Q2 2025 Booking Holdings Inc Earnings Call

Welcome to Booking Holdings. Second quarter 2025 conference call. 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 guarantees 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 statements, expressions of future, goals, or expectations, and similar Expressions, reflecting something other than historical fact are intended to identify forward-looking statements.

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 statement in Booking Holdings' earnings press release, as well as Booking Holdings' 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

A copy of Booking Holdings' earnings press release is available in the Investors section of Booking Holdings' website, www.bookings.com.

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

Thank you and welcome to Booking Holdings. Second quarter conference call. I'm joined this afternoon by our CFO, Ewout Steenbergen.

I am pleased to report a strong quarter that demonstrates the resilience of our business and the enduring appeal of global leisure travel.

Our topline trends saw a solid improvement, with room nights, gross bookings, and revenue all exceeding our prior expectations.

This revenue, outperformance combined with our continued disciplined expense management, increased adjusted EBITDA by 28% year-over-year.

In these financial achievements, I'm proud of our team's progress in accelerating our strategic priorities.

This year continues to underscore the exciting intersection of technology and travel.

Our Legacy of innovation and our scale and proprietary data position as well to continue to drive meaningful value for our Travelers and partners.

All share specific examples from the quarter shortly. But first, let's briefly cover our second quarter financial highlights.

During the quarter, we delivered strong results that exceeded our expectations, reflecting robust demand across our global, diversified business.

Room nights reached 309 million in Q2 2025, exceeding the high end of our prior expectations, driven by strong performance across Europe and Asia.

Asia, in particular, saw healthy growth in the low double digits, and we remain optimistic about our long-term outlook for the region.

The U.S. continued to be our slowest growing region, but growth in the second quarter improved slightly from the first quarter and likely outpaced the broader U.S. accommodations industry.

The stronger-than-expected global room night growth helped drive second quarter gross bookings up 13%.

And revenue was up 16%; both were above the high end of our prior guidance ranges.

It's important to note that FX favorably impacted our growth rates by approximately 4 percentage points, consistent with our expectations. Finally, adjusted earnings per share for the quarter grew 32% year-over-year.

That will provide more detailed financial insights shortly, including our outlook for the third quarter and full year.

Beyond the headline numbers, I am energized by the significant strides we are making across several key initiatives.

We can continue to expand alternative accommodations, enhance the Genius loyalty program, and grow our presence in Asia.

We are also pushing forward our Connected Trip vision and continuing to develop our AI capabilities. All these initiatives, and others, contribute interactively and synergistically, allowing us to deliver a better planning and booking experience for our travelers and bring incremental demand to our partners.

Let's start with alternative accommodations.

Strong relationships with our partners and a broad selection for travelers are fundamental to providing a comprehensive planning and booking offering.

And we're constantly working to make the alternative accommodation experience even better for both sides of the marketplace.

We strengthen our payment capabilities to deliver our partners a faster, simpler, and more efficient experience. Also, we are further rolling out request-to-book functionality with the pre-booking messaging through an API, providing access to a segment of the alternative accommodation supply that relies on this model.

For travelers, we can continue to broaden the supply with Booking.com alternative accommodation listings, reaching 8.4 million, an increase of 8% year-over-year.

Growth provides even more choices for our travelers and contributes to a 10% year-over-year growth in alternative accommodation room nights for the quarter, outpacing our core hotel business.

Another core way we deliver benefits to our Travelers is through Booking.com, specifically our royalty program called Genius.

This program offers discounted pricing and other mostly supplier-provided benefits to our travelers.

Bring these benefits to more elements of travel.

We've also been experimenting on how we can continue to reward and provide a differentiated offering to our most loyal customers with additional features, like dedicated customer support agents.

We're encouraged to see more of our Travelers. Continue to move into our higher-level 2 and 3 Genius tiers, which now represent over 30% of our active Travelers and Book Aid. This accounts for 50% of Booking.com's total room nights.

These genius Travelers exhibit meaningful direct booking rates and a higher booking frequency than our other Travelers.

From a regional perspective, Asia remains central to our long-term strategy. Its size and economic momentum make it an attractive travel market, and our strong position there allows us to benefit from that growth.

We expect industry growth in the region to be in the high single digits over the medium term, the fastest among our major markets.

and our ambition is to keep outpacing the broader industry as we have for several years.

As mentioned earlier in the call in the second quarter, we delivered low, double digit room night growth in Asia reflecting the strength of our 2 brand approach with the Goa and booking.com.

This success comes from localizing the user experience, expanding flights and attractions, tailoring our methods, and ensuring travelers can engage with us in their own language, all supported by thousands of our dedicated employees in the region.

Now.

Onto the connected trips. We continue to make progress there towards our long-term vision.

It's all about making the plan, booking, and overall travel experience easier and more personalized. Providing more value for the travelers, along with a data-driven process to enable partners opportunities to obtain incremental business.

Travelers who booked a connected trip directly with us—meaning a trip that includes booking more than one travel vertical—more frequently choose to book directly again with us in the future.

To board a Broadway, we see greater loyalty in our customers who have purchased a connected truck.

A lot of our foundational work in recent years has been about growing verticals outside of accommodations with a view to facilitate a more comprehensive travel experience. And our efforts are showing results. Connected Trip transactions grew over 30% year-over-year in the second quarter and now represent a low double-digit percentage of Booking.com total transactions. Non-accommodation verticals continue to show strong growth, with flight tickets up 44% and attractions ticket growth more than doubled year over year. Although from a lot of space.

Walls are a direct financial impact for attractions. This is minimal today.

We believe this vertical allows us to offer our travelers compelling in-destination experiences. These data points indicate that more travelers are choosing to book multiple elements of their trips on our platforms, reflecting the increasing value and convenience we offer to travelers and enabling our flights, attractions, and ground transportation partners, many of whom are small and medium-sized enterprises, to obtain incremental business.

We always know that the Connected Trip needs exceptional technology at its core.

AI in general and particularly Gen AI is propelling us closer to the vision.

We are actively investing in advanced AI capabilities, accelerating our ability to meet the evolving needs of travelers and partners.

During the quarter, we continue to see developments that are allowing us to better inform Travelers by creating more personalized and responsive experiences.

For example.

Price lines, AI assistant Penny, and some multiple enhancements, including expanded voice capabilities, are leading to increasing engagement rates and improved conversion metrics.

At Kayak, the team's kayak AI, which is its test lab for AI-first features, continues to improve its product to be more personalized and conversational. Another example is OpenTable's AI concierge, which we launched earlier this month.

Restaurant profiles, concerns draw from OpenTable's extensive restaurant data, including menus, reviews, and descriptions, to offer more tailored recommendations.

On the customer service side, Jai has notably reduced live agent contact rates across our brands.

It allows us to answer customer questions faster and more conveniently.

At a good Agent. Enablement. Tools. Such as oil summarization of cases and guided workflows have resulted in more customized and seamless engagement.

At Booking.com, voice-enabled Gen AI agents and customer service have improved resolution times and increased customer satisfaction scores. Continuing to advance these capabilities will yield an easier, more responsive, and better-served travel experience.

In addition to our organic efforts, we continue to collaborate with leading AI companies, such as OpenAI, Microsoft, Amazon, and others, on their agentic developments.

This enables us to stay at the Forefront of this rapidly developing field and we believe will expand our potential sources of new customers in the future.

Of course, as we mentioned in the past, we also need to engage with social media platforms and travelers search patterns, and travel Discovery methods, evolved particularly at the inspiration. Stage of the travel funnel on the topic of Partnerships. I am thrilled by the traction, the Open Table team continues to gain.

They've done tremendous work, creating genuine value for both our restaurant partners and diamonds.

This quarter, we announced our partnership with Chase. Sapphire, Reserve, giving eligible. Chase Card members exclusive access to selected Co restaurants on Open Table. It builds on the great momentum from our recent, Uber and Visa analysis.

Looking forward.

While we acknowledge that navigating geopolitical and macroeconomic uncertainties is simply the norm for a business. As Global as ours history's repeatedly, shown us the enduring resilience of travel, and we remain confident in the long-term outlook for the travel industry, and in our ability to adapt and innovate to continue the position as well to deliver attractive growth.

I am incredibly excited about what's ahead. Our commitment is to strategically drive our business for the long term, focusing on what we can control to seek to deliver unparalleled value to both our travelers and our partners.

Thank you. I will now turn the call over to Ava for a more detailed financial review and our guidance.

Thank you, Glenn, and good afternoon, everyone. I want to start by thanking all the teams across the company. Their great work is what allows us to share these positive updates today.

I will now review our results for the second quarter and provide our current thoughts for the third quarter and full year all growth rates on a year-over-year basis. Information regarding reconciliation of non-gaap to gaap financials can be found in our earnings release. Now, let's move to our second quarter results.

Our room nights. In the second quarter grew 8%, which exceeded the high end of our guidance. By about 2 percentage points, the higher than expected room. Night growth was written by stronger than expected performance in Europe, Asia and the us. We observed an impact in our rest of world region in June from the offense, in the Middle East, which we estimate impacted Global growth by about 1% in June and 1/3 of a percentage Point overall, in the second quarter,

Looking at our room night growth by region in the quarter, Europe was up high single digits, Asia was up low double digits, the rest of the world was up high single digits, and the US was up low single digits.

The U.S. continues to be our lowest-growing region, but growth in the second quarter was slightly higher than in the first quarter, and we believe it outpaces the broader U.S. accommodations industry. However, in the U.S., we observed lower ADRs, as well as a shorter length of stay and booking window. This may suggest that U.S. consumers are being more careful with spending in the current economic environment.

Last year, the global booking window expanded year over year.

We saw consistent trends in certain travel corridors that were noted on our previous call. Inbound travel to the U.S. was down year over year in the second quarter, particularly from bookers in Canada and, to a lesser extent, from bookers in Europe. That said, we also saw strong growth in other travel corridors, including Canada to Mexico and Europe to Asia, contributing to accelerating room night growth overall.

These results, once again, highlight our global diversification as a core strength of our business.

We remain focused on executing on our key strategic initiatives to strengthen our long-term earnings potential. And we're seeing continued momentum across several areas, including alternative accommodations growth, increasing the direct and mobile ethnics of our bookings, expanding our Genius loyalty program, and further growing our other travel verticals.

For our alternative accommodations at Booking.com, our second quarter room night growth was 10%, which continues to outpace the growth of our overall business. The global mix of alternative accommodation room nights was 37%, which was up 1 percentage point from the second quarter of 2024.

We'll also see tangible progress in our efforts to strengthen our direct relationships with our Travelers and increase loyalty on our platforms over the last four quarters. Our B2C direct mix was in the mid-60% range, which was up from the low-60% range one year ago.

The mobile mix of our room nights was in the mid-50% range over the last 4 quarters, which was up from the low 50% range a year ago. We find that the significant majority of bookings received from our mobile apps come through the direct channel.

We continue to provide compelling benefits and value to both our Travelers and our partners through our Genius loyalty program. The mix of Booking.com room nights booked by Travelers in the higher Genius tiers of levels 2 and 3 was in the mid-50% range over the last 4 quarters, and this mix continued to increase year-over-year. These Genius level 2 and 3 Travelers have a meaningfully higher direct booking rate than our other Travelers.

We achieved another quarter of healthy growth across our other travel verticals. As Glenn mentioned during the second quarter, over 16 million airline tickets were booked across our platforms, representing an increase of 44% year-over-year. This growth was driven by the continued expansion of our flight offerings at Booking.com. Our attractions vertical is scaling nicely, with tickets booked on our platforms more than doubling year-over-year from a modest base. We are actively investing in driving further growth in these verticals that help strengthen our offering and underpin our long-term Connected Trip vision.

Second quarter growth bookings increased 13% year-over-year, or about 9% on a constant currency basis. The constant currency growth rate was approximately 1 percentage point higher than room night growth, due to about 2 percentage points from higher flight booking growth. This was offset by a decrease in constant currency accommodation ADRs of about 1%.

The decrease in ADRs was impacted by a higher mix of room nights from Asia and a lower mix from the U.S. As I noted before, excluding regional mix, constant currency ADRs were about in line with the second quarter of 2024.

The increase in gross bookings exceeded the high end of our guidance by 1 percentage point, driven by about 2 percentage points of benefit from higher room nights, partially offset by lower accommodation ADRs versus our expectations. The impact from changes in FX was about in line with our expectations.

Second quarter revenue of $6.8 billion grew 16% year-over-year, which exceeded the high end of our guidance by 4 percentage points. The outperformance was greater than growth in bookings, primarily due to higher revenues from facilitating payments and lower merchandising spend. The lower merchandising spend is driven by timing, which we anticipate will impact revenue in the third quarter.

14% and 12% were up about 40 basis points year over year due to the timing impact from the Easter calendar shift and higher revenues from payments, partially offset by an increased mix of flight bookings.

Constant currency revenue growth was about 12%. When normalizing for the year-over-year impacts of the Easter calendar shift, constant currency revenue growth was about 10% in the second quarter. Marketing expense, which is a highly variable expense line, increased 10% year-over-year.

In expense as a percentage of growth, bookings was a source of leverage compared to the second quarter of 2024, driven by lower brand marketing expenses, as well as a higher direct mix, partially offset by increased spend in social media channels and attractive incremental ROIs.

Second quarter, sales and other expenses. As a percentage of growth. Bookings was about in line with last year, despite an increasing mix as higher payment expenses were offset by increased efficiencies in customer service, as well as lower transaction, taxes and bet that provisions,

Adjusted fixed operating expenses increased 11% year-over-year, or about 7% on a constant currency basis, and were a source of leverage in the quarter as we continue to be highly focused on managing our fixed expenses. The year-over-year increase was impacted by higher performance-based compensation, increased cloud costs, and a legal settlement in the second quarter.

Adjusted EBITDA of approximately $2.4 billion grew 28% year-over-year, which was 12 percentage points faster than the high end of our guidance, due primarily to stronger revenue growth.

Adjusted EPS of $0.554 per share was up 32% year-over-year, faster than the growth in adjusted EBITDA, aided by the benefit of a 5% lower average share count.

During the second quarter, we realized approximately 45 million dollars of in quarter savings from the transformation program primarily in the sales and other expenses. Like we expect the actions. We have taken so far will enable approximately 350 million dollars in annual run rate Savings of which about 150 million dollars is forecast to be realized this year consistent with our prior expectations.

In the second quarter, we incurred $38 million in transformation costs, which were almost entirely excluded from our adjusted results. We continue to estimate that the aggregate transformation costs will be about $400 million to $450 million, which is similar to a one-time cost. The run-rate savings we anticipate from executing the program...

Now on to our cash and liquidity position our second quarter ending cash and Investments balance of 18.2 billion dollars was up versus our first quarter ending balance of 16.1 billion. This was driven by about 3.1 billion dollars of free cash flow generated in the quarter and approximately 700 million from the impact of changes in FX on our cash balance. Partially offset by Capital return activities including 1.3 billion dollars in share purchases and dollars in dividends

Of new shares by settling the note in cash, we will realize the benefit in the year-over-year reduction. In diluted share count, the cash payment of $1.1 billion to settle. The conversion has an effect similar and incremental to the regular share repurchases of $1.3 billion just mentioned. Free cash flow in the second quarter benefited by over $800 million from changes in working capital, driven primarily by the seasonal increase in our deferred merchant bookings balance.

Moving to our thoughts for the third quarter, at the global level, we have seen steady travel dimensions in our business so far in the third quarter. However, we recognize that comparables with the prior year will be higher in August and September. Additionally, we will remain mindful that the geopolitical dynamics and uncertainty in the broader macroeconomic environment could potentially impact consumer behavior, as we have seen in the Middle East most recently. We continue to closely monitor the travel environment for any changes.

Our guidance for the third quarter assumes, recent FX rates for the remainder of the quarter, including the Euro US dollar at 1.17 we estimate changes in FX. Will positively impact our third quarter US dollar reported growth rates by about 4 percentage points.

We currently expect third quarter room night growth to be between 3 and a half and 5 and a half percent. We expect growth to moderate from the second quarter as the third quarter has a tougher prior year growth comparison.

We currently expect third quarter growth bookings to increase between 8% and 10%, including 2 percentage points of positive impact from higher flight ticket growth. We expect constant currency. Accommodation ADRs will be down slightly year-over-year.

We currently expect third quarter revenue growth to be between 7% and 9%, lower than the increase in gross bookings due to a higher mix of flight bookings, as well as increased merchandise and contra revenue, some of which is related to bookings made in prior quarters.

We currently expect third quarter adjusted EBITDA to be between $3.9 billion and $4 billion, growing 9% year-over-year at the high end.

We currently expect third-quarter adjusted EBITDA margins to be similar to last year. This is primarily due to marketing leverage being offset by the timing of merchandising spend and increased sales and other expenses, some of which relate to the timing of payment costs.

Turning to the full year 2025, while we recognize there is still elevated uncertainty in the macroeconomic and geopolitical environment, we're pleased to see that global travel demand trends continue to be steady so far in the third quarter.

Given these trends and with improved visibility for the third quarter, which historically has been our largest revenue and profit quarter, we are increasing our full-year guidance ranges at the midpoint.

Assuming recent FX rates for the remainder of the year, we estimate changes in effects that will positively impact our full-year reported growth rates. We're estimating about 3 percentage points on a constant currency basis. Our current expectations continue to be aligned with our long-term growth ambition of at least 8% gross bookings and revenue growth, and 15% adjusted EPS growth.

On the reported basis for the full year, we currently expect.

Gross bookings and revenue are expected to be up in the low double digits.

Adjusted EBITDA is expected to be up in the mid-teens.

Adjusted EBITDA margins are expected to expand year-over-year by about 125 basis points, higher than our prior expectation of 50 to 100 basis points.

Revenue will grow faster than both marketing and adjusted fixed operating expenses.

Sales and other expenses to grow similar to revenue and adjusted EPS to be up high teams.

To work delivering value for our Travelers partners and shareholders with that. We will now take your questions. Operator, will you please open the lines?

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again, your first question today comes from the line of Mark mahaney from evercore isi. Your line is open.

Okay, can I throw 2 questions by you, please? First on Asia, you know, you gave Glenn a couple of um.

Uh, product details or vertical details. But would you also give us a little bit of color on, you know, some of the many different markets in Asia and other particular ones that are performing, uh, well for you, and then, um, uh, aart I think at the conference investor conference at the end of May, you ask about the, you know, the potential impact of llms and you, you posited that, you know, its potential that they actually can help the business and that they could be a create a diversification of traffic sources. And, uh, I just want you to follow up on that. Is there, is there anything that you've already seen in that, uh, that suggests that or, or is it just a reasonable hypothesis? For the long term. Thank you very much.

Hi Mark.

Nice to hear from you. Um, as you know, we don't break out individual countries within regions. We are pleased. What's going on in Asia in general? And I will give one specific. We have talked about how we don't really think much of China as an area where we're going to be able to compete—well, domestically at all. It's also somewhat more problematic than we'd hoped, say, a decade ago, when we had higher hopes of us being able to be a major, major player there for outbound business. We are no longer in that kind of thinking. Of course, we still enjoy a benefit of inbound to China because we have many Europeans or other parts of the world who want to travel to China, and we have a nice business there. That's probably the only specific thing I'll point out in terms of the individual country in Asia. But I will just reemphasize it is the area that we think long term is going to have the highest growth rate, and therefore that's the reason we're very pleased to have two great brands there. We have Agoda, which is based there.

We have thousands of employees throughout the region, which is one of the really important things in our business. Being able to actually have that person-to-person relationship with the suppliers and also really understanding what is going on in that market is crucial. They go to understand that, and that's why they're able to do things like localization. That's very powerful. At the same time, we have our global player, Booking.com, that obviously has a global playbook, and they too are doing well. So overall, I think we have a...

Great playbook in general. There we like what we're doing it was our fastest growing region for the uh previous quarter, which we reported. So all in all good things there and I'm going to take a little bit of a a out staying on on the llms. They don't they don't let them follow up just because I find it such an exciting thing that we're doing and we obviously are talking with all the major players they're in some of the minor players too, come with different ways that we can work together. Look, this is a very, very early technology that even though we all see so many great things coming through it right now, we know that things that are going to come down the road that we haven't thought of yet. But I see it's a great opportunity for us to be able to do even better service for both. Our Travelers who obviously are enjoying the benefits of these large language models and be able to do Discovery and all sorts of inspirational things they want to do but also with our partners and ways to be able to do better things for them. I just think it's the greatest thing and then throw on the benefit, of course. And it's not your question mark, but in terms of improving efficiency for our business. So we have so many great things coming out of it and it's great.

That we have the scale to be able to take advantage of this, having the people having the capital having the AI Engineers. This is 1 of the benefits of being a global giant that you can really be able to take advantage of these new things that come down. And that's why I'm just so excited but Eva. I'll let you follow up on what you've ever said to mark back in San Francisco.

That's, of course, the best traffic we can have, and it is also the traffic with the highest ROIs. But then next to that, if you look at the performance marketing channels, it's actually, to some extent, interesting that the Google clicks continue to hold up quite well. Actually, they are still growing for accommodations slightly, period over period, so we don't see yet a decline in that. But we would like to, of course, really diversify our performance marketing channels to other channels, like we are doing with social media. Just to give you another data point, the spend in social media channels was up 25% this quarter compared to the second quarter of last year. So, also, we are continuing to learn and experiment, finding new modern channels that travelers are using to get inspired for travel and finding ways to ultimately book. And then also, as you know, we are very actively working together with all the hyperscalers and what they are doing with respect to their agent development. So, for example, we're very proud that we were.

Mentioned, as 1 of the key partners for chat GPT agent mode and booking.com was clearly highlighted in the demos that they showed a couple of days ago. So a little bit overall still to early to say, but what you should take away. I think main point is we are really trying to expand to learn and the more channels we can use the better, it is for the company in the future.

Thanks for all the extra colored Glenn and award.

You are next question. Comes from the line of Brian Noak from Morgan Stanley. Your line is open

Thanks for taking my questions. I I have 2 that the first 1 is on the on the US. Maybe can you just talk to us about some of the the growth initiatives you have internally to to Really sort of catapult the growth in the US to be durably faster, going forward? Then the second thing Glenn. I know we've talked a lot about Senai and Genai assistance over the last few years. Walk us through sort of in your mind the the biggest 1 or 2 technological hurdles that have to be cleared in order to make sort of scalable gen AI assistance, that can be deployed to hundreds of millions of people anytime soon.

Right. And first on the U.S., I think our strategy and approach with respect to the U.S. is a lot of small initiatives that ultimately add up to us every period gaining a little bit of market share. And then over time, I think our position gets larger and larger. So to give you a little bit more color on that, we are investing in products, we’re investing in supply, we’re investing in marketing, we’re investing in brands, we’re investing in many different initiatives, for example, of course, also alternative accommodations, to really improve our position. If we look at the growth, as we said in our prepared remarks.

Second quarter growth or slightly above our first quarter growth. So we definitely see some early signs of strengthening of the US market, but there are also signals that are a bit mixed because if we, for example, look at adrs, there were slightly down. There was a shorter booking window shorter length of stay. Uh, domestic travel was up, but was up less than international travel. International travel is definitely stronger. So there's a lot of those signals that we're seeing at the same time, but if we bring it all together, we will leave that based on third party data sources. We have been able to grow faster again in the second quarter than the market in general. So in other words, another quarter where we have gained a little bit of market share in the US, the other positive thing I would like to say is, of course, our Global diversification. So we're such a large Global business. We're not overly dependent on the US, so if you see differences in travel behaviors differences, in travel corridor

Of course, wherever people want to go, we're picking up that traffic. And therefore, I think the global diversification is clearly a sign of strength for booking Holdings.

And Brian.

So, the question is, is this something that we think about an awful lot? Because in the ultimate goal, it is to provide the greatest service to both our travelers and our partners. And I think you were thinking more on the traveler side, the demand side. We know there are hundreds of millions of people using different LMS right now to do all sorts of research and ask questions. One of the ones that people are looking at a lot is inspiration for travel, how to do their travel better, or where to go—in all sorts of questions like that.

You look at our customer base and even I think mentioned it. So in our business to Consumer right now, we're getting a mid 60% of the people are coming us to us right now directly

Going over to any of the other ways they can start doing their travel. But even increasing that, how are we going to do that? Well, you’ve got to give a better reason. You’ve got to give a better service. You’ve got to do this. And how will these large language models, how will this Gen AI? Because it may not be a large Cinema; it may be a very specific travel model that we are creating on our own, such that they really feel that they are achieving what they want, which is getting the best service, the greatest value, making it efficient, easy, and God forbid anything else wrong, but everything gets fixed right away. Or even in our case, what we really want to do is fix it before they even know something is going wrong. That’s what we’re building right now. Now, you may be asking, well, how long is it going to take? When is that going to happen? The truth is, though, this will not be one of those things that a year from now or two years from now, oh, it’s done. Here it is. So, this is happening incrementally, and you’re already seeing little things here and there coming in. So, for example, maybe you’ve already tried Booking.com being able to search using natural language. You said, I go to a whole bunch of filters that you want, and you just type in, I need a villa on the beach.

On the Jersey Shore, of course, villagers New Jersey Shore, probably this is match up well but even the natural language thing, we figure that 1 out and give what you want. That's 1 example where we already have that going out and things like that and it will can build it on and off, in addition, we're looking at other things. So a little bit more technical, a little more fiscally, I don't want to give away the entire Playbook but we are looking for their head, for a more technical thing. It will be something that will be definitely better for the consumer. I get what you're saying, that's what we want to do and I believe in

In the long run, this is going to happen. Our job is to get there faster.

Great. Thank you both. Thanks.

You are. Next question. Comes from a line of Doug Andrews from JP Morgan. Your line is open.

Thanks for taking the questions, um, Glenn about uh to um, just for sounds like you're more encouraged, certainly on the backdrop and you mentioned, the tougher August, and September comps and and some tougher macro and geopolitical headwinds are there. Any other factors that we should be thinking about for 3Q? That might be keeping the Outlook in check there and then just on an alternative accommodations the room that growth looks like a little bit of the cell. Um do you feel like that's a broader uh industry Trend? Or is there something else more specific going on? Thanks,

That took, first of all, if you look at the third quarter guidance that we have provided, the backdrop is to following very steady results. We have seen so far this year across the board, all the regions up to and including the month of July. So, very steady results we have seen so far. Having said that,

If you look back to 2024 the market started to accelerate in August and September so we're facing some very high coms for those 2 months and we have taken that into consideration with respect to our third quarter guidance. But overall what I would like to recommend is don't look too much on a quarter to quarter basis. That is also not how we manage the company. They can be flipped to a quarter to quarter basis. They can be timing of certain items as we called out during our prepared remarks. But the most important thing is the full year guidance. And if you look at the food, your guidance, we really believe it's very strong. We've actually increased our guidance at the midpoint for both Top Line, metrics and bottom line metrics. So overall we feel very good about a year how the year is progressing. And also the Outlook in terms of the guidance for the full year 2025

When do you take alternative accommodations, you can take it.

So alternative accommodations. I think overall we we are quite pleased uh, Doug with uh where we are and the growth in the second quarter. It's still outpaces, traditional accommodations in every region in the the world and from our perspective, it continues to have quite a large potential also. Over the next period, I do need to point out, it is reaching a level of maturity. Now for us as a company, we have today, 8.4 million listings and that is up 8% year.

Over here, we’re now approximately 75% of the largest player in this space with respect to room nights. Obviously, we don’t know exactly where that is because we are not including experiences in our number, but we say approximately 75%.

For our Travelers is the most important. But I would say great growth in alternative accommodations and that continues to be from our perspective in important driver of future growth as well. And when you think about this in the longer term and you tie back to that question about gen, AI in trying to come up with something that people really feel that it's a better way to do it. So right now we have a customer comes to us and they're not sure what they want but they're fortunately come to us because we offer both homes and hotels and they can go in and they can use filters or stuff. And now we have for booking.com, we have that natural language search and that's a good start. But what we really want to be able to do is tie everything together, the personalization. What we know about that customer when they come to us because they're logged in, we know about them, what kind of family have, what kind of trip is this, and they're typing and you are having a conversation back. Just like you used to do, with an all-time human travel agent, and being able to come up with what really is the best potential.

Ways they can accomplish their goal of going on this holiday. This vacation, this trip, maybe with a family. Maybe it's a few children with all the elements of all the knowledge and all the data that we have proprietary data, that we have reviews, everything, we have immediately will come back with that better solution. That's how we went in the long run and that's why we don't think too much about your. Is it accommodations uh alternative combinations or hotels that we want to offer, what the customer needs and putting it all together in.

Ballistic synergistic approvement upon what has been done in the past, we're getting there. We're definitely going to get there. And I think at that point, we'll have that question before about when we have that big increase in people, realistic. Aha. This is better and that's what's really exciting.

Great, thank you both.

You're our next question. It comes from the line of Eric Sheridan from Goldman Sachs. Your line is open.

Thanks so much for taking the question. Um, appreciate the staff's on connected trip and how that could continue to scale? Can you talk a little bit about what some of the key Investments are that are still left to sort of building scale on the inventory, side behind connected trip and and give us a little bit of color on how, uh, broadly that is marketed in terms of owning more of the overall basket size of travel. And how that uh go to market approach might evolve over the long term. Thanks so much.

So I'll talk a little bit about it. Eric turns, a basket size, anything into the finance? He wants to see if he wants to reveal anything in that area. Look, it's interesting. You ask about what we need more in Supply in that area and the important thing is to remember, Konnect trip is everything, it's all things travel, and we're always want to make sure we have the greatest selection for the customer. So we talked in general about some of the individual verticals and I think every single time we've done this call, I've mentioned about how we want to get more alternative accommodations and I talk to you in the past. I talked about in the US or certain types, etc, etc.

None of that has changed. We still want to get more of that Etc, flights. Of course we want to make sure we have all the flights throughout the world that people want and attractions. Same thing. We're always doing that so there's no particular area. Oh, we need more of this and that would make a that would be a huge difference. We always want to get more of everything because we want every customer have the opportunity to get whatever they want. The critical thing is putting it together in a way in a way using the data we have.

Using what we know again, going back to my previous answer about personalization, bringing it all together using science to be able to present it in the right way the right time. So that customer is being shown, what they are most likely going to want that is most likely going to achieve their goals. And by the way, the great thing is the other side of the marketplace and we don't talk enough about this to connect. The trip gives us incredible opportunity for us to give our partners. And I said it in the in our, in our prepared remarks about how so many of them are small and medium-sized Enterprises are small businesses, they don't have the technology, they don't have the knowledge, they don't have the data, they don't have the scientists, they don't know. We do it for them to be able to give them more incremental business and putting it up. When that person is going to want to buy this small business person's offering and doing it in a way that it combines for both sides. That's what we're building. And we're using technology and using science data. And that's what's so great right now is we are finally achieving

Start seeing an increase year-over-year that a about mentioned 30 over 30%, increase in Connected trip, year of your that showing results and that brings back. Loyalty that brings back more frequency. It's a flywheel that can continues to accelerate and that's why things are so exciting right now.

Let me add to two other points. Uh, more from a value creation perspective to, uh, Glenn. Answer 1 is payments. Payments as a strategic underpinning of our Connected Trip because payments gives us an opportunity to create value for partners. For travelers, it gives us an opportunity to, uh, have, uh, competitive pricing in the market. And it is great for our shareholders because it's an added benefit to the P&L overall. So payments are really important as an underpinning for Connected Trip as well. And doesn't. Uh, the second point is about the economics because besides the convenience and the peace of mind, having all these pieces of Connected Trip together and logically linked to each other, generative AI powered behind that for a traveler. I think for us the benefit is that usually if we see travelers booking across multiple verticals, that we only have to incur the acquisition.

Cost once. And that overall, bringing that all together, actually increases the economics for us as a company. Moreover, if you see people booking more often with us more across multiple verticals, they tend to come back more often. They tend to come more back directly to us in the future. So also, that is clearly a benefit for us, ultimately, from an economics perspective. So I think in the end everyone is a winner with this outcome of connected trip growing very rapidly. And when you hit on and you you mentioned the glue about of the connected trip. We threw on another piece of glue is all of our incredible genius offering, which now is going across all the verticals and again, using the data coming up with what genius offering should be added perhaps at that specific time to that specific customer. And that contribution many times is going to come from the supplier not from us to contribute. The supplier wants to offer up that genius benefit to get that sale so it's traveler wants to get that benefit.

That of course because the benefit to them and we're happy to be the in between the 2. Providing that incredible now is that this is the right time, the right place, the right offer for you to get that sales done, it all comes together and it's I tell you it's just so exciting right now.

Thank you.

Your next question comes from a line of Kevin copelan from TD Cowen. Your line is open.

Great. Thanks so much. Looking at the U.S., you noted some softening of metrics like booking window, length of stay. Can you comment on any trends you've seen in U.S. behavior? If any, as you move further away from what seemed like peak macro concerns in April. And then could you also comment on what you're seeing in those kinds of macro-sensitive metrics from your Europe and APAC customers? Thanks.

Uh Kevin uh just a few additional data points of what we've set in the prepared remarks, we see generally top end of the US consumer Market, be a little stronger spending more in the 5-star hotel category. Spending more on international travel, including to Europe, you would say, Europe is much more expensive now with the exchange rate of euro dollar. But still at the high end, people are traveling to Europe and are spending, uh, we see at the lower end more, a careful behavior of us consumer. That is more where we see the the pressure on the domestic travel on the lower star hotel rated, uh, rating on the lower star rated hotels. Uh, so there is definitely a little bit more of the, the negative behavior that we see, in terms of impact through the US consumer. If you look at other parts of the

Outside of mainland. China, and booking.com also has a strong position in in several markets. So overall again, I think the fact that we are such a global business and that we can serve as consumers across the board in many different parts of the world. I think is overall clearly a positive from a profile perspective uh for the company.

Thanks Eva.

You. Our next question comes from Alina of Justin post from Bank of America. Your line is open

great. Uh, just like to take a little bit about Q4, uh, and what's implied in your guidance, but can you just remind us of of what happened last year? Uh, why it was so strong and how you're thinking about forward holiday bookings at this point and then I know advertising was 1 of your initiatives for growth this year. Just maybe give us an update on how that's going and how you think about the advertising opportunity uh from here. Thank you.

Uh, Justin, uh, with respect to the fourth quarter of last year, what we saw was basically two main effects. One is we saw growth continuing; I was already mentioning that growth started to accelerate from August and September onwards, so that continued in the fourth quarter. But the second effect that we saw as well was that, of course, compared to the fourth quarter of 2023, we had relatively low comps, and so that helped.

Also optically with the growth in the fourth quarter. So hopefully, the first impact is something that is real and we are facing in the fourth quarter of this year. The second factor is not so real because that was more a comparison of 24 over 23. So there's not something that we're taking into account, in terms of our forward, expectations for the fourth quarter, um, maybe to to add to. That is we're not so much. Now, guiding implicitly for the fourth quarter. We're really looking at the full year guidance. And again, if you look at the full year guidance, we have raised our expectations at the midpoint. You see that the Top Line metrics, look better, the bottom line metrics, look better. The ibitta margin Outlook has improved. So that is uh, I think overall, what we believe will happen for for the year, as a whole, with respect to advertising, and as a new channel of growth, you see advertising revenues, going up 11%

Compared to the second quarter of 2024, um, in that category is Kayak. So, Kayak is, of course, technically purely an advertising business. But you see also the growth of some of our strategic investments in advertising because it's one of the elements of our $170 million investment program this year. And that is scaling up nicely as well. So, therefore, 11% growth on that line item, which I'm quite happy with, um, in terms of,

Results for the second quarter.

Great. Thank you.

And your final question comes from the line of Ron Josie from City. Your line is open.

Great. Thanks for. Thanks for speaking me in here. I I just too, too. What is a follow-up? And you mentioned with natural language. Now, live on booking talk, just a little bit more, just about conversion rates that you're seeing from. From this new tool, are you seeing that the conversion rates, repeat usage and things along those lines and then Ava, maybe a quick follow-up to Justin's um comment on on investments. But just on the Opex side, given the rise in direct, bookings, genius adoption, and usage, and mobile just longer term, talk to us. How you see the penal evolving. Just giving, you know, direct to the larger part and and you could see some leverage and continue leveraging sales and marketing. Thank you.

So regarding just that 1 small use of gen, AI natural language. I'm not going to give a specific. But I, as you know, we do a lot of testing and if something's not working, we take it off, you know, every single Pixel is very, very valuable on our our business and we will, if anything just not working, we don't have it anymore. So if it's still there, it means that it's doing something positive for us. That's just 1 element. And there's so many other areas, we're doing other things. And we talked about the other businesses in our group that are doing this like open table with their consear system. Now, and going back and use all the data they have to present in a way that is better for the for the diner. Or or we mentioned things like Price Line and the things that

Benefit of a very, very large scale business with the opportunity, to so many different things in an area that's growing so rapidly where a person that doesn't have that kind of scale doesn't have that many people working on it. You know you're taking 1 shot and hoping that's the 1 that's going to work whereas we we're like imagine you're at a casino and you're able to you know put bets in so many parts of the table. That's the benefit that we really have and that's 1 of the reasons, I'm really enthusiastic about where our future's going. You bet. I'll let you I'll let you finish us off here. Yeah, Ron I love your question about Investments because I'm I'm really super passionate about that topic.

And the way how we look at this, from a management philosophy perspective, I call it the double discipline. So we are on the 1 hand very disciplined thing going after operating leverage efficiencies opportunities really to take the skill that we have as a business, as an advantage, we can run much higher volume to over the skill of the company that we have today and therefore, really achieve those efficiencies and that will help longer term From p&l perspective. But then the other side of where we have the discipline is, we have so many opportunities to reinvest in our business and we have mentioned several of those during this call. But there are so many others where we can grow this company. So much faster in the future by really making investments. In those verticals in generative, AI in fintech and many other areas. But obviously,

We are very disciplined around reinvesting in those initiatives because we have to make sure that ultimately, they end up in a place of driving higher Topline growth for the company in the future. It's very to very different mechanisms, but we have them both in place this year, we are for the first year, really working through it, by taking 150 million dollars out of our transformation program, in your savings and reinvesting, 170 million. But I think over time there's so much more we can do on both sides and the outcome for shareholders. Of course that we can draw Drive the Top Line faster grow this company even faster than we, otherwise would have been able to accomplish. So, uh, it's it's really exciting. What is possible in the future with the company and openly that's also score shows up in the p&l as well.

Thank you, Glenn. Thank you. Bye.

And that concludes our question-and-answer session. I will now turn the call back over to Glenn Fogel for some final closing remarks.

Thank you. I want to thank our partners, our customers, our dedicated employees, and our stockholders. We greatly appreciate everyone's support as we continue to build on the long-term vision for our company. Thank you, and good night.

This concludes today's conference call. Thank you for your participation. You may now disconnect.