Booking Holdings Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Although the request metadata references 2021 Q4, this filing reports full-year results; it does not provide a clear standalone Q4 income statement in the supplied text.
Business context
Booking Holdings operates Booking.com, Priceline, agoda, Rentalcars.com, KAYAK and OpenTable. It earns most revenue from online travel reservations, particularly accommodations; approximately 87% of FY2021 revenue came from outside the U.S. The business continued to recover from COVID-19 disruption, but travel restrictions and new variants kept demand and the recovery outlook uncertain.
Financial and operating metrics
| Metric | FY2021 | FY2020 | Comparison |
|---|---|---|---|
| Revenue | $10.958 billion | $6.796 billion | +61.2%; still below FY2019 revenue of $15.066 billion |
| Operating income (loss) | $2.496 billion | $(631) million | FY2021 operating margin was approximately 22.8%; FY2020 included $1.062 billion of goodwill impairment |
| Net income | $1.165 billion | $59 million | FY2021 diluted EPS was $28.17, versus $1.44 |
| Gross bookings | $76.586 billion | $35.395 billion | +116.4% |
| Room nights | 591 million | 355 million | +66.4%; FY2021 ADRs were approximately 25% higher than FY2019 on a constant-currency basis |
| Operating cash flow | $2.820 billion | $85 million | Improved with recovery and higher business volumes |
| Cash, cash equivalents and investments | $14.3 billion | — | At December 31, 2021; includes $11.127 billion cash and cash equivalents |
| Debt | $11.1 billion principal | $12.2 billion | $2.0 billion principal due within 12 months; $2.0 billion undrawn revolving facility |
Revenue mix was $6.663 billion agency, $3.696 billion merchant and $599 million advertising and other. Revenue as a percentage of gross bookings fell to 14.3% from 19.2%, reflecting booking-to-travel timing and the recovery comparison. Marketing expense rose 74.5% to $3.801 billion. Merchant growth also raised payment and related expenses.
FY2021 other expense, net was $697 million, versus $1.554 billion of other income in FY2020. It included $569 million of net equity-security losses and a $242 million debt-extinguishment loss. FY2020 benefited from $1.813 billion of net equity-security gains. These investment and financing items materially affect year-to-year net income comparisons.
Material changes and capital allocation
- Revenue, gross bookings and travel volumes rebounded substantially from the pandemic-affected FY2020, but revenue remained below FY2019.
- FY2021 included no goodwill impairment, compared with $1.062 billion in FY2020. The company reported no goodwill impairment in its 2021 annual test.
- Booking Holdings acquired Getaroom in December for $1.3 billion gross purchase price, or $1.2 billion net of acquired cash. It agreed in November to acquire Etraveli Group for approximately €1.6 billion ($1.9 billion), subject to closing conditions and regulatory approvals.
- The company issued €1.7 billion of senior notes in March and redeemed $2.0 billion of higher-coupon notes in April. It paid $1.0 billion principal plus an $86 million conversion premium on notes maturing in September.
- No cash dividends have been paid, and none are expected in the foreseeable future. FY2021 repurchases were primarily shares withheld for employee taxes; the company reported approximately $500 million of buybacks in early 2022 as of February 22, subject to liquidity and covenant conditions.
Outlook, risks and contingencies
Management expected an operating profit in Q1 2022. It said Q1 room-night volumes could not be accurately predicted after a sharp late-2021 Omicron-related decline and rapid improvement: room nights were down 35% versus December 2019, down about 22% versus January 2019, and about in line with the first half of February 2019. Management expected Q1 gross bookings to compare several percentage points better than room nights versus Q1 2019, but revenue as a percentage of gross bookings below the 2019 level.
Management expects travel recovery growth and intends to invest in marketing, technology, personnel, payments and its Connected Trip strategy. It cautioned that growth acceleration can pressure near-term margins because marketing expense is recorded before related travel revenue, and that merchant and non-accommodation services may carry lower margins. The filing does not provide full-year 2022 financial guidance.
- COVID-19 and demand: Further variants, restrictions, consumer spending, cancellations and changes in travel behavior could impede recovery.
- Competition and distribution: Competition from Google, other online platforms and travel providers may increase marketing costs or weaken market share. Booking Holdings also relies significantly on search and other traffic channels.
- Debt and liquidity: The revolving facility has covenant requirements and restrictions on distributions and repurchases. At year-end, the company reported compliance with the minimum liquidity covenant and said existing liquid resources should fund operations and obligations for at least 12 months.
- Tax and legal matters: Tax assessments and disputes include French, Italian and Turkish matters. A Netherlands travel-industry pension-fund dispute could produce a maximum estimated loss of €289 million ($328 million), excluding potential interest and penalties; no liability was recorded because the loss could not be reasonably estimated.
- Other risks: Foreign exchange, volatile investment values, cybersecurity and privacy, payment processing, regulatory changes, talent costs, acquisition integration and potential goodwill impairment.
Important facts for investors to verify
- Whether recovery in room nights, ADRs, cancellations and international travel supports revenue growth, while recognizing FY2021 revenue remained below FY2019.
- How much operating cash flow and reported earnings are affected by working-capital movements, investment-price changes and other non-operating items.
- Debt maturities, covenant headroom and the conditions governing future share repurchases.
- Regulatory approval, closing and integration progress for Etraveli, and the realized returns from Getaroom.
- Developments in the French, Italian and Turkish tax matters and the Dutch pension litigation, including any changes to estimated exposure.
- Management’s execution of Connected Trip and payments investments, and the resulting effects on margins and returns.