Booking Holdings(BKNG)2024-10-31 00:20Financial Data and Key Metrics - Revenue for Q3 2024 was $8 billion, a 9% year-over-year increase, exceeding the high end of guidance by 5 percentage points [7][40] - Adjusted EBITDA grew 12% year-over-year to $3.7 billion, 9% above the high end of prior guidance [6][7][44] - Adjusted EPS increased 16% year-over-year to $83.89, supported by a 6% reduction in average share count [7][44] - Gross bookings grew 9% year-over-year, driven by 8% growth in room nights and 39% growth in airline tickets [7][38] - Marketing expenses increased 6% year-over-year, but as a percentage of gross bookings, it decreased by 15 basis points to 5.0% [41][42] Business Line Performance - Room nights grew 8% year-over-year to just under 300 million, with alternative accommodations growing 14% [7][11][34] - Airline tickets booked increased 39% year-over-year, accelerating from 28% growth in Q2 [17][37] - Rental car days booked grew 16% year-over-year, driven by strong growth at Booking.com [37] - Connected Trip transactions, which include bookings across multiple travel verticals, grew over 40% year-over-year and represented a high single-digit percentage of total transactions [15] Regional Performance - Europe saw high single-digit growth in room nights, driving the sequential increase in global room night growth [8][34] - Asia continued to perform well with low double-digit growth in room nights, representing 24% of global room nights [8][30][34] - The U.S. experienced low single-digit growth in room nights, outpacing the broader U.S. accommodation industry [8][34] Strategic Initiatives and Industry Competition - The company is focused on growing alternative accommodations, advancing its Connected Trip vision, developing AI capabilities, and expanding in Asia [10] - Alternative accommodation listings reached 7.9 million, up 10% year-over-year, contributing to 35% of Booking.com's global room nights [11][34] - AI initiatives, including the AI Trip Planner and Gen AI-powered tools, are being integrated across platforms to improve customer experience and operational efficiency [18][19][20][22][24][25][26] - The company aims to grow faster than the overall travel industry in Asia, which is expected to grow at a high single-digit rate over the next five years [29][30] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about the resilience of leisure travel demand and the long-term growth of the travel industry [9][31] - The company expects Q4 room night growth between 6% and 8%, with gross bookings growth between 7% and 9% [47][48] - Full-year 2024 revenue growth is expected to be just below 10%, with adjusted EBITDA growth between 13% and 14% [49][51] Other Important Information - The company returned $2 billion in capital through share repurchases and dividends in Q3, reducing its cash and investments balance to $16.3 billion [46] - Fixed expenses grew 7% year-over-year, below expectations due to lower IT and G&A expenses, with a focus on driving operating leverage [43][50] Q&A Session Summary Question: AI's impact on financials and Q4 booking factors [53] - AI is expected to improve customer experience, operational efficiency, and potentially drive more direct traffic, but it is too early to quantify financial impacts [55][56][57] - Q4 bookings are expected to remain robust, with easier comps due to the Middle East conflict last year and a less expanded booking window [59][60][61] Question: Asia's recovery and alternative accommodation mix [64] - Asia's growth is driven by market recovery and strong execution by Agoda, with no single country dominating the region [65][66][67] - The alternative accommodation mix is 35%, with potential for further growth as inventory expands, particularly in the U.S. [68][69][70] Question: Europe's performance and U.S. macro views [72] - Europe saw a reacceleration in growth starting in August, driven by improved demand and the expansion of the booking window [72][73] - The U.S. market remains stable, with the company growing faster than the broader accommodation industry [8][116] Question: Marketing ROI and full-year outlook [76] - Higher ROIs in Q3 were driven by continuous optimization of marketing spend across channels, with social media spend increasing [77][78] - Full-year marketing and merchandising as a percentage of gross bookings are expected to remain flat [78] Question: Fixed investments and long-term margin potential [80] - The company has slowed hiring and is leveraging AI and other efficiencies to drive operating leverage, while reinvesting in growth opportunities [82][83][84] - Long-term margin expansion is expected as fixed investments grow slower than revenue [96][97] Question: Incrementality of alternative accommodations [90] - The company believes its alternative accommodations business has brought in new customers who would not have booked through Booking.com otherwise, particularly in Europe [91][92] Question: Social media as a growth vector [99] - Social media marketing is showing improved ROI, with increased spend contributing to higher incremental ROIs, though it remains a small portion of total marketing spend [100][101][103] Question: U.S. brand awareness and property manager experience [105] - The company is working to simplify the experience for property managers and improve brand awareness in the U.S., with stable growth in room nights [106][107] Question: Gen AI's impact on bookings and Asia partnerships [110] - Gen AI is expected to enhance Booking.com's competitive position by offering personalized experiences, while partnerships in Asia remain a small part of the business [111][112][113] Question: Booking window impact and North America investments [114] - The booking window had a slight benefit on Q3 growth, but the impact was not quantified [115] - Investments in alternative accommodations, brand awareness, and product enhancements are driving growth in North America [116][117]