Booking Holdings Inc. (BKNG) Q3 2025 Earnings Summary

Executive Summary

• Q3 delivered broad-based beats: revenue $9.00B (+13% YoY), adjusted EPS $99.50 (+19% YoY), and adjusted EBITDA $4.23B (+15% YoY), all above prior guidance; FX added ~400–500 bps to reported growth and constant-currency revenue grew ~8% .
• FY25 outlook raised: revenue growth “about 12%,” adjusted EBITDA growth “about 17–18%,” and margin expansion increased to ~180 bps from ~125 bps prior; Q4 guidance implies room nights +4–6%, revenue +10–12%, adjusted EBITDA $2.0–$2.1B .
• Transformation Program savings target raised to $500–$550M run-rate (from $400–$450M) amid stronger execution; in-quarter savings ~$70M in Q3; aggregate program cost ~1× run-rate savings .
• Strategic drivers strengthened: connected trip transactions rose mid-20% YoY; flights +32% YoY; attractions ~+90% YoY; alternative accommodations room nights ~+10%; direct channel and mobile app mix increased; Asia led growth; U.S. accelerated to high single digits .

What Went Well and What Went Wrong

What Went Well

• Double-digit top-line momentum: gross bookings $49.7B (+14% YoY), revenue $9.0B (+13% YoY); adjusted EBITDA margin expanded to 47.0% (+120 bps YoY) .
• Strategic engagement: connected trip transactions grew mid-20% YoY, now low double-digit share; Genius L2/L3 travelers comprised >30% of active base and mid-50% of room nights over last four quarters; quote: “We are building offerings that enhance our value proposition…” — Glenn Fogel .
• U.S. acceleration and channel quality: U.S. room night growth high single digits; B2C direct mix mid-60% range last four quarters; quote: “We saw the booking window in the U.S. normalize in the third quarter… positive trend.” — CFO Ewout .

What Went Wrong

• GAAP headwinds: recorded $457M impairment of KAYAK goodwill/intangibles and $105M transformation costs; net income margin declined to 30.5% from 31.5% in Q3’24 .
• Cash flow seasonality and timing: operating cash flow $1.435B and FCF $1.371B fell ~40% YoY due to working capital timing; merchandising contra-revenue timing weighed on revenue take rate .
• Fixed cost pressures: adjusted fixed operating expenses +10% YoY, impacted by FX and higher cloud costs; sales/other expenses rose with merchant payments mix .

Financial Results

Segment revenue breakdown:

KPIs and operating metrics:

Consensus vs actual (S&P Global):

Values marked with * retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are pleased to report a strong third quarter, with 8% room night growth and double-digit gains in gross bookings and revenue… Through the Connected Trip… our innovations in GenAI, we are building offerings that enhance our value proposition.” — Glenn Fogel, CEO .
• “U.S. booker room night growth accelerated meaningfully… we believe our growth once again outpaced the broader U.S. accommodations industry… encouraging improvement in the booking window.” — CFO Ewout Steenbergen .
• “We now expect to deliver about $500 to $550 million in run rate savings… aggregate transformation cost will be approximately one time the run rate savings.” — CFO Ewout Steenbergen .
• “Genius… now represent over 30% of our active travelers and account for a mid-50% range of room nights over the last four quarters.” — Glenn Fogel .

Q&A Highlights

• U.S. acceleration: Both B2B and B2C contributed; growing direct channel and brand awareness; operational improvements drove share gains .
• AI economics and traffic: Traditional search clicks still growing; LLM leads small but rising; measuring faster search, better conversion, lower cancellations, higher CSAT .
• Social media strategy: Hundreds of millions of dollars in spend; disciplined ROI; diversification across platforms; Asia localization strengths via Agoda and Booking .
• Conversion and cancellations: New tools improving conversion; cancellations trending lower vs prior year; customer service costs down YoY despite ~10% volume growth .
• Connected trip economics: Single acquisition across verticals improves economics; payments foundational; Genius benefits integrated across verticals .
• Competitive landscape: Industry remains highly competitive; AI seen as net advantage given scale/data; continued multi-vertical build-out .

Estimates Context

• Q3 outcomes vs S&P Global consensus: revenue $9.008B vs $8.733B*; adjusted EPS $99.50 vs $95.92*; adjusted EBITDA $4.23B vs $4.01B* — all beats. Q1 and Q2 also delivered beats on all three .
• FY25 expectations raised: adjusted EBITDA growth now 17–18% vs mid-teens* earlier; margin expansion ~180 bps vs ~125 bps prior; consensus likely to move higher on run-rate savings and demand resilience .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Quality beat with raised FY guide and margin expansion — favorable setup into Q4 peak season; FX tailwinds add to reported growth .
• Structural drivers (connected trip, payments, alternative accommodations, flights, attractions) deepen engagement and support superior unit economics over time .
• U.S. trajectory improving; direct/mobile/loyalty mix rising — supports marketing leverage and repeat behavior .
• Cost program ahead of plan (run-rate savings +$100M vs prior target) and reinvestment strategy underpin both near-term margins and long-term growth .
• Watch for one-offs: KAYAK impairment and transformation costs affect GAAP, but non-GAAP excludes; merchandising timing can impact revenue take rate quarter-to-quarter .
• Near-term trading: Continued beats plus FY guide raise and dividend/buybacks may be catalysts; monitor FX, booking-window normalization, and macro/geopolitical headlines .
• Medium-term thesis: Scale/data advantages in AI, multi-vertical integration, and payments position BKNG to expand wallet share and margins across cycles .