EPS of $1.23 increased by 19.1% from previous year
Gross margin of 25.9%
Net income of 300.00M
"Not available due to missing earnings transcript data." -
Hilton Worldwide Holdings Inc (0J5I.L) QQ1 2025 Results Analysis: Revenue Resilience, Healthy EBITDA, and Elevated Leverage in a Recovering Travel Market
Executive Summary
Hilton Worldwide Holdings Inc delivered a solid start to QQ1 2025 with revenue of $2.695 billion and EBITDA of $596 million, translating to an EBITDA margin of approximately 22.1% and an operating margin near 19.9%. Net income of $300 million produced a 11.1% net profit margin and $1.25 basic EPS (diluted $1.23). On a year-over-year basis, top-line growth was modest (+4.7% revenue YoY) but net income rose meaningfully (+13.2% YoY) as margins re-rated and certain cost items normalized. However, quarter-over-quarter performance softened, with revenue down 3.2% QoQ and net income down 40.6% QoQ, reflecting seasonality and ongoing leverage dynamics as Hilton navigates a post-pandemic travel cycle and a still-levered balance sheet.
From a cash flow perspective, Hilton generated $452 million of operating cash flow and $412 million of free cash flow, supporting a significant capital allocation program that included $875 million in share repurchases and $37 million in cash dividends. Despite robust free cash flow, the balance sheet remains heavily indebted with net debt of approximately $11.15 billion and negative equity, highlighting ongoing leverage as a key risk factor. Management’s capital allocation cadence appears focused on deleveraging via cash flow generation and selective returns to shareholders, albeit within a highly competitive and cyclical lodging environment.
Looking ahead, investors should monitor occupancy recovery, ADR (average daily rate) trends, and the mix shift toward franchised/managed revenues versus owned properties, which typically offer higher margins and more predictable cash flows. While Hilton demonstrates resilient operating momentum and strong brand scale, the sustainability of its leverage profile and its capacity to sustain margin expansion in a volatile macro backdrop will be critical beacons for the investment thesis in QQ2–QQ4 2025.
Key Performance Indicators
Revenue
2.70B
QoQ: -3.16% | YoY:4.74%
Gross Profit
697.00M
25.86% margin
QoQ: 4.19% | YoY:0.14%
Operating Income
536.00M
QoQ: 9.61% | YoY:0.56%
Net Income
300.00M
QoQ: -40.59% | YoY:13.21%
EPS
1.25
QoQ: -39.90% | YoY:19.05%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $2.695 billion for QQ1 2025 (YoY +4.74%; QoQ -3.16%)
Liquidity, cash flow and capital allocation:
- Net cash provided by operating activities: $452 million; Operating cash flow: $452 million
- Free cash flow: $412 million
- Capital expenditures: $40 million; Cash capex appetite supports growth and efficiency
- Share repurchases: $875 million in common stock repurchases; Dividends paid: $37 million
- Net change in cash: decline of $569 million; Cash at end of period: $807 million; Cash beginning: $1.376 billion
Balance sheet health and leverage:
- Total assets: $16.043 billion; Total liabilities: $20.382 billion; Stockholders’ equity: -$4.378 billion (negative equity)
- Total debt: $11.88 billion; Net debt: $11.149 billion
- Key coverage: Interest expense $145 million; EBITDA $596 million; Interest coverage ~3.70x
- Goodwill and intangibles: $11.481 billion (Goodwill $4.949b; Intangibles $6.432b)
- Liquidity and solvency dynamics underscore leverage risk despite positive near-term cash generation
Valuation and operating efficiency:
- Price-to-sales ~20.26x; Price-to-earnings ~45.51x; Price-to-free-cash-flows ~132.55x; Enterprise value multiple ~110.34x; Dividend yield ~0.0678%
- Moderate efficiency evidenced by operating cash flow conversion and FCF per share of $1.72; Asset turnover ~0.168x; Fixed asset turnover ~2.74x
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.70B
4.74%
-3.16%
Gross Profit
697.00M
0.14%
4.19%
Operating Income
536.00M
0.56%
9.61%
Net Income
300.00M
13.21%
-40.59%
EPS
1.25
19.05%
-39.90%
Key Financial Ratios
currentRatio
0.57
grossProfitMargin
25.9%
operatingProfitMargin
19.9%
netProfitMargin
11.1%
returnOnAssets
1.87%
returnOnEquity
-6.85%
debtEquityRatio
-2.71
operatingCashFlowPerShare
$1.88
freeCashFlowPerShare
$1.72
dividendPayoutRatio
12.3%
priceToBookRatio
-12.47
priceEarningsRatio
45.51
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data is not provided in the input. As a result, key management themes, strategic pivots, and operational updates from the QQ1 2025 call cannot be quoted or summarized from the transcript content. If a transcript is supplied or accessible, a thematically grouped synthesis (e.g., strategy, operations, demand trends, cost discipline, and capital allocation) with direct quotes will be incorporated here.
Not available due to missing earnings transcript data.
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Not available due to missing earnings transcript data.
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Forward Guidance
No explicit forward-looking guidance was included in the provided data. Consequently, there are no numeric targets to benchmark. Observations from the QQ1 2025 results suggest a continued emphasis on cost discipline, portfolio optimization, and deleveraging through strong free cash flow generation and a sizable share repurchase program. Investors should monitor:
- Occupancy recovery and ADR trends across regions, along with the mix shift toward franchised vs owned properties
- Progress on debt reduction and the potential impact on interest expense and coverage ratios
- Capex cadence and its effect on sustaining systemwide growth while maintaining cash flow resilience
- Competitive environment and supply growth in key markets, which could influence pricing power and margins
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0J5I.L Focus
25.86%
19.90%
-6.85%
45.51%
0IJV.L
73.10%
46.30%
1.95%
29.03%
0HVF.L
39.90%
22.20%
2.71%
19.88%
0I2P.L
26.50%
14.70%
5.37%
8.01%
0JXD.L
41.70%
1.96%
0.85%
21.82%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, QQ1 2025 reflects a financially resilient operator with positive YoY earnings momentum and solid cash generation, but the investment thesis remains heavily conditioned on the ability to manage and reduce leverage. The company demonstrated operating profitability and cash flow strength, yet the balance sheet remains a credibility constraint due to negative equity and a substantial debt burden. In the near term, investors may tolerate the leverage given the traction in cash flows and potential for margin stability through franchised growth. Longer-term upside requires a credible deleveraging path and potential multiple expansion as the lodging cycle normalizes and the mix shifts toward higher-margin revenue streams. Relative to peers, Hilton’s valuation remains elevated; investors should weigh the growth potential against the balance sheet risk and macro-driven travel volatility.
Key Investment Factors
Growth Potential
Hilton benefits from a diversified brand portfolio and a large, global footprint, supporting scalable managed/franchised revenue streams that typically yield higher margins and more stable cash flows as occupancy recovers. A continued shift toward franchised/managed models could enhance margins and reduce capital intensity over time.
Profitability Risk
Key risks include high leverage with net debt around $11.15 billion and negative equity, exposing the company to interest rate volatility and refinancing risk. Cyclicality of travel demand, currency exposure, and competitive dynamics in the lodging sector also pose material downside risks. The valuation is elevated relative to earnings and cash flow metrics, signaling sensitivity to earnings durability and capital allocation effectiveness.
Financial Position
Near-term cash generation is solid (Operating cash flow $452m; Free cash flow $412m), supporting some deleveraging potential. However, the balance sheet remains significantly levered with limited equity, which could constrain financial flexibility if profit dynamics deteriorate or if capital markets tighten.
SWOT Analysis
Strengths
Global scale with a diversified brand portfolio (Waldorf Astoria, Canopy by Hilton, Hilton Garden Inn, etc.) supporting broad consumer reach
Prominent franchise/management revenue mix, which typically entails higher margins and reduced capital intensity
Robust near-term free cash flow generation, enabling capital allocation flexibility
Weaknesses
Significant net debt and negative stockholders’ equity indicating a highly levered capital structure
Large non-cash balance sheet items ( goodwill and intangibles) contributing to equity impairment risk
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