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    BKNG
    Earnings call· Jun 2025(Q2 FY25)

    Booking Holdings Q2 FY25 earnings call BKNG

    Jul 29, 2025 Source

    Executive summary

    Booking Holdings Q2 FY25 — Strong Performance Driven by Global Travel Demand and Strategic Execution

    Booking Holdings delivered a strong Q2 FY25, surpassing expectations across key financial metrics, driven by robust global travel demand, particularly in Europe and Asia. The company continues to advance its strategic priorities, including alternative accommodations, the Genius loyalty program, and the Connected Trip vision, leveraging AI to enhance traveler and partner experiences. While the U.S. market shows some softness, the diversified global business model and increased full-year guidance reflect confidence in sustained growth and operating leverage.

    Highlights

    5

    • Room nights grew 8% year-over-year to 309 million, exceeding the high end of prior expectations.

    • Adjusted EBITDA increased 28% year-over-year to approximately $2.4 billion, 12 percentage points above guidance.

    • Adjusted EPS grew 32% year-over-year to $55.40 per share.

    • Connected Trip transactions grew over 30% year-over-year, now representing a low double-digit percentage of Booking.com's total transactions.

    • Full-year guidance was raised at the midpoint for gross bookings, revenue, adjusted EBITDA, and adjusted EPS.

    Concerns

    3

    • The U.S. region remains the slowest-growing, with lower ADRs, shorter length of stay, and booking window, suggesting consumer caution.

    • An impact from Middle East events in June was estimated to have reduced global room night growth by 1% in June and 0.33% for Q2 overall.

    • Third-quarter room night growth is expected to moderate to between 3.5% and 5.5% due to tougher prior-year comparisons in August and September.

    Guidance & targets

    14
    CategoryTargetConfidence
    Q3 FY25 Room Night Growth
    3.5%-5.5%
    high materiality
    High
    Q3 FY25 Gross Bookings Growth
    8%-10%
    high materiality
    High
    Q3 FY25 Revenue Growth
    7%-9%
    high materiality
    High
    Q3 FY25 Adjusted EBITDA
    $3.9B-$4.0B
    high materiality
    High
    Q3 FY25 Adjusted EBITDA Margins
    Similar to last year
    medium materiality
    High
    FY25 Gross Bookings Growth (reported)
    Low double digits
    high materiality
    High
    FY25 Revenue Growth (reported)
    Low double digits
    high materiality
    High
    FY25 Adjusted EBITDA Growth (reported)
    Mid-teens
    high materiality
    High
    FY25 Adjusted EBITDA Margins (reported)
    Expand by ~125 bps
    high materiality
    High
    FY25 Adjusted EPS Growth (reported)
    High teens
    high materiality
    High
    FY25 Gross Bookings Growth (constant currency)
    At least 8%
    high materiality
    High
    FY25 Revenue Growth (constant currency)
    At least 8%
    high materiality
    High
    FY25 Adjusted EPS Growth (constant currency)
    At least 15%
    high materiality
    High
    Q3 FY25 Constant Currency Accommodation ADRs
    Down slightly year-over-year
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Europe
    Strong performance in Q2 FY25.
    		—high single digits——
    Asia
    Healthy growth in Q2 FY25, fastest among major markets over medium term. Strong sequential growth from Q1 to Q2.
    		—low double digits——
    Rest of World
    Impacted by Middle East events in June.
    		—high single digits——
    U.S.
    Slowest-growing region, but Q2 growth slightly higher than Q1 and believed to outpace broader U.S. accommodation industry. Observed lower ADRs, shorter length of stay, and booking window.
    		—low single digits——

    Operational metrics

    35
    Alternative accommodation listings
    8.4 million+8% YoY
    Q2 FY25

    Broadening supply for travelers.

    Alternative accommodation room nights growth
    +10%YoY
    Q2 FY25

    Outpacing core hotel business growth.

    Global mix of alternative accommodation room nights
    37%+1 percentage point vs Q2 FY24
    Q2 FY25

    Continues to outpace traditional accommodations in every region.

    B2C direct mix
    Mid-60% rangeUp from low 60% range 1 year ago
    Last 4 quarters

    Tangible progress in strengthening direct relationships with travelers and increasing loyalty.

    Mobile app mix of room nights
    Mid-50% rangeUp from low 50% range 1 year ago
    Last 4 quarters

    Significant majority of mobile app bookings come through the direct channel.

    Genius Level 2 and 3 tiers as % of active travelers
    Over 30%
    Q2 FY25

    These travelers exhibit meaningfully higher direct booking rates and higher booking frequency.

    Genius Level 2 and 3 tiers as % of Booking.com total room nights
    Mid-50% rangeContinued to increase YoY
    Last 4 quarters

    These travelers exhibit meaningfully higher direct booking rates and higher booking frequency.

    Connected Trip transactions growth
    +30%YoY
    Q2 FY25

    Travelers who book Connected Trip directly with us more frequently choose to book directly again.

    Connected Trip transactions as % of Booking.com total transactions
    Low double-digit percentage
    Q2 FY25

    Reflects increasing value and convenience offered to travelers.

    Flight tickets booked
    Over 16 million+44% YoY
    Q2 FY25

    Driven by continued growth of flight offerings at Booking.com and Agoda.

    Attraction ticket growth
    More than doubledYoY
    Q2 FY25

    Scaling nicely from a modest base. Direct financial impact is minimal today.

    FX impact on growth rates
    +4
    Q2 FY25

    Consistent with expectations.

    Revenue as % of gross bookings
    14.5%+40 bps YoY
    Q2 FY25

    Due to timing impact from Easter calendar shift and higher revenue from payments, partially offset by increased mix of flight bookings.

    Constant currency revenue growth (normalizing Easter shift)
    ~10%
    Q2 FY25

    When normalizing for the year-over-year impacts of the Easter calendar shift.

    Marketing expense growth
    +10%YoY
    Q2 FY25

    Marketing expense as a percentage of gross bookings was a source of leverage.

    Social media channels spend growth
    +25%YoY
    Q2 FY25

    Increased spend in social media channels at attractive incremental ROIs.

    Adjusted fixed operating expenses growth
    +11%YoY
    Q2 FY25

    Impacted by higher performance-based compensation accruals, increased cloud cost, and a legal settlement.

    Adjusted fixed operating expenses growth (constant currency)
    +7%YoY
    Q2 FY25

    A source of leverage in the quarter.

    Adjusted EBITDA
    $2.4 billion+28% YoY
    Q2 FY25

    12 percentage points faster than the high end of guidance due to stronger revenue growth.

    Adjusted EPS
    $55.40+32% YoY
    Q2 FY25

    Helped by the benefit of 5% lower average share count.

    Average share count reduction
    -5%YoY
    Q2 FY25

    Benefited adjusted EPS growth.

    Transformation program in-quarter savings
    $45 million
    Q2 FY25

    Primarily in the sales and other expenses line.

    Transformation program annual run rate savings
    $350 million
    FY25

    Expected from actions taken so far.

    Transformation program in-year realized savings
    $150 million
    FY25

    Forecasted to be realized this year, consistent with prior expectations.

    Transformation costs incurred
    $38 million
    Q2 FY25

    Almost entirely excluded from adjusted results.

    Aggregate transformation cost estimate
    $400 million to $450 million
    Total

    Similar to one-time the run rate savings anticipated.

    Cash and investments balance
    $18.2 billionUp vs Q1 FY25 end balance of $16.1 billion
    Q2 FY25 end

    Driven by free cash flow and FX impact, partially offset by capital return.

    Share repurchases
    $1.3 billion
    Q2 FY25

    Part of capital return activities.

    Dividends
    $300 million
    Q2 FY25

    Part of capital return activities.

    Debt issued
    $2 billion
    Q2 FY25

    Mostly offset by debt maturity payments.

    Debt maturity payments
    $2 billion
    Q2 FY25

    Related to maturity of debt, including conversion premium on convertible notes.

    Cash payment for convertible notes conversion
    $1.1 billion
    Q2 FY25

    Settled in cash, avoiding new share issuance, similar to regular share repurchases.

    FX impact on Q3 reported growth rates
    +4
    Q3 FY25

    Estimated positive impact, assuming euro-U.S. dollar at 1.17.

    FX impact on FY reported growth rates
    +3
    FY25

    Estimated positive impact, assuming recent FX rates.

    Advertising revenues growth
    +11%YoY
    Q2 FY25

    Includes KAYAK and growth from strategic investments.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales compsFlat (excluding regional mix); down ~1% (reported)%
    Gross bookings value room nights309 million room nights; +13% gross bookingsunits; %

    Product announcements

    4
    ProductTypeDetails
    OpenTable's AI Conciergelaunch
    Priceline's AI assistant Pennyupdate
    KAYAK.aiupdate
    Booking.com natural language searchupdate

    Deals & partnerships

    6
    Chase Sapphire ReserveExclusive access to selected restaurants on OpenTable

    Eligible Chase card members gain exclusive access to selected covered restaurants on OpenTable.

    UberCollaboration with OpenTable

    Builds on recent momentum from prior announcements.

    VisaCollaboration with OpenTable

    Builds on recent momentum from prior announcements.

    OpenAICollaboration on agentic developments

    Actively collaborating with leading AI companies to stay at the forefront of rapidly developing AI field.

    MicrosoftCollaboration on agentic developments

    Actively collaborating with leading AI companies to stay at the forefront of rapidly developing AI field.

    AmazonCollaboration on agentic developments

    Actively collaborating with leading AI companies to stay at the forefront of rapidly developing AI field.

    Risks & headwinds

    4
    Geopolitical and macroeconomic uncertaintiesOngoing

    Impacted global growth by about 1% in June and 0.33% overall in Q2 FY25 due to Middle East events.

    Mitigation: Monitoring the travel environment; global diversification helps mitigate regional impacts.

    Tougher prior-year growth comparisonQ3 FY25

    Q3 FY25 room night growth expected to moderate to 3.5%-5.5% due to higher comparables in August and September.

    Mitigation: Factored into Q3 guidance.

    U.S. consumer cautionQ2 FY25, ongoing

    Observed lower ADRs, shorter length of stay, and booking window in the U.S. market.

    Mitigation: Investing in product, supply, marketing, and alternative accommodations to improve market position.

    Inbound travel to the U.S. declineQ2 FY25

    Down year-over-year in Q2 FY25, particularly from bookers in Canada and Europe.

    Mitigation: Global diversification allows picking up traffic from other strong travel corridors (e.g., Canada to Mexico, Europe to Asia).

    What to watch in Q3 FY25

    5

    U.S. market growth and consumer behavior

    Next quarter
    CurrentLow single-digit room night growth, lower ADRs, shorter length of stay/booking window.
    TargetContinued outperformance of broader U.S. industry; improvement in ADRs, length of stay, and booking window.

    Why it matters

    The U.S. remains the slowest-growing region, and signs of consumer caution could impact overall performance if not mitigated.

    The U.S. continues to be our lowest growing region, but growth in the second quarter was slightly higher than 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.

    Q&A highlights

    6

    Could you provide more color on specific markets within Asia and their performance? Also, what are you seeing regarding the potential for LLMs to diversify traffic sources, as discussed previously?

    Glenn Fogel highlighted Asia's long-term growth potential and the success of Agoda and Booking.com in the region, noting a reduced focus on China outbound business. Ewout Steenbergen stated it's too early to quantify LLM impact on traffic diversification but noted continued growth in direct channels (mid-60% B2C mix) and increased social media spend (up 25% YoY) as diversification efforts.

    “it's a little bit too early, a little bit too premature to give you a precise answer how much LLM will help with the diversification of channels towards us in terms of leads that come to us from those models.”

    asked by Mark Stephen Mahaney · answered by Ewout Steenbergen

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Priorities & AI Integration

    Booking Holdings is actively accelerating strategic initiatives, including expanding alternative accommodations, enhancing the Genius loyalty program, growing its presence in Asia, and advancing the Connected Trip vision. AI, particularly GenAI, is a core enabler, driving personalization and responsiveness in traveler experiences. Examples include Priceline's AI assistant Penny, KAYAK.ai's personalized features, and OpenTable's AI Concierge, all contributing to improved conversion metrics and customer satisfaction. GenAI has also notably reduced live agent contact rates in customer service across brands.

    02

    Alternative Accommodations Growth

    Booking.com's alternative accommodation listings reached 8.4 million, marking an 8% year-over-year increase. This growth contributed to a 10% year-over-year growth in alternative accommodation room nights for the quarter, outpacing the core hotel business. This segment now constitutes 37% of global room nights, a 1 percentage point increase from Q2 FY24, and is seen as a significant driver of future growth.

    03

    Genius Loyalty Program Expansion

    The Genius loyalty program continues to extend its benefits across various travel verticals. Travelers in the higher Level 2 and 3 Genius tiers now represent over 30% of active travelers and account for a mid-50% range of Booking.com's total room nights. These loyal customers exhibit meaningfully higher direct booking rates and increased booking frequency, demonstrating the program's success in fostering loyalty.

    04

    Connected Trip Momentum

    The Connected Trip vision is gaining significant traction, with transactions growing over 30% year-over-year in Q2 FY25 and now representing a low double-digit percentage of Booking.com's total transactions. Non-accommodation verticals are scaling well, with flight tickets up 44% and attraction tickets more than doubling year-over-year. This integration enhances traveler loyalty and provides incremental business opportunities for partners, many of whom are small and medium-sized enterprises.

    05

    Regional Performance & U.S. Trends

    Europe and Asia demonstrated strong performance, with Europe's room nights up high single digits and Asia's up low double digits. The U.S. remains the slowest-growing region, though its Q2 growth slightly improved from Q1 and outpaced the broader U.S. accommodation industry. However, U.S. consumers show caution, particularly at the lower income end, reflected in lower ADRs, shorter lengths of stay, and shorter booking windows. Inbound travel to the U.S. was also down year-over-year.

    06

    Operating Leverage & Capital Allocation

    The company achieved operating leverage through disciplined expense management, with adjusted fixed operating expenses growing 7% constant currency, slower than revenue. The transformation program is on track to deliver approximately $350 million in annual run-rate savings, with $150 million expected to be realized this year. Capital return activities included $1.3 billion in share repurchases and $300 million in dividends during the quarter, alongside $3.1 billion in free cash flow generation.

    AI-generated summary of the company’s earnings call. Not investment advice.