bkng-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-36691

Booking Holdings Inc.

(Exact name of registrant as specified in its charter)


Delaware			06-1528493
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

800 Connecticut Avenue

Norwalk, Connecticut 06854

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (203) 299-8000

Former name, former address and former fiscal year, if changed, since last report: N/A

_____________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock par value $0.008 per share

BKNG

The NASDAQ Global Select Market

0.800% Senior Notes Due 2022

BKNG 22A

The NASDAQ Stock Market LLC

2.150% Senior Notes Due 2022

BKNG 22

The NASDAQ Stock Market LLC

2.375% Senior Notes Due 2024

BKNG 24

The NASDAQ Stock Market LLC

1.800% Senior Notes Due 2027

BKNG 27

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding at July 30, 2020:


Common Stock, par value $0.008 per share						40,948,631
(Class)						(Number of Shares)

Booking Holdings Inc.

Form 10-Q

For the Three Months Ended June 30, 2020


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements			3

Consolidated Balance Sheets at June 30, 2020 (Unaudited) and December 31, 2019			3
Consolidated Statements of Operations (Unaudited) For the Three and Six Months Ended June 30, 2020 and 2019			4
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) For the Three and Six Months Ended June 30, 2020 and 2019			5
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) For the Three and Six Months Ended June 30, 2020 and 2019			6
Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2020 and 2019			8
Notes to Unaudited Consolidated Financial Statements			9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			38

Item 3. Quantitative and Qualitative Disclosures About Market Risk			59

Item 4. Controls and Procedures			60

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			62

Item 1A. Risk Factors			62

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			89

Item 6. Exhibits			90

SIGNATURES			91

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Booking Holdings Inc.

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)


	June 30, 2020		December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,404	$	6,312
Short-term investments (Available-for-sale debt securities: Amortized cost of $998 at December 31, 2019)	—		998
Accounts receivable, net (Allowance for expected credit losses of $282 and $49, respectively)	566		1,680
Prepaid expenses and other current assets, net (Allowance for expected credit losses of $12 and $6, respectively)	483		843
Total current assets	11,453		9,833
Property and equipment, net	736		738
Operating lease assets	577		620
Intangible assets, net	1,865		1,954
Goodwill	2,412		2,913
Long-term investments (Includes available-for-sale debt securities: Amortized cost of $775 and $2,192, respectively)	2,946		4,477
Other assets, net (Allowance for expected credit losses of $44 at June 30, 2020)	923		867
Total assets	$	20,912	$	21,402

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	581	$	1,239
Accrued expenses and other current liabilities	1,445		1,578
Deferred merchant bookings	910		1,561
Convertible debt	973		988
Total current liabilities	3,909		5,366
Deferred income taxes	931		876
Operating lease liabilities	417		462
Long-term U.S. transition tax liability	922		1,021
Other long-term liabilities	101		104
Long-term debt	10,633		7,640
Total liabilities	16,913		15,469

Commitments and Contingencies (see Note 13)


Stockholders' equity:
Common stock, $0.008 par value, Authorized shares: 1,000,000,000 Issued shares: 63,390,891 and 63,179,471, respectively	—		—
Treasury stock, 22,442,328 and 21,762,070 shares, respectively	(24,119)		(22,864)
Additional paid-in capital	5,699		5,756
Retained earnings	22,652		23,232
Accumulated other comprehensive loss	(233)		(191)
Total stockholders' equity	3,999		5,933
Total liabilities and stockholders' equity	$	20,912	$	21,402

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Agency revenues	$	357	$	2,607	$	1,781	$	4,556
Merchant revenues	245		959		904		1,562
Advertising and other revenues	28		284		233		569
Total revenues	630		3,850		2,918		6,687
Operating expenses:
Marketing expenses	211		1,367		1,062		2,560
Sales and other expenses	131		248		508		463
Personnel, including stock-based compensation of $77, $79, $83 and $153, respectively	452		619		936		1,120
General and administrative	104		180		305		371
Information technology	70		70		148		135
Depreciation and amortization	112		119		229		235
Restructuring and other exit costs	34		—		34		—
Impairment of goodwill	—		—		489		—
Total operating expenses	1,114		2,603		3,711		4,884
Operating (loss) income	(484)		1,247		(793)		1,803
Other income (expense):
Interest income	12		34		44		69
Interest expense	(96)		(68)		(160)		(134)
Net gains on marketable equity securities	835		17		528		468
Impairment of investment	—		—		(100)		—
Foreign currency transactions and other	(58)		(23)		(32)		(31)
Total other income (expense)	693		(40)		280		372
Income (loss) before income taxes	209		1,207		(513)		2,175
Income tax expense	87		228		64		431
Net income (loss)	$	122	$	979	$	(577)	$	1,744
Net income (loss) applicable to common stockholders per basic common share	$	2.98	$	22.62	$	(14.07)	$	39.52
Weighted-average number of basic common shares outstanding (in 000's)	40,922		43,251		41,007		44,124
Net income (loss) applicable to common stockholders per diluted common share	$	2.97	$	22.44	$	(14.07)	$	39.17
Weighted-average number of diluted common shares outstanding (in 000's)	40,995		43,601		41,007		44,514

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net income (loss)	$	122	$	979	$	(577)	$	1,744
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax	32		(16)		(45)		(28)
Net unrealized gains (losses) on available-for-sale securities, net of tax	77		(45)		3		114
Total other comprehensive income (loss), net of tax	109		(61)		(42)		86
Comprehensive income (loss)	$	231	$	918	$	(619)	$	1,830

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 and 2019

(In millions except share data)


	Common Stock				Treasury Stock						Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Shares (in 000's)	Amount		Shares (in 000's)	Amount											Total
Balance, March 31, 2020	63,370	$	—	(22,440)	$	(24,115)	$	5,758	22,530		$	(342)	$	3,831

Net income	—	—		—	—		—		122		—		122
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		32		32
Net unrealized gains on available-for-sale securities, net of tax	—	—		—	—		—		—		77		77

Issuance of convertible senior notes	—	—		—	—		96		—		—		96
Conversion of debt	—	—		—	—		(241)		—		—		(241)
Exercise of stock options and vesting of restricted stock units and performance share units	21	—		—	—		6		—		—		6
Repurchase of common stock	—	—		(2)	(4)		—		—		—		(4)
Stock-based compensation and other stock-based payments	—	—		—	—		80		—		—		80


Balance, June 30, 2020	63,391	$	—	(22,442)	$	(24,119)	$	5,699	$	22,652	$	(233)	$	3,999

	Common Stock				Treasury Stock						Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Shares (in 000's)	Amount		Shares (in 000's)	Amount											Total
Balance, December 31, 2019	63,179	$	—	(21,762)	$	(22,864)	$	5,756	$	23,232	$	(191)	$	5,933
Cumulative effect of adoption of accounting standards update	—	—		—	—		—		(3)		—		(3)
Net loss	—	—		—	—		—		(577)		—		(577)
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(45)		(45)
Net unrealized losses on available-for-sale securities, net of tax	—	—		—	—		—		—		3		3

Issuance of convertible senior notes	—	—		—	—		96		—		—		96
Conversion of debt	—	—		—	—		(245)		—		—		(245)
Exercise of stock options and vesting of restricted stock units and performance share units	212	—		—	—		6		—		—		6
Repurchase of common stock	—	—		(680)	(1,255)		—		—		—		(1,255)
Stock-based compensation and other stock-based payments	—	—		—	—		86		—		—		86


Balance, June 30, 2020	63,391	$	—	(22,442)	$	(24,119)	$	5,699	$	22,652	$	(233)	$	3,999


	Common Stock				Treasury Stock						Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Shares (in 000's)	Amount		Shares (in 000's)	Amount											Total
Balance, March 31, 2019	63,122	$	—	(18,936)	$	(17,567)	$	5,519	$	19,132	$	(169)	$	6,915

Net income	—	—		—	—		—		979		—		979
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(16)		(16)
Net unrealized losses on available-for-sale securities, net of tax	—	—		—	—		—		—		(45)		(45)

Exercise of stock options and vesting of restricted stock units and performance share units	22	—		—	—		1		—		—		1
Repurchase of common stock	—	—		(1,442)	(2,606)		—		—		—		(2,606)
Stock-based compensation and other stock-based payments	—	—		—	—		79		—		—		79


Balance, June 30, 2019	63,144	$	—	(20,378)	$	(20,173)	$	5,599	$	20,111	$	(230)	$	5,307

	Common Stock				Treasury Stock						Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Shares (in 000's)	Amount		Shares (in 000's)	Amount											Total
Balance, December 31, 2018