Q1 2025 Booking Holdings Inc Earnings Call
Welcome to booking Holdings' first quarter 2025 conference call.
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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.
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Glenn: A copy of booking Holdings' earnings press release is available in the for investors section of booking Holdings' website, Www Dot booking holdings Dot com and now I'd like to introduce booking Holdings' speakers for this afternoon Glenn.
Speaker Change: Vogel and a route Steenbergen go ahead gentlemen.
Speaker Change: Thank you and welcome to booking Holdings' first quarter conference call.
Speaker Change: I'm joined this afternoon by our CFO <unk>.
Speaker Change: Steenbergen.
steenbergen: I am pleased to report a good start to 2025, we saw healthy growth in room nights and gross bookings as we benefited from our geographical diversification.
steenbergen: When travelers choose to alter their destination preferences, our global network of partner suppliers is a valuable asset.
steenbergen: Our solid topline results combined with our continued focus on driving disciplined management of our fixed expenses helped us deliver strong bottom line outperformance in the quarter.
steenbergen: As far as from our near term financial results I'm excited about our team's continued progress in advancing our strategic priorities. I'm also excited about our continued work to incorporate AI technology in multiple ways across our platforms, which will continue to position us well for the long term.
steenbergen: Our first quarter room nights of $319 million.
steenbergen: First quarter, we have ever exceeded 300 million room nights in a single quarter slightly exceeded the high end of our prior expectations and grew over 7% year over year.
steenbergen: First quarter revenue of $4 $8 billion grew 8% year over year and adjusted EBITDA of about $1 1 billion increased 21% year over year.
steenbergen: Both revenue and adjusted EBITDA exceeded the high end of our prior guidance ranges.
steenbergen: Finally, adjusted earnings per share in the quarter grew 22% year over year.
steenbergen: At the start of the second quarter. We are currently seeing stable levels of global leisure travel demand, despite rising geopolitical and macroeconomic concerns.
steenbergen: <unk> will provide further details on our first quarter results and our thoughts on the second quarter and full year.
steenbergen: While we are encouraged by our first quarter results and the relative stability of trends, we have seen so far in the second quarter, we fully recognize the current geopolitical and macroeconomic uncertainty and concerns about the strength of consumer demand. However, we believe our global diversification <unk>.
steenbergen: Onto liquidity strong free cash flow and historical record of executing effectively position us well to navigate potential changes in the environment.
steenbergen: With the potential changes in the near term I remain confident in the long term outlook for the travel industry, given the importance of travel to consumers and as we witnessed as we exited the pandemic people deep desires to experience the world.
steenbergen: We will continue to drive our business for the long term, while remaining focused on what we can control today to deliver value to our travelers and supplier partners.
steenbergen: You're from and advancing our strategic initiatives, such as increasing the alternative accommodations available to our travelers enhancing our genius offering building towards our connected trip vision and further innovating our AI capabilities and.
And we will do this while managing our operations with the effective and disciplined approach we have demonstrated throughout our history.
steenbergen: Focusing on our supplier partners, we remain committed to being a trusted and valuable partner to all of the combination properties on our platforms. We.
steenbergen: We do so by delivering incremental travel demand and developing products and features designed to support the success of these businesses.
steenbergen: Many of which are small independents.
steenbergen: In times of economic uncertainty, we believe the incremental demand that we can deliver to our partners is even more valuable and this presents an opportunity to work closely with our partners to make sure. They are well positioned on our platform. For example, we can share booking patterns data with a <unk>.
steenbergen: <unk> partner and suggest options that may help that property better capture demand.
steenbergen: We are also leveraging AI technology to better help our partners, whether it's using G&A I at booking com to provide suggested responses to travelers questions that come into our property or some of the development of an AI partner assistant to help a new partner navigate the onboarding process.
steenbergen: We'll continue to build around opportunities, where we can utilize this technology can provide additional value to our partners. We believe these efforts can be particularly helpful for those small and independent businesses with which we are partnering who can now more easily access the data and AI tools that we're providing.
steenbergen: One of the results of our continued focus on driving value to our partners.
steenbergen: Increasing number of partners, making their accommodation supply available on booking dot com.
steenbergen: With growth across both traditional hotels and alternative accommodations booking dotcom as total accommodation listings reached about $31 million by the end of Q1.
steenbergen: For alternative accommodations are booking dot com listings at the end of the first quarter were about $8 1 million increased 9% year over year with growth in every major region.
We believe the increase in accommodation choices for our travelers helps contribute to solid alternative accommodations room night growth of 12% in the first quarter.
steenbergen: Turning to our travelers.
steenbergen: Breadth of supply choices I, just mentioned help us to better deliver a comprehensive planning and booking experience and are one of the important benefits we offer to our travelers. We are laser focused on driving value to our travelers just as we do for our supplier partners and I am pleased to see this focus.
steenbergen: <unk> booked in dot com achieved growth in new travelers as well as repeat travelers in the first quarter. In addition to the growth in travelers I'm encouraged to see that more travelers are choosing to come to our platforms through the direct booking channel, which grew faster than the room nights acquired through paid marketing channels in the first quarter.
steenbergen: Another important way that we can deliver benefits to our travelers is through bookings dotcom genius loyalty program, which provides discounted pricing and other mostly supplier provided benefits to our travelers.
steenbergen: This program also helps to connect more elements of travel as we've extended this program beyond accommodations into other travel verticals. We are encouraged to see more of our travelers continuing to move into our higher genius tiers of levels, two and three which represents over 30% of our active travelers.
steenbergen: These genius level, two and three travelers have a meaningful higher direct booking rate and a higher booking frequency than the rest of our travelers.
steenbergen: We believe AI technology will also play an important role in improving the traveler experience for example at booking Dot com, we're continuing to learn from testing AI powered features including smart filters that help travelers find relevant results faster.
steenbergen: <unk> Q&A the interest specific questions that wouldn't be addressed in a static listing and AI review summaries that allow travelers to more easily sort through thousands of reviews.
steenbergen: Just a few recent examples but we plan to continue integrating AI across additional consumer facing use cases over time.
steenbergen: Yeah, I played a central role in our connected trip vision as we aim to simplify the planning booking and travel experience, making it all more personalised seamless and enjoyable.
steenbergen: And as we build towards our connected trip vision, we believe we are delivering better value to travelers as well as our supplier partners.
steenbergen: We saw connected trip transaction growth of 35% year over year in the first quarter and these connected transactions continue to represent a high single digit percentage of booking dot coms total transactions.
steenbergen: Much of the work in recent years and building towards the connected trip Boone has been standing up the other travel verticals outside of accommodations like flights for example, with air ticket growth of 45% in the first quarter. We continue to see strong growth from our flight platform, which is an important component in many of our.
steenbergen: <unk> connected trips.
Speaker Change: Oh, sorry, the flight we are pleased to have seen strong growth in our attractions vertical in the quarter with attraction tickets, increasing 92% year over year from a modest space.
Speaker Change: While the direct financial impact is minimal today, we believe continuing to enhance the attractions vertical allows us to offer our travelers compelling in destination experiences.
Speaker Change: In dining I'm excited by the progress the open table team is continuing to make including the recent establishment of a strategic partnership with Uber that will include developing integrations of their apps to offer dining reservations access and transportation options.
Speaker Change: When we think about an even more seamless and personalized connected trip experience, we believe that compelling AI powered offerings like a travel vertical specific Egypt will play a central role where.
Speaker Change: We are highly focused on the many opportunities with AI and we'll continue sophisticated work already happening across our company to integrate generative AI into our offerings some of which I mentioned earlier when describing their capabilities for our partners and travelers. We are seeing some of our AI offerings driving faster search in.
Speaker Change: <unk> and conversion and fewer customer support contacts.
Speaker Change: Kayak the team just launched kayak dot AI.
Speaker Change: Which is this test lab for AI first features with the aim to improve <unk> product to be even more personalized and conversational overtime.
Speaker Change: Across the company our teams are testing learning and innovating around how AI can be better incorporate it into our offerings with more to come.
Speaker Change: And then just into our own offerings, where we.
Speaker Change: And with a leading generative air organizations on their HSA developments.
Speaker Change: We're excited for several of our brands to be named as partners for opening eyes, Operator, Egypt, Microsoft Co pilot actions tool and Amazon's Alexa plus.
Speaker Change: While we are still in the very early days. We believe these collaborations reflect our ambition of being at the forefront of this rapidly developing field and are consistent with our long standing approach to work with different potential sources of new customer traffic.
Speaker Change: We will continue to learn how travelers and partners prefer to engage with general via across different touch points and I remain confident in our position and energized by the positive impact this technology is already having.
Speaker Change: In conclusion, I am pleased with the good start to the year and our team's efforts as they continue to advance our strategic initiatives, including our connected trip vision.
Speaker Change: While there is uncertainty around the near term geopolitical and macroeconomic environment. We are confident in the long term growth of travel and in the opportunities ahead for our company as we deploy generative AI technology and aim to deliver an even better offering for our travelers and partners.
Speaker Change: I will now turn the call over to our CFO Dave.
Speaker Change: <unk> steenbergen.
Speaker Change: Thank you Glenn and good afternoon, I will now review our results for the first quarter and provide our current thinking for the second quarter and 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 release.
Speaker Change: We will be posting a summary earnings presentation as well as our prepared remarks to the booking holdings Investor Relations website. After the conclusion of the earnings call.
Speaker Change: Now, let's move to our first quarter results.
Speaker Change: Our room nights in the first quarter grew a bit above 7%, which was slightly above the high end of our guidance looking at our room nights growth by region in the first quarter Europe and Asia were up high single digits rest of World was up low double digits in the U S was up low single.
Speaker Change: Digits.
Speaker Change: In the quarter, we observed notable changes in certain travel patterns. For example, we saw a moderation in trends for inbound travel into the U S, particularly from Bucharest in Canada and to a lesser extent from brokers in Europe. However, we also saw an improvement in trends in other travel corridors.
Speaker Change: For example from Canada to Mexico, resulting in stable growth overall these results demonstrate how our globally diversified business can help to mitigate country specific dynamics, while capturing growth opportunities elsewhere.
While we saw a year over year increase in length of stay on a global basis. We saw a decrease in length of stay in the U S, which could indicate that U S. Consumers are becoming more careful with our spending. We also saw some evidence of a bifurcated economy in the U S is highest star rating Ho.
Speaker Change: <unk> appear to be more resilient than lower star rating hotels, we had not seen either of these dynamics in Europe.
Speaker Change: All of our key strategic initiatives, we continue to see encouraging progress in driving alternative accommodations growth, increasing the direct and mobile app mix of our bookings expanding our genius loyalty program and growing our other troubled verticals.
Speaker Change: We continue to expand our alternative accommodations business faster than the overall business for our alternative accommodations at booking com, our first quarter room night growth was 12% and the global mix of alternative accommodation room nights was 37%, which was up one percentage points.
Speaker Change: From the first quarter of 2024.
Speaker Change: Continue to strengthen our direct relationships with our travelers and increase loyalty on our platforms through our efforts to deliver value to consumers over the last four quarters, our b to C. Direct mix was in the mid 60% range an increase from the low 60% range one year ago.
Speaker Change: The mobile ethics of our total first quarter room nights was in the mid 50% range, which was up from the low 50% range. In 2024, we continue to see that the significant majority of bookings received from our mobile apps come through the direct channel.
Speaker Change: For our seniors loyalty program the mix of booking dot com room nights booked by travelers into higher genius tiers of levels two and three was in the mid 50% range over the last four quarters and this mix continued to increase year over year. These genius level, two and three travelers has a mean.
Speaker Change: Fully higher direct booking rates than our other travelers Im also pleased to share that we delivered another strong quarter of solid growth across our other travel verticals over 16 million airline tickets were booked across our platforms in the first quarter, an increase of 45% year over year.
Speaker Change: Driven by the continued growth of our flight offerings at booking Com and <unk>. We also saw strong growth in attractions with tickets booked up 92% year over year off a modest base.
Speaker Change: First quarter gross bookings increased 7% year over year or about 10% on a constant currency basis. The constant currency growth rate was approximately three percentage points higher than room night's growth due to about two percentage points from higher flight bookings growth as well as an increase in constant currency accommodation.
Speaker Change: <unk> of about 1% a year.
Speaker Change: Year over year, ADR increase was impacted by a higher mix of room nights from Asia, Excluding regional mix constant currency ADR were up about 2% versus the first quarter of 2024.
Speaker Change: The increase in gross bookings slightly exceeded the high end of our guidance driven by less than one percentage point of benefit from changes in FX relative to our expectations.
<unk> currency accommodation adr's in flight tickets growth were about in line with our expectations.
Speaker Change: First quarter revenue of $4 $8 billion grew 8% year over year, which exceeded the high end of our guidance by four percentage points due to higher revenues from facilitating payments as well as less than one percentage points of benefit from changes in FX relative to our expectations.
Speaker Change: Revenue as a percentage of gross bookings of 10.2% was slightly higher than expected due to the higher revenues from payments.
Speaker Change: Constant currency revenue growth was about 10%, but normalizing for the year over year impacts of Easter timing and the leap year constant currency revenue growth was about 15% in the first quarter.
Speaker Change: Marketing expense, which is a highly variable expense line increased 10% year over year marketing expense as a percentage of gross bookings was three 8% and was about in line with our expectations.
Marketing expense as a percentage of gross bookings are slightly higher than the first quarter of 2020 for social media channel spend continues to scale at attractive incremental rois. While successful experimentation has led to improved performance in some of our traditional marketing channels those.
Speaker Change: Improved marketing channels helped to drive increased booker volumes at comparable Rois.
Speaker Change: First quarter sales and other expenses as a percentage of gross bookings was one 5% slightly lower than last year. Despite the higher merchant mix as higher payment expenses were offset by lower bad debt provisions and increased efficiencies in customer service.
Speaker Change: Adjusted fixed operating expenses decreased 3% year over year, which was better than our prior expectation primarily due to lower G&A expenses that benefited from a 17 million dollar reduction of an accrual for certain transaction, Texas personnel expenses came in slightly below our.
Speaker Change: <unk> for the quarter due to a $36 million reduction of our pension accrual we continue to take a disciplined approach towards managing our fixed expenses.
Speaker Change: Adjusted EBITA of approximately $1 $1 billion grew 21% year over year and exceeded the high end of our guidance range by 28% largely due to the higher revenue as well as the better than expected adjusted fixed operating expenses.
Speaker Change: Adjusted EPS of $24 81 per share was up 22% year over year similar to the growth in adjusted EBITDA as the benefit of a 5% lower efforts share count was offset by an increase in interest expense on.
Speaker Change: On a GAAP basis net income was $333 million in the first quarter and was impacted by a mark to market adjustments to the conversion option premium of our convertible notes due may 2025, and then FX remeasurement loss on our euro bonds, partially offset by a return.
Speaker Change: In the accruals related to the Netherlands pension some measure for 2023 and earlier years all of these items were excluded from our adjusted results.
Speaker Change: For the first quarter, we realized a very small amount of in quarter savings from the transformation program. However, we have already taken actions that we expect will enable approximately $300 million in annual run rate savings of which about $150 million is forecasted to be real.
Speaker Change: This year consistent with our prior expectations.
Speaker Change: In the first quarter, we incurred $32 million in transformation costs, which were excluded from our adjusted results.
Speaker Change: To estimate the aggregate transformation costs will be about $400 million to $450 million.
Speaker Change: Which is similar to the run rate savings, we ultimately expect to achieve from the program.
Speaker Change: Now onto our cash and liquidity position, our first quarter, ending cash and investments balance of $16 1 billion.
Speaker Change: Was down versus our fourth quarter, ending balance of $16 7 billion.
Speaker Change: Due to about $2 $1 billion of capital return, including share repurchases and dividends a paydown of about $1 $5 billion for debt that matured in March as well as about $500 million.
Speaker Change: In additional share repurchases to satisfy employee withholding tax obligations, partially offset by about $3 2 billion in.
Speaker Change: And free cash flow generated in the quarter free cash flow in the first quarter benefited by about $1 $9 billion from changes in working capital driven primarily by the seasonal increase in our deferred merchant bookings balance.
Speaker Change: Moving to our thoughts for the second quarter, we have continued to see stable travel demand trends in our business. So far in the second quarter and our guidance for the quarter assumes a continuation of dose trends. However, we will recognize the possibility that these trends could be impacted by the <unk>.
Speaker Change: Increased uncertainty in the geopolitical and macroeconomic environment and the subsequent potential effect on consumer spending and behavior travel patterns or our partners. We will continue to closely monitor the travel environment for any changes.
Speaker Change: Our guidance also assumes recent FX rates, including the Euro U S. Dollar at $1 14 for the remainder of the quarter, we estimate changes and FX will positively impact our second quarter reported growth rates by about four percentage points.
Speaker Change: We currently expect second quarter room night growth to be between 4% and 6%, which includes a slight headwind from the calendar shift of Easter into April.
Speaker Change: We currently expect second quarter gross bookings to increase between 10, and 12%, including a couple of percentage points of positive impact from higher flight tickets growth, partially offset by a slight impact from the calendar shift of Easter we expect constant currency accommodation adr's will be about flat.
Speaker Change: Year over year.
Speaker Change: We currently expect second quarter revenue growth to be between 10, and 12%, including a benefit of about three percentage points from the calendar shift of Easter into April. We currently expect second quarter adjusted EBITDA to be between about $2, one five and $2 2 billion.
Speaker Change: Growing 16% year over year at the high end, which includes about seven percentage points of year over year benefit from the Easter shift.
Speaker Change: Turning to the full year of 2025, although we continued to see stable trends globally. So far in the second quarter, we recognized that our business could be impacted by the increased uncertainty in the geopolitical and macroeconomic environment.
Speaker Change: Therefore, we are widening the range of our full year expectations for constant currency growth at this time, we expect constant currency growth of mid to high single digits for gross bookings and revenue and low to mid teens for adjusted EPS. The high end of each of these ranges remains in line with our prior year.
Speaker Change: Expectations and our long term growth ambition, we continue to expect leverage in our marketing expenses and adjusted fixed operating expenses due to our disciplined management approach. Additionally, we also continue to expect to make targeted reinvestments across the organization of about 100.
Speaker Change: $70 million in 2025.
Speaker Change: At this time, we expect constant currency growth for adjusted EBITDA of high single digits to low double digits, and we expect our adjusted EBITDA margin to expand between 50, and 100 basis points year over year.
Speaker Change: Assuming recent FX rates for the remainder of the year, we estimate changes in FX will positively impact our full year reported growth rates by about two percentage points first is the constant currency growth rates I just mentioned.
Speaker Change: In conclusion, we're pleased with our first quarter results and our team's continued execution toward our strategic initiatives. We remain confident in our ability to successfully navigate through the current environment and take advantage of new opportunities based on our low capital intensity.
Speaker Change: Global diversification and strong financial profile of the company I would like to recognize the success of all our colleagues who are contributing to building a stronger offering for our travelers and partners that will position us well for the long term.
Speaker Change: With that we'll now take your questions operator will you. Please open the lines.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session to ask a question. Please press star one on your telephone keypad and you try your question again Press Star One and your first question comes from the line of Doug Anmuth with J P. Morgan. Please go ahead.
Doug Anmuth: Great. Thanks for taking the questions one for Glen one for about Glenn just on AI can you talk about what drives your confidence that travel vertical specific agents will prove to be valuable over time, and just how it will compare to agents on broader based platforms and then <unk> you.
Doug Anmuth: You mentioned the shift in travel patterns that you're seeing can you talk more about how bookings benefiting from the geographic diversification and whether youre seeing any shift toward lower cost alternatives or shorter booking windows into the summer travel season. Thanks.
Doug Anmuth: Hi, Doug.
Doug Anmuth: That's a good question it's something.
Doug Anmuth: I think a lot of people are wondering about how will.
Doug Anmuth: This new world of AI play out hyperscale or us with very broad.
Doug Anmuth: <unk> narrowed players different domains.
Doug Anmuth: More specific than that going to be better or not.
Doug Anmuth: It's not an either or I think there are actually places for both areas, where we will do well.
Doug Anmuth: So let's take for example, a very large player let's take open AI, who as you know we cut a deal with them, we work with foundry partners and their operator system and of course, we also set one up now.
Doug Anmuth: Earlier remarks about with Microsoft in select surplus and I'd like to thank them.
Doug Anmuth: Comfortable saying, we're having discussions with others.
Doug Anmuth: And that is one way that we will help together do what is best that we both do best they do a great job in creating these very large language models and have a very broad ability to bring in answers to some of these questions well, we now will be able to actually create the booking do what is necessary to.
Doug Anmuth: Execute what the person wants to get it done.
Doug Anmuth: Flip side something that I'm really excited about is what we're working on our own and that is being able to have a narrower.
Doug Anmuth:
Doug Anmuth: Generative AI system that enables people to accomplish the same thing, but we think using all of our resource.
Doug Anmuth: We have the personalization we have incredible abilities are very very smart technologic technology people degrees on that really is incredibly well I know some people are going to go to the Hyperscale I was just going to get used to and obviously, that's where I want to go see them with people right now go to Google, even though I know they would save some status by.
Doug Anmuth: Coming directly to us, which we are seeing and as I think Dave mentioned about how the directors moving up we're now mid sixties when you take out the <unk> stuff and that's an improvement over last year, which was low 60%. This is really good stuff for us in terms of people coming directly but I know some people are like.
Doug Anmuth: I do believe if we provide more value if we make it easier for people to execute what they want in the long run. This will continue to build all the things we've been talking about is cream that seamless frictionless connected trip.
Doug Anmuth: So many people want clean no travel is still a frustrating experience I know we can do it so much better I think we are doing it already I think that's part of the reason why we are doing so well.
I'll, let you answer the second question.
Doug Anmuth: Good afternoon Duck.
Doug Anmuth: I think your question was around the shift in travel patterns and what we're seeing from a geographical perspective. So I think the headline answer there is we see stable demand globally. So from January.
Doug Anmuth: Today in April we have seen very stable demand and don't see any impacts from the general economic environment in our business. So that's really a positive.
Doug Anmuth: If I dive a little bit deeper, yes, we're seeing some underlying changes in trouble preferences and so most of the corridor.
Doug Anmuth: And it also Europeans are traveling less to the U S. You might travel now more to Canada to Asia and intra Europe, what we're seeing I pointed out already out that Canadians are traveling less to the U S or do you see them more traveling to Mexico at this moment for us it doesn't matter, we are agnostic to where.
Doug Anmuth: We are traveling because usually they are spending the same amount just adds another destination and the fact that we are globally. So well diversified just wanted to call out what we have set in the past a little bit over 50% of our business is in Europe about 25% is in Asia low double digit.
Doug Anmuth: In terms of room nights.
Doug Anmuth: So we're very well diversified to help travelers to go through all the destinations and economically we're completely fine neutral with that.
Doug Anmuth: We're seeing globally the length of stay being stable.
Except for the U S. As we called out in our prepared remarks, the booking window is still expanding and if I look at the metric that we call on the books. So how many bookings to already have in the future over the next few months, including the summer period, we see a healthy increase year over year. So generally I would say the underlying.
Doug Anmuth: <unk> are positive with the slight weakness in the U S. But overall our position is really good. Moreover, in a situation like this we can add additional value for our supply partners. They need even more help to really fill their seats filled their rooms. So this is the moment to really step up and deliver that addition.
Doug Anmuth: No value for our supply partners and usually coming out of situations like this.
Doug Anmuth: Are looking much better and were much stronger.
Doug Anmuth: In terms of the partnership.
Doug Anmuth: Thank you both I appreciate it.
Doug Anmuth: Okay.
Speaker Change: Next question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.
Mark Mahaney: Okay, I'm going to ask two questions first on attractions I think across the industry, there's probably going to be a little bit of a greater focus on that this year Glenn.
Speaker Change: Glenn is there anything in particular, that's new about the strategy for you I know you've got this high.
Speaker Change: High growth, but its on a modest space is there something thats caused the opportunity to become more attractive than at other points in the past and then just on the agenda tools that you have on your own sites. The price line Penny et cetera, you want to just talk a little bit about the product path. It seems like there's some really interesting functionality in there based on our tests.
Speaker Change: But it's still kind of beta ask or they could actually literally still listen data. When do you think that will come out and and the average person coming to priceline into booking will actually be able to use the tool and it will be prominently displayed thank you.
Mark Mahaney: Hi, Mark.
Speaker Change: Two good questions.
Speaker Change: Like factories, certainly amount of traction because it gives me an opportunity to talk about that 92% growth rate, which I really like to see so.
Speaker Change: Here's the thing, though and we haven't talked a lot about our traction in the past, but it certainly is within that connected trip vision.
Speaker Change: And if you recall when.
Speaker Change: And I'll leave this out many years ago, even a little bit before the pandemic of course, the pandemic created a little bit of a slowdown due a couple of things in that time, but the idea is the long term vision of the connected trip required us to go basically almost from scratch. The only thing we havent booking dot Com wasn't agency hotel business and that cannot possibly be a foundation.
Speaker Change: Or Ah connected trip to create better experience. So we had a first start doing okay. We need payments. So short building payments or we can have a merchant for the hotels, which is the foundation and then what's the biggest thing that won't flights. We Gotta go flight of course, you saw that 145% growth rate on that one for a quarter like that in the tickets.
Speaker Change: And then we say well we can do other things to the ground transportation ensure we had a we had a car rental business, we had to build up the other stuff too and of course attractions now you can't do everything at once.
Speaker Change: Got to be thinking about what do we need first and how much money you put into it how many people and where should we put et cetera. Now we have all of these verticals up and running and scaling which is great and we did something last year, a little more than a year ago.
Speaker Change: Ranger other people book.
Speaker Change: Our new place called marketplace should help bring this all together and now we're using all of our technology was trying to use all of our data machine learning models and other things and now Gen. Eight Gen. Two to come up to put it together so starting to get a little bit of launch here a little bit of lift.
Speaker Change: We say look the 92% great still relatively smaller number than some of the big players in attractors, who are solely doing just attractions, but I'll tell you. It any tiny and it is going to continue to grow I am very excited because that is something that people really will see is a difference. When you are in destination and I've talked about this in here.
Speaker Change: One in your pocket travel agent your pocket who's, giving you great great deal great opportunity, a great suggestion or something to do and being here.
Speaker Change: I'm getting a lot of examples I won't use the time now because you've heard them before but that's going to be really important for barring that value and it's great to be pretty far along in having set it up and now we're getting more inventory and continue to develop ways to do it. So I'm really really excited about that now the second thing is you're talking about into this idea of the city.
Speaker Change: <unk>.
Speaker Change: And the different things, we have like Penney at Priceline or like the AI trip plan, alright booking and now we just came out kayak on the machine and are not kind of came out of the kayak.
Speaker Change: Another thing coming out.
Speaker Change: All of these things are different approaches to the same thing, which is trying to come up with an easier way for people to be able to accomplish what they want and travel and youre right be it is a good way to say it is early and I use it and from Kazan.
Speaker Change: Well that doesn't look right, that's not right and I understand but these things do take time by the way just so you know.
Speaker Change: But if you use any of the Hyperscale. There's two you get some kind of information that you scratch your head about it's going to take time, you want to know when is it going to be.
Speaker Change: Great Perfect thing I'll tell you John is going to take a little bit of time like each day. It gets a little bit better and I also like the fact that we were working with other big players to really help protect this though so I'm just.
Speaker Change: This is one of these times this new technology.
Speaker Change: Almost feel like it's back when I first started this company in 2000, so many new exciting things coming down the road, they're going to make it so much better I wish I could give you a date mark I can't but I can tell you is coming.
Speaker Change: Thank you Glenn.
Speaker Change: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.
Eric Sheridan: So much for taking the questions maybe two if I could following up on the Skus and the shifts you're seeing around the edges in travel behavior are you yourself changing any focus competitively about where youre aiming some of your incremental growth investments to capitalize on shifts in the broader environment or are you seeing any competitive <unk>.
Eric Sheridan: Steve changes broader across the industry as a result of some of those shifts second.
Eric Sheridan: Second question I think I got this right, but on the on the prepared remarks, I think you made a comment that theres been some successful experimentation and traditional marketing channels to that improved performance and I. Just wanted to know if we can get a little more granularity on what you meant by that in terms of what kind of experiments or what kind of rate of change you might be seeing in terms of approved returns.
Eric Sheridan: Thanks, so much.
Eric Sheridan: Good afternoon, Eric Let me take both questions first in terms of shifts in terms of our investments given what we're seeing across the world. We're not so much making changes at this moment, we very much believe as you know in the long term nature.
Eric Sheridan: Our business, creating value from a medium to long term perspective for our shareholders and not really changing our short term situation to March for opportunistic reasons. So we are continuing with our transformation program, we're continuing with our Reinvestments glenora.
Eric Sheridan: He talks about attractions, which is a part of the reinvestment program is also advertising Gen. AI in several other areas that we are building out fintech as well. So we will continue with that.
Eric Sheridan: We will come to you with alternative accommodations with flights with.
Eric Sheridan: Connected trip to build out our direct channels. So all of that will continue so not so much of a shift.
Eric Sheridan: We are not seeing any changes in terms of trends. So we said, it's very stable in case students shorten T is playing out and again, we're not seeing that today, but in case. This will happen later this year there might be opportunities to shift some of our investments because in fact at that point in time to could be opportunities for us to really take it.
Eric Sheridan: Vantage of such a situation based on based on the financial strength, we are having.
Eric Sheridan: Concrete, but that's not really the case at this at this moment.
Eric Sheridan: In terms of the performance marketing and the traditional performance marketing and what is happening there. What we are seeing is higher performance marketing spend as a percentage of gross bookings, but that was planned for this quarter. So that's not really a surprise for us.
Eric Sheridan: We're continuously optimizing for efficient spend in our performance marketing channels and always doing experiments to find ways to further improve that spend what we have seen is that what you find opportunities with lower rois than our average rois, but still positive rois.
Eric Sheridan: <unk> and Rois that are both our our floors. So economically good outcome, but mathematically it is bringing the average rois slightly down so it's purely based on traffic mix changes, but not so much on anything else. So from our perspective. This is a positive.
Eric Sheridan: Story, excluding mix, we are improving performance, we're growing faster and we're taking there for sure and most of our markets.
Eric Sheridan: Great. Thank you.
I'm sorry.
Eric Sheridan: That said, which I think is important for everybody to keep in mind and that is.
Eric Sheridan: As he pointed out if that's a big deal because we're not see if things work to turn a little bit sideways or downward for such.
Eric Sheridan: We have always in the past use those opportunities to gain share when you look at our comedy over.
Eric Sheridan: Many many years that we've been operating here.
Eric Sheridan: <unk> been able to be nimble and agile.
Eric Sheridan: When there is opportunity to gain share we have used that opportunity and have come out of those situations better off than we went into them and I think that's unfair but it just it just to keep in mind, because I hear some of the noise. Sometimes you are concerned about what the future is and for ourselves we've done well when things have not done so well for them.
Eric Sheridan: Everyone else.
Speaker Change: Your next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.
Brian Nowak: Great. Thanks for taking my questions.
Speaker Change: Maybe the first one just on.
Speaker Change: The new annual guidance and sort of as a widening.
Speaker Change: Some of these things are stable not a lot of changes going on in the business, maybe just sort of walk us through the reasoning for the widening of the range just in case or just being more pragmatic or is there anything youre seeing in the business that is sort of informing your decision to widen the range versus what you thought 90 days ago and then the second.
Speaker Change: One.
Speaker Change: Just to go back to that last answer about the lower Rois driving growth is that is it a geographic.
Speaker Change: Phenomenon or are there certain channels that are sort of like lower ROI or sort of can you just help us understand a little more again by what's going on with the lower ROI.
Speaker Change: Incremental acquisition that you have thanks.
Speaker Change: Sure Brian good after a good afternoon.
Speaker Change: So when we are looking at our full year guidance. What we have said is on a constant currency basis, because as we know FX is moving around a lot. So we felt it's cleaner and simpler and better and easier to understand the guide constant currency and then provide you the FX sensitivities around that on the constant currency.
Speaker Change: She basis at the high end of the range, we're still at high single digits growth on a constant currency basis for gross bookings and revenues and still at mid teens for EPS.
Speaker Change: Based on the trends we are seeing today, we see the market is very stable, we see demand stable, but we also know there's a lot of uncertainty out there in the world. We don't know, particularly the second half of this year, what's going to happen how things are going to play out no one knows Easter going to be at some point impact on consumer confidence.
Speaker Change: And will that impact India is consumer spending in all retail categories, including travel.
Speaker Change: In short in an unknown. So we think it's reasonable to say the possibilities in terms of outcomes has become much wider than 90 days ago, and therefore, it would make sense to widen the range ish and now say on constant currency basis to go from mid to high single digits for growth bookings or revenues.
Speaker Change: And low to mid teens for EPS at the high end is still the same because it's certainly not play out that we will be exactly where we said we would be at 90 days ago. When we did our fourth quarter pool.
Speaker Change: In terms of the performance marketing Rois. So let me give you. An example, there are Brian.
So if you think about the social media channels, we started really to skilled up dose channels. During the second quarter of last year. Those are really attractive rois are above one so it's economically a positive outcome for <unk> for.
Speaker Change: For the company, but the average rois are higher than some of those we're also experimenting in some of our traditional performance marketing channels for competitive reasons I can't give you more details what we are exactly doing there.
Speaker Change: What is happening.
Speaker Change: As long as the Rois are attractive and economically we create value for our shareholders. It would be foolish not to lean in in dose on an incremental ROI basis, even though it might be slightly lower than our efforts rois.
Speaker Change: I would say don't look too much into this because yes. This is happening during the first quarter, but for example in the social media channels.
Speaker Change: Lapping that in during the second quarter, so that the impact wont show up so much anymore. Moreover, we will continue to see our direct channel expanding that's our expectation for the rest of the year. So we're still forecasting marketing leverage for the second quarter and for the full year 2025 physical.
Speaker Change: Great. Thank you very much.
Speaker Change: Your next question comes from the line of Lee Horowitz with Deutsche Bank. Please go ahead.
Speaker Change: Alright. Thanks, So two quick ones, if I could I think.
Speaker Change: Glenn you talked about if things were to perhaps go sideways.
Speaker Change: Boston and use those opportunities to sort of lean in and take share and I think we are starting to see that in the past, but it does.
Speaker Change: Does seem like there is perhaps some concerning about things flattening or going sideways in the U. S are you guys seeing that as a market that maybe remain even more and your plan previously just given that this could be an opportunity to gain share in a key strategic market and then maybe just one on direct mix. We've obviously seen that number continue just to.
Speaker Change: Creep up over time I Wonder how you guys think about sort of what the high high end bar may look like over a longer period of time, you're building the connected trip, so presumably still higher from here, but where do you potentially see high watermarks for direct mix overtime, and how does generative AI, perhaps impact that do generative tools a newbuild.
Speaker Change: Perhaps help you build more direct so mix overtime or vice versa.
Speaker Change: Partners, who are building Gen AI tools, perhaps take.
Speaker Change: Increased paid mix over time, if their tools turned out to be legitimate sources for travel demand. Thank you both.
Speaker Change: Thank you Lee so on the first one about opportunities and use the U S. For example, things get worse, we get we get a bigger opportunity to lean even further and take more share.
Speaker Change: Obviously.
Speaker Change: And I guess the day specifics, but anytime that we see an opportunity that we believe the investment will give us long term value.
Speaker Change: The advantage of that as we have in the past.
Jerry: One of the things for example, so let's take our alternative accommodation Jerry.
Jerry: It's been growing very very well I mean, I like that 12% growth rate.
Jerry: I've had the fun of talking about each quarter, while we do better than the biggest player in the space, who knows where it would be this time last time, we spoke it was 14 or 15 quarters. So this is now the 16th quarter. So it would be four years and I'm, hoping that he'll be able to say that at a four years, we were faster than the biggest player in every single.
Jerry: Except one.
Jerry: And.
Jerry: It's good because we've been leaning into that even in good times now things started.
Jerry: We're getting a little bit skittish, and such and you end up with people will have properties and they are not able to film is easily because they're ours as much demand. We have the tools, we have the way as we get the data and we've proven this in the past during the waters.
Jerry: First the travel since World War two the pandemic in that first year, we had a positive EBITDA of $900 million almost that shows our ability to adapt.
Jerry: Adaptable Eagle to vary what we're doing and Comped up partners with ways for them to get whatever demand is there. So yes. There is an opportunity we are going to take it now in terms of your second one.
Jerry: Correct, Yeah, we like it keeps going up but I will tell you, it's never going to be 100% all back because theres always going to be somebody new comes in go some other way, we want to get that customer to <unk>. Once the and this is a long time ago somebody said, hey, we can get to a 100% of we just stopped advertising and stop the bringing people from other channels, which obviously it wouldn't be.
Jerry: Very good for the business. So I don't know what the optimal amount is I know we look at Rois, we look what's the cost for those costs get a new customer from which channel and your point about some of these new other egencia.
Jerry: So maybe that would be a great opportunity maybe what'll happen is we'll end up with a whole bunch of them, which is going to be a lot more supply for new customers to be coming which will lower the cost for us to acquire them that could be wonderful, but well see how it plays out as it is right now I like it the way we're playing it right now I like the Rois, we've been using like the <unk>.
Jerry: Growth in the direct the way it is so knock on wood and Theres no wouldn't hear me, but knock on wood things seem to be going pretty darn good.
Jerry: Okay.
Speaker Change: Your next question comes from the line of Ken Goralski with Wells Fargo. Please go ahead.
Speaker Change: Thank you for the question two if I may please first.
Speaker Change: I want to address again.
Speaker Change: <unk>.
Speaker Change: Past periods of some macro weakness.
Speaker Change: <unk> in general and booking in particular has had the opportunity to take it.
Speaker Change: Has the opportunity to take share and also has seen partners kind of lean into.
Speaker Change: And to the OTA channel, meaning the big change that et cetera. So I'm curious as if youre seeing anything, especially in the U S, where you're seeing some incremental weakness if youre seeing that behavior already and you expect that throughout the year.
Speaker Change: And then the second one is really a.
Speaker Change: I loved your thoughts on alternative accommodations versus hotels.
Speaker Change: And then if you think about the ADR potential ADR performance throughout the year.
Speaker Change: FX basis would you expect to see maybe more volatility or more variability in ADR as.
Speaker Change: On alternative accommodations relative to hotels, thank you very much.
Speaker Change: Ken Let me take both questions. So first on the opportunities we see in a macro environment, where there is some weakness so opportunities there could be some of that is already playing out that there are some suppliers in the U S.
Speaker Change: This could be airlines this could be hotels that need additional help to fill seats to fill rooms, and where we are building partnerships and by the opportunities shorten programs in order to help to create additional demand. So that is actually already happening as we speak.
Speaker Change: Other opportunities could be as Glenn mentioned to really help alternative accommodation owners.
Speaker Change: Filler owners apartment owners that see that our bookings are not really developing as they have seen in the past, where we can put them on our platform and take advantage of our listings in alternative accommodations will go up.
Speaker Change: It might also be that at some point shorten players will get in our industry more into financial difficulties and given the financial strength, we have as a company. We can lean in more in performance marketing channels based on our possibility to really invest in those channels at attractive Rois and therefore.
Speaker Change: Really expense the level of activity that we can ultimately get to us in those auctions. So those are a number of examples that are happening in terms of your question. Your second question the economics of the alternative accommodations versus hotels.
Speaker Change: Actually there is not a large economic difference and the best proof point is what you can see in our results over the last multiple quarters, because we have been growing alternative accommodations for the last multiple quarters faster than traditional accommodations in all regions in the world, but you haven't seen an impact on <unk>.
Speaker Change: You haven't seen an impact on EBITA margins haven't seen an impact on any of our other metrics on the contrary we have continue to really build out all of those metrics in a very healthy way. The other thing just to point out is if you look at the post stock based compensation basis.
Speaker Change: Parents to the largest player in alternative accommodations, we are growing faster with EBITDA margins again on the post SPC basis is really important to make that correction and not take numbers as they are being reported our EBITA margins are approximately 50% higher and we are growing.
Speaker Change: Faster. So that's another example of that we are really not having any negative impact from that mix shift.
Speaker Change: Thank you very much.
Speaker Change: Your next question comes from the line of Kevin Kopelman with TD Cowen. Please go ahead.
Kevin Kopelman: Thanks, a lot can you talk about how broadly and in what ways. Your suppliers are engaging with the genius program, particularly with the tier two and tier three geniuses that are growing and to what extent is genius coming into play beyond traditional accommodations.
Kevin Kopelman: Nations into alternatives connected trip verticals and just as a follow up to the last question.
Kevin Kopelman: When you are seeing some early signs of pressure like you noted in the U S might you also see some pickup in supplier engagement with genius. Thanks.
Kevin Kopelman: Hi, Kevin Yes is the answer.
Kevin Kopelman: That's one of the wonderful things about genius win win win for everybody.
Speaker Change: Obviously for the consumer who gets a better deal.
Speaker Change: It's a win for the supplier because they are able to get an incremental customer into there whether it be a hotel.
Speaker Change: Our rental or whatever it is that's the aim.
Speaker Change: <unk>.
Speaker Change: Out impacting without having a channel conflict because they want to have a public price somewhere else and of course, we do well because we get more bookings.
Speaker Change: And yes, when things get softer people look for different ways to try and get that incremental demand with out hurting without cannibalizing without destroying whatever pricing strategies. They have and by the way is not just genius and I'm glad you pointed out genius, because I love. The fact that we've got the level two level three are now well.
Speaker Change: Over 30% in the producing great great volume, but we offer tremendous number of different ways for supplier to get that incremental demand it whether it be mobile rate, whether it be geography rates, we have all different ways to bring opportunities to a supplier in a scientific way not just throwing out a sale.
Speaker Change: Not just coming out with a placard they all come at lower prices, we're doing targeted selectively that's part of the beauty of our company with incredible incredible amount of data that we have that helps with all the science in all of them.
Speaker Change: All the machine learning to come out what should be priced we're working together with the partner having an account manager go and talk to that hotelier here's the product I think you need to do here because of this business and getting them back demand that is the partnership that we do I think unfortunately, a lot of people say Oh this is Justin.
Speaker Change: Place you put the price up and so I see this all works science that goes into it and that is part of the reason we are informing so well over the last 25 years.
Glenn: Thank you Glenn.
Glenn: And that's all the time, we have for questions today, and I will now turn the call back over to Glenn for closing comments.
Glenn: Thank you I want to thank our partners our travelers our dedicated employees and our stockholders. We are truly grateful for everyone's support as we work towards realizing our company's long term vision. Thank you and good night.
Glenn: And this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Glenn: Okay.
Glenn: