Booking Holdings (BKNG) 2025 Conference September 03, 2025 09:30 AM ET Company ParticipantsRon Josey - Managing DirectorEwout Steenbergen - EVP & CFORon JoseyWe are on the clock, so we can get started here. I'm Ron Josey. I cover the internet sector here at Citi, and look, I'm thrilled to have with us today Ewout Steenbergen. Ewout, you joined about a year and a half ago. We have a lot to get to talk to everybody. I'm here pretty much. I'm sure you know what Booking.com does. Why don't we just jump into it? ...

Core Insights - Booking Holdings (BKNG) reported Q2 2025 earnings of $55.4 per share, exceeding the Zacks Consensus Estimate by 8.82% and reflecting a 32.2% year-over-year increase [1] - Revenues reached $6.8 billion, surpassing the Zacks Consensus Estimate by 3.56%, marking a 16% year-over-year growth, with a 12% increase on a constant-currency basis [2] - Adjusted EBITDA rose 28% year over year to approximately $2.4 billion, exceeding guidance by 12 percentage points, with an adjusted EBITDA margin expansion of 330 basis points to 35.6% [12] Revenue Breakdown - Merchant revenues accounted for $4.46 billion (65.6% of total revenues), up 29.3% year over year [4] - Agency revenues were $2.04 billion (30.1% of total revenues), down 4.7% year over year [4] - Advertising & Other revenues totaled $297 million (4.4% of total revenues), increasing by 10.4% year over year [4] Operational Highlights - Room nights reached 309 million, a 7.7% year-over-year increase, driven by strong growth in Europe and Asia [5] - Alternative accommodations listings grew to approximately 8.4 million, an 8% year-over-year increase, with a 10% rise in alternative accommodation room nights [6] - Connected Trip transactions grew by 30% year over year, representing a low double-digit percentage of total transactions [7] Expense Management - Marketing expenses increased by 10.3% year over year, accounting for 4.6% of gross bookings, slightly lower than the previous year's 4.7% [8][9] - Sales and other expenses as a percentage of gross bookings remained at 1.9%, with efficiencies in customer service offsetting higher payment expenses [10] Financial Position - As of June 30, 2025, cash and investments totaled $18.2 billion, up from $16.1 billion at the end of Q1 2025, reflecting $3.1 billion in free cash flow [13] - Total debt decreased to $18.47 billion from $16.02 billion as of March 31, 2025 [13] Future Guidance - For Q3 2025, room night growth is expected between 3.5% and 5.5%, with gross bookings projected to grow 8-10% [15] - Full-year 2025 anticipates low double-digit growth in gross bookings and revenues, with adjusted EBITDA expected to increase in the mid-teens [16]

Financial Data and Key Metrics Changes - Booking Holdings reported a strong quarter with adjusted EBITDA increasing by 28% year over year, driven by revenue outperformance and disciplined expense management [3][6] - Room nights reached 309 million, an 8% year over year increase, with gross bookings up 13% and revenue up 16%, both exceeding prior expectations [5][29] - Adjusted earnings per share grew 32% year over year, reflecting a strong financial performance [6][32] Business Line Data and Key Metrics Changes - Alternative accommodations saw room night growth of 10%, outpacing the core hotel business, with listings reaching 8.4 million, an 8% increase year over year [8][25] - The Genius loyalty program has expanded, with over 30% of active travelers now in higher tiers, contributing to higher direct booking rates [9][27] - Non-accommodation verticals showed strong growth, with flight ticket bookings up 44% and attractions ticket growth more than doubling year over year [12][27] Market Data and Key Metrics Changes - Asia experienced low double-digit room night growth, driven by strong performance from both Pagoda and Booking.com, while the U.S. remained the slowest growing region [10][22] - The U.S. market showed slight improvement in growth, but lower average daily rates (ADRs) and shorter booking windows were noted, indicating cautious consumer spending [23][61] - The Rest of World region was impacted by geopolitical events, which affected global growth by approximately 1% in June [22] Company Strategy and Development Direction - The company is focused on expanding alternative accommodations, enhancing the Genius loyalty program, and developing AI capabilities to improve the travel experience [7][14] - The connected trip vision aims to provide a more personalized travel experience by integrating various travel services, which is expected to drive loyalty and repeat bookings [12][90] - The company is investing in technology and partnerships to leverage AI for better customer service and operational efficiency [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the travel industry despite geopolitical and macroeconomic uncertainties [18][39] - The company anticipates steady travel demand trends in the third quarter, although comparisons with the previous year will be more challenging [35][74] - Full-year guidance has been increased, reflecting strong performance and improved visibility for the remainder of the year [39][40] Other Important Information - The company generated approximately $3.1 billion in free cash flow during the quarter, with a cash and investments balance of $18.2 billion at the end of the quarter [34] - The transformation program is expected to yield approximately $350 million in annual run rate savings, with $150 million forecasted for the current year [33] Q&A Session All Questions and Answers Question: Can you provide details on the performance of different markets in Asia? - Management noted that while they do not break out individual countries, they are pleased with overall performance in Asia, emphasizing the importance of localized strategies and strong brand presence [44][46] Question: What are the growth initiatives for the U.S. market? - The company is focusing on small initiatives across product, supply, and marketing to gradually gain market share in the U.S., with early signs of strengthening growth [59][62] Question: What are the technological hurdles for scalable GenAI assistance? - Management acknowledged that while progress is being made, the development of scalable GenAI assistance will take time and is an ongoing process [66][70] Question: What factors are influencing the outlook for the third quarter? - The company highlighted steady results so far but noted tougher comparisons with the previous year, particularly in August and September [74] Question: How is the growth in alternative accommodations compared to industry trends? - Management indicated that growth in alternative accommodations continues to outpace traditional accommodations, reflecting strong demand and potential for future growth [77][79]