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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 September 30, 2023
OR
      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)
Delaware06-1528493
(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 BKNGThe NASDAQ Global Select Market
2.375% Senior Notes Due 2024BKNG 24The NASDAQ Stock Market LLC
0.100% Senior Notes Due 2025BKNG 25The NASDAQ Stock Market LLC
4.000% Senior Notes Due 2026BKNG 26The NASDAQ Stock Market LLC
1.800% Senior Notes Due 2027BKNG 27The NASDAQ Stock Market LLC
3.625% Senior Notes Due 2028BKNG 28AThe NASDAQ Stock Market LLC
0.500% Senior Notes Due 2028BKNG 28The NASDAQ Stock Market LLC
4.250% Senior Notes Due 2029BKNG 29The NASDAQ Stock Market LLC
4.500% Senior Notes Due 2031BKNG 31The NASDAQ Stock Market LLC
4.125% Senior Notes Due 2033BKNG 33 The NASDAQ Stock Market LLC
4.750% Senior Notes Due 2034BKNG 34The 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 October 26, 2023:
Common Stock, par value $0.008 per share34,889,873
(Class)(Number of Shares)



Booking Holdings Inc.
Form 10-Q
 
For the Three Months Ended September 30, 2023
 
PART I - FINANCIAL INFORMATION 
  
Item 1. Financial Statements
  
Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022
Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Changes in Stockholders' (Deficit) Equity (Unaudited) For the Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2023 and 2022
Notes to Unaudited Consolidated Financial Statements
  
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
Item 4. Controls and Procedures
  
PART II - OTHER INFORMATION 
  
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Item 5. Other Information
Item 6. Exhibits
  
SIGNATURES
2


PART I — FINANCIAL INFORMATION
Item 1.  Financial Statements

Booking Holdings Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
 September 30,
2023
December 31,
2022
(Unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$13,294 $12,221 
Short-term investments (Available-for-sale debt securities:
Amortized cost of $632 and $176, respectively)
624 175 
Accounts receivable, net (Allowance for expected credit losses of $116 and $117, respectively)
3,447 2,229 
Prepaid expenses, net680 477 
Other current assets434 696 
Total current assets18,479 15,798 
Property and equipment, net733 669 
Operating lease assets643 645 
Intangible assets, net1,660 1,829 
Goodwill2,804 2,807 
Long-term investments (Includes available-for-sale debt securities:
Amortized cost of $576 at December 31, 2022)
420 2,789 
Other assets, net896 824 
Total assets$25,635 $25,361 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY  
Current liabilities:  
Accounts payable$3,020 $2,507 
Accrued expenses and other current liabilities4,182 3,244 
Deferred merchant bookings3,717 2,223 
Short-term debt1,913 500 
Total current liabilities12,832 8,474 
Deferred income taxes350 685 
Operating lease liabilities547 552 
Long-term U.S. transition tax liability515 711 
Other long-term liabilities160 172 
Long-term debt11,856 11,985 
  Total liabilities26,260 22,579 
Commitments and contingencies (see Note 13)
Stockholders' (deficit) equity:  
Common stock, $0.008 par value,
Authorized shares: 1,000,000,000
Issued shares: 64,032,162 and 63,780,528, respectively
  
Treasury stock: 28,843,826 and 25,917,558 shares, respectively
(38,944)(30,983)
Additional paid-in capital6,996 6,491 
Retained earnings31,608 27,541 
Accumulated other comprehensive loss(285)(267)
Total stockholders' (deficit) equity(625)2,782 
Total liabilities and stockholders' (deficit) equity$25,635 $25,361 
        
See Notes to Unaudited Consolidated Financial Statements.
3


Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2023202220232022
Merchant revenues$3,945 $2,614 $8,467 $5,413 
Agency revenues3,135 3,203 7,346 6,954 
Advertising and other revenues261 235 768 674 
Total revenues7,341 6,052 16,581 13,041 
Operating expenses:  
Marketing expenses2,022 1,795 5,340 4,679 
Sales and other expenses723 540 1,931 1,344 
Personnel, including stock-based compensation of $128, $101, $369, and $302, respectively
788 636 2,262 1,867 
General and administrative387 262 980 627 
Information technology187 129 468 400 
Depreciation and amortization129 109 370 327 
Restructuring, disposal, and other exit activities2 (2)4 40 
Total operating expenses4,238 3,469 11,355 9,284 
Operating income3,103 2,583 5,226 3,757 
Interest expense(254)(102)(689)(246)
Other income (expense), net300 (305)533 (1,040)
Income before income taxes3,149 2,176 5,070 2,471 
Income tax expense638 510 1,003 648 
Net income$2,511 $1,666 $4,067 $1,823 
Net income applicable to common stockholders per basic common share$70.62 $42.10 $111.09 $45.20 
Weighted-average number of basic common shares outstanding (in 000's)35,570 39,564 36,615 40,326 
Net income applicable to common stockholders per diluted common share$69.80 $41.98 $110.02 $45.00 
Weighted-average number of diluted common shares outstanding (in 000's)35,987 39,671 36,971 40,504 

See Notes to Unaudited Consolidated Financial Statements.

4


Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Net income$2,511 $1,666 $4,067 $1,823 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments4 (127)(22)(235)
Net unrealized gains (losses) on available-for-sale securities2 (12)4 (12)
Total other comprehensive income (loss), net of tax6 (139)(18)(247)
Comprehensive income$2,517 $1,527 $4,049 $1,576 

See Notes to Unaudited Consolidated Financial Statements.
5


Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
(In millions, except share data)
 
Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
Three Months Ended September 30, 2023Shares
(in 000's)
AmountShares
(in 000's)
Amount
Balance, June 30, 202364,015 $ (27,974)$(36,319)$6,848 $29,097 $(291)$(665)
Net income— — — — — 2,511 — 2,511 
Foreign currency translation adjustments, net of tax— — — — — — 4 4 
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 2 2 
Exercise of stock options and vesting of restricted stock units and performance share units17  — — 13 — — 13 
Repurchase of common stock— — (870)(2,625)— — — (2,625)
Stock-based compensation and other stock-based payments— — — — 135 — — 135 
Balance, September 30, 202364,032 $ (28,844)$(38,944)$6,996 $31,608 $(285)$(625)
Nine Months Ended September 30, 2023
Balance, December 31, 202263,781 $ (25,918)$(30,983)$6,491 $27,541 $(267)$2,782 
Net income— — — — — 4,067 — 4,067 
Foreign currency translation adjustments, net of tax— — — — — — (22)(22)
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 4 4 
Exercise of stock options and vesting of restricted stock units and performance share units251  — — 122 — — 122 
Repurchase of common stock— — (2,926)(7,961)— — — (7,961)
Stock-based compensation and other stock-based payments— — — — 383 — — 383 
Balance, September 30, 202364,032 $ (28,844)$(38,944)$6,996 $31,608 $(285)$(625)
6


Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Loss
Three Months Ended September 30, 2022Shares
(in 000's)
AmountShares
(in 000's)
AmountTotal
Balance, June 30, 202263,766 $ (23,618)$(26,664)$6,278 $24,640 $(252)$4,002 
Net income— — — — — 1,666 — 1,666 
Foreign currency translation adjustments, net of tax— — — — — — (127)(127)
Net unrealized losses on available-for-sale securities, net of tax— — — — — — (12)(12)
Exercise of stock options and vesting of restricted stock units and performance share units8  — — 2 — — 2 
Repurchase of common stock— — (1,067)(1,966)— — — (1,966)
Stock-based compensation and other stock-based payments— — — — 105 — — 105 
Balance, September 30, 202263,774 $ (24,685)$(28,630)$6,385 $26,306 $(391)$3,670 
Nine Months Ended September 30, 2022
Balance, December 31, 202163,584 $ (22,518)$(24,290)$6,159 $24,453 $(144)$6,178 
Cumulative effect of adoption of accounting standards update— — — — (96)30 — (66)
Net income— — — — — 1,823 — 1,823 
Foreign currency translation adjustments, net of tax— — — — — — (235)(235)
Net unrealized losses on available-for-sale securities, net of tax— — — — — — (12)(12)
Exercise of stock options and vesting of restricted stock units and performance share units190  — — 7 — — 7 
Repurchase of common stock— — (2,167)(4,340)— — — (4,340)
Stock-based compensation and other stock-based payments— — — — 315 — — 315 
Balance, September 30, 202263,774 $ (24,685)$(28,630)$6,385 $26,306 $(391)$3,670 

See Notes to Unaudited Consolidated Financial Statements.

7


Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 Nine Months Ended
September 30,
 20232022
OPERATING ACTIVITIES:
Net income$4,067 $1,823 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation and amortization370 327 
Provision for expected credit losses and chargebacks224 179 
Deferred income tax benefit(409)(246)
Net losses on equity securities151 1,142 
Stock-based compensation expense and other stock-based payments369 302 
Operating lease amortization120 117 
Unrealized foreign currency transaction gains related to Euro-denominated debt(2)(70)
Other3 40 
Changes in assets and liabilities: 
Accounts receivable(1,506)(1,358)
Prepaid expenses and other current assets96 (424)
Deferred merchant bookings and other current liabilities2,644 3,591 
Long-term assets and liabilities (129)(1,042)
Net cash provided by operating activities5,998 4,381 
INVESTING ACTIVITIES: 
Purchase of investments(12)(751)
Proceeds from sale and maturity of investments1,785 30 
Additions to property and equipment(251)(293)
Other investing activities3 (14)
Net cash provided by (used in) investing activities1,525 (1,028)
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt1,893  
Payment on maturity of debt(500)(1,102)
Payments for repurchase of common stock (7,889)(4,278)
Proceeds from exercise of stock options122 7 
Other financing activities(45)(3)
Net cash used in financing activities(6,419)(5,376)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents(29)(83)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents1,075 (2,106)
Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period 12,251 11,152 
Total cash and cash equivalents and restricted cash and cash equivalents, end of period $13,326 $9,046 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes$1,573 $501 
Cash paid during the period for interest$557 $240 

See Notes to Unaudited Consolidated Financial Statements.
8


Booking Holdings Inc.
Notes to Unaudited Consolidated Financial Statements
 
1.    BASIS OF PRESENTATION
 
Management of Booking Holdings Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document. The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by U.S. GAAP for annual financial statements. These Unaudited Consolidated Financial Statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
 
The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations.
 
Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.

Impact of COVID-19

Even though there have been improvements in the economic and operating conditions for the Company's business since the outset of the COVID-19 pandemic, the Company cannot predict the long-term effects of the pandemic on its business or the travel and restaurant industries as a whole. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the impact of the COVID-19 pandemic.

Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

See "Recent Accounting Pronouncements Adopted" and "Other Recent Accounting Pronouncements" in Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.


9


2.    REVENUE

Disaggregation of Revenue

Geographic Information

The Company's revenues from its businesses outside of the U.S. consists of the results of Booking.com, Agoda, and Rentalcars.com in their entirety and the results of the KAYAK and OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of the results of the Company's businesses outside of the U.S. The Company's geographic information on revenues is as follows (in millions):
Outside of the U.S.
United StatesThe NetherlandsOtherTotal Company
Total revenues for the three months ended September 30,
2023$633 $6,127 $581 $7,341 
2022$606 $4,991 $455 $6,052 
Total revenues for the nine months ended September 30,
2023$1,771 $13,326 $1,484 $16,581 
2022$1,675 $10,300 $1,066 $13,041 

Revenue by Type of Service

Approximately 89% of the Company's revenues for the three and nine months ended September 30, 2023 and 90% and 88% of the Company's revenues for the three and nine months ended September 30, 2022, respectively, relate to online accommodation reservation services. Revenues from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10% of the Company's total revenue for each period.

Incentive Programs

At September 30, 2023 and December 31, 2022, liabilities of $183 million and $143 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets for incentives granted to consumers, including referral bonuses, rebates, credits, discounts, and loyalty programs.

Deferred Merchant Bookings

Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations.

3.    STOCK-BASED COMPENSATION
 
The Company maintains equity incentive plans that include broad-based grants of restricted stock units, performance share units granted to officers and certain other employees, and stock options granted to certain employees.

Restricted stock units and performance share units granted by the Company during the nine months ended September 30, 2023 had an aggregate grant-date fair value of $574 million. Restricted stock units and performance share units that vested during the nine months ended September 30, 2023 had an aggregate fair value at vesting of $436 million. At September 30, 2023, there was $748 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 1.9 years.

10


The following table summarizes the activity in restricted stock units and performance share units for employees and non-employee directors during the nine months ended September 30, 2023: 
Restricted Stock UnitsPerformance Share Units
SharesWeighted-average Grant-date Fair ValueSharesWeighted-average Grant-date Fair Value
Unvested at December 31, 2022 (1)
280,460$2,070143,702$2,294
Granted (2)
165,427$2,62951,941$2,679
Vested(133,767)$2,021(30,118)$2,327
Performance shares adjustment (3)
33,096$2,411
Forfeited(13,903)$2,315(7,141)$2,262
Unvested at September 30, 2023298,217$2,391191,480$2,415
(1)    Excludes 14,087 performance share units awarded during the years ended December 31, 2022 and 2021 for which the grant date under Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, was not established as of December 31, 2022. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.
(2)    Includes 9,688 performance share units awarded during the years ended December 31, 2022 and 2021 for which the grant date under ASC 718 was established.
(3)    Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications.

The following table summarizes the activity in stock options during the nine months ended September 30, 2023:
Employee Stock OptionsNumber of SharesWeighted-average Exercise PriceAggregate
 Intrinsic Value (in millions)
Weighted-average Remaining Contractual Term
(in years)
Balance, December 31, 2022120,813 $1,408$73 7.3
Exercised(86,763)$1,407
Forfeited (62)$1,411
Balance, September 30, 202333,988 $1,411$57 6.6
Exercisable at September 30, 202333,988 $1,411$57 6.6

The aggregate intrinsic value of employee stock options exercised during the nine months ended September 30, 2023 was $110 million.

4.    NET INCOME PER SHARE
 
The Company computes basic net income per share by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period. Only dilutive common equivalent shares that decrease the net income per share are included in the computation of diluted net income per share.

Common equivalent shares related to stock options, restricted stock units, and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.

The Company's convertible senior notes have net share settlement features requiring the Company, upon conversion, to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. If the conversion prices for the convertible senior notes exceed the Company's average stock price for the period, the convertible senior notes generally have no impact on diluted net income per share. The Company uses the if-converted method for the convertible senior notes in the calculation of diluted net income per share.
11



A reconciliation of the weighted-average number of shares outstanding used in calculating diluted net income per share is as follows (in thousands):
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2023202220232022
Weighted-average number of basic common shares outstanding35,570 39,564 36,615 40,326 
Weighted-average dilutive stock options, restricted stock units, and performance share units
231 107 211 149 
Assumed conversion of convertible senior notes186  145 29 
Weighted-average number of diluted common and common equivalent shares outstanding
35,987 39,671 36,971 40,504 

5.    INVESTMENTS

The following table summarizes the Company's investments by major security type at September 30, 2023 (in millions): 
 CostGross
Unrealized Gains /Upward Adjustments
Gross
Unrealized Losses /Downward Adjustments
Carrying Value
Short-term investments:
Debt securities:
International government securities$73 $ $(1)$72 
U.S. government securities (1)
185  (2)183 
Corporate debt securities374  (5)369 
Total short-term investments$632 $ $(8)$624 
Long-term investments:
Equity securities:
Equity securities with readily determinable fair values$715 $ $(424)$291 
Equity securities of private companies78 259 (208)129 
Total long-term investments$793 $259 $(632)$420 
(1)    Includes investments in U.S. municipal bonds.

12


The following table summarizes the Company's investments by major security type at December 31, 2022 (in millions):
 CostGross
Unrealized Gains/Upward Adjustments
Gross
Unrealized Losses/Downward Adjustments
Carrying
 Value
Short-term investments:
Debt securities:
International government securities$13 $ $ $13 
U.S. government securities (1)
131  (1)130 
Corporate debt securities32   32 
Total short-term investments$176 $ $(1)$175 
Long-term investments:
Debt securities:
International government securities$63 $ $(1)$62 
U.S. government securities (1)
147  (3)144 
Corporate debt securities366  (7)359 
Total debt securities576  (11)565 
Equity securities:
Equity securities with readily determinable fair values1,165 1,352 (446)2,071 
Equity securities of private companies78 259 (184)153 
Total equity securities1,243 1,611 (630)2,224 
Total long-term investments$1,819 $1,611 $(641)$2,789 
(1)    Includes investments in U.S. municipal bonds.

The Company has classified its investments in international government securities, U.S. government securities, and corporate debt securities as available-for-sale debt securities. The aggregate unrealized gains and losses on the available-for-sale debt securities, net of tax, are included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.

At September 30, 2023, the Company's investments in debt securities had an average credit quality of AA-/Aa2/A+. The Company invests in international government securities with high credit quality. At September 30, 2023, investments in international government securities principally included debt securities issued by the governments of Germany, France, Norway, Canada, and Sweden.

Equity securities with readily determinable fair values at September 30, 2023 include the Company's investments in Grab Holdings Limited ("Grab") and DiDi Global Inc. ("DiDi"), with fair values of $150 million and $127 million, respectively. At December 31, 2022, equity securities with readily determinable fair values included the Company's investments in Grab, DiDi, and Meituan, with fair values of $136 million, $125 million, and $1.8 billion, respectively. Equity securities with readily determinable fair values are included in "Long-term investments" in the Consolidated Balance Sheets. Net unrealized gains (losses) related to these investments included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 were as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Grab
$5 $4 $14 $(190)
DiDi
9 (44)2 (123)
Meituan
 (294) (629)

13


During the nine months ended September 30, 2023, the Company sold its entire investment in Meituan for $1.7 billion, resulting in a loss of $149 million included in "Other income (expense), net" in the Unaudited Consolidated Statement of Operations for the nine months ended September 30, 2023. The cost basis of the Company's investment in Meituan was $450 million.

Investments in equity securities without readily determinable fair values are measured at cost less impairment, if any. Such investments are also required to be measured at fair value as of the date of certain observable transactions for the identical or a similar investment of the same issuer. The Company's investments in equity securities of private companies at September 30, 2023 and December 31, 2022, include $51 million originally invested in Yanolja Co., Ltd. ("Yanolja"). The Company evaluated its investment in Yanolja for impairment as of June 30, 2023 and 2022 and recognized impairment charges of $24 million and $184 million during the nine months ended September 30, 2023 and 2022, respectively (see Note 6). The carrying value of the Company's investment in Yanolja was $98 million and $122 million as of September 30, 2023 and December 31, 2022, respectively.

6.    FAIR VALUE MEASUREMENTS

There are three levels of inputs to valuation techniques used to measure fair value:
Level 1: Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.
Level 2: Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.

Financial assets and liabilities measured at fair value on a recurring basis at September 30, 2023 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):
 Level 1Level 2Level 3Total
Recurring fair value measurements
ASSETS:
Cash equivalents and restricted cash equivalents:
Money market fund investments$12,105 $ $ $12,105 
Certificates of deposit79   79 
Short-term investments:    
International government securities 72  72 
U.S. government securities 183  183 
Corporate debt securities 369  369 
Long-term investments:
Equity securities291   291 
Derivatives:
Foreign currency exchange derivatives 52  52 
Total assets at fair value$12,475 $676 $ $13,151 
LIABILITIES:
Foreign currency exchange derivatives$ $102 $ $102 
Nonrecurring fair value measurements
Investment in equity securities of a private company (1)
$ $ $98 $98 
(1)    During the three months ended June 30, 2023, the investment in Yanolja was written down to its estimated fair value (see Note 5).
14


Financial assets and liabilities measured at fair value on a recurring basis at December 31, 2022 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):    
Level 1Level 2Level 3Total
Recurring fair value measurements
ASSETS:   
Cash equivalents and restricted cash equivalents:
Money market fund investments$11,483 $ $ $11,483 
Certificates of deposit60   60 
Short-term investments:
International government securities 13  13 
U.S. government securities 130  130 
Corporate debt securities 32  32 
Long-term investments:
International government securities 62  62 
U.S. government securities 144  144 
Corporate debt securities 359  359 
Equity securities2,071   2,071 
Derivatives:
Foreign currency exchange derivatives 65  65 
Total assets at fair value$13,614 $805 $ $14,419 
LIABILITIES:
Foreign currency exchange derivatives$ $26 $ $26 
Nonrecurring fair value measurements
Investment in equity securities of a private company (1)
$ $ $122 $122 
(1)    During the year ended December 31, 2022, the investment in Yanolja was written down to its estimated fair value.

Investments

See Note 5 for additional information related to the Company's investments.

Investments in private companies measured using Level 3 inputs

The Company's investments measured using Level 3 inputs primarily consist of investments in privately-held companies that are classified as equity securities without readily determinable fair values. Fair values of privately held securities are estimated using a variety of valuation methodologies, including both the market and income approaches. The Company uses valuation techniques appropriate for the type of investment and the information available about the investee as of the valuation date to determine fair value. While observable financing transactions of the investee are generally considered the best indication of the enterprise value, considering factors such as the proximity in timing of the financing transaction to the valuation date, the Company may also use the calibration process and other valuation techniques to supplement this data, including the income approach. Calibration is the process of using observed transactions in the investee company's own instruments to ensure that the valuation techniques that will be employed to value the investment on subsequent measurement dates begin with assumptions that are consistent with the observed transactions.

As of June 30, 2023 and 2022, the Company evaluated its investment in Yanolja for impairment using a combination of the market approach and the income approach in estimating the fair value of the investment as of those dates, and recognized impairment charges. The market approach estimates value using prices and other relevant information generated by market transactions involving comparable companies. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on a company's weighted-average cost of capital adjusted to reflect the risks inherent in its cash flows. The key unobservable inputs and ranges used for the June 2023 impairment evaluation, primarily using the income approach, include the weighted average cost of capital (10.5%-14.5%) and the terminal EBITDA multiple (14x-16x). The key unobservable inputs and ranges used for the June 2022 impairment evaluation include, for the market approach, percentage decrease in the calibrated EBITDA multiple (36%) and for the income approach, the weighted average cost of capital (10%-14%) and the terminal EBITDA multiple (14x-16x). Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. A change in the assumption used for EBITDA multiples would result in a directionally similar change in the fair
15


value, and a change in the assumption used for weighted average cost of capital would result in a directionally opposite change in the fair value.

The determination of the fair values of investments, where the Company is a minority shareholder and has access to limited information from the investee, reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding the investee's expected growth rates and operating margin, as well as other key assumptions with respect to matters outside of the Company's control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value estimate. Future events and changing market conditions may lead the Company to re-evaluate the assumptions reflected in the valuation which may result in a need to recognize additional impairment charges.

Derivatives

The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. As of September 30, 2023 and December 31, 2022, the Company did not designate any derivatives as hedges for accounting purposes.

The table below provides estimated fair values and notional amounts of foreign currency exchange derivatives outstanding at September 30, 2023 and December 31, 2022 (in millions). The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets.
 September 30,
2023
December 31,
2022
Estimated fair value of derivative assets$52 $65 
Estimated fair value of derivative liabilities$102 $26 
Notional amount:
 Foreign currency purchases$4,475 $2,870 
 Foreign currency sales$3,957 $2,682 

The effect of foreign currency exchange derivatives recorded in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 is as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Losses on foreign currency exchange derivatives$56 $58 $140 $114 

Other Financial Assets and Liabilities

At September 30, 2023 and December 31, 2022, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments and certificates of deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities, including restricted cash, accounts payable, accrued expenses, and deferred merchant bookings, are carried at cost which approximates their fair values because of the short-term nature of these items. Accounts receivable and other financial assets measured at amortized cost are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Note 9 for the estimated fair value of the Company's outstanding senior notes, including the estimated fair value of the Company's convertible senior notes.

7.     ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS
 
Accounts receivable in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 includes receivables from customers of $2.5 billion and $1.5 billion, respectively, and receivables from payment processors and networks of $909 million and $730 million, respectively. The remaining balance principally relates to receivables from marketing affiliates. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.

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Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, also taking into account factors such as the macroeconomic conditions, inflationary pressures, potential recession, and the Company's ability to collect the receivable or recover the prepayment.

The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):
Nine Months Ended
September 30,
 20232022
Balance, beginning of year$117 $101 
Provision charged to earnings103 104 
Write-offs and adjustments(103)(75)
Foreign currency translation adjustments(1)(11)
Balance, end of period$116 $119 

8.    INTANGIBLE ASSETS AND GOODWILL

The Company's intangible assets at September 30, 2023 and December 31, 2022 consist of the following (in millions): 
September 30, 2023December 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortization Period
Trade names$1,805 $(883)$922 $1,806 $(812)$994 
3 - 20 years
Supply and distribution agreements1,383 (723)660 1,386 (658)728 
3 - 20 years
Technology and other intangible assets327 (249)78 330 (223)107 
Up to 20 years
Total intangible assets$3,515 $(1,855)$1,660 $3,522 $(1,693)$1,829 
 
Intangible assets are amortized on a straight-line basis. Amortization expense was $55 million and $166 million for the three and nine months ended September 30, 2023, respectively, and $55 million and $167 million for the three and nine months ended September 30, 2022, respectively.

The balance of goodwill as of September 30, 2023 and December 31, 2022 is stated net of cumulative impairment charges of $2.0 billion. The Company tests goodwill for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company tests goodwill at the reporting unit level and the annual tests are performed as of September 30. As of September 30, 2023, the Company performed its annual goodwill impairment test and concluded that there was no impairment of goodwill.

9.    DEBT

Revolving Credit Facility

In May 2023, the Company entered into a five-year unsecured revolving credit facility with a group of lenders. The revolving credit facility extends a revolving line of credit of up to $2.0 billion to the Company and provides for the issuance of up to $80 million of letters of credit, as well as up to $100 million of borrowings on same-day notice, referred to as swingline loans. Other than the swingline loans, which are available only in U.S. Dollars, the revolving loans and the letters of credit are available in U.S. Dollars, Euros, Pounds Sterling, and any other currency agreed to by the administrative agent and each of the lenders. The revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to the Company's ability to borrow.

Borrowings under the revolving credit facility will bear interest at a rate determined by reference to benchmark rates plus an applicable spread (ranging from 0% to 1.375%) based on the Company's leverage or credit rating at the time of the borrowing. Undrawn balances available under the revolving credit facility are subject to commitment fees at the applicable rate determined by reference to the Company's leverage or credit rating.
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Upon entering into this new revolving credit facility, the Company terminated the $2.0 billion five-year revolving credit facility entered into in August 2019. At September 30, 2023 there were no borrowings outstanding and $18 million of letters of credit issued under the new revolving credit facility. At December 31, 2022, there were no borrowings outstanding and $14 million of letters of credit issued under the prior revolving credit facility. See Note 12 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the prior revolving credit facility.

Outstanding Debt
 
Outstanding debt at September 30, 2023 consists of the following (in millions): 
September 30, 2023
Outstanding
 Principal 
Amount
Unamortized Debt
Discount and Debt
Issuance Cost
Carrying
 Value
Current liabilities:
2.375% (€1 Billion) Senior Notes due September 2024