Booking Holdings (BKNG) - Q2 2025 Earnings Call
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Date: July 29, 2025
Executives Present:
Glenn D. Fogel – President, CEO & Director
Ewout Lucien Steenbergen – Executive VP & CFO
Financial Performance
Room nights: 309M, up 8% YoY, exceeding guidance, with Asia leading in growth .
Gross bookings: +13% YoY; revenue +16% YoY to $6.8B, both above guidance .
Adjusted EBITDA: $2.4B, +28% YoY, ahead of guidance .
EPS: $55.40, +32% YoY, boosted by 5% lower share count .
Cash & investments: $18.2B (up from $16.1B in Q1), supported by $3.1B FCF .
Shareholder returns: $1.3B in repurchases + $300M in dividends; also settled $1.1B convertible note in cash to avoid dilution .
Guidance & Future Trends
Q3 2025:
Room nights growth: 3.5–5.5%.
Gross bookings: +8–10%.
Revenue growth: +7–9%.
Adj. EBITDA: $3.9–4.0B (+9% YoY).
Full-year 2025:
Gross bookings & revenue: low double-digit growth.
Adj. EBITDA: mid-teens growth, margin expansion +125 bps (higher than prior 50–100 bps).
Adj. EPS: high teens growth .
FX tailwinds expected to add ~3–4 pts to reported growth .
Macro & Demand Trends
Europe & Asia: strong drivers; Asia up low double digits with Agoda + Booking.com two-brand strategy .
U.S.: slowest-growing but slightly improved from Q1; lower ADRs, shorter booking windows, and more cautious spending among lower-tier consumers .
Middle East unrest: reduced global growth by ~1% in June .
High-end U.S. travelers still spending more on luxury hotels and Europe trips despite FX headwinds .
Europe: holding up strongly, travelers booking earlier and at higher prices.
Capital Allocation & Dilution
$1.3B buybacks + $300M dividends in Q2 .
Convertible note settlement in cash ($1.1B) avoided dilution, effectively adding to buybacks .
Issued ~$2B debt, offset by maturities and FX effects .
Transformation program: $45M in Q2 savings, targeting $350M annual run-rate savings; $38M Q2 transformation costs excluded from adjusted results .
AI & Technology Trends
Connected Trip: +30% YoY transactions; now a low double-digit % of transactions .
Non-accommodation verticals: Flights +44% YoY; attractions more than doubled (albeit from small base) .
AI applications:
Priceline’s AI assistant Penny enhanced with voice, improving conversions.
** building conversational, personalized search.
OpenTable AI concierge launched in July, offering restaurant-specific recommendations.
Customer service: GenAI reducing live agent demand, improving resolution times.
Partnerships with OpenAI, Microsoft, Amazon, integrating into agent development.
Strategic & Competitive Trends
Alternative accommodations: Listings at 8.4M (+8% YoY), room nights +10% YoY, now 37% mix of total (up 1 pt YoY) .
Genius loyalty program: Level 2 & 3 users = 30%+ of actives, book ~50% of room nights; higher frequency and direct bookings .
Direct & mobile mix: Direct B2C mid-60% (up from low 60s YoY), app bookings mid-50% (up from low 50s) .
Advertising revenues: +11% YoY, driven by KAYAK and new initiatives .
10 Notable Quotes
“Room nights reached 309 million, an 8% year-over-year increase exceeding the high end of our prior expectations.”earnings per share in the quarter grew 32% year-over-year.”
“Alternative accommodation listings reached 8.4 million, an increase of 8% year-over-year.”
“Connected Trip transactions grew over 30% year-over-year in the second quarter.”
“Flights up 44% and attraction ticket growth more than doubled year-over-year.”
“AI in general and not particularly GenAI, is propelling us closer to this vision.”
“AITDA of approximately $2.4 billion grew 28% year-over-year.”
“We incurred $38 million in transformation costs, which were almost entirely excluded from adjusted results.”
“We currently expect third quarter adjusted EBITDA to be between $3.9 billion and $4 billion.”
“Our ambition is to keep outpacing the broader industry in Asia as we have for several years.”
Q&A Highlights
Mark Mahaney (Evercore ISI): Asked about Asia and large language models.
A (Fogel): Asia fastest-growing; China not core domestically; Agoda + Booking.com two-brand strategy strong. Excited about LLMs improving discovery, personalization, efficiency .
A (Steenbergen): Too early to quantify LLMs’ impact on channel diversification; direct traffic up to mid-60%; experimenting with social media spend (+25% YoY) .
Brian Nowak (Morgan Stanley): U.S. growth initiatives + scaling GenAI assistants.
A (Steenbergen): Incremental share gains from product, supply, marketing; Q2 U.S. growth slightly improved, mixed signals (lower ADRs, shorter stays) .
A (Fogel): GenAI assistants evolving incrementally; natural language search already live; future will integrate personalization and proactive service .
Doug Anmuth (JPMorgan): Q3 outlook + alternative accommodations.
A (Steenbergen): Strong YTD but facing tough Aug–Sept comps; full-year guidance raised. Alt accommodations still outpacing hotels, but maturing (8.4M listings, ~75% of market share in room nights) .
Eric Sheridan (Goldman Sachs): Connected Trip scale and monetization.
A (Fogel): Expansion across all travel verticals; focus on personalization and SME partner enablement.
A (Steenbergen): Payments strategic for Connected Trip; cross-vertical bookings reduce acquisition costs and increase loyalty .
Kevin Kopelman (TD Cowen): Macro consumer behavior by region.
A (Steenbergen): U.S. top-end strong, low-end cautious; Europe healthy (earlier bookings, higher spend); Asia accelerating sequentially .
Justin Post (BofA): Q4 expectations + advertising.
A (Steenbergen): Last year benefited from acceleration + easy comps; this year tougher, but full-year guidance raised. Advertising revenue up 11% YoY .
Ron Josey (Citi): Natural language conversion rates + OpEx outlook.
A (Fogel): Feature working positively, otherwise would have been removed. AI initiatives being shared across brands .
A (Steenbergen): Operating leverage + reinvestment discipline (“double discipline”); $150M transformation savings reinvested in $170M growth initiatives .
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