Booking Holdings Inc. (BKNG) delivered a strong quarter, but cut its full-year forecast as the conflict in the Middle East disrupts travel worldwide. Room nights booked grew 6%, highlights Doug Gerlach, editor of Investor Advisory Service.
The company estimates room night growth was negatively impacted by 2% due to the conflict. It primarily impacted the month of March, as seen by cancellations and refunds for future travel.
Booking Holdings Inc. (BKNG)
Europe was up mid-single digits, Asia increased high-single digits, and the Rest of World, which includes the Middle East, fell by low-single digits. The US was a bright spot, increasing in the low-teens from direct booking channels.
Gross bookings grew 15%, or 8% on a constant currency basis, and were also impacted by 2% from the conflict. Revenue increased 16%, or 10% in constant currency, with the conflict holding back growth by 1%. Adjusted EBITDA increased 19% on leverage from adjusted fixed expense growth in the low-single digits.
The company remains on track to deliver its previously stated goal of $500 million to $550 million of 2026 savings from its Transformation Program. Adjusted EPS of $1.14 grew 15%, aided by aggressive share repurchases that reduced shares outstanding by 4%.
For the second quarter, Booking is assuming the Middle East conflict will reduce travel through the end of June. Specifically, the outlook accounts for continued fluctuations in travel demand across Middle East inbound, outbound, and intra-region routes – as well as ongoing disruptions to major transit corridors such as those between Europe and Asia. To protect profitability, the company is managing discretionary spending and hiring.
Recommended Action: Buy BKNG.
