4Q23: 4Q EPS beat; optimism for 2024 despite travel growth slowdown
- Delivers record fourth quarter revenue and solid beat to EPS on strength in gross bookings
- Optimistic for 2024 despite a more normalised market environment as revenge travel moderates
- Maintain BUY with higher TP US$4030
Delivers record fourth quarter revenue and solid beat to EPS on strength in gross bookings. Revenue $4.8b (+18% yoy) slightly above consensus estimates of $4.7b on gross booking growth. On the operational metrics front, gross travel bookings of $31.7b is up 16% yoy, attributable to a 9% growth in room nights and higher constant currency ADRs (average daily rates) by 4%. By room nights by region, Asia recovery was the strongest and was up mid-teens compared to Europe’s low double-digit growth, rest of the world’s low single digit growth, and flatness in the US segment. This eventually flowed through to adjusted EPS of $32.00 (+29% yoy), above consensus estimates of $29.86.
Optimistic for 2024 despite a more normalised market environment as revenge travel moderates. For FY24, management is expecting to exceed 2019 growth rates on a constant currency basis, implying top line growth of more than 8% and EPS growth above 15%. This is aligned to current consensus forecasts of 10.9% and 19.0% of revenue and EPS growth. For 1Q24, BKNG expects revenue growth of 11-13%, in line with consensus estimates of 11.8% but midpoint of EBITDA guidance of $680-$720m is below the streets’ forecast of $722m, implying downside risks to consensus 1Q estimates. Nonetheless, we believe that BKNG retains multiple levers to grow in a normalised market including (i) its strong position in the online travel agency industry, (ii) a scaled-up merchant platform at Booking.com (iii) improved mix of alternative accommodation room nights and (iv) an enhanced loyalty program. Maintain BUY with higher TP US$4030 as we remain confident of BKNG’s market leadership and stronger EBITDA growth and margin profile vs Expedia.