Booking Holdings Checks In Strong, But Q3 Outlook Leaves Room for Debate

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Booking Holdings delivered a stronger-than-expected second quarter, underscoring resilient global travel demand even as macroeconomic and geopolitical uncertainty looms over consumer behavior. Adjusted EPS came in at $55.40, well above consensus of $50.32, on revenue of $6.8 billion, which rose 16% year over year and exceeded expectations of $6.55 billion. Room nights grew 8% to 309 million, with particular strength in Europe and Asia offsetting softer U.S. growth. The company also raised its full-year 2025 revenue guidance to low double-digit growth, signaling continued confidence in the durability of consumer travel. Despite the strong print, shares fell about 2.7% in post-market trading, reflecting cautious sentiment around a conservative Q3 outlook and tougher upcoming comparisons.

Financially, the June quarter showed broad-based strength. Gross bookings rose 13% year over year to $46.7 billion, while adjusted EBITDA grew 28% to $2.4 billion, above the Street’s $2.2 billion. EBITDA margins reached 35.6%, improving more than 170 basis points sequentially, with leverage driven by marketing efficiencies and a favorable booking mix. The company also generated $3.1 billion in free cash flow, raising its cash and investments balance to $18.2 billion, even after $1.3 billion in share repurchases and $300 million in dividends. Adjusted EPS grew 32% year over year, reflecting a combination of top-line strength, operating leverage, and efficiency gains from its transformation program.

On the demand front, Booking saw room night growth of 8%, above the high end of guidance, with notable outperformance in Europe and Asia. CEO Glenn Fogel highlighted Asia as a region of “particular strength,” with room night growth in the low double digits, while Europe remained steady despite tariff-driven inflationary pressures. The U.S. market, while lagging, showed some improvement over Q1 with low-single-digit growth, though average daily rates (ADRs) remained under pressure. Management flagged shorter booking windows and length of stay in the U.S., a dynamic contrasting with longer and more resilient patterns in Europe. Notably, alternative accommodations grew 10% year over year, still outpacing the core hotel business, while airline ticket volumes surged 44% and attraction bookings more than doubled, reflecting traction from the Connected Trip strategy.

The macro backdrop remains a balancing act. On one hand, consumer appetite for travel has proven resilient, supported by stable discretionary spending trends and expanding booking windows globally. On the other, geopolitical uncertainty, tariff-driven inflation, and weakening U.S. consumer momentum at the lower end present risks. Management noted that while July trends remained solid, August and September face tougher comps from the prior year. They acknowledged the possibility that travel could be impacted by broader macro headwinds but emphasized that current visibility through Q3 remains constructive. CFO Ewout Steenbergen reiterated confidence in at least mid-single-digit growth for room nights in the quarter, alongside gross bookings growth of 8–10%, aided by strength in air travel.

Looking ahead, Booking guided for Q3 revenue growth of 7–9%, implying $8.55–8.71 billion, in line with consensus. Room nights are expected to rise 3.5–5.5%, reflecting a deceleration tied to more difficult comps. Management noted that gross bookings growth would slightly outpace revenue growth due to a higher mix of lower-margin flight bookings and increased merchandising expenses. For full-year 2025, the company raised its outlook to low double-digit revenue growth, above consensus for 9.3%, and reiterated its long-term growth ambition of at least 8% gross bookings and revenue growth and 15% adjusted EPS growth.

Strategically, the Connected Trip initiative continues to gain traction, with higher adoption of the Genius loyalty program and a growing share of mobile and direct bookings. Mobile app penetration of total room nights reached the mid-50% range, up from the low 50% range in 2024, while higher Genius tiers also gained share. These shifts not only improve customer retention but also mitigate long-term risks tied to large language models (LLMs) and third-party distribution channels. Fogel also pointed to progress in integrating AI tools across Priceline and OpenTable to enhance personalization and conversion. Alternative accommodations now account for 37% of total room nights, while continued expansion in flights and attractions highlights Booking’s ability to broaden its revenue base beyond core hotels.

Analysts generally framed the quarter as strong but mixed. Citi reiterated a Buy rating and raised its price target to $6,500, citing share gains across geographies and robust adoption of Connected Trip features. RBC, while acknowledging strong execution, flagged a more cautious U.S. consumer environment and modest deceleration in alternative accommodation growth, maintaining an Outperform with a $6,100 target. Wedbush downgraded the stock to Neutral with a $5,900 target, pointing to valuation concerns and tougher comps into Q4. Still, consensus remains constructive, with analysts emphasizing Booking’s strong execution, global scale, and loyalty-driven growth engine.

The broader travel trends remain favorable. Europe and Asia are carrying the growth baton, while the U.S. is showing signs of stabilization but remains pressured by ADR softness and shortened stays. Airlines and attractions are helping to drive diversification, with airline ticket growth up more than 40% year over year. Management’s cautious Q3 outlook reflects conservatism in light of comps and macro risk rather than any sign of deteriorating demand. Investors may debate valuation at roughly 22x 2026 earnings, above historical averages, but the medium-term growth algorithm of mid-to-high single-digit revenue growth and margin expansion appears intact.

In sum, Booking delivered a strong Q2 beat, raised its full-year guidance, and continued to advance strategic initiatives in AI, loyalty, and alternative accommodations. While a conservative Q3 guide and tougher comps in the back half temper near-term enthusiasm, the company’s long-term trajectory remains firmly positive, with execution momentum and consumer travel resilience underpinning its growth story.