Booking Holdings (BKNG) Earnings Transcript

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Date

Wednesday, February 18, 2026 at 4:30 p.m. ET

Call participants

• President & Chief Executive Officer — Glenn D. Fogel
• Executive Vice President & Chief Financial Officer — Ewout L. Steenbergen

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Takeaways

• Room nights -- 285 million booked in the quarter, a nine percent increase year over year, surpassing the top end of expectations on healthy demand across major regions.
• Gross bookings -- Grew 16% year over year, or approximately 11% on a constant currency basis, outperforming guidance with growth aided by flights and a one percent rise in constant currency accommodation ADRs.
• Revenue -- Rose 16% year over year and 11% on a constant currency basis, exceeding guidance, with upside contributed by higher payments revenue.
• Adjusted EBITDA -- $2.2 billion, up 19% year over year, with margin expansion supported by transformation program savings.
• Adjusted earnings per share -- Increased 17% year over year, totaling $48.8 per share, helped by a three percent reduction in average share count despite a higher tax rate in the quarter.
• Transformation program -- Enabled $550 million in annual run rate savings by year end, at the high end of prior guidance, with fourth quarter realization of $130 million in savings.
• Full-year metrics -- Over 1.2 billion room nights (up eight percent), gross bookings and revenue up 12%-13%, adjusted EBITDA over $9.9 billion (up 20%), and adjusted EPS over $228 (up 22%).
• FX impact -- Foreign exchange provided a 500 basis point tailwind to fourth quarter growth and 200-400 basis points for full-year metrics depending on the line item.
• Genius loyalty program -- Level two and three Genius travelers represented over 30% of the active user base, accounting for a high 50% share of room nights, and making up the high 50% range of room nights at Booking.com in 2025.
• Connected trip metrics -- Connected trip transactions grew in the high 20% range annually, now making up a low double-digit percentage of Booking.com total transactions.
• Flights and attractions -- 68 million airline tickets booked across platforms (up 37%), and attraction tickets grew nearly 80%, highlighting expanding multi-vertical engagement.
• Alternative accommodations -- Full-year room night growth about 10%, with alternative accommodations at 36% of 2025 room nights, up one percentage point from last year.
• Merchant bookings -- $130 billion in merchant gross bookings, a 25% increase, and now 70% of total gross bookings versus 63% the year prior.
• Free cash flow -- Generated $9.1 billion in free cash flow, 15% higher than last year.
• Capital return -- Returned $8.2 billion to shareholders, with $5.9 billion in share repurchases and $1.2 billion in dividends, plus $1.1 billion to settle convertible note premiums.
• Dividend and stock split -- Board approved a 9.4% increase in quarterly dividend to $10.50 per share and a 25-for-1 stock split effective April 2, trading post-split starting April 6.
• Mobile and direct mix -- Mobile app share of room nights rose to the mid-50% range; B2C direct mix was in the mid-60% range, maintaining stability year over year.
• Operational leverage -- Adjusted fixed operating expenses rose seven percent (four percent constant currency), six percentage points below revenue growth, reflecting cost discipline.
• Customer service efficiency -- Achieved a roughly 10% decline in customer service cost per booking through GenAI adoption, despite booking growth.
• Regional performance -- Asia and U.S. saw low double-digit room night growth; Europe and Rest of World reported high single-digit growth.
• Guidance for 2026 -- Targeting constant currency top-line growth about 100 basis points above the eight percent long-term algorithm, with adjusted EBITDA margin expansion of approximately 50 basis points and mid-teens adjusted EPS growth.

Summary

Booking Holdings (NASDAQ:BKNG) reported a nine percent room night increase for the period, with gross bookings and revenue each up 16% and driven by strong demand in Asia and the U.S. The company delivered double-digit growth across flights, alternative accommodations, and its merchant platform, and attributed both top- and bottom-line outperformance to focused investments and transformation program savings. Capital allocation remained aggressive, as evidenced by an $8.2 billion total return to shareholders, an increased dividend, and the announcement of a 25-for-1 stock split. Management offered clear guidance for accelerating constant currency growth and continued adjusted EBITDA margin expansion for 2026, backed by ramping reinvestment in core, loyalty, AI, fintech, and geographic growth initiatives.

• Management stated a disciplined approach to reinvesting approximately $700 million above baseline spending in 2026, aiming for $400 million in incremental revenue and $300 million in adjusted EBITDA drag balanced by more than $250 million in new transformation savings.
• Annual run rate savings from the transformation program met targeted levels and are expected to deliver increased in-year savings in 2026, with total transformation costs below projected run rate savings.
• Booking.com’s alternative accommodation supply reached 8.6 million listings, growing approximately eight percent year over year, with faster growth in the U.S. market.
• Constant currency growth exceeded long-term ambitions in both gross bookings and adjusted EPS, with margin expansion supported by technology-driven efficiencies, particularly from generative AI in customer service.
• Management reported that nearly 90% of accommodation room nights involved independent hotels, alternative accommodations, or smaller chains, highlighting reliance outside global chains.
• Outbound capital return since early 2022 represented over 100% of free cash flow, and share count dropped 22% net of dilution during the period following program reactivation.
• For the first quarter, reported growth rates are projected to be significantly enhanced by FX, especially for gross bookings and EBITDA.
• The Genius loyalty program continues to drive higher direct booking rates and engagement, with management signaling further enhancements and vertical expansion planned.
• Management expects to maintain marketing leverage in 2026 but will act opportunistically if attractive long-term value opportunities emerge.
• Mobile app bookings have increased their weighting in the revenue mix, supporting direct channel strategy and customer retention.

Industry glossary

• Connected trip: A multi-vertical travel booking, where a customer reserves more than one service (e.g., accommodation, flight, car) for the same trip through a single platform.
• Merchant gross bookings: Booking volume where the platform acts as the merchant of record, handling payment processing and settlement rather than passing transactions directly to suppliers.
• Genius program: Booking.com’s loyalty program, offering tiered rewards (discounts, perks) to customers in exchange for frequent booking and engagement.
• Run rate savings: Annualized, sustainable cost reductions generated through ongoing efficiency programs or structural transformation.
• Agentic capabilities: AI-driven features designed to automate and personalize elements of the travel planning, booking, or service process, functioning as a digital travel agent within the platform.

Full Conference Call Transcript

Glenn Fogel: Good afternoon. And thank you for joining us for Booking Holdings Inc. fourth quarter conference call. 2025 was another year of strong execution for us. Despite volatility in the broader global markets, the underlying fundamentals of our business are solid. Travel demand remains resilient. And we continue to benefit from our existing global platform which has positioned us well to serve travelers across geographies, trip types, and customer segments, while also developing innovative AI-powered capabilities to serve travelers and partners even better in the future. Throughout the year, we made meaningful progress on the priorities that matter the most for long-term value creation. This month marks the completion of my 26th year at the company.

And I remain as optimistic as ever about our opportunities ahead. It is an extraordinary time to be in the travel industry. With generative AI accelerating the pace of innovation and evolving how we deliver our mission, which is to make it easier for everyone to experience the world. With years of experience applying AI, from early statistical machine learning models to state-of-the-art generative AI systems coupled with a deep understanding of traveler intent through our data, we are beginning to deploy these capabilities to drive even more value personalization, and ease of use for both travelers and partners. I am excited to share some highlights on this front. As well as progress on our strategic priorities.

But first, let me briefly cover our financial highlights from the last quarter, and the full year. Our fourth quarter room nights reached 285,000,000, a 9% year-over-year increase. This exceeded the high end of our expectations. Driven by healthy demand across all of our major regions. The better-than-expected room night growth helped drive fourth quarter gross bookings and revenue both up

Ewout Steenbergen: 16%.

Glenn Fogel: Adjusted EBITDA reached $2,200,000,000. Up 19% from the prior year quarter. Finally, adjusted earnings per share grew 17% year over year. Consistent with our prior earnings guidance, I want to note that FX benefited our fourth quarter growth rates by approximately 500 basis points. For the full year, top line growth metrics are strong with room nights of more than 1,200,000,000, an 8% increase year over year. And gross bookings and revenue growth up 12–13%, respectively. We achieved these top line results while growing our bottom line even faster with adjusted EBITDA of over $9,900,000,000. Increasing 20% year over year and adjusted margins reaching 36.9% or up 193 basis points versus the prior year.

One enabler of this margin expansion was our transformation program. Which we launched in November 2024. And as of year end has already enabled approximately $550,000,000 in annual run rate savings, which was the high end of our prior guidance. Finally, adjusted earnings per share was up 22% year over year, helped by the 4% reduction in our full-year average share count versus last year. I would note that FX benefited our full year growth rates by approximately 200 basis points for gross bookings, 300 basis points for revenue, and 400 basis points for adjusted EBITDA and EPS.

That means our full year 2025 constant currency growth rates exceeded our long-term ambition of growing gross bookings and revenue by at least 8%, and adjusted earnings per share by at least 15%. As we look ahead to 2026, the pace of change across both travel and technology continues to accelerate. Our focus remains on consistently delivering greater value for our travelers and partners and enabling it through differentiated innovative solutions across our platforms. With meaningful margin expansion achieved over the past two years, and with savings from our transformation program we are strategically investing further to support sustained growth and long-term value creation.

Assuming 2026 travel industry growth is in line with recent years, we are targeting full year constant currency top line growth of approximately 100 basis points ahead of our long term growth algorithm. While keeping bottom line performance firmly in line with that framework. Ewout will give further details on our full year outlook. Beyond the financial results, we continue to make steady progress on the initiatives that support our long-term strategy. We are advancing our connected vision executing our growth strategies in Asia and the U.S., and continuing to build out AI capabilities that create more value for both travelers and partners.

Taken together, these efforts are focused on improving how travelers plan, book, and manage their trips while also strengthening the tools, and services we provide to our partners. We continue to make measurable progress on our connected trip strategy with the goal of making the planning booking, and travel experience more personalized, seamless, and enjoyable. For the full year, connected trip transactions grew in the high 20% range and represented a low double-digit percentage of Booking.com’s total transactions. As a reminder, a connected transaction is when customers choose to book more than one vertical with us for the same trip. Flights remains an important component of many connected trips.

For the full year, travelers booked 68,000,000 airline tickets across our platforms up 37% year over year and represented gross bookings of $16,800,000,000. We continue to see flights bring us new customers, meaning travelers who have not booked any service with us in the past while also helping existing customers plan more of their trips with us, meaning multiple services across the journey. And we continue to advance the underlying capabilities that enable the connected trip at scale, including payments, and customer service. We also remain focused on our Genius loyalty program, which is available in more than 200 countries and territories and spans a broad range of supply, primarily independent properties and increasingly alternative accommodations and other verticals.

The benefits of Genius are straightforward. Rewarding our most loyal travelers with meaningful value while delivering more incremental bookings for our partners. Genius is built around immediate relevant benefits such as tiered discounts and perks like free breakfast or room upgrades. Genius members book more frequently, book further in advance, and return more consistently than non-Genius travelers. In 2025, level two and three Genius travelers represented over 30% of our active base and accounted for a high 50% share of room nights. Up from the previous year. Given the importance of loyalty and the success of Genius so far, we see additional opportunities to further strengthen the Genius bar in 2026. Now let me talk a bit about Asia.

Asia continues to be one of the most attractive growth opportunities. Travel demand in the region remains structurally strong, supported by rising incomes and increasing cross-border travel. Our position in Asia benefits from the complementary strengths of Agoda and Booking.com. Agoda’s strong local presence and consumer trust across Asia, combined with Booking.com’s global reach and brand recognition, allows us to serve both local outbound, and inbound travelers. For full year 2025, we saw low double-digit room night growth in Asia by staying focused on disciplined execution and balancing growth with profitability.

We continued to invest in product improvements that support traveler value and worked closely with partners to enhance payments and servicing capabilities that reduce friction and improve the end-to-end experience. Asia remains one of our highest focus areas and our ambition there continues to be to grow faster than the market over time. Let me spend a moment on our supplier value proposition. Because it is foundational to how our two-sided marketplace works, a competitive strength as the generative AI accelerates the pace of change, and a key driver of our long-term growth.

To provide context on our partner base, independent partners drive the vast majority of our room nights with the top 10 global chains representing only a low double-digit percentage of Booking.com’s total room nights. Independent partners choose to work with us not just for the demand we deliver, but for the broader set of technological capabilities we provide. Capabilities that would be complex or expensive to replicate on their own. From global brand and performance marketing expertise and data-driven insights to integrated technology solutions across payments, advertising, and multilingual 24/7 customer service among others, we help partners operate effectively and more efficiently in an increasingly complex digital environment.

At the same time, we recognize effective partnerships require much more than technology alone. It is technology, global expertise, and working together. That is why we have dedicated partner services teams on the ground across the world. For example, we learned with our partners the importance of local payments. And why we have invested in the ability to process over 100 payment methods and over 50 currencies, an important solution for partners that do not accept alternative payment methods and for travelers who want to use their customary payment method. This is just one small example of how we are continuously improving our supplier value proposition.

Now let me spend some more time on generative AI which presents a major opportunity to further improve both the traveler and partner experience. Since inception, we have been an early adopter of technology and have been deploying AI at scale for more than a decade. Our approach to GenAI mirrors what has been our long-established approach to leveraging all artificial intelligent technologies. We focus on where AI can deliver tangible, measurable outcomes for our customers, partners, and our business by continuing to improve our existing products and continuously testing so we can learn quickly and help shape what is next in travel.

In 2025, we focused on rolling out agentic capabilities across our brands that enhance the full traveler journey. Helping customers discover and plan trips through natural language search, make more informed booking decisions with smart filters and summaries, and get better, faster support before and during their trip through interactive AI agents. Once established in our core accommodations business, we then extended these capabilities into other verticals and added voice functionality.

Based on our learnings in 2026, we will focus on further connecting these agentic capabilities to offering more unified and personalized experience deploying the technology in the places where it can have meaningful impact for customers and partners, in addition to continuing to collaborate with leading AI companies such as OpenAI, Google, Microsoft, Amazon, and others. As general purpose LLMs increasingly create new top-of-funnel entry points for travel, and generative AI drives increased global online participation and spend our proactive engagement with major technology and AI players, is positioning us to meet whatever level of demand ultimately migrates from traditional search firms to horizontal LLMs.

In everything we do, we leverage our global breadth proprietary data, deep supplier integrations, decades of travel industry experience, and talented teams to accelerate the realization of AI’s value across our business and for our customers. Ultimately, our goal is to leverage AI to make it easier for everyone to experience the world. And we are encouraged by the progress we are making and the opportunities ahead. In conclusion, as I look back over 2025, I am proud of all the hard work and excellent execution by our teams as they continue to advance our strategic initiatives while delivering strong financial results.

These are exciting times in our industry and I am confident in our position and in the investments we are making to support long-term value creation and deliver an even stronger offering for both travelers and partners. I will now turn the call over to Ewout. Thank you, Glenn, and good afternoon, everyone.

Ewout Steenbergen: I am pleased to report that we finished 2025 with a strong fourth quarter and to share our current outlook for the first quarter and full year of 2026. All growth rates are a year-over-year basis, and the reconciliation of non-GAAP to GAAP financials can be found in our earnings release. Now let us turn to our fourth quarter performance. We finished off a year of steady improvement with our room night growth accelerating each quarter throughout 2025.

Our room nights in the fourth quarter grew 9% exceeding the high end of our guidance range by three percentage points as we saw benefits from our continued investments into Asia and the U.S., and the booking window was more expanded than expected. On a regional basis, Asia and the U.S. each delivered low double-digit growth, and Europe and the rest of world were up high single digits. We are pleased to see an acceleration in U.S. room night growth over a strong prior year comparison. Growth in the U.S. was helped by continued targeted investments including in brands and our traditional performance marketing channels. And by continued momentum in our B2B business.

We are also encouraged by the continued growth in our direct channel in the U.S. The booking window in the U.S. remained steady in the fourth quarter, though we continue to see slightly lower ADRs and a slightly shorter length of stay versus the prior year, which may indicate that some consumer segments are continuing to be thoughtful on their discretionary spending. Gross bookings increased 16% year over year or about 11% on a constant currency basis.

The constant currency growth rate was approximately two percentage points higher than room night growth, due to about one percentage point from higher bookings growth from flights and other travel verticals, as well as an increase in constant currency accommodation ADRs of about 1%. The increase in gross bookings exceeded the high end of our guidance by about three percentage points, driven primarily by the room night outperformance. Fourth quarter revenue grew 16% year over year which exceeded the high end of our guidance by about four percentage points slightly higher than the outperformance of the gross bookings, due to higher than expected payments revenue. Constant currency revenue growth was about 11%.

Marketing expense as a percentage of gross bookings was 24 basis points higher year over year. In the quarter, we saw opportunities to achieve incremental demand at attractive ROIs in traditional performance marketing channels, in addition to higher brand marketing expenses, versus a comparatively lower level of spend a year ago. We also continue to make disciplined investments in social media channels at attractive ROIs. We remain focused on our efforts to strengthen our direct relationship with our travelers, while maintaining the flexibility to invest in customer acquisition when and where there are attractive opportunities to do so.

In the fourth quarter, sales and other expenses was a source of year-over-year leverage, driven by increased efficiencies in customer service, partially offset by an increasing merchant mix resulting in higher payment expenses. Adjusted fixed operating expenses increased 10% year over year or low single digits, after normalizing for changes in FX and a $44,000,000 accrual for an indirect tax matter. Adjusted EBITDA of approximately $2,200,000,000 grew 19% year over year, which was about five percentage points faster than the high end of our guidance due primarily to the stronger-than-expected revenue growth. Constant currency adjusted EBITDA growth was about 14%.

Adjusted EPS of $48.8 per share was up 17% year over year lower than the growth in adjusted EBITDA as a higher tax rate in the quarter was partially offset by a 3% lower average share count. The higher tax rate was mostly due to the timing of certain adjustments in the quarter. Please note, our full-year tax rate was slightly below last year. During the fourth quarter, we realized approximately $130,000,000 of in-quarter savings from the transformation program, primarily in sales and other expenses and in personnel expenses. We incurred $30,000,000 in transformation costs, which were excluded from our adjusted results. Turning now to our full year 2025 results.

We are pleased to report that our 2025 room nights grew 8% year over year. On a regional basis, we saw high single-digit room night growth from Europe and Rest of World, Asia was up low double digits, and the U.S. was up mid single digits. We saw a strong acceleration in U.S. room night growth in the 2025 as growth improved from low single digits in the first half of the year to low double digits in the fourth quarter. Similar to 2024, bookers from Europe represented about half of the room nights booked in 2025, bookers from Asia were about a quarter, and U.S. bookers were a low double-digit percentage.

Our 2025 B2C direct mix was in the mid 60% range, similar to last year. The mobile app mix of our room nights was in the mid 50% range in 2025, which was up from the low 50% range in 2024. The significant majority of bookings received from our mobile apps come through the direct channel. Our Genius loyalty program is a cornerstone of our value proposition. We are seeing strong engagement as travelers benefit from compelling rewards and partners gain access to our most loyal customer segments.

The mix of Booking.com room nights booked by travelers in the higher Genius tiers of level two and three was in the high 50% range in 2025, and this mix increased from the mid 50% range in 2024. These Genius level two and three travelers have a meaningfully higher direct booking rate than our other travelers. We continue to make progress across our key growth areas, such as alternative accommodations, payments, flights, and attractions, which help drive engagement with our platform

Glenn Fogel: platforms.

Ewout Steenbergen: For our alternative accommodations at Booking.com, our full year room night growth was about 10%, including about 9% in the fourth quarter. The global mix of alternative accommodation room nights was about 36% for the full year, which was up one percentage point from last year. We believe travelers value the optionality to choose between alternative accommodations, independent hotels, chain hotels in one integrated accommodation offering. As Glenn noted, almost 90% of Booking.com’s room night are associated with independent hotels, alternative accommodations, and smaller chains. In 2025, we generated $130,000,000,000 in merchant gross bookings, a 25% increase year over year. Merchant gross bookings represented about 70% of total gross bookings, an increase from about 63% in 2024.

Our merchant payments platform is a core enabler of the connected trip vision as we provide flexibility for both travelers and partners while also generating incremental revenue and contribution margin dollars for our business.

Operator: In 2025, approximately 68,000,000 airline tickets were booked

Ewout Steenbergen: across our platforms. Representing an increase of 37% year over year. Driven by the continued growth of our flight offerings at Booking.com and Agoda. Attraction tickets booked on our platforms grew nearly 80% year over year from a relatively smaller base. These strong growth rates reflect continued progress on our connected trip vision, and our data shows that travelers who book more than one travel vertical with us come back more frequently to us. As Glenn noted, we delivered top and bottom line results ahead of our long-term growth algorithm in 2025, reflecting the resilience of our business model. Our total gross bookings and revenue increased 12–13%, respectively. And both growth metrics grew about 10% on a constant currency basis.

Revenue as a percentage of gross bookings was 14.5% in 2025, which was up slightly versus 14.3% in 2024, due primarily to a benefit from higher payment revenues. Our underlying accommodation take rates continued to be stable. Marketing as a percentage of gross bookings in 2025 was 4.4%, similar to 2024 as growth in our direct channel was offset by our decision to invest in traditional performance marketing and social media channels at attractive ROIs. On a combined basis, marketing and merchandising as a percentage of gross bookings was 5.5% similar to 2024.

Sales and other expenses as a percentage of revenue was a source of leverage in 2025 due to efficiencies in customer service, which more than offset higher payment costs. We are encouraged by the tangible results we are seeing from our accelerated integration of generative AI within our customer service operations. It is remarkable to see a year-over-year decrease in customer service cost even as we delivered double-digit growth on gross bookings and revenue. Our 2025 adjusted fixed operating expenses were up 7% versus 2024, and up about 4% on a constant currency basis, which was six percentage points lower than revenue.

This was a substantial source of operating leverage a direct result of the disciplined actions we executed throughout the year to keep our cost base lean as we continue to scale. We delivered approximately $250,000,000 of in-year savings in 2025 through our transformation program, primarily in sales and other expenses and in personnel expenses, and well ahead of our commitment of $150,000,000 of in-year savings at the start of the year. Through our transformation program and broader operational efficiencies, we create a capacity to reinvest about $170,000,000 above our baseline investments into key strategic priorities such as GenAI, the connected trip, fintech, advertising, OpenTable’s international expansion, and growing in Asia and the U.S. to strengthen our long-term earnings profile.

These reinvestments benefited our 2025 gross bookings and revenue growth particularly in the back half of the year. We remain disciplined in our approach to reallocating our resources ensuring that our reinvestments are aligned with our strategic priorities and deliver measurable returns for our shareholders. And we expect these to help deliver incremental top line growth in 2026. Our full year adjusted EBITDA was over $9,900,000,000, which was up 20% year over year and up about 15% on a constant currency basis. Adjusted EBITDA margin of 36.9% was 193 basis points higher year over year, underscoring our ability deliver profitable growth and margin expansion while simultaneously funding the strategic investments that support future growth.

Our full year adjusted EPS was over $228 per share and grew 22% year over year, and about 18% on a constant currency basis, aided by a 4% lower average share count. As we have said before, we believe stock-based compensation is a real operating cost, and as a result, we consistently reflected in all of our profit metrics, and we strongly believe there should be an industry standard in reporting. Now on to our cash and liquidity position.

Our fourth quarter ending cash and investments balance of $17,800,000,000 was up versus our third quarter ending balance of $17,200,000,000 due to about $1,700,000,000 of debt raised in November and about $1,400,000,000 in free cash flow generated in the quarter partially offset by about $2,400,000,000 of capital return including share repurchases and dividends, which was the highest amount of capital return in a quarter since 2023. For the full year, we generated about $9,100,000,000 in free cash flow, 15% more than in 2024. We believe we have set a solid framework to compound shareholder value by prioritizing organic reinvestments in the business combined with attractive capital returns. For the full year, we returned a total of $8,200,000,000 to our shareholders.

This included $5,900,000,000 in share repurchases. And $1,200,000,000 through our quarterly cash dividend program. Alongside $1,100,000,000 utilized to settle the conversion premium on our convertible notes at maturity and avoid dilution from settlement in stock. Since restarting our repurchase program in early 2022, following the pandemic-related pause, we have returned over 100% of free cash flow to shareholders, repurchasing $29,000,000,000 in stock and driving a 22% reduction in share count net of the dilutive effect of stock-based compensation. Going forward, we plan to continue to return capital to our shareholders, as well as maintain our disciplined focus on optimizing our capitals for built on the foundation of investment grade credit ratings, and around 2x growth leverage through the cycle.

And we are pleased to announce that our Board of approved a 9.4% increase to our quarterly cash dividend per share to $10.5 per share. This reflects our confidence in our long-term earnings trajectory and our commitments to leverage our financial strength to deliver sustained capital returns to our shareholders, all supported by our strong free cash flow generation. We are also pleased to announce that our Board of Directors has approved a 25 for one stock split. This split will take effect on April 2, and we will begin trading on a post-split basis starting April 6.

Moving to our thoughts for the full year 2026, we intend to build upon what we accomplished in 2025, a year in which we reinvested in our strategic priorities and expanded adjusted EBITDA margins. We exited 2025, having enabled approximately $550,000,000 in annual run rate savings through our transformation program, meeting the high end of our previous guidance. We expect to deliver these run rate savings by the 2026. We estimate the aggregate transformation costs will be less than 1x the ultimate annual run rate savings. In 2026, we will maintain this disciplined model driving further operational efficiencies, including through the transformation program to free up capacity for continued reinvestments in our strategic priorities.

We expect the transformation program to deliver in-year savings of $500,000,000 to $550,000,000 in 2026 or more than $250,000,000 higher than in 2025. Beyond the transformation program, we aim to drive additional efficiencies in our ongoing operations, through both marketing and fixed operating expense leverage. With the capacity created by these savings and efficiencies, we are reinvesting about $700,000,000 above our baseline investments in 2026 into areas such as progressing our Gen AI capabilities, advancing our connected trip vision, growing in Asia and the U.S., growing our advertising business, OpenTable’s international expansion and expanding our fintech and loyalty offerings.

We expect these initiatives to contribute approximately $400,000,000 in incremental revenue in 2026, resulting in a net impact of about $300,000,000 to adjusted EBITDA for the year. We expect the reinvestments in 2025 and 2026 will help us to deliver constant currency gross bookings and revenue growth that is about 100 basis points faster than our long-term growth ambition of 8%. While expanding adjusted EBITDA margins by approximately 50 basis points. This framework supports a constant currency adjusted EPS growth trajectory in line with our long-term growth ambition of 15%. Our guidance for 2026 assumes recent FX rates for the remainder of the year, including the euro, U.S. Dollar 1.17.

We estimate changes in FX will positively impact our full year reported growth rate by about 2.5 percentage points for gross bookings, about two percentage points for revenue, and by about one and a half percentage points for adjusted EBITDA and adjusted EPS.

On a reported basis, for the full year, we expect gross bookings to be up low double digits, revenue to be up low double digits, adjusted EBITDA to grow faster than revenue and adjusted EBITDA margins to expand year over year by about 50 basis points, revenue to grow faster than both marketing and adjusted fixed operating expenses, sales and other expenses as a percentage of gross bookings to be flat year over year and adjusted EPS to be up mid teens. Zooming in on the 2026, we are encouraged by the positive momentum we have seen so far in the New Year.

We currently expect first quarter room night growth to be between 5–7%, We estimate changes in FX will positively impact our first quarter reported growth rates by about seven percentage points for gross bookings and revenue and by about eight percentage points for adjusted EBITDA. We expect first quarter gross bookings to increase between 14–16%, including more than one percentage point of positive impact from higher flight ticket and other verticals growth. We expect constant currency accommodation ADRs, to be about in line with last year. We expect first quarter revenue growth to be between 14–16%, similar to growth bookings as higher payment revenues are offset by increasing flights mix.

We expect first quarter adjusted EBITDA growth to be between 10–14%. First quarter adjusted EBITDA growth expectations would be about 20% at the high end of the range, after normalizing for the $53,000,000 in one-time benefits that we noted during last year's first quarter earnings call. In conclusion, I am proud of how our teams executed in a dynamic environment, delivering strong results expanding margins and strategically investing in growth opportunities. Entering the year ahead, we do so with unwavering confidence and focus on growth and innovation, particularly by leveraging the immense potential of generative AI-enabled capabilities. Our vision is to continue to unlock increasing value for our travelers and partners.

Drive durable growth and attractive returns for our shareholders, and remain well positioned for the opportunities ahead. I would like to thank all of my colleagues across the company for their dedication and extraordinary work throughout the year. With that, we will now take your questions.

Operator: Thank you, and we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is 1 to join the queue. And our first question comes from the line of Mark Mahaney with Evercore. Your line is open.

Mark Stephen Mahaney: Okay, thanks. I think the most impressive number I heard there was 26. I think, Glenn, that may make you the longest lasting executive in tech land. The question I wanted to ask had to do with the marketing spend deleverage in the December quarter, could you just talk about that a little bit more. Was there something that you saw in particular that made you want to lean in, and it is

Glenn Fogel: like you are going to continue to lean in into marketing spend in 2026 but just any more any more color on that. That seems like a little bit of a change for you. Thank you very much. Hi, Mark. Just Glenn, and thank you, I think. I think it is marking me older than I would like to be noticed as. But okay. Look. We look. Here is one of the things that we have always and you know this, Mark. You have been following us for a very long time. You know we like to be tactical. We like to take advantage when we see opportunities. You know that old saying about strike while the iron is hot?

I mean, it goes back to 1300s. Chaucer first came up with it. I mean, that is really important. So if we see time where we can put money to work going to help build the value of this franchise over the long term, we are going to do it, and I am not going to worry about the fact that, oh, it looks like a little deleverage here. That is not the way to look at it. You know, I always talk about look for the long term. And that is what we are doing here. It is especially nice you can do it if you are saving money in other places. That is the part I really like.

Is yeah. Okay. So maybe we do leverage a little bit in marketing. That is how build the business, and we have the money because we have leveraged elsewhere. And I will let, you know, let Ewout talk because he is always looking these numbers very quite carefully.

Ewout Steenbergen: Yes. Good evening, Mark. A couple of additional points. First, I think it is important to look at the marketing deleverage in the context of a quarter where we delivered 19% EBITDA growth and expanded EBITDA margins by 80 basis points. Besides the reason that Glenn just highlighted, the opportunities we saw in performance marketing, leaning in there with attractive ROIs. There are two other reasons. The other reason the first other reason is we saw also continued expansion in our social media investments, so great opportunities there leaning in. With some other social media platforms than we were using in the past. So overall, 13% growth in terms of investments in social media marketing.

And the third reason is we also had higher brand marketing spend in the fourth quarter. That can always a little bit be lumpy in 2024, it was mostly centered in the summer around UEFA European soccer championship. In 2025, it was more back-ended in the year in terms of brand marketing spend. But overall, this helped us to accelerate our room night growth to 9% in the fourth quarter. And also, please note that for 2026, what we said is that we aim to achieve marketing leverage again unless, of course, we find those really great opportunistic moments that we can lean in again in this year.

Mark Stephen Mahaney: Thank you very much.

Operator: And our next question comes from the line of Lee Horowitz with Deutsche Bank. Your line is open.

Lee Horowitz: Great. Thanks so much for the question. I guess as you roll out agentic capabilities across your properties in the coming months and years, where do you see the greatest economic uplift for bookings from these technologies? In terms of how you expect them to change consumer behavior? And relatedly, what should we expect in terms of, say, the product cadence you intend to deliver in terms of getting these agentic experiences into the hands of the consumer?

Ewout Steenbergen: In 2026. Thanks so much.

Lee Horowitz: Hi, Lee.

Glenn Fogel: So a lot of talk about agentic travel, agentic commerce, you can almost have a conversation without using the word agentic. So you know we have been building for a long time. And let me move this as a bigger picture. Because I have been talking about this for, God, before the deal talk about it, all sorts of neural networks and large language models, I have been talking about trying to create

Operator: that personal

Glenn Fogel: travel agent digitally. Using technology to replace what was that human travel agent where we would be able to personalize and using all we know, all the data, and be able to come up with a better solution for the travelers, and also a better way that our partners could then lean in to be able to get more business by offering the right upper the right thing, the right offer to the people the right time. And that is what we are building and have been building for some time in all different ways. Now look. You have seen the growth we had in our connected trip. Ewout talked about that, and we are going to continue on that.

We are keen to build out all sorts of new ways to do agentic different parts of the systems where agentic capabilities are being brought in. But I am not going to talk specifically to which areas or what the rollout times are. I will just say I love what we are doing. We are spending an awful lot of energy, effort, money into these different parts of our business. And I am looking very forward to what we will be bringing through the year, and you will be seeing it. But we are not going to actually give away the playbook right now. Ewout, do you want to add anything specific that we want?

Ewout Steenbergen: Yeah. Lee, a couple of metrics that we are looking at very specifically in terms of impact. I have to say in advance these numbers are still relatively small, but I think it is already quite encouraging what we are seeing with respect to agentic tools that we are implementing within our current product, within our current FX, to UX, I mean, today. More engagement from our traveler customers, faster search, better conversion, lower cancellation rates, and positive customer satisfaction. So those are a couple of things we are seeing. Again, the numbers are relatively small, but certainly encouraging. You did mention, though, you love to talk about the

Glenn Fogel: customer service. Now I mean, you did say it in your script, but you could say it again because it is one about lower cost. Yeah. And this is, of course, very much around

Ewout Steenbergen: efficiencies and opportunities around efficiencies. I think a colleague CFO said during a call last quarter, I have forgotten who it was, Gen AI is everywhere except for in the P&L. I am very proud that we can point to a line item in the P&L, where we actually do have meaningful results on the efficiency basis. Because as we said during the call, our absolute number in terms of customer service costs are down and our bookings are up approximately 10%. So we have about a 10% decline in customer service cost per booking, and that has a real impact in our S&O, our sales and other line, where we have seen now more leverage in the past.

So pretty proud about what the teams have accomplished in that area, and more to come. Of course. Thank you, Lee.

Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Eric James Sheridan: Thanks so much for taking the question and thanks for all the detailed

Eric Sheridan: prepared remarks. I want to come back to the comments you made about the Genius program. Can you talk to us a little bit about what signal you are getting as the scale of the Genius program continues to build? And how do you think about that as an area for incremental investments in the business to continue to gain operating momentum around the Genius program when you think about your priorities for the next twelve to eighteen months? Thanks so much.

Glenn Fogel: Yeah. Eric, I think that Genius is a wonderful program. But it is not nearly what it can be and will be in the future. Look. We know how important loyalty is, particularly nowadays, the way we see the world changing, and we want to increase that loyalty. We absolutely want to do things that are more than just the way it has been done, and we look up. I am thrilled. It produces tremendous amount of value. We have got, you know, Ewout talked the numbers, our level two and three Genius members and who are coming back. And it is nice to see the expanding it from just accommodations and go the other verticals, offering more things.

I think it would be a lot more. And it is going to be. But I do not think we are going to disclose today what it is going to be, but I will say we are working hard because we know how important it is.

Eric Sheridan: Thank you. And, Eric,

Ewout Steenbergen: just to point out one additional data point. So we have seen the contribution of Genius levels two and three customers to the overall room nights going up year over year. So we are now at the high 50% level. And that is, of course, a number that is highly correlated with travelers that come direct to us, the frequency that are coming to us, the number of verticals that are booking with us. So all of these things are interrelated.

And I think what is really important is we will continue over the next period to make it really attractive for customers to continue to come direct to us in the future, we are going to build a lot of agentic tools at the top of the funnel, so people that can come to us in our platform that they like, they trust, they have the loyalty with, they know if something goes wrong, we will fix it for them. They can now connect it to other parts of the protocols, so that we make it really attractive for those customers to come to us even more often direct in the future.

Operator: And our next question comes from the line of Alex Brigmill with Rothschild and Company. Your line is open.

Alex Brigmill: Thank you very much for taking my questions. Good evening.

Ewout Steenbergen: I had one on you have obviously been ahead of many in terms of being early partners with some of the agentic businesses. I wonder if you could give us an update on how their plans are evolving, what behaviors you are seeing, strategies that they are adopting in terms of how they sell traffic or

Kenneth Gawrelski: anything they are attempting to do? Potentially, you know, if you could talk about their views on being the merchant of record, that would be hugely helpful. Thank you.

Glenn Fogel: Alex, so you are correct. We have been very early working with all of the large language model players. And lots of different ways we have been working. And we said in the last call, and I will say it again, it is very early. There is not a lot to show right now. So it is no real information to give in that area. And your question you are asking is, you know, what can we tell you about what their paths are going forward or not? And, of course, we do not sit in their boardrooms nor do we nor do they share their strategies with us in great detail. However, I can say this, though.

And this is important because I think there is a lot of discussions about, you know, are the OTAs going to be disadvantaged in the future by large language models entering the space? Etcetera. And you brought up the right question about being a merchant of record. That is really hard. That requires a lot of things. So we, you know, I talked about the supplier proposition and the incredible things that we do to make sure that we are able to help our partners succeed.

You know, Ewout mentioned about how and I have mentioned too about almost 90% of our accommodation business is coming from either independent hotels or homes, you know, alternative accommodations, small brands, those are not sophisticated players at all. You have got to establish connectivity with them to get that availability, get that pricing, get that inventory, be able to keep it up because it is always changing. Now we have over 4,000,000 properties that we have to deal with all the time, and we had to keep that constant all the time. So that is really complex and hard to do, but we do it.

And then we have thousands and we have several thousand people who are our partner services people. So part of them are just keeping the technology up so we can get all of that information, have it live, and bring it through. It looks, you know, dealing daily with these property managers to make sure that we are helping them succeed in their business. It is not as though you just put it up, and all of a sudden, works for her. No. And we are bringing new ideas, new rates, coming up with being part of Genius, where we say, gee. You know, we have some geography, rate or mobile rates.

It is a constant thing that we are going back and forth. Whether it is one-to-one conversations, or we are doing other types of communications, but it is helping their business be successful. The idea that the large language players are going to be doing that. I do not know about that. And then you get into the area of payments. You want to be merchant of record. You know, payments, Ewout talked how important that is. Well, that is really complex. And we have over 100 different payment methods. More than 50 currencies. Now why is that? Because the supplier has no idea how to take these strange payments the customer wants to give.

They want their payments to come to them in a certain way. By the way, the traveler wants to pay in a certain way. That is another issue of complexity that I do not think, my opinion, I do not think that the large language models are going to enter that whole space and all that issue. And then, by the way, just so you know, I mean, regulations on the payments area, tremendous. In fact, there is regulations, the whole thing.

You want to be involved in the travel business, you want to be dealing with merchant of record and you want to be dealing with compliance, because it is, you know, in Europe, you have got, I mean, just the combination of abbreviations. You have got to deal with DSA, DNA, TSA, EUAIA, P2B, DAC 7. I can go on and on, and that is just EU. And then, of course, there is the national regulation. We are dealing with over 200 countries deal with. So do we think that the large language models are going to be entering, want to enter down the full down to where? I do not think so.

And then even if that did happen, even if they were thinking about going in there, the question is, would the customer want to be there? Ewout was just talking about that loyalty. Talking about Genius, talking about how many of you come to us direct also. Those people come to us because they actually find value using us. Look. We have been competing, so to speak, with a top-of-the-funnel player who is very big, very long time.

Kenneth Gawrelski: And people go there. But yet, then they come to us direct many of them.

Glenn Fogel: Why? Because we are offering them something of value. That is what I believe is going to continue. And by the way, it has been very successful for that large person at the top of the funnel, Google. We have both done very well. They have made very good money setting up an auction format for taking advertising, and we have been more than happy to pay lot of money as have competitors of us. It has worked out really well for them. It has worked out really well for us.

And by the way, some of these other large language models when they are looking at this they may say, you know, that is the right way to do it. Not go down the funnel. Do not become a merchant of record. Take it high above. Do not deal with the mess of the day to day in and out that we have to deal with all the time. Successful for us, successful to them, I think that is the way it is probably going to go in the end. But that is my opinion.

Kenneth Gawrelski: Thank you very much indeed.

Operator: And our next question comes from the line of Lloyd Walmsley with Mizuho. Your line is open.

Lloyd Walmsley: Two, if I can. First,

Ewout Steenbergen: sort of following up a little bit on the last question. Are you still seeing growth in paid search traditional paid search channels? And then second one would just be looking at some of the reinvestment. I think you said $700,000,000 and you guys gave helpful color on some of the product areas where you are investing. But is a lot of that show up in marketing spend? Does it show up in, you know, supply acquisition to build out experiences? Or, like, where if you can elaborate a bit on where some of that spend is hitting, we would that would be helpful. Thanks.

Glenn Fogel: So in terms of search, search is good. We are doing good business. Let us say it is good, and I am sure you have heard Google talk about it. It says this is a good place for us to continue to grow our business. In regard to the second question, I do not know how much more Ewout is going to want to share here.

Kenneth Gawrelski: Let me give a

Ewout Steenbergen: couple of additional points in color, Lloyd. So if we think about the investment areas, there are a couple of those. They are in the category of core OTA. So as we already have said, last year, we are investing in advertising, in social media, from a geographical perspective, U.S., in Asia, we spoke already about loyalty and connected trip. So all of these will continue in some new areas in those categories. But we believe those would be very attractive also in general AI, several different developments, an expansion of our total addressable markets in new verticals, like attractions and expanding the OpenTable dining network internationally, and then fintech. Fintech is becoming a really large business for us.

Already a significant P&L driver. And there, we continue with localization of our fintech offerings as we already discussed before. Scaling our FX products. So those are a number of areas where we are investing. So please keep in mind that those expenses then go into two lines, fixed OpEx and sales and other. But we will have also then revenues that are offsetting. So we said a net impact on the EBITDA line is about $300,000,000. But we also said that the transformation program is delivering additional in-year savings in 2026 of €250,000,000. So largely self funded through our initiatives.

So therefore, we can still expense our EBITDA margins by approximately 50 basis points and grow the top line 100 basis points faster than our overall algorithm. So we are very excited about these opportunities. Have a great track record in delivering and execution of growth initiatives. So if you think about the past, if this company puts its resources behind certain areas, it will deliver. Flights, payments, attractions, and so on. So this is going to help to drive a much faster growth trajectory for the company in the future. So super excited about that.

Lloyd Walmsley: Okay. Thank you.

Operator: And our next question comes from the line of Trevor Young with Barclays. Your line is open.

Trevor Young: Great. Thanks for squeezing me in. In your alternative

Stephen Ju: business continuing to slow a little bit there, albeit with very tough compares, I appreciate you do not guide granularly, but how should we think about growth from here. Should this return to double-digit growth territory on a room night basis? If you expect stronger top line for total overall company is there anything in particular you need to do to reaccelerate that growth? I do not recall hearing, alts being called out as kind of one of the investment areas for this year. Thank you.

Glenn Fogel: Trevor, we are not going to give a number going forward. And I think, Ewout, has always set out, you know, this is a number. It is a little bit noisy. You get noise from there. So but we believe that the alternative accommodation area is a very important area for us the future. And the fact that Ewout did not call it out in the investing, I mean, we are always investing there and trying to build it out. And I have talked about this, and it is good a good thing you asked the question because it would be a shame if we had a quarter I did not talk about it. It is a great product.

We are growing it. It is nice, but we got more to be done.

Glenn D. Fogel: We got more to be done there in improving the product. And certainly, there are areas where we are still nowhere near where I would like to be in terms of inventory. But we are building it. So I hope nobody takes something from this call and thinks, oh, they are not it is not as important. No. It is important. And is something that we are going to continue to be working hard on.

Kenneth Gawrelski: And, Trevor,

Ewout Steenbergen: just to add some numbers to what Glenn just said to underscore that alternative accommodations still really will have a large potential for us in the future. So what we have seen is healthy growth of alternative accommodation supply. So this is year over year up approximately 8%. We are now at 8,600,000 listings. In the U.S., it is actually growing faster. That is a great area where we still a lot of potential in terms of alternative accommodations. So this has been input in terms of our 2026 guidance for overall faster top line growth metrics for this year. So definitely, you should interpret here that we are quite optimistic the outlook for alternative accommodations.

Trevor Young: Great. Thank you both.

Operator: And that concludes our question and answer session. I will now turn the call back over to Mr. Glenn Fogel for closing remarks.

Glenn Fogel: I want to thank our dedicated employees, our stockholders, and most importantly, our customers. Travelers, and partners whose commitment and support were foundational to our strong performance in 2025. Thank you, and good night.

Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

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