Bookings slightly up, revenue slightly down for Booking Holdings in Q1 2019

A mixed report comes from Booking Holdings regarding its financial measures in the first quarter of 2019.

Gross travel bookings were up 2% over the same period in 2018 (approximately 8% on a constant-currency basis), to $25.4 billion.

But revenue was down 3% (up 3% on constant currency), to $2.8 billion. And adjusted EBITDA fell back even more, 10% compared to 2018, to $718 million.

Net income in the first quarter was $765 million, a 26% increase year-over-year.

“Our direct channel is growing faster than our paid channels, our mobile share is increasing and our alternative accommodation business is growing faster than our overall business,” says Booking Holdings CEO Glenn Fogel on a call with analysts to discuss the results.

“We will look to drive shareholder returns through a combination of organic growth investment, share repurchases and opportunistic M&A.”

When asked what types of companies he might be looking at, Fogel says, "As you know, we wouldn't talk about any specific targets or anything of that nature. But, we’ve built this company over time by bringing in great teams, great products, and that's what we're going to continue to do." 

Regarding revenue, of the $2.8 billion recorded in the first quarter, $1.94 billion came from agency revenue – down from $2.1 billion in the first quarter of 2018. Merchant revenue rose in 2019 to $603 million from $526 million in the first quarter last year. Advertising and other revenue was nearly flat at $285 million.

In February of this year, Booking Holdings launched a new brand marketing campaign for Booking.com. The “Be A Booker” campaign attributed to the jump in brand marketing expenses in the quarter, to $163 million from $101 million in 2018.

When asked whether the new campaign is driving ROI, Fogel says, “With any new campaign you need to have some time before you declare victory or not, so we will say just that it’s early and so far, so good.”

Spending on performance marketing was down in the period. The company spent $1.03 million on performance marketing in the first quarter of 2019 compared to $1.11 in the first quarter of 2018.

"We remained disciplined with our spending on performance marketing, which helped drive better than expected leverage of 250 basis points in the quarter," says David Goulden, Booking Holdings CFO.

"While we have seen slowing growth across our performance marketing channels, we continue to see these channels as an effective way to acquire customers, and we will continue to spend rationally to optimize growth."

For gross travel bookings, the bulk of the activity comes from agency bookings, which were down 4% compared to the first quarter of 2018, to $19.7 billion. Positive results from merchant bookings – up 29% to $5.7 billion – only slightly offset those results, for a total decline of 2%.

Across Bookings Holdings' diverse product base, accommodations performed the best. Room nights sold grew 10.3% year-over-year, exceeding the high end of the guidance for the quarter. Airline tickets sold increased slightly – 4.4% - and rental car days sold dropped 1.3%.

Fogel says as of March 31, the platform has 5.8 million reported listings in alternative accommodations, an increase of 13% compared to the first quarter of 2018, but he would not answer an analyst’s request to provide data regarding the number of alternative accommodations booked compared to last year.