Booking Holdings (BKNG) - Q3 2025 Earnings Call
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Call Details
Call Title: Booking Holdings Q3 2025 Earnings Call
Date held: October 28, 2025
Management team members present:
Glenn Fogel - President and CEO
Avout Steenbergen - Chief Financial Officer
Call Summary
Financial Performance
Booking Holdings reported a strong performance in Q3, with room nights reaching $323 million, representing an 8% year-over-year increase, which exceeded prior expectations. CEO Glenn Fogel noted, “Our third quarter room nights...exceeded the high end of our prior expectations.”
Gross bookings rose by 14% year over year to reach $50 billion, significantly higher than the anticipated figures, driven by robust demand across various regions. Steenbergen emphasized that the “increase in gross bookings exceeded the high end of our guidance by about 4 percentage points.”
Revenue climbed by 13% year over year, totaling $9 billion, aligning with the outperformance in gross bookings. Steenbergen stated, “Third quarter revenue...exceeded the high end of our guidance by about 4 percentage points.”
Adjusted EBITDA was reported at $4.2 billion, a 15% increase from the previous year, and indicated a margin expansion of about 180 basis points.
Adjusted earnings per share (EPS) grew 19%, benefiting from lower share count. “Adjusted EPS of $99.50 per share was up 19% year over year,” noted Steenbergen.
Guidance
For Q4, the company expects room night growth to moderate to between 4% and 6%, influenced by a contraction of the booking window. “We currently expect the four-quarter room night growth to be between 4% and 6%.”
Gross bookings are projected to increase between 11% and 13% for Q4, with a similar anticipated growth for revenue. Steenbergen remarked, “We expect growth to moderate from the third quarter...and 10 to 12% revenue growth.”
The full-year revenue and gross bookings guidance has been raised due to Q3 performance, expecting adjusted EBITDA growth of 17% to 18%, exceeding long-term growth targets.
Currency fluctuations are expected to positively impact growth rates by approximately 5% for Q4. Steenbergen mentioned, “We estimate changes in FX will positively impact our fourth quarter US dollar reported growth rates by about 5 percentage points.”
Capital Allocation
The cash and investments balance at the end of Q3 was $17.2 billion, down from $18.2 billion, attributed to changes in deferred merchant bookings.
Free cash flow of $1.4 billion was generated, tempered by $700 million in share repurchases and $300 million in dividends.
A significant $1.5 billion was paid to redeem high coupon debt that was due in 2030, underscoring prudent capital management as part of the capital allocation strategy.
Macro & Demand Trends
Demand for global leisure travel remains stable, with particularly strong growth in the U.S. market driven by outbound travel and improvements in the B2B segment. Fogel stated, “As we enter the fourth quarter, we continue to observe stable levels of global leisure travel demand.”
The U.S. segment saw higher growth rates in both domestic travel and outbound trips, which Fogel attributed to “solid improvements in domestic and outbound growth” leading to acceleration in US Booker room night growth.
Competition
The competitive landscape remains intense, yet Fogel believes Booking Holdings is well-positioned. “We just have to keep on grinding out better things for our services,” indicating continuous improvements and strategic enhancements to maintain market leadership.
The rise of alternative competitors, particularly in Asia Pacific, does not seem to diminish Fogel’s confidence in Booking’s unique value proposition, as he remarked, “We see this as an opportunity for us to create...Growth factor here if we do it right.”
AI Trends
Booking has embraced AI innovations as part of their strategy, such as enhancing customer service and user engagement. Notably, the integration of AI-powered tools has shown early signs of improving conversion rates and customer satisfaction. “What we are seeing in terms of traditional search that we still see volume growth,” noted Steenbergen.
The company has launched AI features across platforms, including a chat capability on Agoda that assists travelers promptly and confidently. Fogel mentioned, “At Agoda, for example, we launched an AI-powered chatbot that provides travelers with prompt, hotel-specific answers.”
Expense and Headcount Trends
Marketing expenses rose by 9% year-over-year but were noted to have leverage due to effective strategies leading to a favorable marketing performance. Steenbergen remarked that marketing can fluctuate significantly depending on returns.
Adjusted fixed operating expenses increased by 10%, primarily due to rising cloud costs; however, ongoing efficiency initiatives aim to optimize operational expenses moving forward.
Product Updates
The “Connected Trip” initiative continues to enhance booking experiences across multiple verticals, with growing transaction metrics. “Connected trip transactions...grew mid-20% year-over-year in the third quarter,” reported Fogel.
The Genius Loyalty Program proved to be effective, as members booked over 30% of room nights, driving repeat business with enhanced rewards, thus reinforcing loyalty.
NOTABLE QUOTES
“Our room nights...exceeded the high end of our prior expectations.” - Glenn Fogel
“Gross bookings of $50 billion increased 14% year-over-year.” - Avout Steenbergen
“Genius members book more often, convert at higher rates, and cancel less.” - Glenn Fogel
“The increase in gross bookings exceeded the high end of our guidance by about 4 percentage points.” - Avout Steenbergen
“We expect growth to moderate from the third quarter...” - Avout Steenbergen
“There’s nothing really secret about it. It’s just continue to do the work.” - Glenn Fogel
“At Agoda, we launched an AI-powered chatbot that provides travelers with prompt, hotel-specific answers.” - Glenn Fogel
“Connected trip transactions...grew mid-20% year-over-year in the third quarter.” - Glenn Fogel
“We estimate changes in FX will positively impact our fourth quarter US dollar reported growth rates by about 5 percentage points.” - Avout Steenbergen
“We see this as an opportunity for us to create...growth factor here if we do it right.” - Glenn Fogel
Q&A SUMMARY
Q: [Kevin Copelman] (Firm: TD Cowen), [Can you discuss your U.S. acceleration in detail, particularly on B2B initiatives?]
A: A: Glenn Fogel responded that they are pleased with the U.S. acceleration, attributing both B2B and B2C improvements to enhanced product offerings and brand awareness. He mentioned various B2B contracts but noted that specifics were not shared due to competitiveness, emphasizing the need for continued execution in improving services and product quality.
Q: [Doug Amleth] (Firm: J.P. Morgan), [Can you share your thoughts on the integration of OpenAI and its economic implications?]
A: Glenn Fogel stated caution is warranted as it’s early in the integration process, but they are excited about being part of the first wave of apps with OpenAI. They believe AI will provide substantial value, with Steenbergen noting traditional search volume still shows growth, providing a positive indicator moving forward.
Q: [Lee Horowitz] (Firm: Deutsche Bank), [What are your strategies to mitigate risks from hotels directly partnering with AI tools?]
A: Glenn Fogel acknowledged that some hotels will seek direct partnerships, but he feels it poses little threat to their market. He emphasized the value Booking brings, particularly with the loyalty program, which enhances customer retention and trust, making direct bookings more appealing.
Q: [Mark Mahaney] (Firm: Evercore ISI), [Can you elaborate on your use of social media in performance marketing?]
A: Steenbergen noted that Booking is actively investing in social media channels while closely monitoring ROIs. He mentioned the spending is in the hundreds of millions but still represents a constrained portion of overall marketing expenditures.
Q: [Ronald Josie] (Firm: Citi), [How are evolving web access points affecting your direct booking strategy?]
A: Glenn Fogel reiterated the importance of brand awareness, indicating that capturing the remaining direct traffic requires sustained improvements in services and increased visibility. He highlighted ongoing efforts to enhance customer experience and service quality.
Q: [Justin Post] (Firm: Bank of America), [What factors are contributing to share gains in the OTA industry?]
A: Glenn Fogel pointed out the importance of loyalty programs and product enhancements as vital drivers of share gain within the OTA landscape, emphasizing the need for consistent execution of improvement strategies across the board.
Q: [Trevor Young] (Firm: Barclays), [Do you expect competitive intensity to increase, and how are you adjusting your strategy?]
A: Fogel acknowledged that competition is inherent in the industry but expressed confidence in their strategic positioning, emphasizing the continuous iteration and improvement of services as the key to maintaining their market leadership.
Q: [David Katz] (Firm: Jefferies), [Can you provide insights on your international strategies, particularly in Asia?]
A: Steenbergen responded that they are happy with growth in Asia, leveraging localized strategies through Agoda and maintaining a strong presence with Booking.com, positioning them for future growth in the region.
Q: [Doug Amleth] (Firm: J.P. Morgan), [How is AI impacting customer service?]
A: Steenbergen indicated that AI implementation has improved customer service efficiency, reducing contact rates and handling times, enhancing overall customer satisfaction across their platforms.
Q: [Ronald Josie] (Firm: Citi), [What are your expectations for cancellation rates moving forward?]
A: Avout Steenbergen observed a reduction in cancellation rates due to improved customer experience arising from new tools making it easier for customers to book what they want, contributing to greater satisfaction.
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