Online travel agency Booking Holdings (NASDAQ: BKNG) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 14.4% year on year to $5.47 billion. Its non-GAAP profit of $41.55 per share was 15.1% above analysts’ consensus estimates.

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Company Overview

Formerly known as The Priceline Group, Booking Holdings (NASDAQ: BKNG) is the world’s largest online travel agency.

Online Travel

Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Booking grew its sales at an exceptional 29.4% compounded annual growth rate. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.

This quarter, Booking reported year-on-year revenue growth of 14.4%, and its $5.47 billion of revenue exceeded Wall Street’s estimates by 5.4%.

Looking ahead, sell-side analysts expect revenue to grow 6.6% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Room Nights Booked

Booking Growth

As an online travel company, Booking generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.

Over the last two years, Booking’s room nights booked, a key performance metric for the company, increased by 13.6% annually to 261 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q4, Booking added 30 million room nights booked, leading to 13% year-on-year growth. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating booking growth just yet.

Revenue Per Booking

Average revenue per booking (ARPB) is a critical metric to track for online travel businesses like Booking because it not only measures how much users book on its platform but also the commission that Booking can charge.

Booking’s ARPB growth has been decent over the last two years, averaging 5.1%. Its ability to increase monetization while effectively growing its room nights booked demonstrates the value of its platform.

This quarter, Booking’s ARPB clocked in at $20.96. It grew by 1.2% year on year, slower than its booking growth.

Key Takeaways from Booking’s Q4 Results

We were impressed by how significantly Booking blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this quarter featured some important positives. The stock traded up 1.8% to $5,113 immediately following the results.

Booking put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.