Q4 2019 Earnings Call

[music].

They tend to 19 conference calls booking holdings would like to remind everyone that discussion may contain forward looking statements with Amega West went to the safe Harbor previous himself the private Securities Litigation Reform Act off 1995.

These forward looking statements I met guidance here, a few true performance and that's how thick to thin interest I'm sitting pits and assumptions that are difficult to predict therefore, I told itself may differ materially from those expressed implied or for gosh.

In any such forward looking statements.

Express themselves, you do goals or expectations, and similar expressions, reflecting something other than historical side I intended to identify forward looking statements.

For a list of factors that could Glus booking Holdings act to all the with close to differ materially from those described in forward looking statements.

It's important to the Safe Harbor statement at the end of booking Holdings earnings press release.

Well, that's looking holdings. The most recent filings with the Securities and exchange goodness I am I missing quite by law looking holdings undertakes no obligations to update publicly any forward looking statements.

Whether as a result from new information future events or other wife, a copy of smoking holdings anything spread to list to get a weird and accompanying financial.

And statistical supplement it's available into for investors section looking holdings website, www booking hogging sat com and now I'd like to into doesn't looking clogging speakers for this afternoon, Glenn Fodor I'm, David Bolton go ahead gentlemen.

Thank you and welcome to booking holdings fourth quarter Conference call.

Joined this afternoon.

It would be.

We had a strong fourth quarter as we booked 191 million room.

Which is up 12% year over year and exceeded the high end of our garden trends.

We produced over $3.3 billion in revenue and approximately $1.3 billion EBITDA, which are year over year increases of approximately 5% and three person on a constant currency basis, respectively.

I would talk first about our full year performance in 29 cheaper than about or objectives for 2020.

I will address the current situation regarding the claim survivors.

2019 was a good year for our company, we booked 845 million room nights for the year, which is 11% more than 20 each.

Just to put that in context that means we booked on average more than 2.3 million room nights each day.

We produced strong year over year growth across our key financial metrics non-GAAP revenue and adjusted EBITDA grew up 8% and 6% on a constant currency basis, respectively.

Our non-GAAP EPS was up 15% on a constant currency basis exceeding our guidance for the year.

Our EPS growth rate benefited from over $8 billion share repurchases during 2019, which demonstrates our disciplined approach to returning capital to shareholders and our confidence in our business I am pleased with these results considering the macro environment, we faced in certain geographies throughout the year.

Moreover, we accomplished this topline growth rate, while also producing solid leverage in our performance marketing spend.

Our ability to execute consistently in this environment speaks to our scale and global diversity as well as to the dedicated and talented teams we have at our company.

We made solid progress against our key strategic goals for the year, expanding the booking dotcom payment platform, improving our alternative accommodations business and further building our connected trip strategy.

We move into 2020, we will continue to focus on becoming even more customer centric company that drives loyalty and increased repeat behavior.

We can we plan to accomplish this go to smart customer acquisition, while providing the best experience in our core accommodations part it using our scale to offer the best value to our customers and making further progress in our connected trip strategy.

In addition, well we've always been a cost conscious organization in 2020, we will further emphasize the need to make sure. Our expenses are appropriate for revenue and well look at ways to streamline and make all aspects of our company more efficient.

Investing in products and processes is important for the long term, but so two is eliminating unnecessary expense during 2020, we'll be taking a close look at these opportunities.

One of our highlights during 2019 was expanding our payment capabilities at booking dot com.

Over 50% of our booking dot com gross bookings now occur on properties that are on needled on its payment platform.

A percentage of booking dot coms gross bookings process on its payment platform grew for approximately 10% in 2018 to over 15% and 29 team and we expect this to reach approximately 25% in 2020.

As we've discussed this platform provides payment options favored by both our customers and property partners, particularly non hotel property partners and provides a platform for merchant product offerings.

Yes, and offerings also provide booking dot com with merchandising capabilities and we expect to continue to increase our investment in this capability to drive growth. This payment platform is foundational for connected trip strategy in which we envision a frictionless customer experience across multiple products that we believe will drive increased.

Loyalty.

Oh alternative accommodations business grew solidly in 2019 and has large scale.

As of December 31, 29 team, we had 6.3 million listings in our alternative accommodations business, we remain focused on increasing the quality and variety of properties joining our platform. So we can provide the best choices for our customers and drive search conversion booking dot coms alternative accommodations business recorded.

Approximately $3.1 billion in revenue in 2019, representing approximately 21% of our overall revenue for the year and a solid growth rate a 14% when expressed in euros. It consistently grew faster than our core accommodations business throughout the year and also maintained a healthy profit.

Margin.

We believe presenting both alternative accommodations and traditional properties on one platform is the best customer proposition.

Last year, we took further steps to create our vision of the connected trip where on a journey to build a multi product offering including accommodations flight attractions ground transport and dining well connected by a seamless payment network and supported by personalized intelligence to provide a frictionless customer experience that we believe.

Drive enhanced loyalty and support growth.

We saw early signs of these benefits last year as we leverage the integration of rental cars dot com and booking dot com to deliver a better ground transport offering for booking dot coms customers rental car days grew 12% year over year in the fourth quarter, primarily due to the increased cross sell the product booking dot com customers. We believe we.

In the early stages are seeing the benefit from this cross sell opportunity. We've also been encouraged by certain incentive programs that provide discounted ground transport options to bookings to bookers with higher value accommodations. These programs have shown an increase in conversion at acceptable our lives we look forward to further.

Presentation. These types of offerings during 2020.

We also expanded our flight capabilities across the company in that 29 team.

Booking dot com launched an integrated flight product well Agoda and price line began building a global flight platform that is initially focused on the APAC region. Currently booking dot com offers a flight products in 12 countries in Europe, but we plan to expand this throughout 2020 booking dot coms goal for the year is to be able.

To expose 50% of its total customers to a flight product globally.

Developing a robust flight product remains an important investment considering there are more than 4 billion global flight passengers last year, having the ability to engage with these customers early in their travel journey gives us a better opportunity to cross sell or accommodation and other products, but even more important it enables us to offer a true connected trip experience.

This year, we will continue to expand other aspects of the connected trip such as attractions and dining options for these offerings, we will utilize not only our own assets, but also partner with third party providers. So we can offer the best customer experience possible, we continue to see loyalty benefits from a combination customers.

Who also use our attractions product.

We will continue to invest in our App platform as it becomes the center of our connected trip experience booking dot com remains one of the most downloaded travel apps in the iOS and Android stores globally.

According to a leading third party research for booking Dot com was the only OTI to rank in their top 10 travel apps in the world ex China in 2019 coming in and number three we've been investing in the <unk> platform for some time as is becoming the preferred platform for travel bookings and we're very pleased with a strong.

Room night growth that occurs on booking dotcom.

As I mentioned earlier all of these investments are designed to drive greater loyalty and increased repeat behavior with our customers. We made progress on this front last year in each quarter of 29 team our direct channel grew faster than our primary p. channels and our direct channel increased it share for the.

Here.

Direct channel represents over 50% of our total book room nights, and when including rooms booked through branded search terms this number increases to over 60%.

We have a large on loyal customer base today, but we believe we can grow. This further an increased market share booking dot coms best and most loyal customers are part of its genius program. This group of customers has grown consistently for several years in 2019, we had over 70 million active genius customers.

Increase of 9% year over year.

These genius customers were responsible for a growing proportion of booking dotcoms booked room nights in 2019, and we thank them for their loyalty.

On top of that we see that genius customers book more frequently and more often on a direct basis when compared to nine genius customers. We will continue to focus our efforts on growing this special group of customers and offering them great value as part of their genius membership.

Well, we are pleased about our long term prospects, we recognize that current travel demand has been impacted by the Corona virus at the present time greater China has been affected the most the broader APAC region has also been impacted which is an area in which we had been experiencing strong growth over the last several.

Years, and we're now starting to see a slowdown in travel globally and are aware of the potential for further demand deceleration around the world David will provide more details in his remarks, but I would like to point out. This is not the first time our company management team has faced an exaggerated impact to travel demand.

We know the travel is fundamental to People's lives and we believe travel industry growth will rebound to prior growth rates, while the Corona virus impacts travel we will continue to manage the company in a measured way that builds value for the long term. However, the steps we're taking today include one.

Making sure we take care of our customers and help them with their travel plans, which includes facilitating cancellations and working closely with our supply partners.

To ensuring that health and safety of our over 26000 employees around the world three managing our marketing efforts appropriately we will continue to participate in those p. channels that provide us quality traffic and attractive our allies, recognizing that we need to incorporate higher cancellation rates.

In our bidding calculations in regards to brand marketing, we will be very cognizant of when and where brand marketing money should be spent this year.

For working with our travel suppliers. So they are best positioned to achieve success on our platform.

And five continuing to invest for the future.

The company that provides a better travel service a holistic seamless frictionless connected trip that delivers more value to both a traveler and our supply partners will create a lasting relationship with both travelers and suppliers and we intend to create this service overtime.

With that I will now turn the call over to David for the financial review.

Thank you Glenn and good afternoon.

I will review our operating results for fourth quarter in 2019, and then discuss all four of them 2020, our guidance for the first quarter.

All growth rates relative to the prior comparable period, unless otherwise indicated information regarding reconciliation to GAAP can be found in our earnings release now onto our results for the quarter.

Our book room night growth of 12% in Q4 exceeded the high end our guidance range as growth accelerated through the quarter with a strong finish in December.

Our room night growth in Europe continues to exceed our expectations. Despite that continue to exceed our expectations in Q4, despite the macro environment that remain cautious.

The growth rates for the rest of World also exceeded our expectations I'm grew slightly faster than Europe in Q4.

Average daily rates for accommodations will aid yaws, we're down about 4% year on year in Q4, and constant currency basis, which was inline with our guidance.

Indicated all opportunities cool the year over year HDR decline was impacted by decreases in rates within several key markets such as the U.S., Japan, Hong Kong as well as an increasing makes to faster growing lower NGL markets and the impact of lapping, 1% and you all growth in Q4 of last year.

Changes in foreign exchange rates reduced Q4 growth rates and U.S. dollar by approximately one percentage point versus last year, we estimate the changes FX rates impact to gross bookings revenue and EBITDA growth in Q4 by similar mouse dps growth by less than one percentage points.

Q4, gross bookings grew by 6% expressed to us daus and grew about 7% on a constant currency basis coming in above the high end our guidance range.

Consolidated revenue in the fourth quarter was $3.3 billion I grew by 4% to U.S. dollar and about 5% on a constant currency basis.

Advertising and other revenue, which is mainly comprised of kaka open table grew by 3% in Q4 as we lap the benefits of the hotel combined acquisition in December.

Adjusted EBITDA for Q4 was $1.3 billion, which exceeded the high end on guidance range I'm was up 2% year over year on reported basis and about 3% on a constant currency basis.

[noise] performance marketing expense increased 2% year on year, which helped drive leverage about 40 basis points in the quarter. The your and your growth was driven by higher than expected volumes you don't pay channels.

We spent $86 million on brand marketing the quarter, which represented a decline of 31% versus Q4 last year and contributed about 130 basis points of leverage.

This decrease is in part driven by ramp up in spend in the second half of 2018, we remain committed to investing brand marketing disciplined manner going forward.

Sales and other expense decreased 1% versus Q4 last year I'm confused is about 30 basis points of leverage due to reduced charge back expenses as well as a reclassification of certain sales and other expense a certain sales and other expenses incurred during 2019 into contra revenue in Q4 both away.

Which offset the increase in expenses related to the continued growth although payments platform of booking dot com.

Personnel expense was in line with our forecast growing 16% year on year I'm contributing about 175 basis points of de leverage in the quarter as expected driven in part by lower at year end reversal of bonus accruals than we experienced in Q4 2018.

Gee I expenses increased 16% year over year on non-GAAP basis, which excludes a 21 million dollar travel transaction tax charge in Q4 of 2018.

Non-GAAP Gionee expenses contributed about 60 basis points de leveraging the quarter. This year over year increase in June a was driven largely by a higher indirect taxes, including the French DST.

Finally information technology expenses increased 42% year over year, driven by several items important grows the business, including payments to contractors software license fees outsource datacenter and cloud costs.

Our non-GAAP, yes was $23.30 a four cents all reported and constant currency basis versus the prior year non-GAAP net income reflects the non-GAAP tax rate of 70.7% in Q4, which is significantly higher than Q4 last year due to a onetime adjustment of approximately $72 million in Q4 2000 and.

18 related to a provision to the tax act that was clarified by revenue guidance issued in Q4 2018.

Q4 tax rate was about one percentage point law. The guidance you some discrete items or 9% lower share count in Q4 benefited EPS growth in the quarter.

On a GAAP basis operating income increased by 3% and got or operating margins decreased by about 50 basis points compared to Q4 last year.

Q4, GAAP net income amounted to $1.2 billion or $27.75 per share of 81% from Q4 2018. Our Q4 GAAP net income includes 360 $326 million of pretax unrealized gains on equity investments in metro and see trip.

$47 million of FX, remeasurement losses or euro bonds.

We excluded these unrealized losses on Remeasurement gains from non-GAAP results.

We had a GAAP tax rate of 17.5% for the quarter, which increased significantly from the prior year due to the tax impact of the items excluded from non-GAAP results as well as the facts as I mentioned the impact is it on GAAP tax rate.

In Q4, we generated $1.1 billion operating cash flow, which declined 1% compared to Q4 last year, our free cash flow cash flow from quarter was about $1 billion, which decreased by 1% compared to last year, mainly due to timing of a payments, which reduced gross bye.

15 percentage points.

We repurchased $1.3 billion, most talking Q4, bringing the total repurchases through the year over $8 billion. As then yes, we had about $11.5 billion remaining under a 15 billion dollar repurchase authorization, we ended the quarter with $11.8 billion in cash and investments on eight.

Point $7 billion of outstanding debts.

Looking back at 2019, we're quite pleased with outperformance drew India as we produced steady room night growth in the 10, 12% range, we delivered a very healthy 39% EBITDA margin, while investing in the business and absorbing unplanned DST expenses and we grew our non-GAAP EPS by 11%.

Our around 15% on constant currency basis, which exceeded our annual guidance of low double digit growth.

Turning to 2020, our initial outlook, reflecting a continuation of this more of this operating model I eat to gain share and accommodations with some deceleration in room night growth to invest in payments merchandising I wonder could actually trip Freddie maus pressure on operating margins.

EPS growth to benefit from our share repurchases.

Due to a few mechanical factors, including the lapping of Aer declines on the phasing of first LNG. They expenses during the year, we expected earnings growth to be wagered, largely to second half of the year.

Now turning to more recent events. The Kuroda viruses has an impact across all business since it made news headlines on January 21st.

The only impacts were raised in China, but we also sold these impacts across Asia and to a lesser extent and in other regions outside of Asia as well.

Help me context, the APAC region represents a little over 20% of our room nights with no single country accounting for more than a mid single digit share of total room nights.

In APAC, we've seen an increasing cancellations reduction in new bookings I'm pressure on Agios.

Are you will note, it's not possible to predict where and to what degree outbreaks of the CRO to vars will disrupt travel patterns.

While the while the incidence of infections are slowed in China and last week alone new outbreak. So it could in south Korea around and Italy.

We've been able to measure the impacts on our business so far in Asia, and we've seen our recent impact a room night, a room night bookings in Europe. Following the outbreak in Italy. As a result, we're providing only a near term outlook with a widely guidance range to account for the possibility there will be a growing travel disruption in Europe.

Based on where we are in the quarter and considering the continued impact the grown of ours. We are forecasting Q on book room nights to be down 5% to 10% versus the prior year clearly, we're dealing with a very fluid situation and it's extremely difficult to predict where Q1 will come out but this is our best estimate based upon the data we have available now.

We forecast total gross bookings declined 8% to 13% on a constant currency basis, and about 200 basis points more in us dollars. Our Q on forecast assumes that constant currency also company will be down about 4%.

We forecast Q1, non-GAAP revenue declined 3% to 7% on constant currency basis on declined 200 basis points more in us dollars.

Q1, adjusted EBITDA is expected to range between $560 million and find a $90 million, which is down 16% to 20% year over year on a constant currency basis, and about 200 basis points more in us dollars.

We are forecasting Q on non-GAAP EPS were $49.05 to $9.65, which is 14% to 19% below Q on 2019 on a constant currency basis, we estimate Q1, non-GAAP EPS to decrease year on year by probably 12% to 17%.

Our non-GAAP EPS forecast for Q1 includes estimated income tax rate approximate 18.5%.

Our Q1 longer coffee guest guidance assumes a fully diluted share count about 41.6 million shares which is 9% below Q1 of last year.

We forecast GAAP EPS to be between $7, a 95 cents an $8.55 for Q1, our GAAP EPS guidance for Q1 assumes a tax rate of approximately 18.5%.

We use a dollar to euro exchange rate of $1.10 when setting our Q1 guidance, we have hedge contracts in place to substantially shield, our first quarter EBITDA and net income from any further fluctuation in currencies versus the dollar between now and you ended the quarter for the hedges do not protects our gross bookings revenue operating profit from the impact of foreign currency fluctuations.

Finally housekeeping item, starting with Q1 results and going forward, we plan on reporting our performance on brand marketing expenses on a combined basis as we view, our overall marketing spend as an investment in customer acquisition and retention.

We'll now take your questions.

Operator.

I kind of minded I asked the question you will need Progressive star one telephone.

Question Best filing.

This is Tom compiler through any roster.

Okay. That's our first question comes from the line Afua Ahwoi Weinstein from Deutsche Bank. Your line is open.

Hi, Thanks, So I guess just the first question a bit of a clarification I think David you said something about.

You know seeing expecting some share gain with deceleration in room nights.

I wasn't sure if I heard that correctly is that kind of before the impact of the virus or including the impact.

Of the drivers.

Anything you can kind of share there and along the same lines.

Hey, ex the virus are you seeing anything.

In particular, changing with marketing ROI based at some competitors pullback in certain brands in certain geographies.

And then I get a second question if I can go just the anything particular changing with regard to some of the CEO channel impacts from last quarter are you seeing that spread to either new geographies or or change in intensity anything you could share there would be great. Thanks.

Sure Yes. Thank you, let me sort of answering the first question. So yes to clarify what I said was when we turn to 2020, we talked about our initial outlook, which is our outlook you hopefully at the softer year, obviously around the times reporting all plans to get a fall the yet we talked about that reflects a continuation of the same operating model we delivered in 2019 so.

My comments about gaining share in combinations with some of deceleration room nights, some modest pressure on operating margins and EPS to benefit from our share buybacks, which give you a flavor of the shape our profile for the coming into the year before the Corona Vars.

Yes, and then on the on the Seo challenges to pick up your your second I just want to kind of remind people. The as we said the FCO channel is a relatively small for all of our business and has been for a period of time.

Yes, Joe channel continues to be under pressure.

As.

The primary provided that shall folks more upon that that page search for all than than research, but we continue to do well not shall we have teams dedicated to it.

We are pleased with our share in that channel as a channel. It is under continued pressure as we said before really contribution rate might have part of our overall business.

Okay, and then anything on marketing ROI outside of the impact of the virus like any competitive dynamics.

Yeah, we saw that maybe going Thats currently again I'll talk about Q on Q4, because obviously Q4 was well, it's very clean quarter relative and not having a virus and it's only a few weeks behind us. So I think it's a good time still talk about Q4.

We were pleased with the ROI is in the challenging in Q4, we didn't see any major shifts we mentioned we saw continued.

Leverage in our performance marketing spend because all performed smoking shells continues to grow less rapidly than down the overall business, though the leverage that we saw that we demonstrated was cabot mixed driven leverage mathematic leverage.

ROI is.

Didn't really change very much in in a Q4 nothing to really note, we're pleased with where wet weather with where the world.

And I think there was that the jet Genesis of your question, where you're also acting asking about current quarter as well.

That's great.

I'll assume that viruses, making things pretty messy, but unless you want to add something.

No I just wanted so there I think thats the right place to stop.

Great. Thank you.

We do have another question from the line off Mike My hand, you from RBC. Your line is open.

Thanks, I wanted to ask about two things.

This kind of attach rate with the connected trip and how how.

How far along you think you are in tapping into that opportunity I notice to both rental car days, an airline ticket growth.

Unit growth rates nicely accelerated in December quarter to take that is much easier comp in airline tickets, but you called out to some kind of greater cross selling opportunity should get it with rental car. So just talk about how where you are in a process of doing that is it.

Small percentage that you've even attempt at this at so we can get a sense of how much better the results could be in rental cars and then Glenn when you were talking about the outlook you seem to emphasize a little bit more streamlining costs. In 2020, I don't think that was related to Corona virus I think it's or maybe it was but I don't think it was sounded like you.

Want to take a b a little bit more.

Careful about costs or something like that could you just explained the why behind that why get a little bit more focused on streamlining costs. This year versus last year, unless it was all krona virus, but I didn't get that impression. Thanks clynt.

Hi, Mark let me take the first one the attach rates et cetera, and I think you called out correctly.

The rental car business has shown some good numbers you look in the supplemental statistics and the end of our press release and you can see some nice growth there and part of that growth is coming from that cross sale part of our connected trick that we're building out and you're also correcting your statement about the air because their business sows early we.

Just really are getting that up and running that you're not really seen any of the increase there from from that are knocking off to matter right now.

It's very very low attach rates when I look at those numbers I believe overtime, we should increase those significantly and it's going to take some time as we continue to optimize here, what's the best way to present, it where the shell with one of things I'm very proud about is the center we've built in Tel Aviv today is filled with.

Bunch of machine learning experts.

Geniuses, who really look at all the different parts of the way, we present things and they're trying to come up with what is the best way to present, an offer to a trial were at the right time, putting in what is the right merchandising benefit that we should do it to get the REIT conversion and the right bottom line, it's something that the more data we get the.

Better we'll know what the right thing to do but it's something that's going to take time. So that so that's the answer to that one regarding costs. You're also absolutely correct on that one other things when I took the job over in Amsterdam, as CEO of booking dot com and I've been there now will more than six months is looking at what are you spending on where.

We spending what projects on which ones are the right ones, which one should we not be doing right now and then taking that throughout our entire organization.

Always believed that you should be a cost effective company and I believe it's also very natural as companies grow very rapidly and achieve great success on the bottom line, sometimes discipline lightened up little bit. So certainly before the call virus I was already thing that we need to make sure that we're doing everything we can to spend.

Tony correctly, one of things I've mentioned in the calls over the last couple of quarters is us, bringing all of our companies together better and that in one of the benefits that is to get some efficiencies in our spend a real cost procurement type projects and in the past we've run all these companies independent.

And that was the right thing to do at the time, but while doing that you do lose out on some cost efficiencies now the state of the company, where it's at now it's time to start bringing that in and that's what we're going to be doing.

Okay. Thanks Clynt.

We do have another question from the line of Kevin Kopelman from Cowen Your line is open.

Great. Thanks, a lot could you give us more color on the latest trends in Europe travel bookings that you've seen over the last few days following the outbreak as the current a virus in Italy. Thanks.

Yeah. Kevin This is David let me take take that's we just got maybe frame is in the way that the quarters shapes up and we are now projections do take into account what we're seeing the last few days.

So let me kind of give you a lay of the land first of all by region not surprising we already mentioned the Chinese was impacted.

Asia, Excluding China has also been impacted for some time.

The rest of World. It's always includes Europe in Europe is a big piece out for us.

Was growing through February.

But we also expect it to be impacted to negative in March as well as to give you a bit more color and some just how it plays across the quota.

On a consolidated basis, we saw we of course will remain in January room night growth in January even though we saw some tapering off at the end.

With the virus in the news on the 21st.

Expects beverage should be approximately flat from a road from brokering point of view and therefore to get through our guidance for the quarter expect to see declines in March.

Got it and so that and that that March expectation is based on just the worsening kind of trends over the last few days.

Yes, I mean, we really obviously as I mentioned, we're dealing with a very fluid situation very difficult to predict what's going on because we're responding somebody that we have no control over.

Give me your how best view art. So when we when we have a where we built is what we expect to happened in March and create the guidance range. We're looking very specifically a what's happened over the last few days after the outbreak in Italy and the response, we've seen in Europe in response to that which is not surprising how it has been negative. So yes, we are.

Expecting.

We are seeing even though we're going to get a room night growth through rest of world in February towards the end of fabric that was already in the decline we expected to continue to decline into March.

Got it thank you.

Our next question comes from the line of testing <unk> from Bank of America. Your line is open.

Great. Thank you a couple of questions I guess it would be helpful. You could give us a view on past behavior. When you've had traveled disruptions and people cancel their trips or your most loyal customers don't book, how long does it take before they start going on trips again or do you see a timeframe where people castle and then and then rebook.

I know you can't be too specific but but any thoughts on that and then second it's interesting your main competitor pulling back spending a you're talking about some cost savings.

You think theres inefficiencies in marketing or other channels in travel and maybe the industry as a whole could benefit as people take a deeper look at their cost. Thank you.

Hi, Justin.

I think it'd be it would not be wise to dry news past.

Experience as an analogy for what will happen in the future.

The situation now is very different say.

Now been in this business in fact this week, you'll be 20 years I've been at this company My anniversaries Friday 20 years, and so I've seen a lot of Exone just factors I manage them impacting travel some extremely severe and I won't go through all of them because we use of the entire time for the call that being said they all have different.

Facts and different rebound time periods. So it's not going to be helpful. For me to tell you what took after 911 or after the GFC or after swine flu or after the volcano nicely imac and go on and on and on I'll stop there. So I really can't be that helpful and you'll just have to make.

Sure on best guess admits which will be as good as anybody else's guesstimates.

Regarding spending.

We have very high margins compared to anybody else in the industry, but that does not give us a license to waste money and I want to continue to always be looking are we spend incorrectly every single part of this company and so we can then spend the money in the right places right time interests and marketing there probably is a lot of.

Waste in the industry, probably and I think we can see that some people who are probably going to be pulling back in turn into their marketing.

We like to think that we've been efficient and effective but I think there's always room everywhere to do better and we're going to continue to do so thats only the right way to try and have a long term successful company.

I am confident though that regardless of what the.

Towards your first question I am confident that business will be coming back is something that we've seen over and over and over again as I said. Many many times here travel is a basic need for people. They have been doing for a very very long time and as soon as the air clear.

So to speak you will see people will be coming back to travel.

Great. Thank you.

We don't have another question from the line up right I know rats from Morgan Stanley. Your line is open.

Great. Thanks for taking my question I too. Please David just appreciate the month over month commentary for the for the first quarter that maybe just so we can all sort of better understand that the underlying durability of growth how big of a have a room night and EBITDA headwind have you put into the guide to factor in Corona after the first.

Quarter and then the second one Glenn this is there a talk about opportunities in sort of untapped geographies talk to us about how you think about the the important any opportunity to focus more on the U.S. from a branding and our performance marketing perspective, this year to perhaps take more share in that area. Thanks.

Okay. Thanks, Brian I'll take the first part of it Oh I'm going to try to avoid gains or specific growth rates by by month I've. Given you a flavor I think you can do some back the on with Mastercard figure out what March has to look like in terms of getting to a minus five to minus 10% range.

Why do we look to this is this a we has we have as I mentioned in my answer to Kevin have looked a very much. So what's happened to the last few days and anticipated at the lower end the range that the travel environment in Europe may get worse, because we would be surprised if there's only one outbreak in the Europe over the course of the.

Rest of the quota so we've taken.

Into accounts, what we still happening over the deal the last week, which of course is led by a lot of cancellations. So.

Over time, you may all be quite as bad as we're seeing in English the last week, because you see obviously to the different growth rate on underlying bookings visibly cancellations.

Early reaction to these views pads is usually you got to spike cancellations and things can more moderate out, but we've taken into account what we've seen happening over the course of the last week, we projected that through the rest of the quota and I recognize the impact it may get worse. If there are additional outbreaks in in Europe or for the slowdowns in the rest.

Of the World, that's how we try to intelligently give you some guidance data points from obviously they were getting is moving very rapidly but is it is the best data that we have as up until this morning.

In regards to our opportunities around the world. The us is without doubt our biggest opportunity is enormous market that we under indexed significantly.

The reason for why we have not achieve what we'd like to yet.

Historical it's you know booking dot com was always a hotel only company.

And we didn't have an air product. There for example, many Americans like start their travel business.

Oh using air So we now we're gonna be bringing out in air products overtime that will be one second thing is extremely price competitive price sensitive consumer in the U.S. booking dotcom historically in agency a player meaning the price was set by the hotels or by the non hotel.

Accommodations.

We believe that we have to be able to merchandise, meaning adjusting what that value to the consumers going to be but to do that you've got to have a payment product who is only last quarter that we got up running the domestic payment part for us consumer. So that's another one another big issue packages.

Many Americans like to use a package park or like to do some toward a combination that we'll get the more value well. We're just starting that now want to things I'm very proud about is working between price line dotcom and booking dotcom to come up with a package product for the years consumers that we're just getting that out. The other thing is we have other assets to help bring.

<unk> consumers to our sites and make them aware of the great things. We have won the for example open table a lot of people are using open table every month in the past we've never done anything really bringing together the power the open table platform and the booking dotcom platform whey, they will provide more value the consumers so long.

So things that we're working on because I do believe the U.S. is a great opportunity for us to help build out our business.

Great. Thanks, guys.

We have another question from the line of testing, but his line from mainland team. Your line is open.

Great. Thanks, so much a one on connect that threat first how should we think about scaling supply through your own assets, a third party partners on the attractions and dining side.

Partners than there is there anything any that control to ensure optimal customer experience I'm in the second questions on marketing. That's your direct channel next growth and your payments. That's that's growth how should we how do you think about that incremental ROI of you, saying coupons to drive conversion versus say attracting customers via Brad.

Performance marketing thanks, so much.

I wanted to first I'll, let David BRC of where you can talk about how we're going to optimize answers the coupons.

You're right in terms that.

In an ideal world you would like to have all of your supply directly connect to us and you prefer in an ideal world not to be using third party suppliers that being said thats a balance against speed to market and making sure you have to supply necessary to create a good.

I would offer to the consumers so in the interest to speed, we have gone with third party.

Providers to provide inventory that we don't have I mentioned open table, a while ago will open table has a great product and they are they do a lot of business a lot different cities, but also licensees around the world that they don't to business and we want to provide that dining opportunity to our consumers in as many cities as we can so we will partner with others attractions.

The same thing we had our own I'll contrast, with supply, but there are a lot of placing them a world where people are traveling so to make sure that we have supply we're going to third parties overtime. We believe that in the long run having your own supply helps you can turn into creating that truly seamless connected.

Trip.

But speed matters in this market, so we're going to do that too.

Yeah interested on the.

All the different marketing channels, we first of all.

We're very pleased to build our direct business is very important with future. The connected trip in the App and all things are driving that direction, but the performance marketing channels are also really important source of acquisition of new customers for us and sometimes some existing customers can come back to that and that as well.

But to answer your question, we look at all these on a very measured incremental ROI basis, we can really measure a different activities I'm competitive on a very comfortable basis. So when it comes to things like coupons or other attractions. We may only offer through all our channels. We just look at the ROI on that because of the other channels and decide where we lead in all.

Although as the case, maybe I'm. So we have pretty good metrics on all things like that because we are able to measure the short term return on those investments again longer term, we're looking to drive people towards the Dart channel, particularly towards the App and Glen mentioned, how well downloaded that that that the isn't how is becoming very much.

A powerful app in the travel space and as the connected trip becomes a bigger piece the business in the out becomes a way to experienced the connected trip in.

During the trip, it's even more strategic.

Tacitly, we can look at all these different things, including things like couponing on a very measured based and decide to lead in baseball, which ones give us the both a shortlist.

Short term returns it also create the highest level of repeat or return to direct activity. After the initial offer.

Thank you.

Our next question comes from the line of Deepak Mathivanan from Barclays. Your line is for them.

Great. Thanks for taking the question David last year, you talked about achieving double digits earnings growth and then exceeded it pretty nicely I expect facts I understand the situation is a little bit more fluid right now and the coloring provided on the operating model was helpful. How should we think about those things kind of translates into earnings growth for this year and then.

How are you thinking about using the balance sheet for share repurchases you know in the near when there is like a disruption currently going on thank you.

Sure defect. Thanks, a question, let me take the first part of it. So yes, three we talked about the operating model X X expectations pretreatment of ours is a continuation of the mobile I think was quite successful for us in 2019, and I I don't want to get to two specific targets for 2020.

Because the dollar point importing hypothetically a hypothetical forecast the yet which we can never measure against a bridge you guys, because obviously you're going to come out very different from what we expected. It only a few a few weeks ago, but.

We were pleased with the way the 2019 came out if you kind of look back in Q4 look at 2019 understand the underlying health of of the business and we believe that there's no reason why that model can continue in normal times.

And then Glenn you will talk about.

Second part balance sheet, yeah. So.

We're very pleased to have a very strong balance sheet.

Significant amount of free cash.

We have very good credit rating and the question really is.

As we've always had is how should we best use our capital one of things there's always been share repurchases. Another thing that we always do is we're always looking at other companies that could potentially help.

Add to our connecting trip strategic vision, and we're going to continue to look at that.

Certainly valuations have changed significantly in the recent past and that May provide an opportunity for us in both areas, but as David said, it's a very fluid situation right now and we're not going to box ourselves into anything right. This second I will say, though however, we do look there's very very carefully because we do want to be.

Wow.

Operator, we have.

And your question please.

Yes, and we have added question from the line of Eric Hi, Ben Samuels, Yes. Your line is open.

Thanks for taking the question, maybe if I kind of Q around our cost structure and how you're thinking about investing in that business and in sort of a relatively uncertain environment is there weve used out what are some of the investment you plan on making just because they fit with the strategic vision, they're going to be made for the long term irrespective of how the environment ARX up or down.

Over the next sort of couple of quarters and how much of it is more variable in nature, where you buy tuned up or down investments, we could better understand the variable piece, but probably more likely track with how room nights, either get better or worse from the <unk>. The excellent results in Q4 versus the.

Cautionary, resulting or guide for coupon. Thanks, so much cost.

Sure So I've been talking about.

Our long term strategic vision for sometime now since I became CEO holding company.

Little more than three years ago, and how important is to create and continue to create value for all sides of this marketplace and we're going to begin to do that that requires investing in people in terms of code, making sure. We're providing something that is a differentiator from what is out there right now and there is.

No reason to slow that down stop that or hold back on that the sooner we get out that truly superior travel service the better we will be and I want to be in that position. When we come out of this current environment, which is something that is unexpected, but we'll end I want to come out of that as soon as Pos.

So with the best services that we have so we're going to continue on that we're not changing that at all now in terms of in terms of investments in terms of marketing and things like that naturally you always want to make adjustments based on what the environment is so far as high as I mentioned about brand marketing well, we're not going to be.

Making brand marketing to people, who are not listening to that message at all if you're not thinking about traveling you're not listening to a travel add its foolish for us to invest money in a brand marketing campaign and that's an example extreme on the other side and in between there always different things in between that we're going to be making adjustments as we go through out.

The year and we've always been doing that and that's no different do anything to add yeah, Eric I, just maybe for a little bit of a framework around won't Glen talked about so if you think of Oh all of our operating expenses and just kind of look in 2019 for second about $9.5 billion.

So a little over half of our Opex is really variable with volume, obviously outperforms maxing change, we are going up and down of embarked easily no volume related but obviously, there's Glenn just said no point spend a lot brown if people not primarily think about travel a large piece of our sales I know expenses is also relates to volume as well because that ties back to the.

Motion processing costs on our payment platform, so well over half of our Opex really is directly tied to the volume within the business now obviously there are volume related.

Aspects in the other areas, which is mainly in our personnel Gionee I T et cetera, and obviously, there's some fiction and there's some variable expenses there, but if you think about our cost structure. It really is quite variable the larger expense items being tied to volume quite directly.

<unk> costs in the areas are not to not tied directly there are things we continue to do to refine and optimize has been talked about.

Thanks, so much guys.

We do have another question from the line of Navios <unk>. Some sense. That's your line is open.

Yeah. Thanks, a lot a couple of questions. So David in your commentary you spoke about.

Maybe 2020 seeing payments process, we had on.

And then talk from going to 25% what are the levers that you control to kind of get that from 15% in 2019% to 25%. This year and then the other question I have just maybe can you shed some light on your maybe earlier there was from the graph partnership how that might we be working for you.

Oh, So let me start off with the payments platform actually Glenn was when we gave them the numbers out, but let me, yes, but let me just kind of talks about how we see it.

Developing I'm would impact will have on on our income statement. So.

As you see we basically had a growth from 10% in 2018 15.

In 1925 in 20, we expect always you to exit 2020, a heightened 25% payments that's the average for the year.

Might be helpful. Just to understand a little bit of up but well that's doing to income statement 'cause there's always some questions about I'm prior in prior calls.

2020, we expect said payments actually to contribute both to both revenue growth as it has been but also to start contributing to EBITDA growth as well.

With very little impact at all upon our EBITDA range in 2020 will contribute towards EBITDA growth as we recover an ever increasing percentage of our payment costs. So that's how to think about payments are rolling through up a business. Obviously, there's still a very attractive nature in agency model as well so one vertical.

Completely replaced yellow, but as Glenn said for all sorts of reasons, including the ability to participate merchandising and also to be able to packaging control things together in the via the connected trip a payment will become an ever increasing part of business and we're pleased with how is progressing and we're on track to get its assays will start to contribute towards EBITDA growth, which will.

Start doing this year.

And regarding the grab relationship I'm very pleased about how that's been progressing and remember we invested in grab for three reasons. One reason was grab has a significant number of customers and we want to find all different ways that we can get expose our hotel accommodation over our travel services.

To customers in different ways and that certainly was a great way to do one.

Things that are travelers when they arrive at a place that they're not familiar with they want to know how are they going to get around and many people sometimes mistakenly assumed that whatever ride sharing capabilities have in their home country is going to be in that place. They go visit and it's not going to be done and I can know what they're going to do and then the a figure what am I gonna do.

And one of the great things as we said that we would come up with Graham away. Their first can use the booking dot com App is seamless way can get a ride sharing without having to download another app and put a credit card and some that they're not familiar with and it'll be seamless and great experience and I mentioned last quarter, how we got made up and running in Singapore.

And the third thing of course, we said, we'd like to have a financial return on the money we invested.

One of the things I mentioned last quarter was helped by the end of year I expected us to be able to have that graph app operational in the booking dot com App abiding, therefore, Indonesia, and Thailand, and I'm very pleased that we are now actually operational in every single territory. They grab operates on the iOS platform.

Just a great shout out to the team, whose and working on that and thank you guys for getting that done ahead of schedule and really pushing that through will be will be operation for Android I think a two to four weeks I've been told and we're talking about it's not beyond Singapore, Malaysia, Indonesia, Thailand, Vietnam is Cambodia's Philippines is my more it everywhere the grab is.

And I tell you I've seen this used and it really is something that makes it. So easy you can't off that playing that airport you just go that booking dot com apps and right away you can get that Kartik. Your hotel, it's a wonderful experience and we're also on the other side being able to show our hotel accommodations to more and more grab customer so good oil.

Yes.

Yeah. Thanks.

Our next question comes on line of Defense Your from Credit Suisse. Your line is open.

Okay. Thanks, very much so Glenn I guess, how tough adversity can come opportunity so.

In an environment in which folks are going to be really starved for business are there any silver linings, we should be thinking about in terms of booking becoming a more important partner for your suppliers or being able to onboard more supply for the future and I guess for the integrated travel experience as well as the rollout of euro.

Payment Reos you are talking about transforming what the booking dotcom experience has meant for the consumer for sometime now. So do you feel like you have you have to retrain them to look for non hotel products or pay upfront and do you think you need to incur some cost to bring up that awareness. Thank you.

So.

Nobody nobody wants their bills to succeed because unfortunate events nobody hopes for that.

Most of those events happen anyway, and you do end up being a beneficiary of those events.

Companies that are stronger when they enter into a bad period emerge even stronger and in this industry I've seen it happened over and over again.

There's no doubt I've talked in the past about potential recessions and what would happen in recession and why I believe that would make us more valuable to some pliers. So that they would use us more to get demand because they needed more and you have pointing out what could be a very unfortunate thing for many players in our industry. So yes.

Silver lining is one way to describe it I do believe that in the long right. We will emerge from this in a much better position a stronger competitor and we will end up even better off though of course, no whatever hope for that to happen under that some of that way.

In regards to the consumer consumers are amazing how they they learn very rapidly how to save money get value when they see a new up but it. It's interesting you don't even see announcements of them in different products. Many times, it's just you're playing around with it and you see it now we of course will be using all sorts of marketing methods.

To get make sure our customers are aware of the better way to do your travel planning your travel execution, but I have I am not concerned at all that when we have that better products I'm not concerned that people know about it people know about.

Thank you.

Yeah.

Our next question comes from the line of Doug I'm, Mike from JP Morgan Your line is something Thats.

Thanks for taking the question I'm, just wanting us to Ah first you talked about the 15% of booking dot com bookings using the payments platform can you just talk a little bit more about what you're seeing in terms of conversion rates and speed to book and then other metrics that you may look at a in payments and then secondly, Glenn you mentioned wanting to expose flight.

Ultimately to 50% of your customers just curious why that's the number.

Why you'd stop there thanks.

Well, we wouldn't actually stop there that's just might your target for this year out we do intend to have 100% of people eventually be exposed to and we want to 100% using it but this is it takes time, because a regulatory licensing things it sounds as though you can just immediately just started.

Well the airline tickets everywhere, that's that takes time to get your license is uncertain in certain jurisdictions and yeah. Let me just characterize a little bit what we're seeing on the payment platform and why we think is very important both now into future. So the benefits come in different areas and that multiple and sometimes they are additive so.

In some cases, just offering people payments in different methodologies payments in currency on their own choice or or payment.

Crosses all of their own choice recipe.

I'll offer a Chinese customer pay in Oh, you pay we jump pay or something like that just often not payment choice. Even if the underlying hotel product is the same we have seen conversion increases even if people don't use our choices with a bit like offering something in the local language and of course, we offer our site in afford.

Languages. The fact, you offer something present in somebody's native language or in this case, you give them payment choice. They recognize that the recognize is actually some of the myself will help with with with conversion. We can demonstrate does that does albeit a small amount if if if they don't use parents and then of course, if they do use parents. It helps a little bit more so you do get some coming.

Version benefits, but the other thing the payment platform bless do as well as we can also as I mentioned, we can start participating in the pricing process via merchandising more more proactively. So we can offer basically booking dot com can get involved in asked an offer booking sponsor benefits or other office to the customer you can only.

Really do if you are participating as emotion and you're taking the payments on behalf of the of the property I'm passing it through so the other thing that the payment can do the payment platform also we'll do it will help bridge a gap between a.

Across the customer and on the property in terms of where customers can pay in in that payment platform or all that payment currency of choice and we can pay out to the property partner in that payment currency of choice. So for example, again they hotel in in Italy, or or in Paris made on say overpaid.

It's a message is all that we offered to our Asian customers and we can give them virtual Craig calls in for example, a mastercard or visa formats. So they're all sorts of different benefits from the payments platform I know when I told you about that helps in the business as well is that the agency model of course leaves the payment process open to the customer to deal with the property.

And vice versa, and we actually got a lot of off a customer service requests Kohl's ought to do with on things that go wrong. So my all were not expected in that equation between the a property and the customer we went well we don't participate because we just being ages, providing the booking so we find if we made the payment process.

As we can reduce the number of customer service incidence around the payment question and actually increase the rules as the overall satisfaction on experience for both the customer and the property partner. So there are many benefits of the payment platform or let's say I mentioned a few in some cases you get all of them one transaction in some cases, you only get Wong.

But it's something that we developing rapidly inside a booking chemicals, we go long experience in payments in both Agoda and in price line. So we're taking leverage that capability, where we've already seen those benefits occur.

Thanks very helpful.

Our next question comes from the line ahead tell you from Goldman Sachs. Your line is open.

Great. Thank you.

You called out specifically the January 21st date is.

The one where you you've sort of started to see the headlines for current of Iris.

Wondering if you could share with us sort of where your expectations were then for bookings growth in a in the quarter just to get a better sense of sort of where you know the magnitude of the shifts between then and where we are where we are now.

And then.

Also on the as we think about sort of where where you're seeing the divergence and bookings growth and room night growth continuing and spreading I know in the past you've talked about obviously that being a function of cheaper 80 ours. So wondering if maybe you could get a little bit more into.

Into detail with us on that as far as how much of that is is geographic how much of that is you believe customers continuing to downshifted touchy cheaper rooms, and how much of it might be and access to inventory issue is.

Telx look to to retain.

More of their compression nights for their their own platform.

Sure, Let me say those in reverse order. So a the IDR question, probably the best place to goes back to back to Q4, because we were operating obviously and as usual type environments and without going through a long explanation because we gave a fairly long explanation as to what's happening to a $80 and why we saw a reduction in the fourth quarter and manpower.

All of it is because we were laughing a role and you increase your it goes to the for really became a three if if you normalize that and then we saw based the half of that decline due to a lower rates in the key countries, which we like us a Japan Hong Kong of course, you know again on a pre virus model and so that was one of those.

Macro about half of the decline in radiology Judah shift towards lower a our country's again. So that was also macro because some of the Hyatt a the our country's got very expensive from a on FX point of view. So when we go back and look at Q4 I look at Q3, we saw basically.

Two points of normalize reduction in 80 AWS in Q.

Three and three points in Q4, we believe about half of that was kind of macro and half of that was a mix related going forward.

So hopefully that gives you a little bit of flavors to kind of what's going on going into 2020, we expected the HDR reductions to be down to a couple of points again on a pre Corona Meyer vars bases basically just assuming that the macro piece that continued with a little bit more in the first off a little bit less in the second half due to lapping effect.

So occurring last year and just to go back to your very first part of all of the question. You know just like we try not to give specific guidance well why we were for the year <unk> pre the krona Myers than we did give you a I think a fairly good flavor as to how we thought the business would would would.

Operating during the.

Pre the Corona buyers, we try not to get into a lot bridging exercises between where we work Q1 before and and and afterwards for its worth I can tell you that we're tracking nicely ahead of our internal expectations for the first three weeks in January but as only a three week period of time. So take it full full was worth but we were running.

Slightly in front of the expectations, we had for the year, which I outlined.

Relative to when we talked about 2019, and when we expecting things to to continue into 2020, but don't want to get into a specific we thought room night growth. We would would be actually now is why because we can never really compare against a hypothetical growth we were comfortable with where the yeah was shaping up we felt good about the profile of business we talked about.

In 2020 relative to what we saw in that 2019 in the business model continuing and hopefully that gives you a flavor you can have really come to your own conclusion as to what it was but we're pleased with how things are shaping up going into 20 on the shape of 20 as we looked at the full yet.

So this concludes the remarks and I'm just want to end by saying in summary, our 2019 performance.

Met some important financial strategic goals and I'm very pleased about the steps we've taken today to provide more value to customers and our supply partners and we look forward and doing more so in the future and we're going to manage through the current travel environment and I am very confident in our long term prospects and finally I want to thank our supplier marketing part.

Owners are more than 26000 employees distributed across more than 300 offices and a very special. Thank you to a subset of those 26000 over the last couple of months have been working so hard in this environment and I want to thank very much and most of all I want to thank our traveler customers who are out there exploring ways.

World Goodnight.

Ladies and Goodbye. This concludes today's conference call. Thank you for eating you may now disconnect.

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Welcome to booking Holdings' fourth why they tend to 19 conference call booking holdings would like to remind everyone that this call may contain forward looking statements, we make what's the right to the safe Harbor sense off the private Securities Litigation Reform Act.

1995.

These forward looking statements I <unk> guidance eat a few true performance and that's how safe to say interest.

So Dave Pitts under some sense that's difficult to predict.

Therefore, I tell them. So its may differ materially from those expressed implied.

Oh gosh that in any such forward looking statements.

Expressing their goals or expectations and similar expressions, reflecting something other than historical sites I intended to identify forward looking statements.

For a list of fast paced. That's a quick question looking holdings out to all the results to differ materially from those described in forward looking statements. They say for it to the Safe Harbor statement at the end of looking Holdings earnings press release.

Well, that's looking holding some wasn't really SEC filings with the securities and exchange it can get so unless it quite by law booking clothing undertakes no obligation to update publicly any forward looking statements.

Whether as a result, oh from new information feed to events or otherwise a copy of smoking holdings anything spread to list to get a weird and accompanying financial and statistical supplement is available in the for investors section looking holdings website Www <unk>.

Looking holdings Dot com.

Now I'd like to into doesn't looking clogging speakers for this afternoon, Glenn Fodor I'm, David Gold and go ahead gentlemen.

Thank you.

Welcome to booking holdings fourth quarter conference call.

Joined this afternoon bar CFO everything.

We had a strong fourth quarter as we booked 191 million room nights, which is up 12% year over year and exceeded the high end of our guidance range.

Produced over $3.3 billion in revenue and approximately $1.3 billion, EBITDA, which are year over year increases of approximately 5% and 3% on a constant currency basis, respectively.

I would talk first about our full year performance in 29 change then about or objectives for 20 Schwartz.

I will address the current situation regarding the corridor virus.

2019 was a good year for our company, we booked 845 million room nights for the year, which is 11% more than in 28.

Just to put that in context that means we booked on average more than 2.3 million room nights each day.

We produce strong year over year growth across our key financial metrics non-GAAP revenue and adjusted EBITDA grew up 8% and 6% on a constant currency basis, respectively.

Our non-GAAP EPS was up 15% on a constant currency basis exceeding our guidance for the year.

Dps growth rate benefited from over $8 billion of share repurchases during 2019, which demonstrates our disciplined approach to returning capital to shareholders and our confidence in our business I am pleased with these results considering the macro environment, we faced in certain geographies throughout the year.

Moreover, we accomplished this top line growth rate, while also producing solid leverage in our performance marketing spend.

Our ability to execute consistently in this environment speaks to our scale and global diversity as well as to the dedicated and talented teams we have at our company.

We made solid progress against our key strategic goals for the year.

Expanding the booking dot com payment platform, improving our alternative accommodations business and further building our connected trip strategy.

As we move into 2020, we will continue to focus on becoming even more customer centric company that drives loyalty and increased repeat behavior.

We can we plan to accomplish this goal to smart customer acquisition, while providing the best experience in our core accommodations products using our scale to offer the best value to our customers and making further progress in our connected trip strategy.

In addition, well we have always been a cost conscious organization in 2020, we will further emphasize the need to make sure. Our expenses are appropriate for revenue and well look at ways to streamline and make all aspects of our company more efficient.

Investing in products and processes is important for the long term, but so two is eliminating unnecessary expense and during 2020, we'll be taking a close look at these opportunities.

One of our highlights during 2019 was expanding our payment capabilities at booking dot com.

Over 50% of our booking dot com gross bookings now occur on properties that are unable to on its payment platform.

The percentage of booking dot coms gross bookings process honest payment platform grew from approximately 10% in 2018 to over 15% 2019, and we expect this to reach approximately 25% in 2020.

As we've discussed this platform provides payment options favored by both our customers and property partners, particularly non hotel property partners and provides a platform from merchant product offerings merchant offerings also provide booking dot com with merchandising capabilities and we expect to continue to increase.

Our investment in this capability to drive growth. This payment platform is foundational for connected trip strategy, which we envision a frictionless customer experience across multiple products that we believe will drive increased loyalty.

Oh alternative accommodations business grew solidly in 2019 that has large scale.

As of December 31, 29 gene, we at 6.3 million listings in our alternative accommodations business, we remain focused on increasing the quality and variety of properties joining our platform. So we can provide the best choices for our customers and drive search conversion booking backups alternative accommodations is recorded and.

Approximately $3.1 billion in revenue in 2019, representing approximately 21% of our overall revenue for the year and a solid growth rate of 14% when expressed in euros. It consistently grew faster than our core accommodations business throughout the year and also maintained a healthy profit.

Margin.

We believe presenting both alternative accommodations and traditional properties on one platform is the best customer proposition.

Last year, we took further steps to create our vision of the connected trip.

We're on a journey to build a multi product offering including accommodations flight attractions round transport and dining well connected by a seamless payment network and supported by personalized intelligence to provide a frictionless customer experience that we believe will drive enhanced loyalty and support growth.

We saw early signs of these benefits last year as we leverage the integration of rental cars dot com and booking dot com to deliver a better ground transport offering for booking dot coms customers rental car days grew 12% year over year in the fourth quarter, primarily due to the increased cross sell the product booking dot com customers. We believe we.

In the early stages of seeing the benefit from this cross sell opportunity. We've also been encouraged by certain incentive programs that provide discounted ground transport options to bookings to bookers with higher value accommodations. These programs are showing an increase in conversion at acceptable our allies, we look forward to further.

Fragmentation with these types of offerings during 2020.

We also expanded our flight capabilities across the company in 2019.

Booking dotcom launched an integrated flight product well Agoda and price line began building a global flight platform that is initially focused on the APAC region. Currently booking dot com offers a flight products in 12 countries in Europe, but we plan to expand this throughout 2020 booking dot com goal for the year is to be able.

To expose 50% of its total customers to a flight product globally.

Developing a robust flight product remains an important investment considering there are more than 4 billion global flight passengers last year, having the ability to engage with these customers early in their travel journey gives us a better opportunity to cross sell or accommodation and other products, but even more important it enables us to offer a true connected trip experience.

This year, we will continue to expand other aspects of the connected trends such as attractions and dining options for these offerings, we will utilize not only our own assets, but also partner with third party providers. So we can offer the best customer experience possible, we continue to see loyalty benefits from a combination customers.

Who also use our attractions product.

We will continue to invest in our App platform as it becomes the center of our connected trip experience.

Dot com remains one of the most downloaded travel apps in the iOS and Android stores globally.

According to a leading third party research for booking Dot com was the only OTI to rank in their top 10 travel apps in the world ex China in 2019 coming in and number three we've been investing in the platform for some time is becoming the preferred platform for CRO bookings and we're very pleased with a strong.

Room night growth that occurs on booking dotcom.

As I mentioned earlier all of these investments are designed to drive greater loyalty and increased repeat behavior with our customers. We made progress on this front last year in each quarter of 2019, our direct channel grew faster than our primary paid channels and our direct channel increased it share for the.

Here.

The direct channel represents over 50% of our total book room nights, and when including rooms booked through brand that search terms this number increases to over 60%.

We have a large on loyal customer base today, we believe we can grow. This further an increased market share booking that causes a best in most loyal customers are part of this genius program. This group of customers has grown consistently for several years in 2019, we had over 70 million active genius customers.

Increase of 9% year over year.

These genius customers were responsible for a growing proportion of booking Dotcoms a book room nights in 2019, and we thank them for their loyalty.

Half of that we see that genius customers, but more frequently and more often on a direct basis when compared to nine genius customers. We will continue to focus our efforts on growing this special group of customers and offering them great value as part of their genius membership.

Well, we are pleased about our long term prospects, we recognize that current travel demand has been impacted by the Corona virus at the present time greater China has been affected the most the broader APAC region has also been impacted which is an area in which we had been experiencing strong growth over the last several years.

And we are now starting to see a slowdown in travel globally and are aware of the potential for further demand deceleration around the world David will provide more details in his remarks, but I would like to point out. This is not the first time our company management team has faced an exaggerated impact to travel demand.

We know the travel is fundamental to People's lives and we believe travel industry growth will rebound to prior growth rates.

All the Corona virus impacts travel we will continue to match the company in a measured way that builds value for the long term.

However, the steps we're taking today include one making sure we take care of our customers and help them with their travel plans, which includes facilitating cancellations and working closely with our supply partners.

To ensuring the health and safety of our over 26000 employees around the world right.

Managing our marketing efforts appropriately we will continue to participate in those paid channels that provide us quality traffic at attractive our allies, recognizing that we need to incorporate higher cancellation rates in our bidding calculations in regards to brand marketing, we will be very cognizant of when and where.

End marketing money should be spent this year.

For working with our travel suppliers. So they are best positioned to achieve success on our platform.

And five continuing to invest for the future.

The company that provides a better travel service a holistic seamless frictionless connected trip that delivers more value to both a traveler and our supply partners will create a lasting relationship with both travelers and suppliers, we intend to create this service overtime.

With that I will now turn the call over to David foot Financial review.

Thank you Glenn and good afternoon.

I'll review, our operating results for fourth quarter in 2019, and then discuss all falls on Twentytwenty guidance for the first quarter.

All growth rates relative to the prior comparable period, unless otherwise indicated information regarding reconciliation to GAAP can be found in our earnings release now onto our results for the quarter.

Our book room night growth of 12% in Q4 exceeded the high end our guidance range as growth accelerated through the quarter with a strong finish in December.

Our room night growth in Europe continues to exceed our expectations. Despite the continued to exceed our expectations in Q4, despite a macro environment that remain cautious right growth rates. The rest of world also exceeded our expectations and grew slightly faster than Europe in Q4.

Average daily rates for accommodations or 80, AWS, we're down about 4% year on year in Q4, and constant currency basis, which was inline with our guidance.

Indicated our last earnings call.

HDR decline was impacted by decreases in rates within several key markets such as the U.S., Japan, Hong Kong as well as an increasing makes to faster growing lower NGL markets and the impact of lapping 1% growth in Q4 of last year.

Changes in foreign exchange rates reduced Q4 growth rates in us dollars by approximately one percentage point versus last year, we estimate the changes FX rates impacted gross bookings revenue and EBITDA growth in Q4 by similar mouse on EPS growth by less than one percentage points.

Q4, gross bookings grew by 6% expressed in us dollars and grew about 7% on a constant currency basis coming in above the high end our guidance range.

Consolidated revenue in the fourth quarter was $3.3 billion grew by 4% in us dollars and about 5% on a constant currency basis.

Advertising other revenue, which is mainly comprised of kayak open table grew by 3% in Q4 as we lap the benefit of the hotel combined acquisition in December.

Adjusted EBITDA for Q4 was $1.3 billion, which exceeded the high end our guidance range I was up 2% year over year on reported basis and about 3% on a constant currency basis.

Performance marketing expense increased 2% year on year, which helped drive leverage about 40 basis points in the quarter.

And your growth was driven by higher than expected volumes paid channels.

We spent $86 million on brand marketing in the quarter, which represented a decline of 31% versus Q4 last year and contributed about 130 basis points of leverage.

This decrease is in part driven by ramp up in spend in the second half of 2018, we remain committed to investing brand marketing disciplined manner going forward.

Sales to other expense decreased 1% versus Q4 last year I'm curious is about 30 basis points of leverage due to reduced charge back expenses as well as a reclassification of certain sales other expense.

Sales and other expenses incurred during 2019 into Contra revenue in Q4, both of which offset the increase in expenses related to the continued growth although payments platform a booking dot com.

Personnel expense was in line with our forecast growing 16% year on yet I'm contributing about 175 basis points of de leverage in the quarter as expected driven in part by lower at year end reversal of bonus accruals that we experienced in Q4 2018.

Gee I expenses increased 16% year over year on non-GAAP basis, which excludes a 21 million dollar travel transaction tax charge in Q4 of 2018.

Non-GAAP Gionee expenses contributed about 60 basis points to de lever to the quarter. This year over year increase in June eight was driven largely by a higher indirect taxes, including the French DST.

Finally information technology expenses increased 42% year over year, driven by several items important grows the business, including payments to contractors software license fees outsource datacenter and cloud costs.

Our non-GAAP EPS was $23.30, a 4% all reported and constant currency basis versus the prior year non-GAAP net income reflects a non-GAAP tax rate of 70.7% in Q4, which is significantly higher than Q4 last year due to a onetime adjustment of approximately $72 million in Q4 2000.

18 related to a provision of the tax act that was clarified by revenue guidance issued in Q4 2018.

Q4 tax rate was about one percentage point laws, our guidance you some discrete items or 9% lower share count in Q4 benefited EPS growth in the quarter.

On a GAAP basis operating income increased by 3% and got or operating margins decreased by about 50 basis points compared to Q4 last year.

Q4, GAAP net income amounted to $1.2 billion or $27.75 per share of 81% from Q4 2018.

Q4, GAAP net income includes 360 $326 million of pretax realized gains equity investments in metros see trip $47 million of FX Remeasurement losses, all euro bonds.

We excluded these unrealized losses on Remeasurement gains from non-GAAP results.

We had a GAAP tax rate of 17.5% for the quarter, which increased significantly from the prior year due to the tax impact of the items excluded from non-GAAP results as well as a factor as I mentioned the impact is it on GAAP tax rate.

In Q4, we generated $1.1 billion operating cash flow, which declined 1% compared to Q4 last year, our free cash flow cash flow quarter was about $1 billion, which decreased by 1% compared to last year, mainly through the timing of a payments we've reduced gross bye.

15 percentage points.

We repurchased $1.3 billion roast off in Q4, bringing the total repurchases to the.

$8 billion as that is yet we had about $11.5 billion remaining under 15 billion dollar repurchase authorization, we ended the quarter with $11.8 billion in cash and investments and $8.7 billion of outstanding debts.

Looking back in 2019, we're quite pleased with outperformance drew India as we produced steady room night growth in the 10, 12% range, we delivered a very healthy 39% EBITDA margin, while investing in the business and absorbing unplanned DST expenses.

We grew our non-GAAP EPS by 11% or around 15% on a constant currency basis, which exceeded our guidance of low double digit growth.

Turning to 2020, our initial outlook reflected a continuation of this all of this operating model by eight to gauge Jay and accommodations with some deceleration in room night growth to invest in payments merchandising other connected trip Freddie Maus pressure on operating margins at the EPS growth to benefit from our share repurchases.

Due to a few mechanical factors, including the lapping of Aer declines on the phasing of first LNG that expenses during the year, we expected earnings growth to be wage is largely the second half of the.

Now turning to more recent events. The Kuroda viruses has an impact across all business since it may news headlines on John between first.

The only impacts were raised in China, but we also sold these impacts across Asia onto a lesser extent and in other regions outside of Asia as well.

Help me concepts. The fact region represents a little over 20% our room nights with no single country accounting for more than mid single digit share of total room nights.

In a pack, we've seen an increasing cancellations reduction in new bookings I'm pressure on Agios.

Are you will note, it's not possible to predict where and to what degree outbreaks of the CRO to vars will disrupt travel patterns.

While the while the incidence of infections are slowed in China and last week alone new outbreaks that occurred in South Korea around on Italy.

We've been able to measure the impacts on our business so far in Asia, and we see our recent impacts our room night.

Hi bookings in Europe, following the outbreak in Italy as a result, we provided only a near term outlook with a wider guidance range to account for the possibility that will be a growing travel disruption in Europe.

Based on where we all into quarter and considering the continued impact the grown of ours. We're forecasting Q1 book room nights to be down 5% to 10% versus the prior year clearly, we're dealing with a very fluid situation and it's extremely difficult to predict where Q1 will come out but this is our best estimate based upon the data we have available now.

We forecast total gross bookings to decline, 8% to 13% on constant currency basis, and about 200 basis points more in us dollars. Our Q on forecast assumes that constant currency. You also the company will be down about 4%.

We forecast few on non-GAAP revenue declined 3% to 7% on constant currency basis declined 200 basis points more in us dollars.

Q1, adjusted EBITDA is expected to range between $560 million and $590 million, which is down 16% to 20% year over year on a constant currency basis about 200 basis points more in us dollars.

We are forecasting Q1, non-GAAP EPS were approximately 9005 cents to $9.65, which is 14% to 19% below Q on 2019 on a constant currency basis, we estimate Q1, non-GAAP EPS to decrease year on year by probably 12% to 17%.

Our non-GAAP EPS forecast for Q1 includes estimated income tax rate approaching 18.5%.

Q1 longer copycats guidance assumes affordability share count about 41.6 million shares, which is 9% below Q1 of last year.

We forecast GAAP EPS to be between $7, a 95 cents an $8.55 for Q1.

GAAP EPS guidance for Q1 assumes a tax rate of approximately 18.5%.

We use a dollar to euro exchange rate of $1.10 when setting out Q1 guidance, we have hedge contracts in place is essentially shield, our first quarter EBITDA and net income from any further fluctuation in currencies versus the dollar between now and ended the quarter, but the hedges do not protects our gross bookings revenue operating profit for the impact of foreign currency fluctuations.

Finally housekeeping item, starting with our Q1 results and going forward, we plan on reporting outperformance on brand marketing expenses on a combined basis as we view, our overall marketing spend as an investment in customer acquisition and retention.

I'll take your questions.

Operator.

As a reminder, I asked a question you will need for breakfast Star one telephone regarding your question best to filing.

This is Tom.

Looking at any roster.

The agenda. Our first question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open.

Hi, Thanks, So I guess, just the first question a bit of a clarification.

David You said something about.

Seeing expecting.

Some share gain with deceleration in room nights.

I wasn't sure if I heard that correctly is that kind of before the impact of the virus or including the impact.

Of the drivers.

Anything you can kind of share there and along the same lines.

Hey, ex the virus are you seeing anything.

In particular changing with marketing ROI is at some competitors pullback in certain brands in certain geographies.

And then I guess, a second question if I can with just the anything particular changing with regard to some of the CEO channel impacts from last quarter are you seeing that spread to either new geographies or change in intensity anything you could share there would be great. Thanks.

Sure Yeah. Thank you, let me sort of answering the first question. So yes, I should clarify what I said was when we turn to 2020, we talked about our initial outlook, which is our outlook for the soft obviously around the times reporting all plans together for the yet we talked about that reflects a continuation of the same operating model we delivered in 2019, so Mike.

Points about Ganesha and combinations with some of deceleration room nights, some modest pressure on operating margins and EPS to benefit from our share buybacks, which gives you a flavor of the shape our profile for the coming into the yet before the Corona bars.

Yes, and then on the on the Seo challenges to pick up your second I, just want to kind of remind people.

As we said the FCO shall is a relatively small for all of our business and has been for a period of time.

Yes, Joe channel continues to be under pressure.

As.

The primary provided that shall folks more upon that that page search rather than research, but we continue to do well not shall we have teams dedicated to it.

We are pleased with our share in that channel as a shall it is under continued pressure as we said before really contribution rate might have part of our overall business.

Okay, and then anything on marketing ROI outside of the impact of the virus.

And competitive dynamics.

Yes, what we saw that maybe like that currently again I'll talk about Q on Q4, because obviously Q4 was well, it's very clean core relative and not having a virus and it's only a few weeks behind us. So I think it's a good times are still talk about Q4.

We were pleased with the ROI is in the challenging in Q4, we didn't see any major shifts we mentioned we saw continued.

Leverage in our performance marketing spend because all performed smoking shelves continues to grow less rapidly them down the overall business, though the leverage that we that we demonstrated was cabot mixed driven leverage mathematic leverage.

ROI is.

It didn't really change very much in Q4, nothing to really note, we're pleased with where wet weather with where the world.

I think there was that just as all of your question, where you're also acting asking about current quarter as well.

That's great.

I'll assume that viruses, making things pretty messy, but unless you want to add something.

No I just wanted guys. So there I think thats the right let's talk.

Great. Thank you.

You will have another question from the line off Mark Mahaney from RBC. Your line is open.

Thanks, I wanted to ask about two things.

This kind of attach rate with the connected trip and how how.

How far along you think you arent tapping into that opportunity I notice that both rental car days and airline ticket growth.

Unit growth rates nicely accelerated in the December quarter looks like that is much easier comp and airline tickets, but you called out to some kind of greater cross selling opportunities you get it with rental car. So just talk about how where you are in a process of doing that is it.

Small percentage that you've even attempted this that so we can get a sense of how much better the results could be in rental cars and then Glenn when you were talking about the outlook you seem to emphasize a little bit more streamlining costs. In 2020, I don't think that was related to Corona virus I think it's.

Or maybe it was but I don't think it was sounded like you want to take be a little bit more.

Careful about costs or something like that could you just explained the why behind that why get a little bit more focused on streamlining costs. This year versus last year, unless it was all corona buyers, but I didn't get that impression. Thanks clynt.

Hi, Mark let me take the first one the attach rates et cetera, and I think you called out correctly.

The railcar business has shown some good numbers you look in the supplemental statistics and the end of our press release and you can see some nice growth there and part of that growth is coming from that cross sell part of our connected trick that we're building out and you're also correcting your statement about the air business Air business. So early we.

Just really again that up and running that's where you're not really seen any of the increase there from from that or not but not enough to matter right now.

It's very very low attach rates when I look at those numbers I believe overtime, we should increase those significantly and it's going to take some time as we continue to optimize here, what's the best way to presented were to show with one of things I'm very proud about is the center, we've built in Tel Aviv those filled with UBS.

Thanks, and machine learning experts.

Mrs who really look at all the different parts of the way, we present things and they're trying to come up with what is the best way to present, an offer to a trial were at the right time, putting in what is the right merchandising benefit that we should do it to get the REIT conversion and the right bottom line, it's something that the more data we get.

Better we'll know what the right thing to do but its something thats going to take time. So that that's the answer to that one regarding costs. You're also absolutely correct on that one other things when I took the job over in Amsterdam, as CEO of booking dot com and I've been there now little more than six months is looking at what are you spending on where we.

Spending what projects, which ones are the right was which one should we not be doing right now and then taking that throughout our entire organization.

Always believed that you should be a cost effective company and I believe it's also very natural as companies grow very rapidly and achieve great success on the bottom line, sometimes disciplined lightened up little bit. So certainly before the CRO virus I was already thing that we need to make sure that we're doing everything we can to spending.

Money correctly, one of things I've mentioned in the calls over the last couple of quarters is us, bringing all of our companies together better and then one of the benefits that is to get some.

Fission sees in our spend a real cost procurement type project.

In the past we brought all these companies independently and that was the right thing to do at the time, but while doing that you do lose out on some cost efficiencies now the state of the company, where it's at now it's time to start bringing that in and that's what we're going to be doing.

Okay. Thanks Clynt.

We do have another question from the line of Kevin Kopelman from Cowen Your line is open.

Great. Thanks, a lot could you give us more color on the latest trends in Europe travel bookings.

That you've seen over the last few days following the outbreak as the current of Iris, Italy. Thanks.

Yes, Kevin This is David let me take take that.

Just maybe frame is in the way that the quarters shapes up and we are now projections do take into account what we've seen the last few days.

So let me kind of give you a lay of the land first of all by region not surprising we already mentioned that China is worse.

Acted.

Excluding China has also been impacted for some time.

The rest of World. It was always includes Europe, and Europes, a big piece out for us.

Was growing through February.

But we also expect it to be impacted to the negative in March as well as to give you a bit more color and some just how it plays across the quota.

On a consolidated basis, we saw we of course will rely in January room night growth and Jamere, even though we saw some tapering off at the end.

With the Forest City the news on the 21st.

Expects.

Beverage should be approximately flat from a road from a growth rate point of view and therefore to get to our guidance for the quarter expect to see declines in March.

Got it and so that and that that.

March expectation is based on just the worsening kind of trends over the last few days.

Yes, I mean, we really obviously as I mentioned, we're dealing with a very fluid situation very difficult to predict what's going on.

We are responding something that we have no control over we give you how best view art. So when we when we have where we've built is what we expect that happened in March and create the guidance range. We're looking very specifically what's happened over the last few days after the outbreak in Italy. The response, we've seen in Europe.

In response to that which is not surprising how it has been negative so.

Yes, we are.

Expecting.

Seeing even though we're going to get room night growth through rest of world in February two agenda for every that was already in the decline we expected to continue to decline into March.

Got it thank you.

Our next question comes from the line upfront testing Paula from Bank of America. Your line is open.

Great. Thank you a couple of questions I guess it would be helpful. If you could give us a view on past behavior. When you've had traveled disruptions and people cancel the trips or your most loyal customers don't book.

Long does it take before they start going on trips again or do you see a timeframe where people cancel and rebook I know you can be too specific but but any thoughts on that and then second it's interesting your main competitor pulling back spending you're talking about some cost savings.

Theres inefficiencies in marketing or other channels in travel and maybe the industry as a whole could benefit as people pick a deeper look at their cost. Thank you.

Hi, Justin.

I think it'd be it would not be wise and Ryan use past experience as an analogy for what will happen in the future.

The situation now is very different say I've now been in this business. In fact this week, you'll be 20 years I've been at this company.

Anniversaries Friday 20 years, and so I've seen a lot of Exone just factors I manage them impacting travel some extremely severe and I won't go through all of them because we'll use of the entire time for the call.

Being said we'll have different.

Effects and different rebound time periods. So it's not going to be helpful. For me to tell you what took after 911 or after the GFC or after swine flu or after.

Volcano nicely imac can go on and on and on I'll stop there.

So I really can't be that helpful and you'll just have to make your own best guesses, Miss which will be as good as anybody else's guesstimates.

Regarding spending.

We have very high margins compare to anybody else in the industry, but that does not give us a license to waste money.

I want to continue to always be looking are we spend incorrectly every single part of this company. So we can then spend the money in the right places right time in terms of marketing there probably is a lot of waste in the industry, probably and I think we can see this on people who are probably going to be pulling back in turn into their marketing.

We like to think that we've been efficient and effective but I think there's always room everywhere to do better and we're going to continue to do so that's only the right way to try and have a long term successful company.

I am confident though that regardless of what the.

Towards your first question I am confident the business will be coming back.

Summing that we've seen over and over and over again as I said, many many times year travel is a basic need for people who have been doing for a very very long time and as soon as the air clear. So to speak you will see people will be coming back to travel.

Great. Thank you.

We don't have another question from the line of Brian Nowak from Morgan Stanley. Your line is open.

Great. Thanks for taking my question I too please.

David I appreciate the month over month commentary for the for the first quarter that maybe just so we can all sort of better understand that the underlying durability of growth how big of the of a room night and EBITDA headwind have you put into the guide to factor in Corona after the first quarter.

And then the does that go on Glenn This is sort of talk about.

Opportunities and sort of untapped geographies talked obviously about how you think about the the important than the opportunity to focus more on the U.S. from a branding and our performance marketing perspective, this year to perhaps take more share in that area. Thanks.

Okay. Thanks, Brian I'll take the first part of it.

Now I'm going to try to avoid getting into specific growth rates by by month I've. Given you a flavor I think you can do some back the on road map to cap figure out what March has to look like in terms of getting to a minus five to minus 10% range.

Why do we look to this is that we has we have as I mentioned in my answer to Kevin have looked a very much. So what's happened to the last few days and anticipated at the lower end the range that the travel environment in Europe may get worse, because we would be surprises is only one outbreak in Europe over the course of the.

Rest of the quota so we've taken.

Into accounts, what we still happening over the deal the last week, which of course is led by a lot of cancellation. So.

Over time, you may all be quite as bad as we're seeing and placed in the last week, because you see obviously to the different growth rate on underlying bookings visibly cancellations.

Early reaction to these new pads is usually you guys spike cancellations and things can more moderate out, but we've taken into account what we see happening over the course of the last week, we projected that through the rest of the quarter and I recognize the impact it may get worse, if there are additional outbreaks in.

In Europe or for the slowdowns in the rest of the World. That's how we've tried to intelligently give you some guidance data points from obviously they were getting is moving very rapidly but is the best data that we have as up until this morning.

In regard to our opportunities around the world. The U.S. is without doubt our biggest opportunity is enormous market that we under index significantly.

The reason for why we have not achieved what we'd like to yet.

Historical.

No calm was always a hotel only company and we Didnt have an air product. There for example, many Americans like start their travel business.

Oh using air So we now we're going to be bringing out in air products over time that will be one second thing is extremely price competitive price sensitive consumer in the U.S booking dotcom historically in agency player, meaning the price was set by the hotels or by the non hotel.

Accommodations.

We believe that we have to be able to merchandise, meaning adjusting what that value to the consumers going to be but to do that.

Payment product, who is only last quarter that we got up running the domestic payment part for us consumer so thats. Another one another big issue packages. Many Americans like to use package product or like to do some sort of combination that will get them more value well. We're just starting that now want to things I'm very.

What about is working between price line dotcom and booking dotcom to come up with a package product for the use consumers that we're just getting that out. The other thing is we have other assets to help bring consumers to our sites and make them aware of the great things on the for example open table a lot of people are using open table every.

The month in the past, we have never done anything really bringing together the power the open table platform and the booking dotcom platform whey, they will provide more value to consumers. So lots of things that we're working on because I do believe the U.S. is a great opportunity for us.

Build out our business.

Great. Thanks, guys.

We have another question from the line of Dustin, but his line from Raymond James Your line is open.

Great. Thanks, so much one unconnected tripped first how should we think about scaling supply three or own assets, a third party partners on the attractions and dining side.

Partners and there is there anything any of that control to ensure an optimal customer experience.

Second question is on marketing at your direct channel mix growth and your payments that growth how should we how do you think about that incremental ROI of using a coupon that drive conversion versus say attracting customers via Brad and performance marketing. Thanks, So much.

I want to any of the first I'll, let David being our CFO you can talk about how we're going to optimize answers the coupons.

You're right in terms that in an ideal world you would like to have all of your supply directly connect to us and you prefer.

We will not to be using third party suppliers that being said thats a balance against speed to market and making sure you have to supply necessary to create a good offer to the consumers. So the interest to speed, we have gone with third party.

Providers to provide inventory that we don't have I mentioned open table, a while ago will open table has a great product and they are they do a lot of business a lot different cities, but also lessees around the world that they don't to business and we want to provide that dining opportunity to our consumers in as many cities as we can so we will partner with others attractions.

The same thing we had our own contracts with supply, but there are a lot of placing them a world where people are traveling so to make sure that we have those supply we're going to third parties overtime. We believe that in the long run having your own supply helps you can turn into creating that truly seamless.

Connecting trip.

But speed matters in this market, so we're going to do that too.

Yeah, just it on the.

All the different mocking challenge, we first of all.

We're very pleased to build our direct business, that's very important with future exactly trip in the App and all things have driving that direction for the fourth marketing channels are also very important sources of acquisition of new customers for us and.

Sometimes some existing customers can come back to that as well.

But to answer your question, we look at all of these on a very measured incremental ROI basis, we can really measure our different activities I am competitive on a very comfortable bases. So when it comes to things like coupons or other attractions. We may only offer through one of our channels. We just look at the ROI will not visibly all the channels and decide where we lead in all.

Although as the case may be so we have pretty good metrics on all things like that because we are able to measure the short term return on those investments again long it's.

We're looking to drive people towards the Dart channel, particularly towards the App and Glen mentioned, how well downloads that that is and how is becoming very much.

Helpful App and the travel space and as the connected trip becomes a bigger piece the business and that becomes a way to experienced the connected trip in.

Joined the trip.

More strategic but typically we can look at all these different things, including things like couponing on a very measured based and decide to lead in baseball, which ones give us the both assured us.

Sjostrom returns that also create the highest level of repeat or return to direct activity. After the initial offer.

Thank you.

Our next question comes from the line Alfred Deepak Mathivanan from Barclays. Your line is helpful.

Great. Thanks for taking the question David last year, you talked about achieving double digit signings growth and then exceeded in pretty nicely expect facts I understand the situation is a little bit more fluid right now and the color you provided on the operating model was helpful. How should we think about those things kind of translates into earnings growth for this year and then.

How are you thinking about using the balance sheet for share repurchases.

When there is Lincoln disruption currently going on thank you.

Sure defect. Thanks, a question, let me take the first part of it so yes, I mean, we talked about the.

Our operating model expectations Freak run of ours is a continuation of the model I think was quite successful for us in 2019.

And I I don't want to get to specific targets for 2020, because there's a lot of point importing hypothetic, a hypothetical forecast the yet which we could never measure against the bridge you guys. Because obviously is going to come out very different from what we expected. It only a few a few weeks ago, but.

We were pleased with the way the 2019 came out if you kind of look back in Q4 look at 2019 understand the underlying health of of the business and we believe that there's no reason why that model can continue in normal times.

And then Glenn Youre talking about.

Second thought balance sheet, yes. So.

We're very pleased to have a very strong balance sheet.

Significant amount of free cash.

We have very good credit rating and the question really is.

As we've always had is how should we best use our capital one of things there's always been share repurchases. Another thing that we always do is we're always looking at other companies that could potentially help.

Add to our connecting trip strategic vision, and we're going to continue to look at that.

Certainly valuations have changed significantly recent past and that may provide an opportunity for us in both areas, but as David says, it's a very fluid situation right now and we're not going to box ourselves into anything right. This second I will say, though however, we do look this is very very carefully because we do want to be.

John.

Operator, we have.

And your question please.

Yes, Sir we have added question from the line of AG K then from mute, Yes. Your line is open.

Thanks for taking my question, maybe if I kind of few around cost structure, and how you're thinking about investing in the business and sort of a relatively uncertain environment is there weve. It is out what are some of the investment you plan on making just because they fit with the strategic vision and they're going to be made for the long term irrespective of how the environment ARX up or down.

Over the next sort of couple of quarters and how much of it is more variable in nature, where you buy tune up or down investments, we could better understand the variable piece, but probably more likely track with how room nights, either get better or worse from.

Excellent results in Q4 versus the.

The cautionary resulting or guide for coupon. Thanks, so much guys.

Sure So I've been talking about.

Our long term strategic vision for sometime now since I became CEO holding company.

A little more than three years ago, and how important is to create and continue to create value for all sides of this marketplace and we're going to continue to do that and that requires investing in people in terms of code, making sure. We're providing something that is a differentiator from what is out there right now and there is.

No reason to slow that down stop or hold back on that the sooner we get out that truly superior travel service the better we will be and I want to be in that position. When we come out of this current environment, which is something that is unexpected, but we'll end I want to come out of that as soon as Pos.

So with the best services that we have so we're going to continue on that we're not changing at all.

Turns of in terms of investments in terms of marketing and things like that naturally always want to make adjustments based on what the environment is so for us I as I mentioned about brand marketing well, we're not going to be.

Taking brand marketing to people, who are not listening to that message at all if you're not thinking about traveling you're not listening to a travel AD is foolish for us to invest money brand marketing campaign and Thats example, extreme on the other side and in between there always different things in between that we're going to be making adjustments as we go through out the.

And we've always been doing that.

No different do anything to add Eric I, just maybe for a little bit of a framework around what Glenn talked about so if you think of.

Oh.

Operating expenses and just got look 2019 per second about $9.5 billion.

So a little over half of our Opex is really variable with volume, obviously outperforms maxing change was going up and down ranbaxy easily not volume related but obviously as Glen just said no point spend a lot brown and people are not primarily think about travel a large piece of our sales I know expenses is also relates to volume as well because that ties back to that.

Motion processing costs on our payment platform. So over half of our Opex really is directly tied to the volume within the business now obviously there are volume related.

Specs in the other areas, which is mainly our personnel gionee IP et cetera.

Obviously, there's some fixed and the some variable expenses that but if you think about our cost structure. It really is quite variable the larger expense items being tied to volume quite directly.

I don't close in the areas are not not tied directly there are things. We can continue to do to refine and optimize has been talks about.

Thanks, so much cash.

We do have another question from the line of NAV.

From Suntrust. Your line is open.

Yes, Thanks, a lot couple of questions. So David.

When do you spoke about.

Maybe 2020 seeing.

Payments process, we had on.

And then talk from going to 25% what are the levers that do controller to kind of give that from 15% in 2019% to 25% This year and then.

Of course I have just maybe can you shed some light on your maybe early there was from the graph partnership how that might be.

Looking for you.

Sure. So let me start off with the payments platform actually Glenn was when we gave them the numbers out but let me.

Yeah, Let me just kind of talked about how we see its.

Developing.

Impact will have on on our income statement so.

As you see we basically had a growth from 10% in 2018 15.

In 1925 in 20, we expect obviously to exit 2020 hide and 25% payments that's the average for the yet.

Might be helpful. Just to understand a little bit of about but will allow us doing to income statement because avoid some questions about I'm prior in prior calls.

2020.

We expect said payments actually to contribute boast to both revenue growth as it has been but also to start contributing to EBITDA growth as well with very little impact at all for EBITDA, raising 2020 will contribute towards EBITDA growth as we.

Recover an ever increasing percentage of our payment costs. So that's how to think about payments are rolling through up a business. Obviously, there's still a very attractive nature in agency model as well so ones are going to completely replaced but as Glenn said for all sorts of reasons, including the ability to participate merchandising and also to be able to.

Package and control things together in the via that could actually trip payment will become an ever increasing part of business and we're pleased with how is progressing and we're on track to get its assays, we start to contribute towards EBITDA growth, which will start doing this year.

Regarding the graph relationship I'm very pleased about how that's been progressing.

Remember we invested in grab for three reasons, one reason was grab.

A significant number of customers and we want to find all different ways that we can get exposed our hotel a combination or travel services to customers in different ways and that certainly was a great way to do one go things that are travelers when they arrive at a place that they're not familiar with they want to know how are we going to get around and many people.

Oh, sometimes mistakenly assumed that would ever ride sharing capabilities have in their home country is going to be into place. They go visit and it's not going to be doing that going into what they're going to do and then they.

Figure what am I going to do and one of the great things as we said that we would come up with Graham away that approach can use the booking dot com app seamless way can get a ride sharing without having to download another app and put a credit card and some that they're not familiar with and it will be seamless and great experience and I mentioned last quarter, how we gunmen up and why.

Turning in Singapore, and the third thing said, we'd like to have a financial return on the money we invested.

One of the things I mentioned last quarter was helped by the end of year I expected us to be able to have that graph app operational in the booking dot com app.

By name your for Indonesia, and Thailand, and I'm very pleased that we are now actually operational in every single territory. They grab operates on the iOS platform. So just a great shout out to the team, whose and working on that and thank you guys were getting that done ahead of schedule really pushing that through will be will be operational in France.

Android I think it to four weeks I've been told and we're talking about beyond Singapore, Malaysia, Indonesia, Thailand, Vietnam, as Cambodia's, Philippines, as Mike Lawrie everywhere the grab is.

And I tell you I've seen this used and it really is something that makes us. So easy you can't off that plane that airport you just go to that booking dot com App and right away you can get that Kartik, John It's a wonderful experience and we're also on the other side being able to show our hotel accommodations to more and more grab customer so good.

Yes.

Okay. Thanks.

Our next question comes on line Stephen Ju from Credit Suisse. Your line is open.

Okay. Thanks, very much so Glenn I guess, how tough adversity can come opportunity so.

In an environment in which folks are going to be really starved for business are there any silver linings, we should be thinking about in terms of booking becoming a more important partner for your suppliers or being able to onboard more supply for the future and I guess for the integrated travel experience as well as the rollout of euro.

Payment Reos.

You are talking about transforming what the booking dotcom experience has meant for the consumer for sometime now. So do you feel like you have you have to retrain them to look for non hotel products or pay upfront and do you think you need to incur some cost to bring up that awareness. Thank you.

So.

Nobody nobody wants their bills.