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    BKNG
    Earnings call· Dec 2024(Q4 FY24)

    Booking Holdings Inc. BKNG

    Feb 20, 2025 Source

    Executive summary

    Booking Holdings Q4 FY24 — Strong Finish Driven by Room Night Outperformance and AI Integration

    Booking Holdings concluded FY24 with strong Q4 results, driven by outperforming room night growth across all regions and significant adjusted EBITDA expansion. The company is actively integrating generative AI into its offerings for both customer experience and operational efficiency, while advancing its connected trip vision and loyalty programs. Despite some Q1 headwinds from calendar shifts, management is confident in achieving its long-term growth targets for FY25.

    Highlights

    5

    • Q4 room nights grew 13% year-over-year, exceeding the high end of prior expectations.

    • Q4 gross bookings grew 17% year-over-year, exceeding the high end of guidance.

    • Q4 adjusted EBITDA grew 26% year-over-year to $1.8 billion, 12% above the high end of guidance.

    • Full-year adjusted EPS was up 23% year-over-year, aided by a 7% reduction in average share count.

    • Connected trip transaction growth accelerated to over 45% year-over-year in Q4, representing a high single-digit percentage of Booking.com's total transactions.

    Concerns

    2

    • Q1 FY25 room night growth is expected to be between 5% and 7%, impacted by the leap year and Easter calendar shift.

    • Q1 FY25 adjusted EBITDA is expected to be between $800 million and $850 million, down 5% year-over-year at the high end, due to the Easter shift and FX impacts.

    Guidance & targets

    20
    CategoryTargetConfidence
    Full-year 2025 constant currency gross bookings growth
    at least 8%
    high materiality
    High
    Full-year 2025 constant currency revenue growth
    at least 8%
    high materiality
    High
    Full-year 2025 constant currency adjusted EPS growth
    at least 15%
    high materiality
    High
    Q1 2025 room night growth
    5% to 7%
    high materiality
    High
    Q1 2025 gross bookings growth
    5% to 7%
    high materiality
    High
    Q1 2025 revenue growth
    2% to 4%
    high materiality
    High
    Q1 2025 adjusted EBITDA
    $800 million to $850 million
    high materiality
    High
    Full-year 2025 reported gross bookings growth
    mid-single digits
    high materiality
    High
    Full-year 2025 reported revenue growth
    mid-single digits
    high materiality
    High
    Full-year 2025 constant currency reported gross bookings growth
    high single digits
    high materiality
    High
    Full-year 2025 constant currency reported revenue growth
    high single digits
    high materiality
    High
    Full-year 2025 adjusted EBITDA growth
    couple of percentage points faster than revenue
    high materiality
    High
    Full-year 2025 constant currency adjusted EBITDA growth
    low double digits
    high materiality
    High
    Full-year 2025 adjusted EBITDA margin expansion
    slightly below 100 basis points
    high materiality
    High
    Full-year 2025 adjusted EPS growth
    low double digits
    high materiality
    High
    Full-year 2025 constant currency adjusted EPS growth
    mid-teens
    high materiality
    High
    Full-year 2025 CapEx as % of revenue
    about 2%
    medium materiality
    High
    Transformation program annual run rate cost reductions
    $400 million to $450 million
    high materiality
    High
    Transformation program cost savings embedded in FY25 guidance
    about $150 million
    medium materiality
    High
    Reinvestment in strategic priorities
    about $170 million
    medium materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Europe
    Q4 room night growth.
    		—low double digits——
    Asia
    Q4 room night growth.
    		—mid-teens——
    Rest of World
    Q4 room night growth.
    		—about 20%——
    U.S.
    Q4 room night growth.
    		—about 10%——
    Europe
    Full-year 2024 room night growth.
    		—high single digits——
    Asia
    Full-year 2024 room night growth.
    		—mid-teens——
    Rest of World
    Full-year 2024 room night growth.
    		—high single digits——
    U.S.
    Full-year 2024 room night growth.
    		—mid-single digits——

    Operational metrics

    52
    Room nights growth
    13%YoY
    Q4 FY24

    Exceeded the high end of prior expectations.

    Room nights growth
    9%YoY
    FY24

    Full-year growth.

    Gross bookings growth
    17%YoY
    Q4 FY24

    Exceeded the high end of prior guidance by 8 percentage points.

    Gross bookings growth
    10%YoY
    FY24

    Full-year growth.

    Revenue growth
    14%YoY
    Q4 FY24

    Exceeded the high end of prior guidance by 5 percentage points.

    Revenue growth
    11%YoY
    FY24

    Full-year growth.

    Adjusted EBITDA
    $1.8 billionup 26% YoY
    Q4 FY24

    12% above the high end of prior guidance range.

    Adjusted EBITDA
    over $8 billionup 17% YoY
    FY24

    Generated $1.2 billion more adjusted EBITDA than in 2023.

    Adjusted EPS
    $41.55up 30% YoY
    Q4 FY24

    Benefited from a 5% lower average share count.

    Adjusted EPS
    over $187 per shareup 23% YoY
    FY24

    Full-year growth.

    Average share count reduction
    7%YoY
    FY24

    Full-year average share count reduction versus 2023.

    Connected trip transaction growth
    over 45%YoY
    Q4 FY24

    Accelerated growth.

    Connected transactions as % of total transactions
    high single-digit percentage
    Q4 FY24

    Represents a portion of Booking.com's total transactions.

    Airline tickets booked
    almost 50 millionup 38% YoY
    FY24

    Across all platforms.

    Airline tickets gross bookings value
    $13.1 billion
    FY24

    Full-year value.

    Airline tickets booked
    about 14 millionup 52% YoY
    Q4 FY24

    Accelerated from 39% growth in Q3.

    Merchant gross bookings mix
    59%up 9 percentage points YoY
    FY24

    Higher than expectations at the start of 2024.

    Alternative accommodations listings
    7.9 millionup about 8% YoY
    Q4 FY24

    At the end of Q4.

    Alternative accommodations room night growth
    19%YoY
    Q4 FY24

    Acceleration from 14% growth in Q3.

    Global mix of alternative accommodation room nights
    33%up 1 percentage point from Q4 FY23
    Q4 FY24

    Mix of total room nights.

    Direct booking mix of total room nights
    mid-50% rangeincreased YoY
    FY24

    Mix of total room nights coming through the direct channel.

    B2C direct mix
    mid-60% rangeimprovement from low 60% range in 2023
    FY24

    Excluding B2B business.

    Mobile app mix of total room nights
    mid-50% rangeup from low 50% range in 2023
    Q4 FY24

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

    Genius Level 2 and 3 travelers as % of active travelers
    over 30%
    FY24

    Represents travelers in higher Genius tiers.

    Genius Level 2 and 3 travelers room night mix
    mid-50% rangeincreased YoY
    FY24

    These travelers have meaningfully higher direct booking rate and higher booking frequency.

    Constant currency accommodation ADRs
    about 2%YoY
    Q4 FY24

    Impacted by a higher mix of room nights from Asia.

    Revenue as % of gross bookings
    14.7%
    Q4 FY24

    Lower than expected due to timing impacts and higher mix of flight bookings.

    Revenue as % of gross bookings
    14.3%up slightly versus 14.2% in 2023
    FY24

    Positive impact from increased revenues associated with payments, mostly offset by increased mix of flights.

    Marketing expense growth
    10%YoY
    Q4 FY24

    Highly variable expense line.

    Marketing expense as % of gross bookings
    4.2%30 bps better than Q4 FY23
    Q4 FY24

    Due to lower brand marketing expense and higher direct mix, partially offset by higher spend in social media channels.

    Marketing expense as % of gross bookings
    4.4%down slightly from 4.5% in 2023
    FY24

    Driven by higher direct mix, lower brand marketing expenses, and higher performance marketing ROIs.

    Sales and other expenses as % of gross bookings
    2.0%in line with last year
    Q4 FY24

    Despite a higher merchant mix, as higher payment expenses were offset by efficiencies in customer service.

    Adjusted fixed operating expenses growth
    9%YoY
    Q4 FY24

    Better than expected due primarily to lower IT and G&A expenses.

    Adjusted fixed operating expenses growth
    8%versus 2023
    FY24

    Better than expectation for low to mid-teens growth at the start of 2024.

    Adjusted EBITDA margin
    33.8%up about 320 bps YoY
    Q4 FY24

    Due primarily to leverage from adjusted fixed operating expenses and marketing expenses.

    Adjusted EBITDA margin
    35%170 bps higher than 2023
    FY24

    Ahead of expectations at the start of the year.

    Cash and investments balance
    $16.7 billionup from $16.3 billion Q3 end
    Q4 FY24

    Ending balance.

    Debt raised
    $1.9 billion
    Nov 2024

    Raised in November.

    Stock repurchased
    $6 billion
    FY24

    Full-year amount.

    Dividends paid
    $1.2 billion
    FY24

    Full-year amount.

    Stock repurchased since early 2022
    almost $23 billion
    since early 2022

    Cumulative amount.

    Remaining share repurchase authorization
    $7.7 billion
    end of 2024

    Remaining under existing authorization.

    New share repurchase authorization
    $20 billion
    announced Feb 2025

    Approved by Board of Directors.

    Quarterly cash dividend increase
    10%
    announced Feb 2025

    Increase to quarterly cash dividend per share.

    Transformation program run rate savings actioned
    over $35 million
    by end of 2024

    Run rate savings achieved by year-end.

    Transformation program aggregate cost
    similar to annual run rate savings
    2-3 years

    Expected to be incurred over the coming 2 to 3 years, similar to the $400M-$450M annual run rate savings.

    Long-term constant currency gross bookings growth ambition
    at least 8%
    annual

    In a normalized travel environment.

    Long-term constant currency revenue growth ambition
    at least 8%
    annual

    In a normalized travel environment.

    Long-term constant currency adjusted EPS growth ambition
    at least 15%
    annual

    In a normalized travel environment.

    Room nights booked by booker region
    about half
    FY24

    Mix of total room nights booked.

    Room nights booked by booker region
    about 1/4
    FY24

    Mix of total room nights booked.

    Room nights booked by booker region
    low double-digit percentage
    FY24

    Mix of total room nights booked.

    Industry KPIs

    1
    MetricValueDetails
    Gross bookings value room nights$166 billionUSD

    Product announcements

    4
    ProductTypeDetails
    Booking.com's AI Trip Plannerupdate
    Priceline's AI-powered travel assistant called Pennyupdate
    OpenTable's use of Salesforce's Agentforce platformupdate
    Agoda and KAYAK generative AI advancesupdate

    Deals & partnerships

    2
    Leading generative AI organizationsCollaboration on agentic developments

    Collaborations reflect commitment to staying at the forefront of the rapidly developing AI field and are consistent with a long-standing approach to work with different sources of new customer traffic.

    SalesforceOpenTable's use of Agentforce platform

    OpenTable is using Salesforce's Agentforce platform for generative AI advances.

    Risks & headwinds

    4
    Q1 FY25 growth rate headwind from leap yearQ1 FY25

    about 1 percentage point

    Q1 FY25 revenue and profitability growth headwind from Easter calendar shiftQ1 FY25

    larger headwind to revenue and profitability growth; about 3 percentage points to revenue growth; about 14 percentage points to adjusted EBITDA

    FX impact on FY25 reported growth ratesFY25

    about 3 percentage points for gross bookings and revenue; about 3.5 percentage points for adjusted EBITDA and adjusted EPS

    Aggregate transformation program costs2 to 3 years

    similar to expected annual run rate savings ($400 million to $450 million)

    Mitigation: Costs will be reported separately in a transformation cost expense line, and certain costs will be excluded from adjusted results.

    What to watch in Q1 FY25

    5

    Q1 FY25 Room Night Growth

    next quarter (Q1 FY25 results)
    Current13% (Q4 FY24)
    Target5-7% (Q1 FY25 guidance)

    Why it matters

    Verifies the impact of calendar shifts and leap year on growth, and underlying demand trends.

    We expect first quarter room night growth to be between 5% and 7%, which includes a slight benefit from the calendar shift of Easter into April.

    Q&A highlights

    6

    How does Booking Holdings contextualize the risks associated with greater competition from Agentic platforms, which could circumvent direct bookings and go straight to hotels?

    Glenn Fogel acknowledged the recurring nature of disintermediation concerns throughout the company's history. He emphasized Booking's ability to evolve, adapt, and leverage its resources, technological knowledge, data, and trusted brand. He highlighted collaborations with major AI players and the development of travel-vertical-specific agents. Ewout Steenbergen added that LLM developers' significant capital expenditures make partnerships with Booking attractive for monetization opportunities.

    “I've been here now, as I mentioned in my prepared remarks, I've been here almost 25 years. And it's been a rare time that somebody hasn't brought to me to the fact that we were going to be disintermediated if someone else is going to take away our business.”

    asked by Lee Horowitz · answered by Glenn Fogel

    2 min read6 chapters

    Detailed Narrative

    01

    AI Strategy and Innovation

    Booking Holdings is actively integrating generative AI across its platforms to enhance traveler experience and drive operational efficiencies. Key initiatives include Booking.com's AI Trip Planner and Priceline's AI-powered travel assistant, Penny. The company is also collaborating with leading generative AI organizations to leverage their agentic developments, aiming to stay at the forefront of this rapidly evolving field and create value for all participants in the new economic landscape.

    02

    Connected Trip Vision Progress

    The company is making steady progress towards its connected trip vision, simplifying the travel experience and delivering better value. Connected trip transaction growth accelerated to over 45% year-over-year in Q4, representing a high single-digit percentage of Booking.com's total transactions. Flights are a crucial component, with almost 50 million airline tickets booked across platforms in FY24, generating $13.1 billion in gross bookings value and bringing new customers to the platforms.

    03

    Merchant Offering Expansion

    Booking.com's merchant offering continues to expand, with merchant gross bookings reaching 59% of total gross bookings in 2024, an increase of 9 percentage points year-over-year. This offering provides greater flexibility for travelers and partners, unlocks cross-vertical merchandising capabilities, and is expected to reduce transaction costs while contributing to the company's bottom line as its fintech journey progresses.

    04

    Genius Loyalty Program Impact

    The Genius loyalty program at Booking.com is fostering customer loyalty, frequency, and direct booking behavior. Over 30% of active travelers are in the higher Genius tiers (Levels 2 and 3), and these travelers booked a mid-50s percentage of Booking.com's room nights in 2024. These higher-tier members exhibit meaningfully higher direct booking rates and booking frequency compared to other travelers.

    05

    Alternative Accommodations Growth

    Alternative accommodations remain a significant growth driver for Booking.com. Listings reached 7.9 million at the end of Q4, up approximately 8% from the prior year. This expansion contributed to alternative accommodations room night growth accelerating to 19% in Q4, outpacing the overall business and increasing its global mix to 33% of Booking.com's total room nights.

    06

    Transformation Program and Efficiency

    Booking Holdings initiated a transformation program in November 2024 to modernize processes, optimize procurement, and achieve real estate savings. This program targets annual run rate cost reductions of $400 million to $450 million versus the 2024 expense base, with $150 million embedded in the FY25 guidance. The company is also reinvesting $170 million in strategic priorities like GenAI and fintech, while still aiming for adjusted EBITDA margin expansion.

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