $52.7bn.
The mix of results points to a widening gap between activity on the platform and the revenue the company keeps from it. Customers booked more travel than expected, but less of that value turned into revenue than analysts had modelled. The shortfall also appears to fall outside the company’s own guidance. Management had guided third-quarter revenue growth of 4% to 6%. Figures cited ahead of the release put the year-earlier quarter at roughly $9bn, which suggests reported revenue was little changed or slightly lower.
The company had flagged a difficult quarter in advance. When it set its outlook in early August, management said it expected the indirect effects of the Middle East conflict to persist through the third quarter. Those effects included higher flight ticket prices, reduced capacity on some routes and softer demand for long-haul international travel, while domestic travel held up better. Currency moves were also expected to trim reported growth by about one percentage point.
The earnings figures reflect the 25-for-1 stock split that took effect in April, which explains why the per-share numbers are much smaller than in past years.
Attention now turns to the company’s conference call and fourth-quarter outlook. Investors will be looking for an explanation of the revenue shortfall and an update on how the conflict is affecting bookings. They will also want to know whether management still expects full-year revenue growth in the high single digits.
This article was written by Eamonn Sheridan at investinglive.com.
