Form 10-Q Booking Holdings Inc. For: Mar 31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2024
OR
For the transition period from to
Commission File Number: 1-36691
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203 ) 299-8000
Former name, former address and former fiscal year, if changed since last report: N/A
_____________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of each exchange on which registered: | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
| Smaller reporting company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of Common Stock outstanding at April 25, 2024:
| Common Stock, par value $0.008 per share | ||||||||
| (Class) | (Number of Shares) | |||||||
Booking Holdings Inc.
Form 10-Q
For the Three Months Ended March 31, 2024
| PART I - FINANCIAL INFORMATION | |||||
| Item 1. Financial Statements | |||||
Consolidated Balance Sheets at March 31, 2024 (Unaudited) and December 31, 2023 | |||||
Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2024 and 2023 | |||||
Consolidated Statements of Comprehensive Income (Unaudited) For the Three Months Ended March 31, 2024 and 2023 | |||||
Consolidated Statements of Changes in Stockholders' (Deficit) Equity (Unaudited) For the Three Months Ended March 31, 2024 and 2023 | |||||
Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2024 and 2023 | |||||
| Notes to Unaudited Consolidated Financial Statements | |||||
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||||
| Item 4. Controls and Procedures | |||||
| PART II - OTHER INFORMATION | |||||
| Item 1. Legal Proceedings | |||||
| Item 1A. Risk Factors | |||||
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
| Item 6. Exhibits | |||||
| SIGNATURES | |||||
3
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Booking Holdings Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
| March 31, 2024 | December 31, 2023 | |||||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Short-term investments (Available-for-sale debt securities: Amortized cost of $ | ||||||||||||||
Accounts receivable, net (Allowance for expected credit losses of $ | ||||||||||||||
| Prepaid expenses, net | ||||||||||||||
| Other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Operating lease assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Long-term investments | ||||||||||||||
| Other assets, net | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Deferred merchant bookings | ||||||||||||||
| Short-term debt | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Long-term U.S. transition tax liability | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (see Note 13) | ||||||||||||||
| Stockholders' deficit: | ||||||||||||||
Common stock, $ Authorized shares: Issued shares: | ||||||||||||||
Treasury stock: | ( | ( | ||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total stockholders' deficit | ( | ( | ||||||||||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
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Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Merchant revenues | $ | $ | ||||||||||||
| Agency revenues | ||||||||||||||
| Advertising and other revenues | ||||||||||||||
| Total revenues | ||||||||||||||
| Operating expenses: | ||||||||||||||
| Marketing expenses | ||||||||||||||
| Sales and other expenses | ||||||||||||||
Personnel, including stock-based compensation of $ | ||||||||||||||
| General and administrative | ||||||||||||||
| Information technology | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Interest and dividend income | ||||||||||||||
| Other income (expense), net | ( | |||||||||||||
| Income before income taxes | ||||||||||||||
| Income tax expense | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Net income applicable to common stockholders per basic common share | $ | $ | ||||||||||||
| Weighted-average number of basic common shares outstanding (in 000's) | ||||||||||||||
| Net income applicable to common stockholders per diluted common share | $ | $ | ||||||||||||
| Weighted-average number of diluted common shares outstanding (in 000's) | ||||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
5
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Other comprehensive loss, net of tax | ( | |||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
6
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
(In millions, except share data)
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | Shares (in 000's) | Amount | Shares (in 000's) | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and vesting of restricted stock units and performance share units | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and vesting of restricted stock units and performance share units | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
7
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Provision for expected credit losses and chargebacks | ||||||||||||||
| Deferred income tax benefit | ( | ( | ||||||||||||
| Net losses on equity securities | ||||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Operating lease amortization | ||||||||||||||
| Unrealized foreign currency transaction (gains) losses related to Euro-denominated debt | ( | |||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable | ( | |||||||||||||
| Prepaid expenses and other current assets | ( | |||||||||||||
| Deferred merchant bookings and other current liabilities | ||||||||||||||
| Other | ( | |||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||
| Proceeds from sale and maturity of investments | ||||||||||||||
| Additions to property and equipment | ( | ( | ||||||||||||
| Other investing activities | ( | ( | ||||||||||||
| Net cash provided by investing activities | ||||||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||
| Proceeds from the issuance of long-term debt | ||||||||||||||
| Payment on maturity of debt | ( | |||||||||||||
| Payments for repurchase of common stock | ( | ( | ||||||||||||
| Dividends paid | ( | |||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||
| Other financing activities | ( | ( | ||||||||||||
| Net cash provided by (used in) financing activities | ( | |||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | ( | |||||||||||||
| Net increase in cash and cash equivalents and restricted cash and cash equivalents | ||||||||||||||
| Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period | ||||||||||||||
| Total cash and cash equivalents and restricted cash and cash equivalents, end of period | $ | $ | ||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||
| Cash paid during the period for income taxes | $ | $ | ||||||||||||
| Cash paid during the period for interest | $ | $ | ||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
8
Booking Holdings Inc.
Notes to Unaudited Consolidated Financial Statements
1. BASIS OF PRESENTATION
Management of Booking Holdings Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document. The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by U.S. GAAP for annual financial statements. These Unaudited Consolidated Financial Statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations.
Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.
Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation. These include the reclassification of certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" in the Unaudited Consolidated Statement of Operations. See Notes 2 and 21 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
See "Recent Accounting Pronouncements Adopted" and "Other Recent Accounting Pronouncements" in Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Improved guidance to help determine transactions to be accounted for as share-based payment arrangements
In March 2024, the Financial Accounting Standards Board issued an Accounting Standards Update adding illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of the Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation. The update is effective for annual and interim financial statements beginning with the fiscal year 2025. The Company is currently evaluating the impact of the update on its Consolidated Financial Statements.
9
2. REVENUE
Disaggregation of Revenue
Geographic Information
The Company's revenues from its businesses outside of the U.S. consists of the results of Booking.com, Agoda, and Rentalcars.com in their entirety and the results of the KAYAK and OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of the results of the Company's businesses outside of the U.S. The Company's geographic information on revenues is as follows (in millions):
| Outside of the U.S. | ||||||||||||||||||||||||||
| United States | The Netherlands | Other | Total Company | |||||||||||||||||||||||
| Total revenues for the three months ended March 31, | ||||||||||||||||||||||||||
| 2024 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2023 | $ | $ | $ | $ | ||||||||||||||||||||||
Revenue by Type of Service
Approximately 89 88 % of the Company's revenues for the three months ended March 31, 2024 and 2023, respectively, relate to online accommodation reservation services. Revenues from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10
Incentive Programs
At March 31, 2024 and December 31, 2023, liabilities of $120 million and $149 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets for incentives granted to consumers, including referral bonuses, rebates, credits, discounts, and loyalty programs.
Deferred Merchant Bookings
Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations.
10
3. STOCK-BASED COMPENSATION
The Company maintains equity incentive plans that include broad-based grants of restricted stock units, performance share units granted to officers and certain other employees, and stock options granted to certain employees.
Restricted stock units and performance share units granted by the Company during the three months ended March 31, 2024 had an aggregate grant-date fair value of $594 million. Restricted stock units and performance share units that vested during the three months ended March 31, 2024 had an aggregate fair value at vesting of $699 million. At March 31, 2024, there was $1.1 billion of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 2.2 years.
The following table summarizes the activity in restricted stock units and performance share units for employees and non-employee directors during the three months ended March 31, 2024:
| Restricted Stock Units | Performance Share Units | |||||||||||||||||||||||||
| Shares | Weighted-average Grant-date Fair Value | Shares | Weighted-average Grant-date Fair Value | |||||||||||||||||||||||
Unvested at December 31, 2023 (1) | $ | $ | ||||||||||||||||||||||||
Granted (2) | $ | $ | ||||||||||||||||||||||||
| Vested | ( | $ | ( | $ | ||||||||||||||||||||||
Performance shares adjustment (3) | $ | |||||||||||||||||||||||||
| Forfeited | ( | $ | ( | $ | ||||||||||||||||||||||
| Unvested at March 31, 2024 | $ | $ | ||||||||||||||||||||||||
(1) Excludes 4,399 performance share units awarded during the year ended December 31, 2022 for which the grant date under ASC 718, Compensation - Stock Compensation, was not established as of December 31, 2023. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.
(2) Includes 4,399 performance share units awarded during the year ended December 31, 2022 for which the grant date under ASC 718 was established.
(3) Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications.
The following table summarizes the activity in stock options during the three months ended March 31, 2024:
| Employee Stock Options | Number of Shares | Weighted-average Exercise Price | Aggregate Intrinsic Value (in millions) | Weighted-average Remaining Contractual Term (in years) | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | ||||||||||||||||||||||||
Exercised | ( | $ | $ | |||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | ||||||||||||||||||||||||
| Exercisable at March 31, 2024 | $ | $ | ||||||||||||||||||||||||
11
4. NET INCOME PER SHARE
The Company computes basic net income per share by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period. Only dilutive common equivalent shares that decrease the net income per share are included in the computation of diluted net income per share.
Common equivalent shares related to stock options, restricted stock units, and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.
A reconciliation of the weighted-average number of shares outstanding used in calculating diluted net income per share is as follows (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Weighted-average number of basic common shares outstanding | ||||||||||||||
Weighted-average dilutive stock options, restricted stock units, and performance share units | ||||||||||||||
| Assumed conversion of convertible senior notes | ||||||||||||||
Weighted-average number of diluted common and common equivalent shares outstanding | ||||||||||||||
5. INVESTMENTS
The following table summarizes the Company's investments by major security type at March 31, 2024 (in millions):
| Cost | Gross Unrealized Gains /Upward Adjustments | Gross Unrealized Losses /Downward Adjustments | Carrying Value | |||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||
| International government securities | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. government securities | ||||||||||||||||||||||||||
| Corporate debt securities | ( | |||||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Long-term investments: | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Equity securities of private entities | ( | |||||||||||||||||||||||||
| Total long-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
12
The following table summarizes the Company's investments by major security type at December 31, 2023 (in millions):
| Cost | Gross Unrealized Gains/Upward Adjustments | Gross Unrealized Losses/Downward Adjustments | Carrying Value | |||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||
| International government securities | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. government securities (1) | ( | |||||||||||||||||||||||||
| Corporate debt securities | ( | |||||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Long-term investments: | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Equity securities with readily determinable fair values | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Equity securities of private entities | ( | |||||||||||||||||||||||||
| Total long-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
(1) Includes investments in U.S. municipal bonds.
The Company has classified its investments in debt securities as available-for-sale debt securities. The aggregate unrealized gains and losses on the available-for-sale debt securities, net of tax, are included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The Company's investments in available-for-sale debt securities at March 31, 2024 had investment grade credit quality ratings. At March 31, 2024, investments in international government securities principally included debt securities issued by the governments of Germany, Norway, Canada, and Sweden.
Equity securities with readily determinable fair values include the Company's investments in DiDi Global Inc. ("DiDi") and Grab Holdings Limited ("Grab"), with fair values of $150 million and $133 million, respectively, at March 31, 2024, and $155 million and $143 million, respectively, at December 31, 2023. Net unrealized (losses) gains related to these investments are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023. During the three months ended March 31, 2023, the Company sold its entire investment in Meituan for $1.7 billion, resulting in a loss of $149 million included in "Other income (expense), net" in the Unaudited Consolidated Statement of Operations for the three months ended March 31, 2023. The cost basis of the Company's investment in Meituan was $450 million.
The Company's investments in equity securities of private entities at March 31, 2024 and December 31, 2023
include the investment in Yanolja Co., Ltd., ("Yanolja") which had a carrying value of $98
6. FAIR VALUE MEASUREMENTS
There are three levels of inputs to valuation techniques used to measure fair value:
Level 1: Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.
Level 2: Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
13
Financial assets and liabilities measured at fair value on a recurring basis at March 31, 2024 are classified in the categories described in the table below (in millions):
| Level 1 | Level 2 | Total | ||||||||||||||||||
Recurring fair value measurements (1) | ||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||
| Cash equivalents and restricted cash equivalents: | ||||||||||||||||||||
| Money market fund investments | $ | $ | $ | |||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||
| International government securities | ||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||
| Corporate debt securities | ||||||||||||||||||||
| Long-term investments: | ||||||||||||||||||||
| Equity securities | ||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||
| Foreign currency exchange derivatives | ||||||||||||||||||||
| Total assets at fair value | $ | $ | $ | |||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||
| Foreign currency exchange derivatives | $ | $ | $ | |||||||||||||||||
(1) The Company did not have any Level 3 fair value measurements at March 31, 2024.
Financial assets and liabilities measured at fair value on a recurring basis at December 31, 2023 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||
| Cash equivalents and restricted cash equivalents: | ||||||||||||||||||||||||||
| Money market fund investments | $ | $ | $ | $ | ||||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||
| International government securities | ||||||||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||||||||
| Corporate debt securities | ||||||||||||||||||||||||||
| Long-term investments: | ||||||||||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||
| Derivatives: | ||||||||||||||||||||||||||
| Foreign currency exchange derivatives | ||||||||||||||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||||
| Foreign currency exchange derivatives | $ | $ | $ | $ | ||||||||||||||||||||||
| Nonrecurring fair value measurements | ||||||||||||||||||||||||||
Investment in equity securities of a private entity (1) | $ | $ | $ | $ | ||||||||||||||||||||||
(1) During the year ended December 31, 2023, the investment in Yanolja was written down to its estimated fair value.
14
Investments
See Note 5 for additional information related to the Company's investments.
The Company's investments in debt securities are measured using "Level 2" inputs as the Company has access to quoted prices for identical or comparable securities, but does not have visibility into the volume and frequency of trading for these investments. A market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.
The Company's investments measured using Level 3 inputs primarily consist of investments in privately-held entities. Fair values of these securities are estimated using a variety of valuation methodologies, including both the market and income approaches.
Derivatives
The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. As of March 31, 2024 and December 31, 2023, the Company did not designate any derivatives as hedges for accounting purposes.
The table below provides estimated fair values of foreign currency exchange derivatives outstanding at March 31, 2024 and December 31, 2023 (in millions).
| March 31, 2024 | December 31, 2023 | |||||||||||||
| Estimated fair value of derivative assets | $ | $ | ||||||||||||
| Estimated fair value of derivative liabilities | $ | $ | ||||||||||||
For the Company's foreign currency exchange derivatives outstanding as of March 31, 2024 and December 31, 2023, the notional amounts of the foreign currency purchases were $6.3 billion and $4.9 billion, respectively, and the notional amounts of the foreign currency sales were $3.1 billion and $4.2 billion, respectively. The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets.
The effect of foreign currency exchange derivatives recorded in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 is as follows (in millions):
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Losses on foreign currency exchange derivatives | $ | $ | ||||||||||||
Other Financial Assets and Liabilities
At March 31, 2024 and December 31, 2023, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments and certificates of deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities, including restricted cash, accounts payable, accrued expenses, and deferred merchant bookings, are carried at cost which approximates their fair values because of the short-term nature of these items. Accounts receivable and other financial assets measured at amortized cost are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Note 9 for the estimated fair value of the Company's outstanding senior notes, including the estimated fair value of the Company's convertible senior notes.
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7. ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS
Accounts receivable in the Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 includes receivables from customers of $1.8 billion and $1.9 billion, respectively, and receivables from payment processors and networks of $1.5 billion and $1.3 billion, respectively. The remaining balance principally relates to receivables from marketing affiliates. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.
Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, including macroeconomic conditions, inflationary pressures, potential recession, and the Company's ability to collect the receivable or recover prepayments.
The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Balance, beginning of year | $ | $ | ||||||||||||
| Provision charged to earnings | ||||||||||||||
| Write-offs and adjustments | ( | ( | ||||||||||||
| Foreign currency translation adjustments | ( | |||||||||||||
| Balance, end of period | $ | $ | ||||||||||||
8. INTANGIBLE ASSETS AND GOODWILL
The Company's intangible assets at March 31, 2024 and December 31, 2023 consist of the following (in millions):
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Amortization Period | |||||||||||||||||||||||||||||||||||
| Trade names | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Supply and distribution agreements | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other intangible assets | ( | ( | Up to | ||||||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
The balance of goodwill as of March 31, 2024 and December 31, 2023 is stated net of cumulative impairment charges of $2.0
16
9. DEBT
Revolving Credit Facility
See Note 12 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for information related to the Company’s five-year unsecured revolving credit facility that extends a revolving line of credit of up to $2 billion to the Company. At March 31, 2024 and December 31, 2023, there were no borrowings outstanding and $21 million and $18 million, respectively, of letters of credit issued under the revolving credit facility.
Outstanding Debt
Outstanding debt at March 31, 2024 and December 31, 2023 consists of the following (in millions):
| March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||
Outstanding Principal Amount | Carrying Value (1) | Outstanding Principal Amount | Carrying Value (1) | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Total outstanding debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Short-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
(1) The carrying values differ from the outstanding principal amounts due to unamortized debt discounts and debt issuance costs of $98 million and $65 million as of March 31, 2024 and December 31, 2023, respectively.
(2) Included in "Short-term debt" in the Unaudited Consolidated Balance Sheet as of March 31, 2024.
(3) Included in "Short-term debt" in the Consolidated Balance Sheet as of December 31, 2023.
Fair Value of Debt
At March 31, 2024 and December 31, 2023, the estimated fair value of the outstanding debt was approximately $17.9 billion and $15.2 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. The estimated fair value of the Company's debt in excess of the outstanding principal amount at March 31, 2024 and December 31, 2023 primarily relates to the conversion premium on the convertible senior notes due in May 2025.
17
Convertible Senior Notes
In April 2020, the Company issued $863 million aggregate principal amount of convertible senior notes due in May 2025 with an interest rate of 0.75 % (the "May 2025 Notes"). The May 2025 Notes are convertible, subject to certain conditions, into the Company's common stock at a current conversion price of $1,881.47 per share. The May 2025 Notes are convertible, at the option of the holder, prior to November 1, 2024, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130 % of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the May 2025 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the May 2025 Notes in an aggregate value ranging from $0 to $235 million depending upon the date of the transaction and the then current stock price of the Company. Starting on November 1, 2024, holders will have the right to convert all or any portion of the May 2025 Notes, regardless of the Company's stock price. The May 2025 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the May 2025 Notes for cash in certain circumstances. Interest on the May 2025 Notes is payable on May 1 and November 1 of each year. If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. At March 31, 2024 and December 31, 2023, the estimated fair value of the May 2025 Notes was $1.7 billion and $1.6 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Based on the closing sales prices of the Company's common stock for the prescribed measurement periods, the May 2025 Notes were convertible at the option of the holder starting the second calendar quarter of 2023 and continue to be convertible during the second calendar quarter of 2024.
Other Senior Notes
The following table summarizes the information related to other senior notes issued in March 2024:
| Other Senior Notes | Effective Interest Rate (1) | Timing of Interest Payments | ||||||||||||
| Annually in March | ||||||||||||||
| Annually in March | ||||||||||||||
| Annually in March | ||||||||||||||
| Annually in March | ||||||||||||||
(1) Represents the coupon interest rate adjusted for deferred debt issuance costs, premiums or discounts existing at the origination of the debt.
The proceeds from the issuance of these senior notes are available for general corporate purposes, including to repurchase shares of our common stock and to redeem or repay outstanding indebtedness.
In March 2023, the Company repaid $500 million on the maturity of the Senior Notes due March 2023 and paid the applicable accrued and unpaid interest relating to these notes.
Interest expense related to other senior notes consists primarily of coupon interest expense of $118 million and $92 million for the three months ended March 31, 2024 and 2023, respectively.
The Company designates certain portions of the aggregate principal value of the Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. For the three months ended March 31, 2024 and 2023, the carrying value of the portion of Euro-denominated debt, designated as a net investment hedge, ranged from $2.3 billion to $3.1 billion and from $5.9 billion to $6.4 billion, respectively.
18
10. TREASURY STOCK AND DIVIDENDS
At December 31, 2023, the Company had a total remaining authorization of $13.7 billion related to a program authorized by the Company's Board of Directors ("the Board") in 2023 to repurchase up to $20 billion of the Company's common stock. At March 31, 2024, the Company had a total remaining authorization of $12.2 billion to repurchase its common stock. The Company expects to complete the share repurchases under the remaining authorization by the end of 2026, assuming no major downturn in the travel market. Additionally, the Board has given the Company the general authorization to repurchase shares of its common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation.
The following table summarizes the Company's stock repurchase activities during the three months ended March 31, 2024 and 2023 (in millions, except for shares, which are reflected in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||
| Authorized stock repurchase programs | $ | $ | ||||||||||||||||||||||||
| General authorization for shares withheld on stock award vesting | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
Stock repurchases of $47 million in March 2024 were settled in April 2024.
For the three months ended March 31, 2024 and 2023, the Company remitted employee withholding taxes of $286 million and $158 million, respectively, to the tax authorities, which may differ from the aggregate cost of the shares withheld for taxes for each period due to the timing in remitting the taxes. The cash remitted to the tax authorities is included in financing activities in the Unaudited Consolidated Statements of Cash Flows.
The Company recorded an estimated excise tax liability for share repurchases of $108 million and $96 million as of March 31, 2024 and December 31, 2023, respectively. The excise tax liability is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets.
In March 2024, the Company paid cash dividends of $299 million. The quarterly cash dividend of $8.75 per share of common stock was declared by the Board in February 2024 and paid to stockholders of record as of the close of business on March 8, 2024. In May 2024, the Board declared a cash dividend of $8.75 per share of common stock, payable on June 28, 2024 to stockholders of record as of the close of business on June 7, 2024.
11. INCOME TAXES
Income tax expense consists of U.S. and international income taxes, determined using an estimate of the Company's annual effective tax rate, which is based upon the applicable tax rates and tax laws of the countries in which the income is generated. A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and operating loss and tax credit carryforwards. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes, and other relevant factors.
The Company's effective tax rates for the three months ended March 31, 2024 and 2023 were 17.1 % and 12.4 %, respectively. The Company's 2024 effective tax rate differs from the U.S. federal statutory tax rate of 21 21
The Company's effective tax rate for the three months ended March 31, 2024 was higher than the effective tax rate for the three months ended March 31, 2023, primarily due to certain lower discrete tax benefits, higher U.S. federal and state tax
associated with the Company’s international earnings, and a decrease in the benefit of the Netherlands Innovation Box Tax, partially offset by certain lower non-deductible expenses.
19
During the three months ended March 31, 2024 and 2023, a majority of the Company's income was reported in the Netherlands, where Booking.com is based. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9 25.8
The aggregate amount of unrecognized tax benefits for all matters at March 31, 2024 and December 31, 2023 was $68 million and $67 million, respectively. As of March 31, 2024, net unrecognized tax benefits of $48 million, if recognized, would impact the effective tax rate. As of March 31, 2024 and December 31, 2023, total gross interest and penalties accrued was $7
12. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT
The table below present the changes in the balances of accumulated other comprehensive loss ("AOCI") by component for the three months ended March 31, 2024 and 2023 (in millions):
| Foreign currency translation adjustments | Net unrealized (losses) gains on available-for-sale securities | Total AOCI, net of tax | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | Net investment hedges (1) | Total, net of tax | Before tax | Tax | Total, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Before tax | Tax (2) | Before tax | Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income ("OCI") for the period | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| OCI for the period | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||
(1) Net investment hedges balance at March 31, 2024 and earlier dates presented above, includes accumulated net losses from fair value adjustments of $35 53
(2) The tax benefits relate to foreign currency translation adjustments to the Company's one-time deemed repatriation tax liability recorded at December 31, 2017 and foreign earnings for periods after December 31, 2017 that are subject to U.S. federal and state income tax, resulting from the enactment of the U.S. Tax Cuts and Jobs Act.
13. COMMITMENTS AND CONTINGENCIES
Competition and Consumer Protection Reviews
Online travel platforms have been the subject of investigations or inquiries by national competition authorities ("NCAs") or other governmental authorities regarding competition law matters, consumer protection issues, or other areas of concern. The Company is and has been involved in many such investigations. For example, the Company is involved in investigations related to whether Booking.com's contractual parity arrangements with accommodation providers are anti-competitive because they require partners to provide Booking.com with rates, conditions, and availability at least as favorable as those offered to other online travel companies ("OTCs") or by the partner itself. To resolve certain of the parity-related investigations, the Company has from time to time made commitments regarding future business practices or activities, such as agreeing to narrow the scope of its parity clauses. These investigations have resulted in fines and the Company could incur additional fines and/or be restricted in certain of its business practices in the future.
20
In October 2022, the Comisión Nacional de los Mercados y la Competencia in Spain (the "CNMC") opened an investigation into whether certain practices by Booking.com may produce adverse effects for hotels and other OTCs. In January 2024, the CNMC notified Booking.com of its draft decision to impose a fine of 486 million Euros and to restrict certain business practices such as those relating to parity provisions and criteria that Booking.com can use to determine how to rank hotels in its display to customers. The amount of the draft fine is based on Booking.com’s historical revenues and it is possible the final amount may be increased when the decision is finalized, which is expected by July 2024. Booking.com does not agree with the rationale stated in the draft decision and certain of the restrictions sought to be imposed, and is continuing to engage with the CNMC prior to the decision being finalized. If the draft decision were to become final, Booking.com plans to challenge aspects of the fine, decision, and/or restrictions. Although the Company disagrees with the rationale stated in the draft decision, the Company accrued a loss of 486 million Euros ($530 million) during the year ended December 31, 2023 with the related liability included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023. In addition, in September 2017, the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland and the investigation is ongoing. If there is an adverse outcome and Booking.com is unsuccessful in any appeal, Booking.com may be required to make other commitments, such as reducing its commissions in Switzerland. In July 2023, the Polish Office of Competition and Consumer Protection opened an investigation into Booking.com's identification of private and professional hosts and its messaging in relation to obligations owed to consumers. In March 2024, the Italian Competition Authority opened an investigation into whether certain practices by Booking.com may produce adverse effects for hotels and other online travel agencies. If any of the investigations were to find that Booking.com practices violated the respective laws, Booking.com may face significant fines, restrictions on its business practices, and/or be required to make other commitments.
The Company is and has been involved in investigations or inquiries by NCAs or other governmental authorities involving consumer protection matters, including in the United Kingdom and the European Union. The Company has previously made certain voluntary commitments to competition authorities to resolve investigations or inquiries that have included showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings on or before the search results page and making certain adjustments to how discounts and statements concerning popularity or availability are shown to consumers. In the future, it is possible new jurisdictions could engage the Company in discussions to implement changes to its business in those countries. The Company is unable to predict what, if any, effect any future similar commitments will have on its business, industry practices or online commerce more generally. To the extent that any other investigations or inquiries result in additional commitments, fines, damages or other remedies, the Company's business, financial condition, and results of operations could be harmed.
The Company is unable to predict how any current or future investigations or litigation may be resolved or the long-term impact of any such resolution on its business. For example, competition and consumer-law-related investigations, legislation, or issues could result in private litigation and the Company is currently involved in such litigation. More immediate results could include, among other things, the imposition of fines, payment of damages, commitments to change certain business practices, or reputational damage, any of which could harm the Company's business, results of operations, brands, or competitive position.
Tax Matters
Between December 2018 and August 2021, the Italian tax authorities issued assessments on Booking.com's Italian subsidiary totaling approximately 251 million Euros ($271 million) for the tax years 2013 through 2018, asserting that its transfer pricing policies were inadequate. The Company believes Booking.com has been and continues to be in compliance with Italian tax law. In September 2020, the Italian tax authorities approved the opening of a mutual agreement procedure ("MAP") between Italy and the Netherlands for the 2013 tax year and the Italian tax authorities subsequently approved the inclusion of the tax years 2014 through 2018 in the MAP. Based on the Company's expectation that the Italian assessments for 2013 through 2018, and any transfer pricing assessments received for subsequent open years, will be settled through the MAP process, and after considering potential resolution amounts, 33 36 15 million Euros ($17 million). As of March 31, 2024, the Company made prepayments of 74 million Euros ($80 million) to the Italian tax authorities to forestall collection enforcement pending the appeal phase of the case. The payments do not constitute an admission that the Company owes the taxes and will be refunded (with interest) to the Company to the extent that the Company prevails. The payments are included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2024 and December 31, 2023.
21
The Company is also involved in other tax-related audits, investigations, and litigation relating to income taxes, value-added taxes, travel transaction taxes (e.g., hotel occupancy taxes), withholding taxes, and other taxes. Any taxes or assessments in excess of the Company's tax provisions, including the resolution of any tax proceedings or litigation, could have a material adverse impact on the Company's results of operations, cash flows, and financial condition. In some cases, assessments may be
significantly in excess of the Company’s tax provisions, particularly in instances where the Company does not agree with the
tax authority’s assessment of how the tax laws may apply to the Company’s business.
Other Matters
Beginning in 2014, Booking.com B.V. received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) ("BPF") claiming that it was required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme in which it is currently participating. BPF instituted legal proceedings and in 2016 the District Court of Amsterdam rejected all of BPF's claims. BPF appealed the decision to the Court of Appeal, and, in May 2019, the Court of Appeal also rejected all of BPF's claims, in each case by ruling that Booking did not meet the definition of a travel intermediary for purposes of the mandatory pension scheme. BPF then appealed to the Netherlands Supreme Court. In April 2021, the Supreme Court overturned the previous decision of the Court of Appeal and held that Booking.com B.V. met the definition of a travel intermediary for the purposes of the mandatory pension scheme. The Supreme Court ruled only on the qualification of Booking.com B.V. as a travel intermediary for the purposes of the mandatory pension scheme and did not rule on the various other defenses brought forward by the Company against BPF's claims. The Supreme Court referred the matter to another Court of Appeal to assess the other defenses brought forward by the Company. In January 2024, that Court of Appeal ruled that Booking.com B.V. is required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999. The Company has filed an appeal of the decision to the Netherlands Supreme Court. Although the Company disagrees with the decision, it accrued a loss of 253 million Euros ($276 million), included in "Personnel" expenses in the Consolidated Statement of Operations for the year ended December 31, 2023. During the three months ended March 31, 2024, the Company recorded additional estimated expenses for the period of 19 million Euros ($21 million), included in "Personnel" expenses in the Unaudited Consolidated Statement of Operations. The related liability is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023. On a go-forward basis, Booking.com B.V. expects to begin paying pension premiums to the BPF scheme or to increase contributions to employees under its existing pension scheme.
From time to time, the Company notifies the competent data protection authority, such as the Dutch data protection authority in accordance with its obligations under the General Data Protection Regulation, of certain incidental and accidental personal data security incidents. Should, for example, the Dutch data protection authority decide these incidents were the result of inadequate technical and organizational security measures or practices, it could decide to impose a fine.
The Company has been, is currently, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention from the Company's business objectives and adversely affect the Company's business, reputation, results of operations, financial condition, and cash flows.
The Company accrues for certain legal contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated. Such accrued amounts are not material to the Company's balance sheets and provisions recorded have not been material to the Company's results of operations or cash flows.
Other Contractual Obligations and Contingencies
The Company had $953 million and $533 million of standby letters of credit and bank guarantees issued on behalf of the Company as of March 31, 2024 and December 31, 2023, respectively, including those issued under the revolving credit facility. These are obtained primarily for regulatory purposes. See Note 9 for information related to letters of credit issued under the revolving credit facility.