Booking Holdings Navigates AI, Loyalty, and Margin Expansion

Date of Call: Feb 18, 2026

Financials Results

• Revenue: Q4: 16% YOY growth; Full Year: 13% YOY growth, 10% constant currency growth.
• EPS: Q4 adjusted EPS: $48.80 per share, up 17% YOY; Full Year adjusted EPS: over $228 per share, up 22% YOY.
• Operating Margin: Adjusted EBITDA margin: 36.9% for Full Year, up 193 basis points YOY.

Guidance:

• For 2026, targeting constant currency top line growth ~100 basis points ahead of long-term algorithm; bottom line performance in line with framework.
• Q1 2026 room night growth expected between 5% and 7%.
• Q1 gross bookings expected up 14-16%; revenue up 14-16%; adjusted EBITDA growth 10-14%.
• Full year 2026 gross bookings expected low double-digit growth; revenue low double-digit growth; adjusted EBITDA margin to expand ~50 basis points YOY; adjusted EPS up mid-teens.
• FX estimated to positively impact full year reported growth rates by ~2.5% for gross bookings, ~2% for revenue, ~1.5% for adjusted EBITDA/EPS.

Business Commentary:

Strong Financial Performance in 2025:

• Booking Holdings reported fourth-quarter room nights of 285 million, a 9% year-over-year increase, driving gross bookings and revenue up 16%.
• Adjusted EBITDA reached $2.2 billion, marking a 19% increase from the previous year.
• The growth was attributed to healthy demand across major regions and the benefits of the company's global platform and AI-powered capabilities.

Connected Trip and Flights Growth:

• Connected Trip transactions grew in the high 20% range, representing a low double-digit percentage of Booking.com's total transactions.
• Airline tickets booked increased by 37% year-over-year, with gross bookings from flights reaching $16.8 billion.
• The increase was driven by more travelers booking multiple services and flights bringing new customers.

Loyalty Program and Genius Member Impact:

• Genius Level 2 and 3 travelers accounted for a high 50% share of room nights, up from the previous year.
• These members booked more frequently and advanced further in the booking process compared to non-members.
• The loyalty program successfully rewarded loyal travelers, driving incremental bookings for partners.

Asia Market and Transformation Program:

• Asia experienced low double-digit room night growth due to strong travel demand supported by rising incomes and cross-border travel.
• The Transformation Program enabled approximately $550 million in annual run rate savings, contributing to margin expansion.
• Investments in product improvements and supplier value proposition strengthened the company's position in Asia.

Generative AI and Future Investments:

• Booking Holdings is focusing on rolling out agentic capabilities across brands to enhance the traveler journey.
• The company is investing in generative AI to improve customer service and personalization, aiming to connect capabilities for a unified experience.
• Proactive engagement with major AI companies is positioning Booking Holdings to meet potential demand shifts in travel search.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'strong execution,' 'solid fundamentals,' and 'resilient travel demand.' They reported results exceeding guidance, margin expansion, and strategic progress in AI and loyalty programs. The tone was confident, citing 'unwavering confidence' and optimism about growth opportunities and AI's potential.

Q&A:

• Question from Mark Stephen Mahaney (Evercore ISI): Could you talk about the marketing spend deleverage in the December quarter and your plans to continue leaning into marketing in '26?
  Response: Management sees tactical opportunities to invest for long-term value, citing attractive ROIs in performance marketing and social media, and higher brand spend; expects marketing leverage to return in 2026 unless there are further attractive opportunities.

• Question from Lee Horowitz (Deutsche Bank): Where do you see the greatest economic uplift from agentic capabilities, and what is the product cadence for 2026?
  Response: Management emphasized building a personal travel agent digitally, driving engagement and conversion; specific rollout details were not disclosed, but early metrics show encouraging results in engagement, conversion, and customer service efficiency.

• Question from Eric Sheridan (Goldman Sachs): What signals are you getting from the Genius loyalty program, and how do you plan to invest in it?
  Response: Genius members (Levels 2/3) represent a high 50% of room nights and drive direct bookings; management plans to further strengthen the program to increase loyalty and attract more direct bookings.

• Question from Alex Brignall (Rothschild & Co): Can you update on large language model partners' plans and their views on being a merchant of record?
  Response: It's too early to see significant impact; management believes LLMs are unlikely to become merchants of record due to complexity in supplier integration, payments, and regulations, and that OTAs will retain value for direct bookings.

• Question from Lloyd Walmsley (Mizuho): Are you still seeing growth in traditional paid search, and where does the $700 million reinvestment hit?
  Response: Search is good and a growth area. Reinvestment spans core OTA areas (advertising, social media, U.S./Asia growth, loyalty, Connected Trip), GenAI, new verticals, fintech, and OpenTable expansion, largely self-funded by Transformation Program savings.

• Question from Trevor Young (Barclays): How should we think about alternative accommodation growth returning to double-digit, and what needs to be done to reaccelerate?
  Response: Management is optimistic about alternative accommodations, citing healthy supply growth (~8% YOY) and significant potential, especially in the U.S.; investments continue to improve product and inventory.

Contradiction Point 1

Timeline and Strategy for Marketing Leverage

Contradiction on when marketing leverage will be achieved.

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2025Q4: The company aims to achieve marketing leverage in 2026 unless there are significant opportunistic moments to invest. - Ewout Steenbergen(COO)

Could you explain the marketing spend deleverage in Q4? What prompted the spending increase, and will you continue investing in marketing in 2026? - Kevin Kopelman (TD Cowen)

2025Q3: A significant positive is the growth of the direct channel, which is a result of increased brand awareness and marketing investments over recent quarters. This is seen as a strong, positive trend. - Ewout Steenbergen(COO)

Contradiction Point 2

Economic Impact and Scale of AI/Agentic Tools

Contradiction on the scale of traffic and bookings impact from AI tools.

What were the key financial results for the quarter? - Lee Horowitz (Deutsche Bank AG)

2025Q4: Early metrics from agentic tools are encouraging, showing increased traveler engagement, faster search, better conversion, lower cancellation rates, and higher customer satisfaction. A key impact is on customer service: absolute customer service costs are down while bookings are up ~10%, achieving a ~10% decline in cost per booking. - Ewout Steenbergen(COO)

Where will the greatest economic uplift for bookings occur during the rollout of agentic capabilities, and what is the expected product cadence for delivering these agentic experiences in 2026? - Douglas Anmuth (JPMorgan Chase & Co)

2025Q3: Traditional search traffic to the company is still growing. Traffic from Large Language Models (LLMs) is small but growing. - Ewout Steenbergen(COO)

Contradiction Point 3

Genius Loyalty Program Investment and Focus

Contradiction on the program's current value versus its future potential and investment plans.

Can you provide an update on your current financial performance and guidance for the upcoming quarter? - Eric Sheridan (Goldman Sachs Group, Inc.)

2025Q4: Genius is a valuable program but has significant future potential. The company is focused on increasing loyalty through new, more attractive offerings beyond the current scope. - Glenn Fogel(CEO)

What signals are you seeing from the Genius loyalty program as it scales, and how do you plan to incrementally invest to gain operating momentum over the next 12–18 months? - Doug Anmuth (JPMorgan)

2025Q2: Alternative accommodations growth (10% in Q2, outpacing hotels) remains strong globally. The business has matured with 8.4 million listings (up 8% YoY) and captures ~75% of the largest player's room nights. Growth is driven by traveler preferences and is a key future growth driver. - Glenn D. Fogel(CEO)

Contradiction Point 4

AI/Agentic Capabilities Rollout Timing and Disclosure

Contradiction on the readiness and specific plans for rolling out AI-driven features.

What were the key points from the recent earnings call? - Lee Horowitz (Deutsche Bank AG)

2025Q4: The goal is to create a digital personal travel agent using data and technology... While significant investment is being made, specific rollout details and timing were not disclosed. - Glenn Fogel(CEO)

Where will the greatest economic uplift for bookings occur as you deploy agentic capabilities, and what is the expected 2026 product cadence for these agentic experiences? - Mark Mahaney (Evercore ISI)

2025Q2: It's too early to quantify how LLMs will diversify traffic, but the company is actively engaging with hyperscalers... The direct booking mix continues to grow... which is the most valuable traffic. - Ewout Lucien Steenbergen(COO)

Contradiction Point 5

Alternative Accommodation Growth Outlook

Contradiction on whether growth is expected to return to double-digit room night growth and the underlying supply trend.

Can you provide guidance on Q3 revenue growth? - Trevor Young (Barclays Bank PLC)

2025Q4: Alternative accommodation supply grew ~8% year-over-year in 2025... This supports optimism for 2026 and is factored into the guidance for faster top-line growth. - Ewout Steenbergen(COO)

What is the expected growth for the alternative accommodation business, and what actions are needed to accelerate it? - Doug Anmuth (JPMorgan)

2025Q2: Alternative accommodations growth (10% in Q2, outpacing hotels) remains strong globally... Growth is driven by traveler preferences and is a key future growth driver. - Ewout Lucien Steenbergen(COO)