Booking.com (BKNG; A3, A-; S) 1Q Results

Booking brought a strong beat on 1Q results last week (below). Recently restarted dividends continue running at $300m/qtr while $1.6b was done in buybacks - guidance to end last year was indic. of a slow-down but 1Q implies it may size it up to performance (not a new approach for co) & not a issue for ratings (gross leverage was only tad above target 2x to end the year).

We took off a screen cheap view in Early April after it tightened away its discount to ratings, a move that followed a Feb 4-part/€2.7b deal. Curve looks fair here & is not far from screening rich. Nothing on draft €500m fine in Spain and/or Italy probe in Q&A - seems to not be a point of concern for equity analyst.

• Revenues at $4.4b (c$4.25b) up +17%yoy with group room nights booked rising +9%yoy (guidance was for +6%). International contributed $3.9b (c$3.4b) vs. US at $0.6b.
• By region Europe was HSD growth, Asia mid-teens & US LSD - still sees US growth as better than market.
• It says beat driven by expansion of booking window, healthy demand particularly in Europe & less impact from Middle east than expected. Says no evidence of consumers trading down (in star rating or length of stay).
• Beats continued further down with EBITDA at $898m with margin of 20.3% (c16.8%). FCF was $2.6b (vs. $2.8b last year), conversion tad weak at 58% of revenue. It did $1.9b in equity returns over the qtr.
• 2Q Guidance; room night growth at +4-6% down from pace in 1Q & Adj. EBITDA $1.7-$1.75b (down LSD yoy).