Booking Q2 Earnings Call Highlights

Key Points

• Booking exceeded its second-quarter guidance across room nights, gross bookings, revenue and adjusted EBITDA, with room nights up 5%, gross bookings up 9% and adjusted EBITDA reaching approximately $2.6 billion. Domestic and intraregional travel helped offset continued weakness in long-haul international demand.
• The company reported strong progress in its Connected Trip, loyalty and payments strategies: multi-vertical transactions grew at a low-double-digit rate, merchant bookings reached 73% of gross bookings, and higher-tier Genius members accounted for more than 30% of active customers.
• Booking expects third-quarter growth to moderate to 3%–5% for room nights and 4%–6% for gross bookings, revenue and adjusted EBITDA. It also raised expected annual transformation savings to $650 million and returned $4.1 billion to shareholders during the quarter, including $3.7 billion in buybacks.

Booking NASDAQ: BKNG said its second-quarter results exceeded the high end of its guidance across room nights, gross bookings, revenue and adjusted EBITDA, as domestic and intraregional travel demand helped offset continued pressure on long-haul international travel.

President and CEO Glenn Fogel said the travel company continued to face volatility tied to the Middle East conflict, including elevated airline prices, reduced capacity on certain routes and disruptions affecting major transit corridors. However, he said travel demand remained resilient, particularly for domestic trips and travel within regions.

“While long-haul international travel remained pressured by elevated airline prices and reduced capacity due to the conflict in the Middle East, domestic and intraregional travel remained relatively healthy across many parts of the world,” Fogel said.

Second-Quarter Performance

Chief Financial Officer Ewout Steenbergen said room nights increased 5% year over year, about one percentage point above the high end of the company’s outlook. Domestic room nights rose at a high-single-digit rate globally, while international room nights increased slightly.

• Europe room nights grew at a mid-single-digit rate, with domestic room nights up high single digits.
• Asia room nights grew at a mid-single-digit rate, while domestic room nights in the region increased low double digits.
• U.S. room nights rose high single digits, supported by domestic demand.
• Rest of World room nights grew mid-single digits, improving from a decline in the first quarter as bookings from Middle East travelers strengthened.

Gross bookings increased 9%, or about 8% on a constant-currency basis, while revenue rose 8%, or 7% on a constant-currency basis. Steenbergen said revenue growth trailed gross-bookings growth partly because elevated cancellations in March affected second-quarter revenue.

Constant-currency average daily rates increased about 2%, driven primarily by pricing strength in Europe and the U.S. Booking windows and length of stay contracted modestly worldwide during the quarter, though both measures began to normalize in June. In Europe, the company’s largest region, both metrics were approximately flat for the quarter.

Adjusted EBITDA totaled about $2.6 billion, up 9% from a year earlier, and adjusted EBITDA margin expanded by nearly 40 basis points. Adjusted earnings per share increased 15% to $2.54, aided by a 6% reduction in average share count, according to the company.

Connected Trip, Loyalty and Market Expansion

Booking said transactions involving travelers who booked more than one travel vertical for the same trip grew at a low-double-digit rate. Such Connected Trip transactions represented a low-double-digit percentage of Booking.com’s total transactions and grew more than twice as fast as Booking.com’s overall transaction growth.

The company’s merchant bookings represented about 73% of gross bookings, up roughly four percentage points year over year. Fogel described the company’s payments platform as central to the Connected Trip strategy because it can enable a more seamless experience across accommodations, flights, rental cars, attractions and other travel products.

Higher-tier participants in the company’s Genius loyalty program also expanded. Genius Level 2 and Level 3 members accounted for more than 30% of active customers and a high-50% share of room nights, both higher than a year earlier.

Alternative-accommodation room nights at Booking.com rose 4%, slightly below overall room-night growth. Alternative accommodations accounted for approximately 37% of Booking.com room nights, unchanged from the prior-year period. Attraction ticket sales grew at a double-digit rate, while flight tickets increased 4% amid airline capacity constraints and higher ticket prices.

Fogel said the company remains focused on expanding in the U.S. and Asia. In the U.S., Booking is investing in products, supply, brand, marketing and technology, while seeking to expand its alternative-accommodation inventory. In Asia, it is combining Booking.com’s global reach with Agoda’s local expertise to develop localized products, payments and distribution capabilities.

AI Initiatives and Distribution

Management highlighted artificial intelligence as a strategic priority, citing uses in trip planning, customer service, software development and partner tools. Booking.com began testing an AI-powered discovery experience designed to help travelers in the inspiration stage of planning. The service combines flight pricing, traveler reviews and AI-generated destination information, including travel tips and itinerary suggestions.

Priceline is rolling out the next generation of its agentic AI travel assistant, Penny, while Agoda has introduced a gallery-view feature that pairs hotel images with relevant guest reviews.

Fogel said early tests of Penny’s integrated hotel checkout experience suggested a potential to improve engagement and business outcomes, though he said the company was not ready to provide specific conversion or customer-satisfaction metrics. Steenbergen said traffic from large language models remained “significantly below 1%” of room nights and had not materially changed in recent months or quarters.

The company said AI-supported customer service has lowered contact rates and improved operational efficiency. Voice AI support has been scaled across the majority of eligible inbound traveler calls, while customer service cost per booking has continued to decline at a double-digit rate as overall customer satisfaction remained high.

Steenbergen said AI costs are rising but remain a low-single-digit percentage of technology spending. He said Booking is using cost-aware model routing to employ less expensive models for simpler tasks and more expensive models for complex work.

Outlook, Savings and Capital Returns

For the third quarter, Booking expects room nights to rise 3% to 5%, with gross bookings, revenue and adjusted EBITDA each expected to increase 4% to 6%. The outlook assumes that the indirect effects of the Middle East conflict, including higher airfares, constrained capacity and softer long-haul demand, continue through the quarter.

For the full year, the company expects reported gross bookings, revenue and adjusted EBITDA to increase at high-single-digit rates, while adjusted EPS is expected to rise in the low- to mid-teens. Steenbergen said the gross-bookings outlook was reduced from the prior forecast primarily because of lower expected flight-ticket growth, while the accommodation outlook was largely unchanged.

Booking increased its expected annual run-rate savings from its transformation program to about $650 million from approximately $550 million. The additional $100 million is expected to be realized primarily in 2027 and largely stems from procurement-related opportunities, Steenbergen said.

During the quarter, Booking generated $3.6 billion in free cash flow and returned $4.1 billion to shareholders, including $3.7 billion in share repurchases. Its cash and investments balance rose by $1.2 billion sequentially to $17.7 billion.

About Booking (NASDAQ:BKNG)

Booking Holdings Inc is a global online travel company that operates a portfolio of consumer brands and technology platforms that facilitate the search for and booking of travel services. The company's businesses focus on accommodations, transportation and related travel services through consumer-facing websites and apps as well as partner distribution channels. Booking Holdings was originally founded as Priceline in the late 1990s and adopted the Booking Holdings name in 2018; it is headquartered in Norwalk, Connecticut.

Its core offerings include online reservations for hotels, vacation rentals and other lodging; flight and car rental search and booking; and ancillary services that support travel planning and on-property experiences.

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