Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

BKNG · Q4 2025 Earnings

Booking Holdings

Reported February 18, 2026

30-second summary

30-second take: Q4 was a clean beat — room nights +9% (3pp above the 4–6% guide), gross bookings +16% (~3pp above guide), revenue +16% (~4pp above guide), adjusted EBITDA $2.2B +19% (~5pp above the high end), adjusted EPS $48.80 +17%, and $1.4B of in-quarter free cash flow — capping a full year of $9.9B+ adjusted EBITDA at a 36.9% margin (+193bps) and $9.1B of FCF. The bigger story is the FY26 framework: gross bookings and revenue growth narrowing to "low double digits" (vs FY25's 12%/13%), adjusted EBITDA margin expansion guided to ~50bps vs FY25's +193bps, and adjusted EPS growth to mid-teens vs FY25's +22% — because management is plowing ~$700M of reinvestment above baseline into GenAI, Connected Trip, Asia/US expansion, advertising, OpenTable, FinTech and Genius, funded by $500–550M of in-year transformation savings. The tone is unmistakably offensive, not defensive: Glenn implicitly rejected the LLM disintermediation thesis by reframing horizontal LLMs as a top-of-funnel partner opportunity, and put a number on GenAI's P&L impact — ~10% decline in customer service cost per booking. Capital return doesn't slow: 9.4% dividend hike to $10.50/share and a 25-for-1 stock split effective April.

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

New guidance

Metric	Period	Guide	YoY
Transformation Program In-Year Savings	FY 2026	$500 to $550 million	—
Strategic Reinvestments	FY 2026	approximately $700 million above baseline	—
Incremental Revenue from Reinvestments	FY 2026	approximately $400 million	—
Net Adjusted EBITDA Impact from Reinvestments	FY 2026	approximately $300 million	—
Constant Currency Gross Bookings and Revenue Growth	FY 2026	approximately 100 basis points faster than 8% long-term ambition	—
Constant Currency Adjusted EPS Growth	FY 2026	in line with 15% long-term ambition	—
FX Impact on Reported Growth	FY 2026	2.5 pp for gross bookings, 2 pp for revenue, 1.5 pp for EBITDA and EPS	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Gross Bookings Growth	FY 2026	11% to 12%	low double digits	Narrowed and shifted lower; prior midpoint 11.5% vs. current 10-12% (low double digits)	Lowered
Revenue Growth	FY 2026	12%	low double digits	Narrowed from ~12% to 10-12% range (low double digits)	Lowered
Adjusted EBITDA Margin Expansion	FY 2026	180 basis points	approximately 50 basis points	-130 basis points	Lowered
Adjusted EPS Growth	FY 2026	slightly more than 20%	mid-teens	-5 to -10 percentage points	Lowered
Room Night Growth	FY 2026	up about 7%	Withdrawn — no replacement	—	Withdrawn

Management tone

Narrative arc: AI as exploratory opportunity (Q1) → AI as operating model with live products (Q2) → AI as declared structural moat (Q3) → AI as documented P&L line item with reinvestment-funding power (Q4).

GenAI moved from declared moat to documented P&L impact in a single quarter. Three quarters ago AI was framed as long-term opportunity; two quarters ago as operating model; last quarter Glenn made the assertive moat claim; this quarter Avout put a number on it: "I'm 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... we have about a 10% decline in customer service costs per booking." The progression matters because each escalation has been accompanied by management's willingness to spend more — and the $700M FY26 reinvestment is the culmination. Management now believes the AI capability set is durable enough to fund aggressively against, which is a different posture than even one quarter ago.

LLM competition was reframed from threat to partner-mediated top-of-funnel. Glenn's framing this quarter: "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." This is a more confident posture on disintermediation than prior quarters — LLMs are positioned as another demand channel to be partnered with (OpenAI, Google, Microsoft, Amazon are named), not as a structural threat. Whether that confidence will look complacent in 18 months is the central question for the equity.

Marketing went from disciplined lever to strategic offensive weapon. Glenn flipped the framing entirely: "if we see time where we can put money to work that's going to help build the value of this franchise over the long term, we're going to do it. And I'm not going to worry about the fact that, oh, it looks like a little deleverage here." This is the opposite of the FY25 narrative — Q4 marketing deleveraged 24bps as Booking leaned into performance, social and brand marketing at attractive ROIs. The $700M reinvestment is the operationalization of this shift. Notably, Avout flagged that FY26 still aims for marketing leverage unless attractive opportunities to lean in present themselves.

Genius was reframed from loyalty performer to multi-vertical expansion vehicle. Glenn was explicit that it is materially under-built: "Genius is a wonderful program, but it's not nearly what it can be and will be in the future." Pair this with the $700M reinvestment and the withdrawn FY room-night guidance, and the message is that the next two years of Booking's strategy will be measured on engagement and lifetime value metrics rather than headline room-night growth.

Alternative accommodations remained a steady contributor rather than escalated. Booking.com alt-accom grew ~10% for FY25 and +9% in Q4, with mix up 1pp to 36%. Management framed this as a structural piece of the connected, integrated accommodation offering rather than as a standalone push — a more measured tone than some prior-quarter expansion framing.

Recurring themes management leaned on this quarter:

GenAI delivering measurable operational efficiency and customer experience improvementsStrategic reinvestment in growth initiatives (GenAI, Connected Trip, Asia/US expansion, loyalty) funded by transformation savingsMargin expansion while investing: 193 bps EBITDA margin improvement YoY + $550M run-rate transformation savings enabling $700M reinvestmentDirect-to-consumer and loyalty (Genius) as core competitive advantages driving higher frequency and lifetime valueAlternative accommodations and connected trip as multi-year expansion opportunities with still-untapped potentialMerchant-of-record moat and supplier integration as protection against LLM/AI competition

Risks management surfaced:

Discretionary spending caution among some consumer segments reflected in lower ADRs and shorter length of stayFX headwinds: 200-400 bps of reported growth attributable to favorable currency in 2025; guidance assumes Euro at 1.17Competitive dynamics with top-of-funnel players and emerging LLM entrantsRegulatory complexity across 200+ countries for payments and travel operationsExecution risk on $700M reinvestment plan and $500-550M transformation program delivery in 2026

Answers to last quarter's watch list

Whether Q4 room night growth lands within the 4–6% guide or above. Q4 room nights grew 9%, exceeding the high end of the 4–6% guide by 3pp, with healthy demand across all major regions and an expanded booking window.

Resolved positively

Whether FY adjusted EBITDA margin expansion reached the new ~180bps FY25 target. FY25 adjusted EBITDA margin expanded 193bps to 36.9%, above the 180bps Q3 raise. The ratification of the margin-expansion thesis is in the bag.

Resolved positively

Whether Connected Trip transaction growth stabilizes after decelerating from >30% to mid-20% YoY. FY25 Connected Trip transactions grew in the high 20% range and represented a low double-digit percentage of Booking.com total transactions — consistent with prior pace, indicating stabilization rather than further deceleration.

Resolved positively

Whether customer service efficiencies continue to offset payments-mix pressure within sales and other expenses. Definitively yes — and now quantified at the unit level: ~10% decline in customer service costs per booking, with absolute customer service dollars down while bookings grew ~10%. FY26 guidance for sales and other expenses as a percentage of gross bookings to be flat YoY confirms the efficiency offset is structural, not a one-quarter timing artifact.

Resolved positively

Direct-channel mix in the U.S. and globally. FY25 B2C direct mix in the mid-60% range (similar to last year); management called out "continued growth in our direct channel in the U.S." in Q4, but did not quantify the U.S.-specific direct mix. The "thoughtful consumer" language and reference to lower ADRs and shorter length of stay continued.

Continue monitoring

What to watch into next quarter

Whether Q1 FY26 room night growth lands within the 5–7% guide. The withdrawal of FY26 room night guidance puts more weight on the quarterly print; a sub-5% Q1 would suggest the "thoughtful consumer" language is materializing into real demand softness rather than just ADR caution.

First quantified evidence that the ~$400M FY26 incremental revenue from reinvestment is on track. Management has put a specific number on the payback of the $700M spend; by Q2 FY26 some attribution disclosure should be expected, and absence of it would be a credibility issue.

Whether customer-service-cost-per-booking efficiency extends beyond ~10% YoY decline. This is now the single cleanest GenAI ROI datapoint Booking has disclosed; a step-up would strongly support the LLM-partner thesis, a flatlining would weaken it.

Whether the EBITDA margin expansion guide of ~50bps holds or gets cut further during the year. FY26 begins with a guide ~143bps below where FY25 landed, which leaves less margin of safety if reinvestment slips or revenue lift disappoints.

Connected Trip and Genius engagement disclosures. Both were named as $700M reinvestment destinations; absence of fresh quantitative anchors on either by mid-FY26 would suggest the reinvestment narrative is running ahead of measurable progress.

Any directional commentary on LLM channel traffic share. Glenn framed horizontal LLMs as a top-of-funnel partner opportunity; the burden of proof now sits with management to disclose how much demand actually migrates and how the partnerships monetize.

Sources

Booking Holdings Q4 FY2025 press release (SEC filing): https://www.sec.gov/Archives/edgar/data/1075531/000107553126000008/R1.htm
Booking Holdings Q4 FY2025 earnings call prepared remarks and Q&A

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