Q2 2024 Booking Holdings Inc Earnings Call

Welcome to Booking Holdings' second quarter 2024 conference call.

Operator: Booking Holdings would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guaranteed of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied, or forecasted in any such forward-looking statement. Expressions of future goals or expectations and similar expressions reflecting something other than historical fact are indeed intended to identify forward-looking statements.

Booking Holdings: Booking Holdings would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Booking Holdings: These forward-looking statements are not guaranteed of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict.

Booking Holdings: Therefore, actual results may differ materially from those expressed, implied, or forecasted in any such forward-looking statement.

Booking Holdings: Expressions of future goals or expectations, and similar expressions reflecting something other than historical fact are indeed to identify forward-looking statements.

Booking Holdings: For a list of factors that could cause Booking Holdings' actual results to differ materially from those described in the forward-looking statements,

Booking Holdings: Please refer to the Safe Harbor Statements at the end of Booking Holdings' earnings press release as well as Booking Holdings' most recent filings with the Securities and Exchange Commission.

Operator: For a list of factors that could cause Booking Holdings' actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor Statements at the end of Booking Holdings' earnings press release, as well as its most recent filings with the Securities and Exchange Commission. Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Booking Holdings: Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Operator: A copy of Booking Holdings' earnings press release, together with an accompanying financial and statistical supplement, is available in the For Investors section of Booking Holdings' website, www.bookingholdings.com. And now I'd like to introduce our speakers for this afternoon, Glenn Fogel and Ewout Steenbergen.

Booking Holdings: A copy of Booking Holdings' earnings press release, together with an accompanying financial and statistical supplement, is available in the For Investors section of Booking Holdings' website, www.bookingholdings.com.

Speaker Change: And now I'd like to introduce Booking Holdings speakers for this afternoon, Glenn Fogel and Ewout Steenbergen. Go ahead, gentlemen.

Glenn Fogel: Thank you and welcome to Booking Holdings' second quarter conference call. I'm joined this afternoon by our CFO, Ewout Steenbergen. I am proud to report second quarter results that exceeded the high end of our expectations for room nights and revenue. The upside on revenue, combined with lower than expected fixed OPEX growth, helped drive adjusted EBITDA above the high end of our prior guidance range. As expected, the travel market has continued to normalize, and we are pleased with the strength of our underlying business.

Glenn Fogel: Thank you and welcome to Booking Holdings second quarter conference call. I'm joined this afternoon by our CFO Ewout Steenbergen.

Glenn Fogel: I am proud to report second quarter results that exceeded the high end of our expectations for room nights and revenue.

Glenn Fogel: The upside on revenue, combined with lower-than-expected fixed OPEX growth, helped drive adjusted EBITDA above the high end of our prior guidance range.

Glenn Fogel: As expected, the travel market has continued to normalize, and we are pleased with the strength of our underlying business.

Glenn Fogel: Moving to our key metrics, in the second quarter, our travelers booked 287 million room nights across our platforms, an increase of 7% year over year. Revenue of $5.9 billion and Adjusted EBITDA of $1.9 billion, both increased 7% year over year. Finally, Adjusted Earnings Per Share grew 11% year-over-year, helped by our strong capital return program, which reduced our average share count by 7% year-over-year, in line with our expectations. However, we saw that the booking window expanded less in the second quarter relative to the first quarter, which negatively impacted room night growth compared to Q1. From a regional perspective, we observed a mild moderation of travel market growth in Europe.

Glenn Fogel: Moving to our key metrics in the second quarter, our travelers booked 287 million room nights across our platforms, an increase of 7% year-over-year.

Glenn Fogel: Revenue of $5.9 billion and adjusted EBITDA of $1.9 billion, both increased 7% year-over-year.

Glenn Fogel: Finally, adjusted earnings per share grew 11% year-over-year, helped by our strong capital return program, which reduced our average share count by 7% year-over-year.

Glenn Fogel: in line with our expectations.

Glenn Fogel: We saw that the booking window expanded less in the second quarter relative to the first quarter, which negatively impacted room-night growth compared to Q1.

Glenn Fogel: From a regional perspective, we observed a mild moderation of travel market growth in Europe . However, we believe we are continuing to perform well relative to the market in Europe .

Glenn Fogel: However, we believe we are continuing to perform well relative to the market in Europe. Looking at our other regions, we continue to see high growth levels in Asia and a slight improvement in growth in the U.S. As we look ahead to the third quarter, we believe room-night growth will be impacted by a booking window that expands less than it did in Q2, as well as by the more moderate market growth we have seen in Europe, where our growth has remained stable from May through July. We expect that this will result in some deceleration in room-night growth compared to Q2.

Glenn Fogel: Looking at our other regions, we continue to see high growth levels in Asia and a slight improvement in growth in the U.S.

Glenn Fogel: As we look ahead to the third quarter, we believe room-night growth will be impacted by a booking window that expands less than it did in Q2, as well as by the more moderate market growth we have seen in Europe , where our growth has remained stable from May through July .

Glenn Fogel: Ewout will provide further details on our second quarter results and our thoughts about the third quarter. I remain confident in the attractive long-term growth profile of the travel industry, our competitive position over the long term, and our long-term growth and earnings model. We remain focused on what is important for the business for the long term, which means continuing to execute against our strategic initiatives while simultaneously taking actions to drive more cost efficiency in the business.

Glenn Fogel: We expect that this will result in some deceleration in room-night growth compared to Q2. Ewout will provide further details on our second quarter results and our thoughts about the third quarter.

Ewout Steenbergen: I remain confident in the attractive long-term growth profile of the travel industry, our competitive position over the long-term, and our long-term growth and earnings model.

Ewout Steenbergen: We remain focused on what is important for the business for the long term, which means continuing to execute against our strategic initiatives while simultaneously taking actions to drive more cost efficiency in the business.

Glenn Fogel: We continue to see progress across several important initiatives, which include advancing our Connected Trip vision, expanding our merchant offering at Booking.com, continuing to develop our AI capabilities, growing alternative accommodations, and enhancing our Genius Loyalty Program. These initiatives all fit together in our ongoing effort to deliver a better planning, booking, and travel experience for our travelers, while also benefiting our supplier partners. We believe that continuing to drive benefits to our supplier partners is critical to successfully operating a growing two-sided market.

Ewout Steenbergen: We continue to see progress across several important initiatives.

Ewout Steenbergen: which include advancing our Connected Trip vision, expanding our merchant offering at Booking.com, continuing to develop our AI capabilities, growing alternative accommodations, and enhancing our Genius Loyalty Program.

Ewout Steenbergen: These initiatives all fit together in our ongoing effort to deliver a better planning, booking, and travel experience for our travelers, while also benefiting our supplier partners.

Ewout Steenbergen: We believe that continuing to drive benefits to our supplier partners is critical to successfully operating a growing two-sided marketplace.

Glenn Fogel: We're encouraged to see healthy second-quarter year-over-year growth in the number of supply partners working with us at Booking.com. We are focused on being a trusted and valuable partner by delivering incremental travel demand and developing products and features to help support these accommodation properties, the majority of which are small and independent businesses. We believe that improving the competitiveness and profitability of our smaller partners and supporting those partners across macroeconomic cycles contributes to the long-term economic health of our society.

Ewout Steenbergen: We are encouraged to see healthy second quarter year-over-year growth in the number of supply partners working with us at Booking.com.

Ewout Steenbergen: We are focused on being a trusted and valuable partner by delivering incremental travel demand and developing products and features to help support these accommodation properties, the majority of which are small and independent businesses.

Ewout Steenbergen: We believe that improving the competitiveness and profitability of our smaller partners and supporting those partners across macroeconomic cycles contributes to the long-term economic health of our sector.

Glenn Fogel: Our alternative accommodation offering at Booking.com continues to benefit from having more listings available for travelers to choose from. At the end of Q2, our global alternative accommodation listings were about 7.8 million, which is about 11% higher than Q2 last year.

Ewout Steenbergen: Our alternative accommodation offering at Booking.com continues to benefit from having more listings available for travelers to choose from.

Ewout Steenbergen: At the end of Q2, our global alternative accommodation listings were about 7.8 million, which is about 11% higher than Q2 last year.

Glenn Fogel: We believe this greater selection of listings is contributing to the increasing mix of alternative accommodation room nights booked on our platform. We continue to make incremental enhancements to our alternative accommodation offering for both our travelers and our supply partners. For our travelers, we are focused on successfully delivering a better planning, booking, and travel experience over time, which we believe will lead travelers to choose to book directly and more frequently with us. At Booking.com, we are continuing to grow the number of total active travelers, with repeat travelers growing at an even faster rate in terms of direct booking behavior. We are pleased to see that the direct booking channel continues to grow faster than roommates acquired through paid marketing.

Ewout Steenbergen: We believe this greater selection of listings is contributing to the increasing mix of alternative accommodation room nights booked on our platform.

Ewout Steenbergen: We continue to make incremental enhancements to our alternative accommodation offering for both our travelers and supply partners.

Ewout Steenbergen: For our travelers, we are focused on successfully delivering a better planning, booking, and travel experience over time, which we believe will lead travelers to choose to book directly and more frequently with us.

Ewout Steenbergen: At Booking.com, we are continuing to grow the number of total active travelers, with repeat travelers growing at an even faster rate.

Ewout Steenbergen: In terms of direct booking behavior, we are pleased to see that the direct booking channel continues to grow faster than room nights acquired through paid marketing channels.

Glenn Fogel: As I've stated before, we think it's important for us to remain proactive in paid marketing channels in order to bring new travelers to our platforms so long as we're able to do this at attractive ROIs. In addition, I'm encouraged by the work our team at Booking.com is doing to increase our spend on social media in a disciplined manner, which is an effort that helps to further diversify the channels we utilize while reaching our travelers on platforms they are actively using.

Ewout Steenbergen: As I've stated before, we think it's important for us to remain proactive in paid marketing channels in order to bring new travelers to our platforms, so long as we're able to do this at attractive ROIs.

Ewout Steenbergen: In addition, I'm encouraged by the work our team at Booking.com is doing to increase our spend on social media in a disciplined manner, which is an effort that helps to further diversify the channels we utilize while reaching our travelers on platforms they are actively using.

Glenn Fogel: Our Genius Loyalty Program at Booking.com plays an important role in helping to drive more travelers to choose to book directly with us over time. We see a meaningfully higher direct booking mix for Genius users versus other users, and that direct mix percentage steps up at each higher level of Genius status.

Speaker Change: Our Genius Loyalty Program at Booking.com plays an important role in helping to drive more travelers to choose to book directly with us over time.

Speaker Change: We see a meaningfully higher direct booking mix for Genius users versus other users. And that direct mix percentage steps up at each higher level of Genius status.

Glenn Fogel: So we are encouraged to see continued success with more of our travelers moving into the higher genius tiers of Levels 2 and 3, which now represent nearly 30% of our active travelers. In addition to a higher direct booking rate, we also see higher booking frequencies from our Genius Level 2 and 3 travelers when compared to our overall business. In Q2, we drove more genius benefits to our travelers with a 15% year-over-year increase in benefits.

Speaker Change: So we are encouraged to see continued success in more of our travelers moving into the higher genius tiers of Levels 2 and 3, which now represent nearly 30% of our active travelers.

Speaker Change: In addition to a higher direct booking rate, we also see higher booking frequency from our Genius Level 2 and 3 travelers when compared to our overall business.

Speaker Change: In Q2, we drove more genius benefits to our travelers with a 15% year-over-year increase in benefits.

Glenn Fogel: This is primarily driven by accommodation bookings. However, we are seeing growth in benefits in the other elements of travel as well, with triple-digit growth in Genius discounts for car rental off of a small base last year, and continued testing of Genius benefits for flight. In addition to these benefits, Bookings and travel verticals outside of accommodations contribute to a traveler's genius level tier.

Speaker Change: This is primarily driven by accommodation bookings. However, we are seeing growth in benefits in the other elements of travel as well, with triple-digit growth in Genius discounts for car rental off of a small base last year and continued testing of Genius benefits for flights.

Speaker Change: In addition to these benefits, bookings in travel verticals outside of accommodations contribute to a traveler's Genius level tier. We will continue to explore opportunities to enhance our Genius loyalty program and deliver more benefits to our travelers.

Glenn Fogel: We will continue to explore opportunities to enhance our Genius loyalty program and deliver more benefits to our travelers. And we know that Genius is a win-win with our supplier partners, enabling them to get incremental demand when they want it, which is one reason more of our supplier partners are electing to participate. On the Connected Trip, we continue to take steps towards our long-term vision to make the planning, booking, and travel experience easier, more personal, and more enjoyable, while delivering better value to our travelers and supplier partners. In order to achieve the easier, more personalized experience of the Connected Trip, we have always envisioned AI technology at the center of this vision.

Speaker Change: And we know that Genius is a win-win with our supplier partners, enabling them to get incremental demand when they want it, which is one reason more of our supplier partners are electing to participate.

Speaker Change: On the Connected Trip, we continue to take steps towards our long-term vision to make the planning, booking, and travel experience easier, more personal, and more enjoyable, while delivering better value to our travelers and supplier partners.

Speaker Change: In order to achieve the easier, more personalized experience of the Connected Trip, we have always envisioned AI technology at the center of this vision.

Glenn Fogel: Our teams of AI experts continue to draw on their valuable experience of using AI extensively for many years as they work to further incorporate this technology into our practice. We believe our proprietary data, along with our resources and scale, position us well to build compelling AI-powered offerings over time. Another foundational element of the Connected Trip is the merchant offering that we continue to expand at Booking.com. Merchant capabilities will help bring the different elements of travel together in a seamless booking experience, while also unlocking the ability to merchandise across verticals.

Speaker Change: Our teams of AI experts continue to draw on their valuable experience from using AI extensively for many years as they work to further incorporate this technology into our platforms.

Speaker Change: We believe our proprietary data, along with our resources and scale, position us well to build compelling AI-powered offerings over time.

Speaker Change: Another foundational element of the Connected Trip is the merchant offering that we continue to expand at Booking.com. Merchant capabilities will help bring the different elements of travel together in a seamless booking experience, while also unlocking the ability to merchandise across verticals.

Glenn Fogel: The mix of merchant gross bookings reached 58% of total gross bookings at Booking.com in the second quarter, which is an increase of 10 percentage points year over year and is higher than our prior expectations. We are pleased to see that processing transactions through Booking.com's Merchant Offering generated incremental contribution margin dollars in the second quarter, though this was still a small percentage of our total adjusted EBITDA. We continue to see growth in transactions that are connected to another booking from a different vertical in a trip.

Speaker Change: The mix of merchant gross bookings reached 58% of total gross bookings at Booking.com in the second quarter, which is an increase of 10 percentage points year-over-year and is higher than our prior expectations.

Speaker Change: We are pleased to see that processing transactions through Booking.com's merchant offering generated incremental contribution margin dollars in the quarter, though this was still a small percentage of our total adjusted EBITDA.

Speaker Change: We continue to see growth in transactions that are connected to another booking from a different vertical in a trip. These connected transactions increased by about 45% year-over-year in the second quarter and continue to represent a high single-digit percentage of Booking.com's total transactions.

Glenn Fogel: These connected transactions increased by about 45% year-over-year in the second quarter and continue to represent a high single-digit percentage of Booking.com's total transactions. We believe by providing a better overall booking experience, travelers may choose to book more trips with us and have a higher likelihood of booking directly in the future. Flights are an important component for many of the connected trips that our travelers are booking.

Speaker Change: We believe by providing a better overall booking experience, travelers may choose to book more trips with us with a higher likelihood of booking directly in the future.

Ewout Steenbergen: In the second quarter, air tickets booked on our platform increased 28% year-over-year, driven primarily by the growth of Booking.com's flight offering, as well as strong growth in Agoda's flight business. We continue to see a healthy number of new customers coming to Booking.com through the flight vertical and are encouraged by the rate that these customers and returning customers see the value of the other services offered on our platform. In conclusion, we continue our work to deliver a better offering and experience for our supply partners and our travelers.

Speaker Change: Flights are an important component for many of the connected trips that our travelers are booking. In the second quarter, air tickets booked on our platform increased 28% year-over-year, driven primarily by the growth of Booking.com's flight offering, as well as strong growth in Agoda's flight business.

BookMe.com: We continue to see a healthy number of new customers coming to Booking.com through the flight vertical and are encouraged by the rate that these customers and returning customers see the value of the other services offered on our platform.

BookMe.com: In conclusion, we continue our work to deliver a better offering and experience for our supply partners and our travelers.

Ewout Steenbergen: We remain confident in our long-term outlook for the travel industry, we are positive about our future, and we believe we are well positioned to deliver attractive growth across our key metrics in the coming years. I will now turn the call over to our CFO, Ewout Steenbergen. Thank you, Glenn, and good afternoon.

BookMe.com: We remain confident in our long-term outlook for the travel industry, we are positive about our future, and we believe we are well-positioned to deliver attractive growth across our key metrics in the coming years. I will now turn the call over to our CFO , Ewout Steenbergen.

Ewout Steenbergen: I will now review our results for the second quarter and provide our thoughts for the third quarter and the full year. All growth rates are on a year-over-year basis. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings.

Ewout Steenbergen: Thank you, Glenn, and good afternoon. I will now review our results for the second quarter and provide our thoughts for the third quarter and the full year. All growth rates are on a year-over-year basis. Information regarding reconciliation of non-GAP results to GAP results can be found in our earnings release.

Ewout Steenbergen: Now let's move to our second quarter results. Our room nights in the second quarter grew 7%, which exceeded the high end of our guidance by one percentage point. As expected, we saw room nights grow moderately from the first quarter, as we saw less year-over-year expansion of the booking window in the second quarter. Looking at our room-night growth by region, in the second quarter, Europe was up mid-single digits, Asia was up mid-teens, the rest of the world was up high-single digits, and the U.S. was up mid-single digit

BookMe.com: Now let's move to our second quarter results.

BookMe.com: Our room nights in the second quarter grew 7%, which exceeded the high end of our guidance by one percentage point. As expected, we saw room nights grow moderate from the first quarter, and we saw less year-over-year expansion of the booking window in the second quarter.

BookMe.com: Looking at our room-night growth by region, in the second quarter, Europe was up mid-single digits, Asia was up mid-teens, the rest of the world was up high-single digits, and the U.S. was up mid-single digits.

Ewout Steenbergen: We continue to grow our alternative accommodations business faster than our overall business. For our alternative accommodations at Booking.com, our second-quarter room night growth was 12%, and the global mix of room nights was 36%, which was up two percentage points from the second quarter of 2023. We continue to see encouraging progress in strengthening direct relationships with our travelers and increasing loyalty on our platform. For the last four quarters, the mix of our total room nights coming to us through the direct channel was in the mid-50%.

BookMe.com: We continue to grow our alternative accommodations business faster than our overall business.

BookMe.com: For our alternative accommodations at Booking.com, our second quarter room night growth was 12%, and the global mix of room nights was 36%, which was up two percentage points from the second quarter of 2023.

BookMe.com: We continue to see encouraging progress in strengthening direct relationships with our travelers and increasing loyalty on our platforms.

BookMe.com: Over the last four quarters, the mix of our total room nights coming to us through the Direct Channel was in the mid 50% range, and when we exclude our B2B business was in the low 60% range.

Ewout Steenbergen: And when we exclude our B2B business, it was in the low 60%. We've seen both of these mixes continue to increase year over year. The mobile ad mix of our total room nights was about 53%, which was up six percentage points from the second quarter of 2023. We continue to see that the significant majority of bookings received from our mobile apps come through the Direct Channel. For our Genius Loyalty Program at Booking.com, we continue to see a year-over-year increase in the mix of room nights booked by travelers in the higher Genius tiers of Levels 2 and 3. These members booked more than half of their room nights over the past four quarters.

BookMe.com: We've seen both of these mixes continue to increase year over year.

BookMe.com: Mobile app mix of our total room nights was about 53 percent, which was up six percentage points from the second quarter of 2023. We continue to see that the significant majority of bookings received from our mobile apps come through the Direct Channel.

BookMe.com: For our Genius Loyalty Program at Booking.com, we continue to see a year-over-year increase in the mix of room nights booked by travelers in the higher Genius tiers of Levels 2 and 3. These members booked more than half of their room nights over the past four quarters.

Ewout Steenbergen: Outside of accommodations, we saw airline tickets booked on our platforms in the second quarter increase 28 percent, about in line with our expectations, driven by the continued growth of the flight offerings of Booking.com and Agoda. Second quarter growth bookings increased 4%, which was approximately three percentage points lower than the 7% room night growth due to about two percentage points of negative impact from changes in effects and about 1% lower constant currency accommodation ADR. The year-over-year ADR decline was negatively impacted by a higher mix of room nights from Asia.

BookMe.com: Outside of accommodations, we saw airline tickets booked on our platforms in the second quarter increased 28 percent, about in line with our expectations, driven by the continued growth of flight offerings of Booking.com and Agoda.

Speaker Change: Second quarter growth in bookings increased 4%, which was approximately 3 percentage points lower than the 7% room-night growth, due to about 2 percentage points of negative impact on changes in effects, and about 1% lower constant currency accommodation ADRs.

BookMe.com: The year-over-year ADR decline was negatively impacted by a higher mix of room nights from Asia. Excluding regional mix, constant currency ADRs were about flat versus 2023.

Ewout Steenbergen: Excluding regional mix, constant currency ADRs were about flat versus 2023. While room-night growth was above the high end of our guidance range, bookings growth came in at the midpoint of our range due to about 2% lower constant currency accommodation ADRs versus our expectation. In addition, our growth bookings were negatively impacted by lower flight ticket prices in line with the recent trends we have heard from many airlines. Second quarter revenue of $5.9 billion drew 7% year over year, which exceeded the high end of our guidance by 1 percentage point. Revenue growth was negatively impacted by about two percentage points from the change in Easter timing and two percentage points from changes in FX.

BookMe.com: While room light growth was above the high end of our guidance range, growth bookings growth came in at the midpoint of our range due to about 2% lower constant currency accommodation ADRs versus our expectation.

BookMe.com: In addition, our growth bookings were negatively impacted by lower flight ticket prices in line with the recent trends we have heard from many airlines.

BookMe.com: Second quarter revenue of $5.9 billion drew 7% year over year, which exceeded the high end of our guidance by one percentage point.

BookMe.com: Revenue growth was negatively impacted by about 2 percentage points from the change in Easter timing and 2 percentage points from changes in FX.

Ewout Steenbergen: Adjusting for these two items, revenue would have grown about 11%. Revenue as a percentage of growth bookings was 14.1%, which was slightly higher than expected. This was due to a timing benefit as we saw growth bookings growth decelerate in the quarter and a less expended booking window than expected. Additionally, revenue associated with payments was higher than expected. Marketing expense, which is a highly variable expense line, increased 8% year over year.

BookMe.com: Adjusting for these two items, revenue would have grown about 11 percent.

BookMe.com: Revenue as a percentage of growth bookings was 14.1%, which was slightly higher than expected. Due to a timing benefit, as we saw growth bookings growth decelerate in the quarter and a less expanded booking window than expected.

BookMe.com: Additionally, revenue associated with payments was higher than expected.

BookMe.com: Marketing Expense, which is a highly variable expense line, increased 8% year-over-year.

Ewout Steenbergen: Marketing expense as a percentage of growth bookings was 4.7%, about 15 basis points higher than the second quarter of 2023, due primarily to the timing of brand marketing spend, as well as increased spend in social media channels. Second quarter adjusted sales and other expenses as a percentage of growth bookings were 1.9%, about 15 basis points higher than last year due to a higher merchant mix and higher transaction tax. Our more fixed expenses, on an adjusted basis, were up 5% and were below our expectations across all three line items, personnel, G&A, and IT.

BookMe.com: Marketing expense as a percentage of growth bookings was 4.7%, about 15 basis points higher than the second quarter of 2023, due primarily to the timing of brand marketing spend, as well as increased spend in social media channels.

BookMe.com: Second quarter adjusted sales and other expenses as a percentage of growth bookings was 1.9%, about 15 basis points higher than last year, due to a higher merchant mix and higher transaction taxes.

BookMe.com: Our more fixed expenses on an adjusted basis were up 5% and were below our expectation across all three line items.

Ewout Steenbergen: We're very focused on carefully managing the growth of our fixed expenses and are taking actions to help improve our operating leverage in future quarters. Adjusted EBITDA of $1.9 billion was above our expectations, largely driven by higher revenue and lower than expected fixed expenses. Adjusted EBITDA grew 7% despite approximately 5 percentage points of pressure from Easter timing and 2 percentage points from changes in effect.

BookMe.com: and IT. We're very focused on carefully managing the growth of our more fixed expenses and are taking actions to help improve our operating leverage in future quarters.

BookMe.com: Adjusted EBITDA of $1.9 billion was above our expectations, largely driven by higher revenue and lower-than-expected fixed expenses. Adjusted EBITDA grew 7% despite approximately 5 percentage points of pressure from Easter timing and 2 percentage points from changes in FX.

Ewout Steenbergen: Adjusting for these two items, Adjusted EBITDA would have grown about 14%. When looking at our Adjusted EBITDA margins for the first half of 2024, which neutralizes the impact of the Easter timing shift, we're pleased to see 160 basis points of margin expansion versus the first half of 2023. Now on to our cash and liquidity position, our second quarter ending cash and investments balance of $16.8 billion was up versus our first quarter ending balance of $16.4 billion due to about $2.4 billion of free cash flow generated in the quarter, partially offset by about $1.9 billion of capital return, including share rate purchases and debit, We expect third quarter room night growth to be between 3% and 5%, a sequential deceleration as we expect the third quarter to benefit less from a year-over-year expansion of the booking window than we saw in the second quarter.

BookMe.com: Adjusting for these two items, adjusted EBITDA would have grown about 14 percent.

BookMe.com: When looking at our adjusted EBITDA margins for the first half of 2024, which neutralizes the impact of the Easter timing shift, we're pleased to see 160 basis points of margin expansion versus the first half of 2023.

BookMe.com: Adjusted net income of over $1.4 billion was up 3%, slower than the growth in adjusted EBITDA due primarily to higher income tax expenses, which was impacted by some discrete items.

BookMe.com: Adjusted EPS of $41.90 per share was up 11% and benefited from a 7% lower average share count than the second quarter of 2023.

BookMe.com: On a gap basis, net income was over $1.5 billion in the second quarter.

BookMe.com: Now on to our cash and liquidity position, our second quarter ending cash and investments balance.

BookMe.com: of $16.8 billion was up versus our first quarter ending balance of $16.4 billion.

BookMe.com: due to about $2.4 billion of free cash flow generated in the quarter, partially offset by about $1.9 billion of capital return, including share rate purchases and dividends.

BookMe.com: Moving to our thoughts for the third quarter.

Speaker Change: We expect third quarter room night growth to be between 3% and 5%, a sequential deceleration as we expect the third quarter to benefit less from a year-over-year expansion of the booking window than we saw in the second quarter.

Ewout Steenbergen: For the third quarter, we expect the booking window to be more similar to the last. We expect third-quarter booking growth to be between 2% and 4%, slightly below room-night growth due to about 1% of negative impact from changes in effects. We expect constant currency ADRs to be down slightly year-over-year and for this to be offset by a slight benefit from flight bookings. We expect third-quarter revenue growth to be between 2% and 4%. We expect third-quarter adjusted EBITDA to be between about $3.25 and $3.35 billion, about flat year-over-year at the midpoint of the range.

BookMe.com: For the third quarter, we expect the booking window to be more similar to last year.

BookMe.com: Additionally, we have seen a mild moderation in the market growth in Europe over the last couple of months, though our growth in Europe has remained stable from May through July , and we believe we continue to perform well relative to the market.

Speaker Change: We expect third quarter growth booking growth to be between 2% and 4%, slightly below room night growth due to about one percentage point of negative impact from changes in effects.

Speaker Change: We expect constant currency ADRs to be down slightly year over year, and for this to be offset by a slight benefit on flight bookings growth.

Speaker Change: While we continue to expect growth in flight bookings, we believe this will be less than previously expected due to lower flight ticket prices.

Speaker Change: We expect third-quarter revenue growth to be between 2 and 4 percent. We expect third-quarter adjusted EBITDA to be between about $3.25 and $3.35 billion, about flat year-over-year at the midpoint of the range.

Speaker Change: We expect Adjusted EBITDA to grow slower than revenues due to de-leverage from sales and other expenses and from growth in IT expenses related to higher software license fees and increased cloud costs.

Speaker Change: We expect third quarter revenue and adjusted EBITDA growth to also be negatively impacted by one percentage point from changes in FX.

Ewout Steenbergen: In terms of our outlook for the full year, we're adjusting our growth bookings growth expectation to faster than 6%, which is a bit lower than our prior expectation due to less growth in flight growth bookings as a result of the lower flight ticket prices I previously mentioned. We continue to expect about one percentage point of negative impact on changes in effects on our top-line growth rate. Great, thank you so much. If you would like to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again.

Speaker Change: In terms of our outlook for the full year, we're adjusting our growth bookings growth expectation to faster than 6%, which is a bit lower than our prior expectation due to less growth in flight growth bookings as a result of the lower flight ticket prices I previously mentioned.

Speaker Change: While flight prices have come down, we still expect strong growth in flight tickets for the year as we continue to expand the flight offerings at Booking.com and Agoda. We expect accommodation ADRs will be about flat to down slightly on a constant currency basis.

Speaker Change: For revenue, we now expect revenue growth of more than 7%, which is a bit higher than our prior guidance, based on the outperformance in the first half of the year and our expectation for higher revenue associated with payments.

Speaker Change: Revenue is impacted to a much lesser extent than growth bookings from the decline in flight ticket prices.

Speaker Change: We continue to expect about one percentage point of negative impact on changes in effects on our top-line growth rates.

Speaker Change: We're reducing our fixed OPEX growth expectation to low double digits as we continue to focus on bringing this growth rate down over time.

Speaker Change: We expect adjusted EBITDA to grow in the high single digits, which is slightly faster growth than our prior expectation, given our outlook for increased revenue growth and lower fixed OPEX growth.

Speaker Change: Finally, we're increasing our adjusted EPS growth expectation to above 15%.

Speaker Change: In conclusion, we continue to expect 2024 to be a strong year for the company. We remain focused on executing against our strategic initiatives while taking actions to drive greater operating leverage.

Speaker Change: We're excited about our long-term vision for the Connected Trip and enhancing our offering through technology innovation like generative AI. And with that, we will now take your questions. Operator, will you please open the lines?

Speaker Change: Great, thank you so much. If you would like to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again.

Operator: Our first question comes from the line of Mark Mahaney with Evercore. Okay, thanks. I was just asked about European travel conditions, Glenn and Ewout.

Speaker Change: Our first question comes from the line of Mark Mahaney with Evercore.

Speaker Change: Mark, your line is open.

Mark Mahaney: Okay, thanks. I was just asked about the European travel conditions, Glenn and Ewout. It sounded like...

Mark Mahaney: It sounded like the market may be slowing a little bit, but if I'm capturing it right, your performance there seems to have been pretty steady. That sort of indicates market share shifts and gains. Any more color on that?

Speaker Change: The market may be slowing a little bit, but if I'm capturing it right, your performance there seems to have been pretty steady. That sort of indicates market share shifts, market share gains. Any more color on that? Why you would be, why your performance would be relatively...

Glenn Fogel: Why would you be, why would your performance be relatively unchanged, I guess, in a slowing European travel market environment? Thank you. Hi Mark, Glenn.

Speaker Change: Unchanged, I guess, in a slowing European travel market environment. Thank you.

Glenn Fogel: I agree with what you say. I'm very pleased with where we're sitting right now. We've talked in the past about normalization. And we're happy with the numbers that we're seeing so far. Your question sort of assumed a softening of the travel business overall. Let's talk about how much and to what extent.

Speaker Change: Hi Mark, it's Glenn. I agree with what you say. I'm very pleased with where we're sitting right now. We've talked in the past about normalization.

Speaker Change: And we're happy with the numbers that we're seeing so far. Your question sort of assumed a softening of the travel business overall.

Glenn Fogel: Our goal is always to gain share, you know, whether the market goes up or the market goes down. I can't control supply. I can't control demand. I can't control economies.

Speaker Change: This makes talk about how much and to what extent, our goal always is to gain share, you know, whether the mark goes up or the mark goes down, I can't control, I can't control demand, I can't control

Ewout Steenbergen: What I can control is how well we can provide value to the travelers and to the suppliers. As long as we continue to do that, as long as we continue to provide a reason that people should come to us as a traveler or use us as a way to distribute somebody's travel suppliers, we'll continue to gain. And we've seen this in the long run here, and I expect to continue to see it in the long run going forward.

Speaker Change: What I can't control is how well we can provide value to the travelers and to the suppliers.

Speaker Change: As long as we continue to do that, as long as we continue to provide a reason that people should come to us as a traveler or use us as a way to distribute somebody's travel suppliers.

Speaker Change: We'll continue to gain, and we've seen this in the long run here, and I expect to continue to see it in the long run going forward. I can't really give more than that right now.

Ewout Steenbergen: I can't really give more than that right now. Mark, if I may quickly build on the answer that Glenn just gave, it's also important to point out that actually, our growth in Europe has been quite steady and stable in the period from May through July. So yes, we are seeing some mild moderation, but it has been relatively stable over the last couple of months. Okay, thank you very much.

Speaker Change: And Mark, if I may quickly build on the answer that Glenn just gave. It's also important to point out that actually our growth in Europe has been quite steady and stable in the period from May through July . So yes, we are seeing some mild moderation, but it has been relatively stable over the last couple of months.

Speaker Change: Okay. Thank you very much.

Operator: Your next question comes from the line of Kevin Kopelman with TD Cowen. Kevin, your line is open. Great, thanks.

Speaker Change: Your next question comes from the line of Kevin Kopelman with TD Cowen. Kevin, your line is open.

Kevin Kopelman: Could you maybe give a little bit more color on some of the moderation you're seeing, like other indicators like length of stay or any trading down activity that you might be seeing? And given that things have started to slow, how do you gain confidence that they're not going to continue to slow both in room nights and rates? Thanks.

Kevin Kopelman: Great, thanks. Could you maybe give a little bit more color on some of the moderation you're seeing, like other indicators like length of stay or any trading down activity that you might be seeing?

Speaker Change: And given that things have started to slow, you know, how do you gain confidence that they're not going to continue to slow both in room nights and rates? Thanks.

Ewout Steenbergen: Kevin, if you look at the overall conditions of the market, we're not really seeing a trade-down on a global basis. So both in terms of the star ratings, as well as in the length of stay, it's relatively stable to what we have seen in previous periods. Maybe with one exception, there is a really mild indication of some trade-down in the U.S., but otherwise, globally, we see a very steady picture.

Speaker Change: Kevin, if you look at the overall conditions of the market, we're not really seeing a trade down on a global basis. So both in terms of the star ratings, as well as in the length of stay, it's relatively stable to what we have seen in previous periods.

Speaker Change: Maybe with one exception, there is a really mild indication of some trade-down in the U.S. But otherwise, globally, we see a very steady picture.

Ewout Steenbergen: Thanks, and a quick follow-up on ad spend dynamics with the deleverage and expected in the third quarter. Is that more of the same in terms of brand and social spend? If we look at de-leverage in the third quarter, that mostly relates to S&O and fixed OPEX.

Speaker Change: Thanks. A quick follow-up on ad spend dynamics with the deleverage expected in the third quarter. Is that more of the same in terms of brand and social spend?

Speaker Change: If we look at de-leverage in the third quarter, that mostly relates to S&O and fixed OPEX.

Ewout Steenbergen: Marketing, actually, we expect to see leverage in the second half of this year and also from a longer-term perspective because we expect to continue to see some benefit from the expansion in the direct mix. I also would like to point out, and we think it's a really positive message for this call, that we are spending more on social media channels. That's a very attractive channel for us where we're expanding now and where we're investing more, and we can do that at a very attractive incremental ROI. Really, an important point to really highlight with respect to our marketing leverage and the success we're gaining there. Fantastic. Thanks, Ewout.

Speaker Change: Marketing, actually we expect leverage, to see leverage in the second half of this year and also from a longer term perspective because we expect

Speaker Change: to continue to see some benefit from the expansion in the direct mix.

Speaker Change: I also would like to point out, and we think it's a really positive message for this goal, that we are spending more on social media channels. That's a very attractive channel for us, where we are spending now and where we're investing more, and we can do that at very attractive incremental ROI. So really an important point to really highlight with respect to our marketing leverage and the success we're gaining there.

Ewout Steenbergen: I think that's it. Thanks, everyone.

Operator: Your next question comes from the line of Justin Post with Bank of America. Justin, your line is open.

Speaker Change: Your next question comes from...

Speaker Change: Your next question comes from the line of Justin Post with Bank of America. Justin, your line is open.

Justin Post: Great. Glenn, I'd love to hear your perspective on the travel market. Booking's growing 3% to 5%. We know Europe has a really tough competition against reopening last year.

Justin Post: Great. Glenn, I'd love to hear your perspective on the travel market. Booking's growing three to five percent. We know Europe has a really tough comp against reopening last year.

Speaker Change: Is that kind of how you're thinking about longer-term market growth or do you think it's kind of depressed right now on really difficult comps?

Glenn Fogel: Is that kind of how you're thinking about longer-term market growth, or do you think it's kind of depressed right now on really difficult comps? And then I would love to hear about alternative accommodations, really strong growth there and an increasing percentage. Are you featuring that more on your website?

Speaker Change: And then, love to hear about alternative accommodations, you know, really, really strong growth there and increasing percentage. Are you featuring that more on your website? And do you really like the economics of autonomic accommodations? How do you, how do you feel about those economics versus hotel? Thank you.

Glenn Fogel: And do you really like the economics of Toronto accommodations? How do you feel about those economics versus hotels? Thank you.... Hi Justin.

Glenn Fogel: So two separate questions. One's just going back to the general sense of the travel market. And, Yeah, we talked about this a lot on many, many, many calls about how much we believe that the travel market is best influenced by GDP, and that in the long run, GDP goes up, more people travel, more people who couldn't travel get wealthy enough that they can travel. That's a tailwind for us.

Speaker Change: Hi, Justin. So, two separate questions. One's just going back to the general sense of the travel market.

Justin: You know, we talk about this a lot over many, many, many calls, about how much...

Justin: We believe that the travel market is best influenced by GDP.

Speaker Change: And that in the long run, GDP goes up, more people travel, more people who couldn't travel get wealthy enough that they can travel. That's a tailwind for us.

Glenn Fogel: And we talk about other things. You mentioned the 3% to 5%. I mean, lots of people can come up with whatever way you want in terms of global growth. What's the global GDP?

Glenn Fogel: What's that going to do for travel? Numbers aren't that different. They're probably somewhere in that neighborhood.

Speaker Change: and we talk about other things. You mentioned the three to 5%. I mean, lots of people can come up with whatever way you want in terms of global. What's global GDP? What's that gonna do to travel?

Glenn Fogel: Then how much additional can we get out of increasing share because we provide a better service? And then, of course, the other tailwinds of offline to online, another one that's a point in our favor. All these things together believe that the growth algorithm that we've talked about in the past is totally intact.

Speaker Change: Numbers aren't that different, they're somewhere probably in that neighborhood. Then how much additional can we get out of increasing share because we provide a better service?

Speaker Change: And then, of course, there are the other tailwinds of the offline to the online, another one that's a point in our favor. All these things together believe that we, you know, the growth algorithm that we've talked about in the past...

Glenn Fogel: There's going to be volatility, there's going to be variations, there's going to be events that are going to happen globally, macro events that happen that can influence a quarter or a week or a day. But in the long run, we just continue to build what we've been trying to build for a long time, which is a better service. And that's how we do it. And one of the things we've been building and we've been working hard on, I've talked about it for a number of years, how important it is for us to build an alternative accommodations business that will rival anybody's. And we admitted that it was taking us time to build it. We started from behind.

Justin: It's totally intact. There's going to be volatility. There's going to be variations. There's going to be events that are going to happen globally, macro events that happen that can influence a quarter or a week or a day.

Justin: But in the long run, we just continue to build what we've been trying to build for a long time, which is a better service, and that's how we do it.

Justin: And one of the things we've been building, and we've been working hard on, I've talked about it for a number of years, how important it is for us to build an alternative accommodations business.

Glenn Fogel: Another company may have had a bigger head start on us and built it bigger, but we think we've done a really good job of catching up. I love the last call we did a few months ago when we went out, and we talked about our home business.

Justin: that will rival anybody's.

Justin: We admitted that it was taking us time to build it.

Justin: We started from behind. Another company may have had a bigger head start on us and building it bigger. We think we've done a really good job of catching up. You know, I love the last call we did, you know, a few months ago, when we came out, we talked about that our homes business, our homes business, more than, you know, two thirds of the biggest player in the industry.

Glenn Fogel: Our home business is more than two-thirds of the biggest player in the industry. In that last quarter, we said how we had grown faster, 11 of the last 12 quarters. Now, I don't know if our 12% is going to win or not this time.

Justin: In that last quarter, we said how we had grown faster, 11 of the last 12 quarters. Now, I don't know if our 12% is going to win or not this time. I don't know. I'm pleased with that growth rate, though, given the size of the business.

Glenn Fogel: I don't know. I'm pleased with that growth rate, though, given the size of the business. And how are we doing it? We're doing it by doing what we do all things: provide a reason. I said this just to Mark earlier, is that we continue to build out a product that gives a person a reason to come and use it. Now, I don't really care whether the customer uses a home or a hotel or a villa or an igloo. I don't care.

Speaker Change: And how are we doing it? We're doing it by doing what we do all the things is provide a reason, I said this just to Mark earlier, is that continue to build out a product that gives a person a reason to come and use it. Now, I don't really care whether the customer uses a home, or a hotel, or a villa.

Glenn Fogel: I care that they get what they want. That's the important thing. And then we come back. In terms of the profitability of one versus the other, we can go into that and talk about it, but it's not really relevant because what's relevant is making sure they use what they want. We don't try and steer them.

Speaker Change: or Igloo. They don't care.

Justin: I care that they get what they want.

Justin: That's the important thing, and then come back. In terms of the profitability of one versus the other, we can go into that and talk about it, but it's not really relevant, because what's relevant is making sure that they use what they want.

Glenn Fogel: We try and just make sure they have the best tools to choose what they need. In the long run, that's the way we'll win and create a great business. And your next question comes from the line of Doug Anmuth with J.P. Morgan. Doug, your line is open.

Speaker Change: Great, thank you.

Speaker Change: And your next question comes from the line of Doug Anweth with J.P. Morgan. Doug, your line is open.

Glenn Fogel: Thanks for taking questions. Glenn, first, how are you interpreting the relative tightening of the booking window and what does that tell you about the state of the traveler and into the back half? And then, just curious, in your outlook, how much are you contemplating any impact from the tech issues that we've seen over the last couple weeks and their impact on airlines as well? Thank you. Maybe they're thinking, well, maybe rates aren't going to keep on increasing, so I can wait and maybe I'll get a lower price later. I don't know. And I haven't done any data analysis to come up with what the reason is.

Doug Anweth: And then, just curious, in your outlook, how much are you contemplating any impact from the tech issues that we've seen over the last couple weeks and their impact to airlines as well? Thank you.

Speaker Change: And we saw it expanding, expanding, expanding. Of course, at some point, it has to stop, right? I mean, eventually, it can't keep getting bigger and bigger.

Glenn Fogel: The fact is, the window gets bigger, and the window gets smaller. That, of course, influences any particular quarter, but in the long run, it all averages out. So I'm not going to worry too much about that. What we do make sure, though, is make sure that we're spending the right amount of marketing money to try and get the right conversion and do it for the right ROI, and that's what we continue to do. And we're very careful with that.

Speaker Change: So I'm not going to worry too much about that. What we do make sure though is make sure that we're spending the right amount of marketing money to try and get the right conversion and do it the right ROI and that's what we continue to do and we're very careful with that.

Glenn Fogel: But again, another thing, just like the economies, I can't control what people are going to decide when they want to book. In regard to the tech thing, the tech issues, as soon as you're talking about the horrific events that disrupted travel throughout the world but particularly hit some of our supplier partners significantly, Delta had a horrific event. I saw the CEO's interview on SquawkBox, and I read about what they're planning to do. Thank you so much.

Justin: But again, another thing, just like the economies, I can't control what people are going to decide when they want to book.

Speaker Change: In regard to the tech thing, the tech issues, I assume you're talking about the...

Speaker Change: That's really unfortunate, and hopefully it won't happen again. Hopefully people test their products before they put them out into the market, and hopefully there are backups.

Speaker Change: Things happen, but in travel we know happens a lot, certainly weather happens an awful lot. This is something though that wasn't, you know, weather, which you can't control. This was making sure that your infrastructure works, and it'll be interesting how that lawsuit turns out.

Operator: Maybe two questions, if I could. First, following up on sort of the demand environment, when you think about the shift from goods to services that has played out in the economy more broadly in the last couple years, do you think elements of stability or maybe re-acceleration in terms of demand might be down to price? Or do you think it's just time and duration that might have to sort of find a new footing for demand and maybe elements of a potential return to growth? So will this come down to sort of suppliers and prices or elements of a new normal and finding a new level? I'd be just curious about your perspective there, Glenn.

Glenn Fogel: And then in terms of the broader marketing messages, you know, you've been on this journey to sort of, you know, sort of rejigger the way you're approaching the marketing funnel and driving more direct traffic. What do you see as the key investment priorities built on some of the learnings from the last 12 months that you want to share in terms of how the marketing focus for the company might continue to evolve beyond just 2024? Thanks so much, guys.

Glenn Fogel: In the end, again, this is one of those things that I believe, but I don't have proof of, is that as people get wealthier, they end up spending more money on services. And it adds up to a lot because people generally have one home, you have one couch; you don't keep buying more and more. But as your wealth increases, you want to do things; you want to enjoy things. And we see that happening.

Speaker Change: You don't keep buying more and more of it as your wealth increases do you want to do things you don't enjoy things and we see that happening. There's also there could be something of the Instagram effect.

Glenn Fogel: There could also be something of the Instagram effect where, man, this is human nature that you want to show off to your friends all the great things you're doing. I think that definitely has some impact because certain parts of the world that people never used to travel to, now they are being overrun, and I think that is the Instagram effect there.

Speaker Change: And this is a human nature that you want to show up your friend to your friends all the great things Youre doing I think that definitely has some impact because we certain certain parts of the world that people never used to travel to now there'll be overrun.

Speaker Change: Instagram effect there so that's all good for our business.

Glenn Fogel: So that's all good for our business. I don't know how much further it'll go, though, because people do need to buy homes, they do need to buy couches, et cetera. And I don't see that as a big swing, but I'm not concerned that it's going to flip back and we're going to end up with lower. So that's one. In terms of marketing, maybe I'll talk about that in a couple of days, but I just want to repeat his point earlier about one of the things that I'm happy to see us making some progress in using social. We had a long problem getting that to work for us for many, many years. It just didn't seem to work.

Speaker Change: I don't know how much further will go though because you need to buy homes released by couches et cetera, and I don't see that as a big swing, but I'm not concerned that it's going to flip back and we're going to end up with lower that's one in terms of the marketing pellet talked a couple of things I just wanted to his point earlier about one of the things that I'm happy to see is seeing us, making some progress in using social.

Speaker Change: One problem getting that to work for us for many many years. It just didnt seem to work, but now we're seeing okay. Starting to work in some good rois, putting more money into it like that and I think they will continue doing that another thing we saw that we don't talk a lot about this won't get too specific.

Glenn Fogel: But now we're seeing it, okay, starting to work, getting some good ROIs, putting more money into it like that, and I think they will continue doing that. Another thing we saw that we don't talk a lot about, that's, I won't get too specific, but we saw ourselves using money that we thought was producing a good ROI. And it turned out, you know, it really wasn't. And we shut some of these things down. I won't go into exactly what they were.

Speaker Change: Using money that we thought was producing a good ROI and we turned out it really wasn't and we shut some of these things down and we're going to exactly what they were when we saw you know.

Speaker Change: That's really not hurting us, but we said well that's great and that's something that over the last year or so that we saw some of the benefit in terms of our marketing leverage was coming from that so two good things and I'll, let Dave or anything else to say about marketing there.

Glenn Fogel: It was like, you know, that's really not hurting us. And we said, well, that's great. And that's something that, over the last year or so, we saw some of the benefit in terms of our marketing leverage coming from that. So two good things.

Dave: Yeah, Eric maybe to give you another perspective.

Dave: So I'm now for five months with the company a lot of joy lot of pleasure to be here and a great honor, but I'm also of course looking at some of the perceptions of the company I think it's still very much an outdated perception out there that we are largely dependent in terms of sales on our business on the page.

Speaker Change: Actually we're emphasizing a lot as you have heard in our calls around the direct mix and being now in the low 60% level for B to C, which is really a game changer from my perspective for the company also we're very much diversifying our pay channels, which is very important because this is a <unk>.

Speaker Change: Very dynamic worlds. This space channels are changing all the time they are changing their algorithms.

Speaker Change: I'm really impressed about the science that the company has behind it space channels. The algorithms that we are adjusting to optimizing all the time the way how we spend our paid marketing dollars and how are we investing debt and so it's.

Speaker Change: There is no silver bullet, it's all the time really the details about your optimization how to get to the highest number of new customers coming to us through the channels and the most optimal way with the most attractive rois and Super impressed how the company is doing that and I think that gives us really an edge in terms of.

Speaker Change: How we can deal with pay channels also in the future.

Ewout Steenbergen: Don't let me have anything else to say about marketing. Operator, I think we're ready for the next question. And our next question is from James Lee with Mizzou. Glenn, did we lose you? Hi, yeah, sorry about that.

Speaker Change: And operator, I think we are ready for the next question Okay.

Speaker Change: Okay, great. Thank you so much.

Speaker Change: And our next question is from James Lee with Mizuho.

Speaker Change: James Your line is open.

James Lee: Great. Thanks for taking my question here to here.

James Lee: First on loyalty program it seems like.

Speaker Change: One of your major peers is having mixed success with their loyalty program and maybe Glenn you can once again talk about how your program is differentiated and that will allow you to have very high rate of repeat bookings.

Speaker Change: And secondly on advertising I noticed that your AD revenues seem to be onto monetize at only 0.7% of gross booking is that a source of opportunity as youre looking to get.

Speaker Change: To take advantage of scale Youll reach and if so maybe help us understand what areas are looking to expand.

Speaker Change: Yeah.

Glenn Fogel: Glenn Thank you.

Operator: I'm thinking of the answer. I'm gonna let Ewout handle the ad opportunity. I'll talk about our loyalty program, Genius, which is the Booking.com program, which we talked a little bit about in our prepared remarks. We really haven't talked about it much in terms of numbers in the past. That's the point that it works.

Speaker Change: Hi, yes, sorry about that.

Glenn Fogel: Thinking of the answer.

Speaker Change: I'll, let <unk> handle b.

Speaker Change: AD opportunity I'll talk about our loyalty program genius, which is the booking dot com program, which.

Speaker Change: Which we talked a little bit about in our prepared remarks, we really haven't talked about it much in terms of numbers in the past.

Glenn Fogel: But I was just really pleased to be able to talk about our level two and level three players.

Glenn Fogel: 30% of our active.

Glenn Fogel: User active travelers are level, two or level, three and we talked about that gives us more than half.

Speaker Change: So the booking dot com business, which is really great that we talked about how they come back more frequently and they come back more direct.

Glenn Fogel: And one of the great things about it is, for the most part, we're not paying for it. Our partners are supplying almost all the benefits right now that we talked about. We are also putting in some benefits at a time, and we're going to experiment with putting more in ourselves. That is where we're driving to. And I see it happening now.

Speaker Change: That's the point that it works in one of the great things about it is for the most part we're not paying for it our partners are supplying almost all of the benefit right now, but we talked about we are also putting some benefits at a time, we're going to experiment with putting more in ourselves.

Speaker Change: But it is a great thing you can why why did the suppliers do it they do it because it gets them incremental demand I guess on demand when they need it when they want it.

Speaker Change: It's very flexible we worked together with them with these partners. So they can get the demand and the reasonably good demand is because our high genius level people are high spending people and they are going to come in theyre going to use those services. It's really a win win win win for our travelers win for our partners a win for us.

Speaker Change: A lot of people who are already doing a program like that so we think it does differentiate and I'm really happy to see car rental now doing a lot more of it and we're experimenting with flights.

Speaker Change: And part of our whole vision of the connected trip the genius program fitting right into that kind of all different types of permutations of ways to provide better benefits to travelers and used in a way a scientific way of data driven way.

Speaker Change: Using all of our AI capabilities all the data we have so that we can come up with the best solution for both sides of the marketplace that is where we are that's what we're driving to and I see it happening now in some of the numbers, we said I think theres a little indication.

Glenn Fogel: And some of the numbers we said, I think they give a little indication. And then, of course, there'll be the other thing, which is really he doesn't have any given loyalty to, advertising opportunities are great. And I'll let Ewout talk a little bit about that. You know, I've heard people say, well, what makes you different?

Speaker Change: And then of course there'll be the other thing, which is really <unk> have anything with royalty is advertising opportunities are great and I'll, let <unk> talk a little bit about that.

Speaker Change: James Thank you for pointing out the advertising revenues because it is indeed, a very attractive.

Speaker Change: Central line that gives us an opportunity in terms of growing our revenues in the future today at this line is mostly coming from kayak and open table.

Speaker Change: There are opportunities of course to think about more advertising income from particularly the apps and the access app use that we're having mostly with our <unk> and booking dot com, but.

Speaker Change: As everyone knows.

Speaker Change: This is a very fine line, because if you get too many advertisement as a traveler on an app, while you're interested in something else that can ultimately also become quite annoying. So finding that optimal point is really important but overall youre right that is an opportunity to help to drive further growth with the company in the future.

Speaker Change: Next to many other opportunities we have because I think that's actually the exciting part for US is a business. We're not just growing with the market. We have so many opportunities to grow faster. If it is alternative accommodations, we discussed or the multiple verticals around the connected trip, we discussed our growing geographically in Asia and the U S around payment.

Speaker Change: That's around generative AI and many other opportunities so definitely I would put it on the same list as well.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Steven <unk> with UBS Steven Your line is open.

Steven: Right great. Thank you so Glenn I think I heard you talk in the prepared remarks about conducted trips bookings up I think it was 45% and accounting for a high single digit percentage of the mix.

Speaker Change: At this point is there anything you can share about how the basket size of a particular trip.

Speaker Change: Could be moving around and presumably it's up a lot because people are attaching more things and I guess, what the impact to your customer acquisition strategy may be.

Speaker Change: As a result of customer lifetime values go up.

Speaker Change: Yes.

Speaker Change: Sure well I won't give specifics I'll confirm what you say is true is that.

Speaker Change: Somebody buys two things, it's definitely going to be bigger than one thing and also because they bought more things as we use the science as we use our data as we use all the capabilities. We have come up with what is the value from that customer well how much should we spend to attract that person is going to change obviously and it's also the.

Speaker Change: Question is in terms of loyalty, we found and.

Speaker Change: It does.

Speaker Change: Makes sense, a more satisfied customer is going to come back more often and people in the connected trip people who use the connected trip, we do see a high repeat higher repeat rate for Connecticut person and we see them coming direct and the great thing about the connected trip to is that in the past with just one vertical which was.

Speaker Change: Does the hotel business, we are missing on customers, who wanted to start with flights and now with flights people are starting at flights may come in they buy something else too and also the convenience factor that goes into the whole is why the connected trip.

Speaker Change: I've heard from people say well what makes you different and the truth is right now or is there any different because we don't have the full connected trip down yet the way I wanted to be by the end of the day, we all know how frustrating travel is and we know how much easier. It would be if there was just one place one person who would handle.

Glenn Fogel: And the truth is, right now, we're semi-different because we don't have the full Connected Trip done yet the way I want it to be. But at the end of the day, we all know how frustrating travel is. And we know how much easier it would be if there was just one place, one person who would handle everything for you and put it all together in the way that was the most optimal way with all the different things you have to decide.

Speaker Change: Everything for you.

Speaker Change: Put them altogether and the way that was the optimal way with all the different things you have to decide upon.

Speaker Change: And then if anything went wrong that it would all get fixed and now with the benefits of journey II coming out and the progress being made with it I talked to our people in customer service and what we're putting together there.

Speaker Change: I believe we will create something that truly is differentiating and that will create a reason that people will want to come to us.

Speaker Change: More people will come to us more opportunities we have to work with our partners to provide them opportunities to help build their businesses again get to use it again I could say win win win again, because that's really what we're trying to achieve here.

Glenn Fogel: The more people come to us, the more opportunities we have to work with our partners to provide them opportunities to help build their business. Lee, thank you so much for asking the question because, at this point in time, we are really putting much more emphasis on this particular area and looking for more operating leverage for the company in the future. And we should be particularly well positioned to do that because we have the skills.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: And your next question comes from the line of Lee Horowitz with Deutsche Bank. Your line is now open.

Lee Horowitz: Great. Thanks for the question so the modestly softer travel environment that the industry seems to be expecting in second half of the year seems to be working through models by way of pricing pressures I guess, Eva can you comment some on how you think about flexing your cost structure going forward to the extent that's a hotel ADR has become a bigger headwind for the industry and by extension your adjusted EBITDA.

Eva: <unk> margins.

Eva: Lee. Thank you so much for asking the question because we are at this point in time really putting much more emphasis on this particular area and looking for more operating leverage for the company in the future and we should particularly to be well positioned to do that because we have to scale. So we should be able to run.

Ewout Steenbergen: So we should be able to run much more volume over the same fixed infrastructure that we have as a company in the future and take advantage of that. And take advantage of that in the way that we can reinvest in new growth initiatives as well as, of course, benefit EBITDA margins and return capital to our shareholders. So let me give you a couple of examples of what we're doing at this moment. We have already done a couple of reorganizations in some of our businesses. We have been looking very carefully at headcount. In some places, we have put a headcount pause in place.

Eva: Much more folio over the same fixed infrastructure that we have as a company in the future and take advantage of that and take advantage of that in a way that we can reinvest in new growth initiatives as well as of course also benefiting EBITDA margins and return of capital to our shareholders. So let me give you a couple of examples.

Eva: What we are doing at this moment, we have already done a couple of reorganizations in some of our businesses.

Eva: We have been looking very carefully at head count in some places to put our head count Pos in place.

Ewout Steenbergen: We're looking at some expense benchmarking in some other brands and businesses, looking at procurement and real estate and many other areas. So more to come on that over the next couple of quarters, and I can give you more details. But definitely, this has become a really big focus area, and we're pleased that, therefore, we can also say to you that for the full year guidance, we're now reducing the outlook with respect to fixed OPX from low to mid teens to now low double digits. As well as, we continue to focus on growing our fixed OPX at a lower level than the top line growth in 2025. Great, thank you.

Eva: Looking at some expense benchmarking and some other brands and businesses looking at procurement and real estate and many other areas. So more to come on that over the next couple of quarters that I can give you more details, but definitely this has become a really big focus area and we're pleased that therefore, we can also say to you that for the full year guidance.

Eva: We are now reducing the outlook in with respect to fixed opex from.

Eva: Low to mid teens to now low double digits as well as we continue to focus on growing our fixed opex at a lower level than the top line growth in 2025.

Speaker Change: Very helpful. Thank you and then Glenn maybe on alternative accommodations, you continued to deliver very healthy supply growth. There do you feel like you are reaching a point of supply parity relative to your peers in the U S. Specifically, where you can perhaps lean in more aggressively investing against marketing and discounting within this vertical to sort of accelerate share gains.

Glenn Fogel: I have to admit I don't believe we are at that level at all right now, but that to me is an incredible opportunity. The fact that we are performing as well as we are in terms of our overall number but we still do not have anywhere near the number or the type of.

Glenn Fogel: <unk> home accommodations in the U S to be fully competitive is while it's a disappointment to me that's not done yet is an opportunity where we have all this upside still to come and we won't be spending huge amounts of money on a sub par product so not to fear, we're not going to do that we're going to instead of spending the money that we're spending now to make.

Glenn Fogel: Sure we get the properties we need.

Glenn Fogel: The things up and running it the way we want the product the way we want it to be so nobody ever comes to our site and feels disappointed because it wasn't as good as X. That's what we're working on right now clearly the numbers show that we're doing a good job in many parts of the world, but the U S is to me.

Speaker Change: That is great opportunity and for people, who live in the New York area. You know if you were looking for I use. This example, all the time because I live in the New York area, you were looking for a rental.

Glenn Fogel: Wanted to home in the Hamptons. This summer when you came to our site you probably achieved theres not a lot here compared to some other people I don't want that to be I want us to have as many if not more and I want it to be easier for them to come I want the trust coming to booking is a better way to get that summer rental.

Glenn Fogel: We're going to work on that and that's good for us and opportunity for us.

Glenn Fogel: But your answer is correct, we're not there yet.

Speaker Change: Great. Thank you.

Glenn Fogel: Okay.

Operator: Your next question comes from the line of John Colantoni with Jeffreys. John, your line is, I'm curious why you're less excited about the opportunity in B2B relative to some of the other players in the space. John, we are not really recognizing that math, and actually, we are really encouraged by the growth of our B2B business as well. You're right that, overall, it's a smaller business than some other players in our industry, but we have a couple of propositions that are really strong, and all of our brands are active in this space. Booking.com is active in this space, Priceline with Get A Room, Agoda with Rocket Travel, and many other propositions that we have in the market.

Speaker Change: Your next question comes from the line of John Cowen Tony with Jefferies. John Your line is open.

John Colantoni: So, it is an important part of our commercial strategy, but it is definitely something that is a bit smaller than other players. Thank you. And you're next. Glad that we're seeing that we did better in America. I'd like to do even better.

Glenn Fogel: Great.

Speaker Change: Thanks for taking my questions.

Speaker Change: You mentioned direct bookings.

Speaker Change: Mid 50% of total and low 60%, excluding b to B, which I think implies your BBB mixed decrease from last year, if I'm doing the math correctly.

Speaker Change: In general, but in general <unk>.

Speaker Change: This smaller offering relative to your biggest competitor and I imagine this was a strategic decision, but I'm curious why you're less excited about the opportunity in.

Speaker Change: <unk> relative to some of the other players in the space.

John: John we are now.

Speaker Change: Not really recognizing that mass and actually we are really encouraged by the growth of our <unk> business as well youre right. It overall, it's a smaller business that some other players in our industry, but we have a couple of propositions that are really strong.

Speaker Change: All of our brands are actually active in this space booking dot com is active in this space Priceline with get a room, a goat with rockets travel and many other propositions that we have in the market. So it is an important part of our commercial strategy, but it is definitely something that is a bit smaller than other players.

Speaker Change: Okay.

Speaker Change: Great and maybe a second one on alternative accommodations.

Speaker Change: I think just broadly speaking marketing intensity in the alternative space appears to have escalated a bit year to date talk about bookings offering and positioning in the in this in the vertical and how that positions you to sort of continue delivering.

Speaker Change: <unk> of growth if the competitive <unk>.

Speaker Change: Environment continues to ramp over time.

Speaker Change: Okay.

Speaker Change: Yeah, John I think actually our proposition is unique with respect to alternate difficult mutations because we're putting both traditional and alternative accommodations on our same platform. So we have the benefit of all our brand marketing spend all our paid marketing spend coming to get are on the same platform and <unk>.

Speaker Change: The traveler and opportunity to speak and select their best option, maybe they are coming in and looking for two hotel rooms for their family and ending up by booking an apartment with two bedrooms and theyre very happy with that that without the outcome as Glenn said earlier, we are actually at not agnostic about which.

Glenn Fogel: Direction. This is staking customers because it is important that they are finding the best option for them ultimately how to travel we're agnostic from an economics perspective about this and it is all about making sure we have the most attractive proposition in the market, but this is from our perspective a differentiator.

Speaker Change: Because we are able to bring all of those supply opportunities together on our platforms.

Speaker Change: The company.

Speaker Change: Thanks, so much.

Speaker Change: Thank you and your next.

Nevada Con: Your next question comes from the line of Nevada Con.

Speaker Change: With <unk> Securities. Your line is open.

Speaker Change: Yes.

Nevada Con: Yeah, Hi, Thanks, a lot.

Speaker Change: Maybe just some days.

Speaker Change: Commentary on.

Speaker Change: Looking into kind of thoughts.

Speaker Change: Not expanding as much can you maybe just talk about if youre seeing any mix in euro and yen.

Speaker Change: Cross border versus domestic bookings that might have been even give me a minute.

Speaker Change: On the second question I have is on the on the.

Speaker Change: The U S.

Speaker Change: It seems like a big number.

Speaker Change: A little bit versus last quarter.

Speaker Change: And wondering if it has if it is driven by.

Speaker Change: Alternative lodging.

Speaker Change: Just one for chase.

Speaker Change: Thank you.

Speaker Change: Why don't you take that first one and then I'll talk a little bit about the U S.

Speaker Change: The increase we saw.

Speaker Change: For the second quarter versus the first quarter.

Glenn Fogel: Now that's the way we look at booking window is as Glenn actually commented on a couple of minutes ago to some extent it doesn't matter for us.

Speaker Change: As a matter of when a traveler actually books, because they will travel at a certain point in time when they travel they have the experience and then at that point, we will recognize the revenues and the economics to the company. So if you look at the performance of the business over a multiple quarter. This is averaging out <unk>.

Speaker Change: Bukhara book earlier or later ultimately for the same trip and that can really depend on many factors. It can depend on assumptions, what will pricing do overtime or looking in shorten flights or is looking in shorten accommodations or other factors why bucharest might come to us.

Speaker Change: Earlier or later for the same trip, but it is important if any investor looks at us from a medium and long term perspective, it doesn't matter because over time, it's averaging out and we will deliver the same results for our shareholders and continue to build our business over time with all the opportunities we have in.

Speaker Change: In regards to the U S and trying to distinguish this because we did better in ohms, where do we better hotels.

Speaker Change: I really try and stay away from that a little bit we're trying to provide a traveler with what they need and providing all the different opportunities wherever.

Speaker Change: Very happy of the second quarter accelerated versus the first quarter for our U S business. That's very good I'm pleased by doing better.

Speaker Change: The long run, but I'm not going to say, it's because we did X y or Z and then we have to do well in every single part of this business that means we've got to provide the homes absolutely I talked about that we got to be a good partner to the hotels and provide them with the incremental demand they need when they need. It. In addition, the connected trip we got to make sure we're getting all the inventory we can.

Speaker Change: In terms of flight, making sure we have that ground transportation as I always say and.

Speaker Change: Nobody goes on holiday to hang out in the accommodation. They wanted to do stock. So we got to make sure we get our attractions things working well and that we're putting up the right offers to the person that they want when they want at the right time and of course, <unk> is providing insurance and tie it all together.

Speaker Change: Merchant platform, which we put in our prepared remarks on the numbers very pleased about the increase in that glad to see it continuing to go up glad is because it provides a great convenience. It makes it easier to do a lot of things in the connected trip all working together, but the ultimate thing, which is having a better experience for the travelers and <unk>.

Speaker Change: Any more opportunities for our supplier partners glad that we're seeing that we did better in America I would like to do even better in the long run I think America. The U S is a great opportunity we continue to under index, there, which means for me Thats a place that we can do better.

Speaker Change: Understood. Thanks.

Speaker Change: Again, thank you.

Speaker Change: Okay.

Speaker Change: Thank you. This concludes I think thats the <unk> question.

Speaker Change: <unk>.

Speaker Change: Yes that was our last question I'm curious formats and with that I will hand, the call back over to you Mr. Sokol for closing remarks.

Mr. Sokol: Thank you so I wanted to thank our partners our customers our dedicated employees our shareholders. We greatly appreciate everyone's support as we continue to build on our long term vision for our company. Thank you very much and good night.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect.

Speaker Change: Yeah.