Booking Holdings Inc. Q3 FY2025 earnings call

• Connected Trip: Advancing the vision to simplify travel planning, booking, and experience. Connected Trip transactions grew mid-20% year-over-year, with travelers booking multi-vertical trips more often returning for future bookings. - Genius loyalty program: Genius members book more often, convert at higher rates, and account for mid-50% range of room nights over the last 4 quarters. Over 850,000 partners participate, and the program is being expanded across verticals. - Gen AI: Applying AI to enhance traveler and partner experience. Agoda launched AI-powered chatbot, KAYAK's AI Mode, and Booking.com integrates AI features into apps. AI also helps partners with personalization and communication. - Alternative accommodations: Listings grew to over 8.6 million, with double-digit room night growth, and demand is healthy across regions. - Asia: Asia remains a growth driver, with Agoda as a strong local player and Booking.com bringing global reach, serving both local and outbound travelers.

Third quarter room nights reached 323 million, an 8% year-over-year increase. Gross bookings were $50 billion, up 14% year-over-year. Revenue grew 13% to $9 billion. Adjusted EBITDA was $4.2 billion, up 15% from the prior year quarter. Room nights growth was broad-based across major regions, with Europe and U.S. up high single digits, and Asia and Rest of World each delivering low double-digit growth. Merchant gross bookings increased 26% year-over-year in the third quarter, and merchant payments business is foundational, generating incremental revenue and contribution margin dollars. Alternative accommodations listings grew to over 8.6 million up approximately 10% year-over-year with double-digit room night growth. Flight tickets booked across platforms increased 32% year-over-year, and attractions vertical tickets booked grew nearly 90% year-over-year.

• Fourth quarter: Expected room night growth between 4% and 6%, gross bookings increase between 11% and 13%, revenue growth between 10% and 12%, adjusted EBITDA between $2 billion and $2.1 billion. FX is expected to positively impact U.S. dollar reported growth rates by about 5 percentage points. - Full year 2025: Increasing full year guidance. On a reported basis, room nights up about 7%, gross bookings up about 11% to 12%, revenue up about 12%, adjusted EBITDA up about 17% to 18%, adjusted EBITDA margins to expand year-over-year by about 180 basis points, adjusted EPS up slightly more than 20%.

• Competitive risks from AI and other players, such as hotel partners potentially bypassing platforms like Booking Holdings. - Macro-economic uncertainties and geopolitical developments that could impact travel demand.

Q: Kevin Kopelman asked about U.S. acceleration, B2B initiatives, and B2C drivers.

A: Glenn Fogel and Ewout Steenbergen discussed U.S. acceleration being due to B2B and B2C growth, B2B initiatives being good but not highlighted much, and B2C growth from improved product and brand awareness.

Q: Douglas Anmuth asked about AI app integration with OpenAI and economic impact.

A: Glenn Fogel said it's early, and Ewout Steenbergen mentioned traditional search volume growth and small but growing leads from large language models with early positive signals on conversion and satisfaction.

Q: Lee Horowitz asked about risk of hotel partners bypassing platforms and mitigation.

A: Glenn Fogel said it's an overblown threat as Booking Holdings provides value with Genius program and connected trip, and people still come direct.

Q: Mark Mahaney asked about social media marketing and Asia performance.

A: Ewout Steenbergen said they experiment with social media, focus on ROI, and Asia has strong growth with Agoda and Booking.com serving local and outbound travelers.

Q: Ronald Josey asked about attracting non-direct traffic and AI impacts.

A: Glenn Fogel and Ewout Steenbergen discussed balancing direct and other channels, and AI improving conversion, reducing cancellation rates, and enhancing customer service.

Q: Justin Post asked about U.S. market share and revenue take rates.

A: Glenn Fogel and Ewout Steenbergen talked about U.S. growth from service and brand, and Connected Trip driving growth in other verticals and revenue take rates.

Q: Trevor Young asked about competitive intensity and strategy.

A: Glenn Fogel said the industry is competitive, but Booking Holdings has scale, data, and AI as advantages to position for growth.