Item 1. Financial Statements

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Item 1. Financial Statements

Booking Holdings Inc.

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	13,294	$	12,221
Short-term investments (Available-for-sale debt securities: Amortized cost of $632 and $176, respectively)	624		175
Accounts receivable, net (Allowance for expected credit losses of $116 and $117, respectively)	3,447		2,229
Prepaid expenses, net	680		477
Other current assets	434		696
Total current assets	18,479		15,798
Property and equipment, net	733		669
Operating lease assets	643		645
Intangible assets, net	1,660		1,829
Goodwill	2,804		2,807
Long-term investments (Includes available-for-sale debt securities: Amortized cost of $576 at December 31, 2022)	420		2,789
Other assets, net	896		824
Total assets	$	25,635	$	25,361
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	3,020	$	2,507
Accrued expenses and other current liabilities	4,182		3,244
Deferred merchant bookings	3,717		2,223
Short-term debt	1,913		500
Total current liabilities	12,832		8,474
Deferred income taxes	350		685
Operating lease liabilities	547		552
Long-term U.S. transition tax liability	515		711
Other long-term liabilities	160		172
Long-term debt	11,856		11,985
Total liabilities	26,260		22,579
Commitments and contingencies (see Note 13)

Stockholders' (deficit) equity:
Common stock, $0.008 par value, Authorized shares: 1,000,000,000 Issued shares: 64,032,162 and 63,780,528, respectively	—		—
Treasury stock: 28,843,826 and 25,917,558 shares, respectively	(38,944)		(30,983)
Additional paid-in capital	6,996		6,491
Retained earnings	31,608		27,541
Accumulated other comprehensive loss	(285)		(267)
Total stockholders' (deficit) equity	(625)		2,782
Total liabilities and stockholders' (deficit) equity	$	25,635	$	25,361

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Merchant revenues	$	3,945	$	2,614	$	8,467	$	5,413
Agency revenues	3,135		3,203		7,346		6,954
Advertising and other revenues	261		235		768		674
Total revenues	7,341		6,052		16,581		13,041
Operating expenses:
Marketing expenses	2,022		1,795		5,340		4,679
Sales and other expenses	723		540		1,931		1,344
Personnel, including stock-based compensation of $128, $101, $369, and $302, respectively	788		636		2,262		1,867
General and administrative	387		262		980		627
Information technology	187		129		468		400
Depreciation and amortization	129		109		370		327
Restructuring, disposal, and other exit activities	2		(2)		4		40

Total operating expenses	4,238		3,469		11,355		9,284
Operating income	3,103		2,583		5,226		3,757

Interest expense	(254)		(102)		(689)		(246)
Other income (expense), net	300		(305)		533		(1,040)

Income before income taxes	3,149		2,176		5,070		2,471
Income tax expense	638		510		1,003		648
Net income	$	2,511	$	1,666	$	4,067	$	1,823
Net income applicable to common stockholders per basic common share	$	70.62	$	42.10	$	111.09	$	45.20
Weighted-average number of basic common shares outstanding (in 000's)	35,570		39,564		36,615		40,326
Net income applicable to common stockholders per diluted common share	$	69.80	$	41.98	$	110.02	$	45.00
Weighted-average number of diluted common shares outstanding (in 000's)	35,987		39,671		36,971		40,504

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	2,511	$	1,666	$	4,067	$	1,823
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	4		(127)		(22)		(235)

Net unrealized gains (losses) on available-for-sale securities	2		(12)		4		(12)
Total other comprehensive income (loss), net of tax	6		(139)		(18)		(247)
Comprehensive income	$	2,517	$	1,527	$	4,049	$	1,576

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

(In millions, except share data)


	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Three Months Ended September 30, 2023	Shares (in 000's)	Amount		Shares (in 000's)	Amount

Balance, June 30, 2023	64,015	$	—	(27,974)	$	(36,319)	$	6,848	$	29,097	$	(291)	$	(665)

Net income	—	—		—	—		—		2,511		—		2,511
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		4		4

Net unrealized gains on available-for-sale securities, net of tax	—	—		—	—		—		—		2		2


Exercise of stock options and vesting of restricted stock units and performance share units	17	—		—	—		13		—		—		13
Repurchase of common stock	—	—		(870)	(2,625)		—		—		—		(2,625)
Stock-based compensation and other stock-based payments	—	—		—	—		135		—		—		135


Balance, September 30, 2023	64,032	$	—	(28,844)	$	(38,944)	$	6,996	$	31,608	$	(285)	$	(625)




Nine Months Ended September 30, 2023
Balance, December 31, 2022	63,781	$	—	(25,918)	$	(30,983)	$	6,491	$	27,541	$	(267)	$	2,782

Net income	—	—		—	—		—		4,067		—		4,067
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(22)		(22)

Net unrealized gains on available-for-sale securities, net of tax	—	—		—	—		—		—		4		4


Exercise of stock options and vesting of restricted stock units and performance share units	251	—		—	—		122		—		—		122
Repurchase of common stock	—	—		(2,926)	(7,961)		—		—		—		(7,961)
Stock-based compensation and other stock-based payments	—	—		—	—		383		—		—		383


Balance, September 30, 2023	64,032	$	—	(28,844)	$	(38,944)	$	6,996	$	31,608	$	(285)	$	(625)



	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss
Three Months Ended September 30, 2022	Shares (in 000's)	Amount		Shares (in 000's)	Amount						Total
Balance, June 30, 2022	63,766	$	—	(23,618)	$	(26,664)	$	6,278	$	24,640		$	(252)	$	4,002

Net income	—	—		—	—		—		1,666			—		1,666
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—			(127)		(127)

Net unrealized losses on available-for-sale securities, net of tax	—	—		—	—		—		—			(12)		(12)


Exercise of stock options and vesting of restricted stock units and performance share units	8	—		—	—		2		—			—		2
Repurchase of common stock	—	—		(1,067)	(1,966)		—		—			—		(1,966)
Stock-based compensation and other stock-based payments	—	—		—	—		105		—			—		105


Balance, September 30, 2022	63,774	$	—	(24,685)	$	(28,630)	$	6,385	$	26,306		$	(391)	$	3,670




Nine Months Ended September 30, 2022
Balance, December 31, 2021	63,584	$	—	(22,518)	$	(24,290)	$	6,159	$	24,453		$	(144)	$	6,178
Cumulative effect of adoption of accounting standards update	—	—		—	—		(96)		30			—		(66)
Net income	—	—		—	—		—		1,823			—		1,823
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—			(235)		(235)

Net unrealized losses on available-for-sale securities, net of tax	—	—		—	—		—		—			(12)		(12)


Exercise of stock options and vesting of restricted stock units and performance share units	190	—		—	—		7		—			—		7
Repurchase of common stock	—	—		(2,167)	(4,340)		—		—			—		(4,340)
Stock-based compensation and other stock-based payments	—	—		—	—		315		—			—		315


Balance, September 30, 2022	63,774	$	—	(24,685)	$	(28,630)	$	6,385	$	26,306		$	(391)	$	3,670

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Nine Months Ended September 30,
	2023		2022
OPERATING ACTIVITIES:
Net income	$	4,067	$	1,823
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	370		327
Provision for expected credit losses and chargebacks	224		179
Deferred income tax benefit	(409)		(246)
Net losses on equity securities	151		1,142
Stock-based compensation expense and other stock-based payments	369		302
Operating lease amortization	120		117

Unrealized foreign currency transaction gains related to Euro-denominated debt	(2)		(70)



Other	3		40
Changes in assets and liabilities:
Accounts receivable	(1,506)		(1,358)
Prepaid expenses and other current assets	96		(424)
Deferred merchant bookings and other current liabilities	2,644		3,591

Long-term assets and liabilities	(129)		(1,042)
Net cash provided by operating activities	5,998		4,381
INVESTING ACTIVITIES:
Purchase of investments	(12)		(751)
Proceeds from sale and maturity of investments	1,785		30
Additions to property and equipment	(251)		(293)
Other investing activities	3		(14)
Net cash provided by (used in) investing activities	1,525		(1,028)
FINANCING ACTIVITIES:




Proceeds from the issuance of long-term debt	1,893		—

Payment on maturity of debt	(500)		(1,102)
Payments for repurchase of common stock	(7,889)		(4,278)

Proceeds from exercise of stock options	122		7
Other financing activities	(45)		(3)
Net cash used in financing activities	(6,419)		(5,376)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(29)		(83)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents	1,075		(2,106)
Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period	12,251		11,152
Total cash and cash equivalents and restricted cash and cash equivalents, end of period	$	13,326	$	9,046
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	1,573	$	501
Cash paid during the period for interest	$	557	$	240

See Notes to Unaudited Consolidated Financial Statements.

Booking Holdings Inc.

Notes to Unaudited Consolidated Financial Statements

1. BASIS OF PRESENTATION

Management of Booking Holdings Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document. The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by U.S. GAAP for annual financial statements. These Unaudited Consolidated Financial Statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations.

Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.

Impact of COVID-19

Even though there have been improvements in the economic and operating conditions for the Company's business since the outset of the COVID-19 pandemic, the Company cannot predict the long-term effects of the pandemic on its business or the travel and restaurant industries as a whole. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the impact of the COVID-19 pandemic.

Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

See "Recent Accounting Pronouncements Adopted" and "Other Recent Accounting Pronouncements" in Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

2. REVENUE

Disaggregation of Revenue

Geographic Information

The Company's revenues from its businesses outside of the U.S. consists of the results of Booking.com, Agoda, and Rentalcars.com in their entirety and the results of the KAYAK and OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of the results of the Company's businesses outside of the U.S. The Company's geographic information on revenues is as follows (in millions):


			Outside of the U.S.
	United States		The Netherlands		Other		Total Company
Total revenues for the three months ended September 30,
2023	$	633	$	6,127	$	581	$	7,341
2022	$	606	$	4,991	$	455	$	6,052

Total revenues for the nine months ended September 30,
2023	$	1,771	$	13,326	$	1,484	$	16,581
2022	$	1,675	$	10,300	$	1,066	$	13,041

Revenue by Type of Service

Approximately 89% of the Company's revenues for the three and nine months ended September 30, 2023 and 90% and 88% of the Company's revenues for the three and nine months ended September 30, 2022, respectively, relate to online accommodation reservation services. Revenues from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10% of the Company's total revenue for each period.

Incentive Programs

At September 30, 2023 and December 31, 2022, liabilities of $183 million and $143 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets for incentives granted to consumers, including referral bonuses, rebates, credits, discounts, and loyalty programs.

Deferred Merchant Bookings

Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations.

3. STOCK-BASED COMPENSATION

The Company maintains equity incentive plans that include broad-based grants of restricted stock units, performance share units granted to officers and certain other employees, and stock options granted to certain employees.

Restricted stock units and performance share units granted by the Company during the nine months ended September 30, 2023 had an aggregate grant-date fair value of $574 million. Restricted stock units and performance share units that vested during the nine months ended September 30, 2023 had an aggregate fair value at vesting of $436 million. At September 30, 2023, there was $748 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 1.9 years.

The following table summarizes the activity in restricted stock units and performance share units for employees and non-employee directors during the nine months ended September 30, 2023:


	Restricted Stock Units		Performance Share Units
	Shares	Weighted-average Grant-date Fair Value	Shares	Weighted-average Grant-date Fair Value
Unvested at December 31, 2022 (1)	280,460	$2,070	143,702	$2,294

Granted (2)	165,427	$2,629	51,941	$2,679
Vested	(133,767)	$2,021	(30,118)	$2,327
Performance shares adjustment (3)			33,096	$2,411
Forfeited	(13,903)	$2,315	(7,141)	$2,262
Unvested at September 30, 2023	298,217	$2,391	191,480	$2,415

(1) Excludes 14,087 performance share units awarded during the years ended December 31, 2022 and 2021 for which the grant date under Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, was not established as of December 31, 2022. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.

(2) Includes 9,688 performance share units awarded during the years ended December 31, 2022 and 2021 for which the grant date under ASC 718 was established.

(3) Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications.

The following table summarizes the activity in stock options during the nine months ended September 30, 2023:


Employee Stock Options	Number of Shares	Weighted-average Exercise Price	Aggregate Intrinsic Value (in millions)		Weighted-average Remaining Contractual Term (in years)
Balance, December 31, 2022	120,813	$1,408	$	73	7.3

Exercised	(86,763)	$1,407
Forfeited	(62)	$1,411

Balance, September 30, 2023	33,988	$1,411	$	57	6.6
Exercisable at September 30, 2023	33,988	$1,411	$	57	6.6

The aggregate intrinsic value of employee stock options exercised during the nine months ended September 30, 2023 was $110 million.

4. NET INCOME PER SHARE

The Company computes basic net income per share by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period. Only dilutive common equivalent shares that decrease the net income per share are included in the computation of diluted net income per share.

Common equivalent shares related to stock options, restricted stock units, and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.

The Company's convertible senior notes have net share settlement features requiring the Company, upon conversion, to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. If the conversion prices for the convertible senior notes exceed the Company's average stock price for the period, the convertible senior notes generally have no impact on diluted net income per share. The Company uses the if-converted method for the convertible senior notes in the calculation of diluted net income per share.

A reconciliation of the weighted-average number of shares outstanding used in calculating diluted net income per share is as follows (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Weighted-average number of basic common shares outstanding	35,570	39,564	36,615	40,326
Weighted-average dilutive stock options, restricted stock units, and performance share units	231	107	211	149
Assumed conversion of convertible senior notes	186	—	145	29
Weighted-average number of diluted common and common equivalent shares outstanding	35,987	39,671	36,971	40,504

5. INVESTMENTS

The following table summarizes the Company's investments by major security type at September 30, 2023 (in millions):


	Cost		Gross Unrealized Gains /Upward Adjustments		Gross Unrealized Losses /Downward Adjustments		Carrying Value
Short-term investments:
Debt securities:
International government securities	$	73	$	—	$	(1)	$	72
U.S. government securities (1)	185		—		(2)		183
Corporate debt securities	374		—		(5)		369

Total short-term investments	$	632	$	—	$	(8)	$	624

Long-term investments:





Equity securities:
Equity securities with readily determinable fair values	$	715	$	—	$	(424)	$	291
Equity securities of private companies	78		259		(208)		129

Total long-term investments	$	793	$	259	$	(632)	$	420

(1) Includes investments in U.S. municipal bonds.

The following table summarizes the Company's investments by major security type at December 31, 2022 (in millions):


	Cost		Gross Unrealized Gains/Upward Adjustments		Gross Unrealized Losses/Downward Adjustments		Carrying Value
Short-term investments:
Debt securities:
International government securities	$	13	$	—	$	—	$	13
U.S. government securities (1)	131		—		(1)		130
Corporate debt securities	32		—		—		32

Total short-term investments	$	176	$	—	$	(1)	$	175

Long-term investments:
Debt securities:
International government securities	$	63	$	—	$	(1)	$	62
U.S. government securities (1)	147		—		(3)		144
Corporate debt securities	366		—		(7)		359
Total debt securities	576		—		(11)		565
Equity securities:
Equity securities with readily determinable fair values	1,165		1,352		(446)		2,071
Equity securities of private companies	78		259		(184)		153
Total equity securities	1,243		1,611		(630)		2,224
Total long-term investments	$	1,819	$	1,611	$	(641)	$	2,789

(1) Includes investments in U.S. municipal bonds.

The Company has classified its investments in international government securities, U.S. government securities, and corporate debt securities as available-for-sale debt securities. The aggregate unrealized gains and losses on the available-for-sale debt securities, net of tax, are included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.

At September 30, 2023, the Company's investments in debt securities had an average credit quality of AA-/Aa2/A+. The Company invests in international government securities with high credit quality. At September 30, 2023, investments in international government securities principally included debt securities issued by the governments of Germany, France, Norway, Canada, and Sweden.

Equity securities with readily determinable fair values at September 30, 2023 include the Company's investments in Grab Holdings Limited ("Grab") and DiDi Global Inc. ("DiDi"), with fair values of $150 million and $127 million, respectively. At December 31, 2022, equity securities with readily determinable fair values included the Company's investments in Grab, DiDi, and Meituan, with fair values of $136 million, $125 million, and $1.8 billion, respectively. Equity securities with readily determinable fair values are included in "Long-term investments" in the Consolidated Balance Sheets. Net unrealized gains (losses) related to these investments included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Grab	$	5	$	4	$	14	$	(190)
DiDi	9		(44)		2		(123)
Meituan	—		(294)		—		(629)

During the nine months ended September 30, 2023, the Company sold its entire investment in Meituan for $1.7 billion, resulting in a loss of $149 million included in "Other income (expense), net" in the Unaudited Consolidated Statement of Operations for the nine months ended September 30, 2023. The cost basis of the Company's investment in Meituan was $450 million.

Investments in equity securities without readily determinable fair values are measured at cost less impairment, if any. Such investments are also required to be measured at fair value as of the date of certain observable transactions for the identical or a similar investment of the same issuer. The Company's investments in equity securities of private companies at September 30, 2023 and December 31, 2022, include $51 million originally invested in Yanolja Co., Ltd. ("Yanolja"). The Company evaluated its investment in Yanolja for impairment as of June 30, 2023 and 2022 and recognized impairment charges of $24 million and $184 million during the nine months ended September 30, 2023 and 2022, respectively (see Note 6). The carrying value of the Company's investment in Yanolja was $98 million and $122 million as of September 30, 2023 and December 31, 2022, respectively.

6. FAIR VALUE MEASUREMENTS

There are three levels of inputs to valuation techniques used to measure fair value:

Level 1: Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.

Level 2: Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

Financial assets and liabilities measured at fair value on a recurring basis at September 30, 2023 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):


	Level 1		Level 2		Level 3		Total

Recurring fair value measurements
ASSETS:
Cash equivalents and restricted cash equivalents:
Money market fund investments	$	12,105	$	—	$	—	$	12,105




Certificates of deposit	79		—		—		79
Short-term investments:
International government securities	—		72		—		72
U.S. government securities	—		183		—		183
Corporate debt securities	—		369		—		369



Long-term investments:




Equity securities	291		—		—		291
Derivatives:
Foreign currency exchange derivatives	—		52		—		52
Total assets at fair value	$	12,475	$	676	$	—	$	13,151

LIABILITIES:
Foreign currency exchange derivatives	$	—	$	102	$	—	$	102

Nonrecurring fair value measurements
Investment in equity securities of a private company (1)	$	—	$	—	$	98	$	98

(1) During the three months ended June 30, 2023, the investment in Yanolja was written down to its estimated fair value (see Note 5).

Financial assets and liabilities measured at fair value on a recurring basis at December 31, 2022 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):


	Level 1		Level 2		Level 3		Total
Recurring fair value measurements

ASSETS:
Cash equivalents and restricted cash equivalents:
Money market fund investments	$	11,483	$	—	$	—	$	11,483




Certificates of deposit	60		—		—		60
Short-term investments:
International government securities	—		13		—		13
U.S. government securities	—		130		—		130
Corporate debt securities	—		32		—		32



Long-term investments:
International government securities	—		62		—		62
U.S. government securities	—		144		—		144
Corporate debt securities	—		359		—		359

Equity securities	2,071		—		—		2,071
Derivatives:
Foreign currency exchange derivatives	—		65		—		65
Total assets at fair value	$	13,614	$	805	$	—	$	14,419

LIABILITIES:
Foreign currency exchange derivatives	$	—	$	26	$	—	$	26


Nonrecurring fair value measurements
Investment in equity securities of a private company (1)	$	—	$	—	$	122	$	122

(1) During the year ended December 31, 2022, the investment in Yanolja was written down to its estimated fair value.

Investments

See Note 5 for additional information related to the Company's investments.

Investments in private companies measured using Level 3 inputs

The Company's investments measured using Level 3 inputs primarily consist of investments in privately-held companies that are classified as equity securities without readily determinable fair values. Fair values of privately held securities are estimated using a variety of valuation methodologies, including both the market and income approaches. The Company uses valuation techniques appropriate for the type of investment and the information available about the investee as of the valuation date to determine fair value. While observable financing transactions of the investee are generally considered the best indication of the enterprise value, considering factors such as the proximity in timing of the financing transaction to the valuation date, the Company may also use the calibration process and other valuation techniques to supplement this data, including the income approach. Calibration is the process of using observed transactions in the investee company's own instruments to ensure that the valuation techniques that will be employed to value the investment on subsequent measurement dates begin with assumptions that are consistent with the observed transactions.

As of June 30, 2023 and 2022, the Company evaluated its investment in Yanolja for impairment using a combination of the market approach and the income approach in estimating the fair value of the investment as of those dates, and recognized impairment charges. The market approach estimates value using prices and other relevant information generated by market transactions involving comparable companies. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on a company's weighted-average cost of capital adjusted to reflect the risks inherent in its cash flows. The key unobservable inputs and ranges used for the June 2023 impairment evaluation, primarily using the income approach, include the weighted average cost of capital (10.5%-14.5%) and the terminal EBITDA multiple (14x-16x). The key unobservable inputs and ranges used for the June 2022 impairment evaluation include, for the market approach, percentage decrease in the calibrated EBITDA multiple (36%) and for the income approach, the weighted average cost of capital (10%-14%) and the terminal EBITDA multiple (14x-16x). Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. A change in the assumption used for EBITDA multiples would result in a directionally similar change in the fair

value, and a change in the assumption used for weighted average cost of capital would result in a directionally opposite change in the fair value.

The determination of the fair values of investments, where the Company is a minority shareholder and has access to limited information from the investee, reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding the investee's expected growth rates and operating margin, as well as other key assumptions with respect to matters outside of the Company's control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value estimate. Future events and changing market conditions may lead the Company to re-evaluate the assumptions reflected in the valuation which may result in a need to recognize additional impairment charges.

Derivatives

The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. As of September 30, 2023 and December 31, 2022, the Company did not designate any derivatives as hedges for accounting purposes.

The table below provides estimated fair values and notional amounts of foreign currency exchange derivatives outstanding at September 30, 2023 and December 31, 2022 (in millions). The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets.


	September 30, 2023		December 31, 2022
Estimated fair value of derivative assets	$	52	$	65
Estimated fair value of derivative liabilities	$	102	$	26

Notional amount:
Foreign currency purchases	$	4,475	$	2,870
Foreign currency sales	$	3,957	$	2,682

The effect of foreign currency exchange derivatives recorded in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 is as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Losses on foreign currency exchange derivatives	$	56	$	58	$	140	$	114

Other Financial Assets and Liabilities

At September 30, 2023 and December 31, 2022, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments and certificates of deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities, including restricted cash, accounts payable, accrued expenses, and deferred merchant bookings, are carried at cost which approximates their fair values because of the short-term nature of these items. Accounts receivable and other financial assets measured at amortized cost are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Note 9 for the estimated fair value of the Company's outstanding senior notes, including the estimated fair value of the Company's convertible senior notes.

7. ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS

Accounts receivable in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 includes receivables from customers of $2.5 billion and $1.5 billion, respectively, and receivables from payment processors and networks of $909 million and $730 million, respectively. The remaining balance principally relates to receivables from marketing affiliates. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.

Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, also taking into account factors such as the macroeconomic conditions, inflationary pressures, potential recession, and the Company's ability to collect the receivable or recover the prepayment.

The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):


	Nine Months Ended September 30,
	2023		2022
Balance, beginning of year	$	117	$	101
Provision charged to earnings	103		104
Write-offs and adjustments	(103)		(75)
Foreign currency translation adjustments	(1)		(11)
Balance, end of period	$	116	$	119

8. INTANGIBLE ASSETS AND GOODWILL

The Company's intangible assets at September 30, 2023 and December 31, 2022 consist of the following (in millions):


	September 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Amortization Period
Trade names	$	1,805	$	(883)	$	922	$	1,806	$	(812)	$	994	3 - 20 years
Supply and distribution agreements	1,383		(723)		660		1,386		(658)		728		3 - 20 years


Technology and other intangible assets	327		(249)		78		330		(223)		107		Up to 20 years
Total intangible assets	$	3,515	$	(1,855)	$	1,660	$	3,522	$	(1,693)	$	1,829

Intangible assets are amortized on a straight-line basis. Amortization expense was $55 million and $166 million for the three and nine months ended September 30, 2023, respectively, and $55 million and $167 million for the three and nine months ended September 30, 2022, respectively.

The balance of goodwill as of September 30, 2023 and December 31, 2022 is stated net of cumulative impairment charges of $2.0 billion. The Company tests goodwill for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company tests goodwill at the reporting unit level and the annual tests are performed as of September 30. As of September 30, 2023, the Company performed its annual goodwill impairment test and concluded that there was no impairment of goodwill.

9. DEBT

Revolving Credit Facility

In May 2023, the Company entered into a five-year unsecured revolving credit facility with a group of lenders. The revolving credit facility extends a revolving line of credit of up to $2.0 billion to the Company and provides for the issuance of up to $80 million of letters of credit, as well as up to $100 million of borrowings on same-day notice, referred to as swingline loans. Other than the swingline loans, which are available only in U.S. Dollars, the revolving loans and the letters of credit are available in U.S. Dollars, Euros, Pounds Sterling, and any other currency agreed to by the administrative agent and each of the lenders. The revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to the Company's ability to borrow.

Borrowings under the revolving credit facility will bear interest at a rate determined by reference to benchmark rates plus an applicable spread (ranging from 0% to 1.375%) based on the Company's leverage or credit rating at the time of the borrowing. Undrawn balances available under the revolving credit facility are subject to commitment fees at the applicable rate determined by reference to the Company's leverage or credit rating.

Upon entering into this new revolving credit facility, the Company terminated the $2.0 billion five-year revolving credit facility entered into in August 2019. At September 30, 2023 there were no borrowings outstanding and $18 million of letters of credit issued under the new revolving credit facility. At December 31, 2022, there were no borrowings outstanding and $14 million of letters of credit issued under the prior revolving credit facility. See Note 12 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the prior revolving credit facility.

Outstanding Debt

Outstanding debt at September 30, 2023 consists of the following (in millions):


September 30, 2023	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Cost		Carrying Value
Current liabilities:
2.375% (€1 Billion) Senior Notes due September 2024	$	1,059	$	(2)	$	1,057
0.75% Convertible Senior Notes due May 2025	863		(7)		856
Total current liabilities	$	1,922	$	(9)	$	1,913

Long-term debt:
3.65% Senior Notes due March 2025	$	500	$	(1)	$	499
0.1% (€950 Million) Senior Notes due March 2025	1,006		(2)		1,004

3.6% Senior Notes due June 2026	1,000		(2)		998
4.0% (€750 Million) Senior Notes due November 2026	794		(3)		791
1.8% (€1 Billion) Senior Notes due March 2027	1,059		(2)		1,057
3.55% Senior Notes due March 2028	500		(2)		498
0.5% (€750 Million) Senior Notes due March 2028	794		(3)		791
3.625% (€500 Million) Senior Notes due November 2028	529		(3)		526
4.25% (€750 Million) Senior Notes due May 2029	794		(5)		789
4.625% Senior Notes due April 2030	1,500		(8)		1,492
4.5% (€1 Billion) Senior Notes due November 2031	1,059		(7)		1,052
4.125% (€1.25 Billion) Senior Notes due May 2033	1,323		(14)		1,309
4.75% (€1 Billion) Senior Notes due November 2034	1,059		(9)		1,050
Total long-term debt	$	11,917	$	(61)	$	11,856

Outstanding debt at December 31, 2022 consists of the following (in millions):


December 31, 2022	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Cost		Carrying Value
Current liabilities:
2.75% Senior Notes due March 2023	$	500	$	—	$	500
Total current liabilities	$	500	$	—	$	500

Long-term debt:
2.375% (€1 Billion) Senior Notes due September 2024	$	1,067	$	(3)	$	1,064
3.65% Senior Notes due March 2025	500		(1)		499
0.1% (€950 Million) Senior Notes due March 2025	1,014		(3)		1,011
0.75% Convertible Senior Notes due May 2025	863		(9)		854
3.6% Senior Notes due June 2026	1,000		(3)		997
4.0% (€750 Million) Senior Notes due November 2026	800		(3)		797
1.8% (€1 Billion) Senior Notes due March 2027	1,067		(2)		1,065
3.55% Senior Notes due March 2028	500		(2)		498
0.5% (€750 Million) Senior Notes due March 2028	800		(3)		797
4.25% (€750 Million) Senior Notes due May 2029	800		(6)		794
4.625% Senior Notes due April 2030	1,500		(9)		1,491
4.5% (€1 Billion) Senior Notes due November 2031	1,067		(7)		1,060
4.75% (€1 Billion) Senior Notes due November 2034	1,067		(9)		1,058
Total long-term debt	$	12,045	$	(60)	$	11,985

Fair Value of Debt

At September 30, 2023 and December 31, 2022, the estimated fair value of the outstanding debt was approximately $14.0 billion and $12.4 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. The estimated fair value of the Company's debt in excess of the outstanding principal amount at September 30, 2023 primarily relates to the conversion premium on the convertible senior notes due in May 2025 partially offset by the increase in market interest rates. As of December 31, 2022, the outstanding principal amount of the Company's debt exceeded the fair value of debt mainly due to the increase in market interest rates partially offset by the conversion premium on the convertible senior notes due in May 2025.

Convertible Senior Notes

In April 2020, the Company issued $863 million aggregate principal amount of convertible senior notes due in May 2025 with an interest rate of 0.75% (the "May 2025 Notes"). The Company paid $19 million in debt issuance costs during the year ended December 31, 2020 related to the issuance. The May 2025 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $1,886.44 per share. The May 2025 Notes are convertible, at the option of the holder, prior to November 1, 2024, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the May 2025 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the May 2025 Notes in an aggregate value ranging from $0 to $235 million depending upon the date of the transaction and the then current stock price of the Company. Starting on November 1, 2024, holders will have the right to convert all or any portion of the May 2025 Notes, regardless of the Company's stock price. The May 2025 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the May 2025 Notes for cash in certain circumstances. Interest on the May 2025 Notes is payable on May 1 and November 1 of each year. If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to

satisfy the conversion value in excess of the principal amount. At September 30, 2023 and December 31, 2022, the estimated fair value of the May 2025 Notes was $1.4 billion and $1.2 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). For the three and nine months ended September 30, 2023 and 2022, the weighted-average effective interest rate related to the convertible senior notes was 1.2%.

Based on the closing sales prices of the Company's common stock for the prescribed measurement periods, the May 2025 Notes were convertible at the option of the holder during the second and third calendar quarters of 2023 and continue to be convertible during the fourth calendar quarter of 2023. The May 2025 Notes are classified as "Short-term debt" in the Consolidated Balance Sheet as of September 30, 2023.

Other Senior Notes

In May 2023, the Company issued senior notes due November 2028 with an interest rate of 3.625% for an aggregate principal amount of 500 million Euros and senior notes due May 2033 with an interest rate of 4.125% for an aggregate principal amount of 1.25 billion Euros. The proceeds from the issuance of these senior notes are available for general corporate purposes, including to repurchase shares of the Company's common stock.

In March 2023, the Company repaid $500 million on the maturity of the Senior Notes due March 2023. In March 2022, the Company repaid $1.1 billion on the maturity of Senior Notes due March 2022. In addition, the Company paid the applicable accrued and unpaid interest relating to each of these senior notes.

Other senior notes had a total carrying value of $12.9 billion and $11.6 billion at September 30, 2023 and December 31, 2022, respectively. Debt discount and debt issuance costs are amortized using the effective interest rate method over the period from the origination date through the stated maturity date.

Interest expense related to other senior notes consists primarily of coupon interest expense of $109 million and $301 million for the three and nine months ended September 30, 2023, respectively, and $54 million and $168 million for the three and nine months ended September 30, 2022, respectively.

The Company designates certain portions of the aggregate principal value of the Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. For the nine months ended September 30, 2023 and 2022, the carrying value of the portion of Euro-denominated debt, designated as a net investment hedge, ranged from $5.9 billion to $8.4 billion and from $4.2 billion to $5.6 billion, respectively.

10. TREASURY STOCK

At December 31, 2022, the Company had a total remaining authorization of $3.9 billion related to a program authorized by the Company's Board of Directors ("the Board") in 2019 to repurchase up to $15.0 billion of the Company's common stock. In the first quarter of 2023, the Board authorized an additional program to repurchase up to $20.0 billion of the Company's common stock. At September 30, 2023, the Company had a total remaining authorization of $16.2 billion to repurchase its common stock. The Company expects to complete the share repurchases under the remaining authorization within four years from when the Company started the program in the first quarter of 2023, assuming no major downturn in the travel market. Additionally, the Board has given the Company the general authorization to repurchase shares of its common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation.

The following table summarizes the Company's stock repurchase activities during the three and nine months ended September 30, 2023 and 2022 (in millions, except for shares, which are reflected in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Authorized stock repurchase programs	867	$	2,616	1,064	$	1,959	2,856	$	7,776	2,090	$	4,178
General authorization for shares withheld on stock award vesting	3	9		3	7		70	185		77	162
Total	870	$	2,625	1,067	$	1,966	2,926	$	7,961	2,167	$	4,340

Stock repurchases of $70 million in September 2023 were settled in October 2023.

For the nine months ended September 30, 2023 and 2022, the Company remitted employee withholding taxes of $185 million and $160 million, respectively, to the tax authorities, which may differ from the aggregate cost of the shares withheld for taxes for each period due to the timing in remitting the taxes. The cash remitted to the tax authorities is included in financing activities in the Unaudited Consolidated Statements of Cash Flows.

Effective January 1, 2023, the Inflation Reduction Act of 2022 has mandated a 1% excise tax on share repurchases. Excise tax obligations that result from the Company's share repurchases are accounted for as a cost of the treasury stock transaction. As of September 30, 2023, the Company recorded an estimated excise tax liability of $72 million for stock repurchases during the nine months ended September 30, 2023, which is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet.

11. INCOME TAXES

Income tax expense consists of U.S. and international income taxes, determined using an estimate of the Company's annual effective tax rate, which is based upon the applicable tax rates and tax laws of the countries in which the income is generated. A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and operating loss and tax credit carryforwards. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes, and other relevant factors.

The Company's effective tax rates for the three and nine months ended September 30, 2023 were 20.3% and 19.8%, respectively, compared to 23.4% and 26.2% for the three and nine months ended September 30, 2022, respectively. The Company's 2023 effective tax rates differ from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax (discussed below), partially offset by higher international tax rates and certain non-deductible expenses. The Company's 2022 effective tax rates differed from the U.S. federal statutory tax rate of 21%, primarily due to higher international tax rates, unrecognized tax benefits, a valuation allowance related to certain unrealized losses on equity securities, and certain non-deductible expenses, partially offset by the benefit of the Netherlands Innovation Box Tax.

The Company's effective tax rate for the three months ended September 30, 2023 was lower than the effective tax rate for the three months ended September 30, 2022, primarily due to lower unrecognized tax benefits, lower international tax rates, and certain lower non-deductible expenses, partially offset by certain lower discrete tax benefits and a decrease in the benefit of the Netherlands Innovation Box Tax.

The Company's effective tax rate for the nine months ended September 30, 2023 was lower than the effective tax rate for the nine months ended September 30, 2022, primarily due to lower unrecognized tax benefits, lower valuation allowance related to certain unrealized losses on equity securities, lower international tax rates, and certain lower non-deductible expenses, partially offset by a decrease in the benefit of the Netherlands Innovation Box Tax.

During the three and nine months ended September 30, 2023 and 2022, a majority of the Company's income was reported in the Netherlands, where Booking.com is based. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings during the three and nine months ended September 30, 2023 and 2022 qualified for Innovation Box Tax treatment, which had a beneficial impact on the Company's effective tax rates for these periods.

The aggregate amount of unrecognized tax benefits for all matters at September 30, 2023 and December 31, 2022 was $51 million and $184 million, respectively. As of September 30, 2023, net unrecognized tax benefits of $31 million, if recognized, would impact the effective tax rate. As of September 30, 2023 and December 31, 2022, total gross interest and penalties accrued was $7 million and $43 million, respectively. The decrease in unrecognized tax benefits, as well as gross interest and penalties, primarily relates to the settlement by Booking.com of certain French tax matters. The majority of unrecognized tax benefits are included in "Other assets, net" and "Other long-term liabilities" in the Consolidated Balance Sheet as of September 30, 2023. It is reasonably possible that the balance of gross unrecognized tax benefits could change over the next 12 months.

12. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT

The tables below present the changes in the balances of accumulated other comprehensive loss ("AOCI") by component for the three and nine months ended September 30, 2023 and 2022 (in millions):


		Foreign currency translation adjustments														Net unrealized (losses) gains on available-for-sale securities										Total AOCI, net of tax
	Foreign currency translation						Net investment hedges (1)						Total, net of tax				Before tax			Tax			Total, net of tax
	Before tax			Tax (2)			Before tax			Tax

Three Months Ended September 30, 2023
Balance, June 30, 2023		$	(476)		$	76		$	163		$	(46)		$	(283)			$	(11)		$	3		$	(8)		$	(291)



Other comprehensive income (loss) ("OCI") for the period		(240)			46			259			(61)			4				3			(1)			2			6

Balance, September 30, 2023		$	(716)		$	122		$	422		$	(107)		$	(279)			$	(8)		$	2		$	(6)		$	(285)

Nine Months Ended September 30, 2023
Balance, December 31, 2022		$	(579)		$	93		$	310		$	(81)		$	(257)			$	(13)		$	3		$	(10)		$	(267)


OCI for the period		(137)			29			112			(26)			(22)				5			(1)			4			(18)

Balance, September 30, 2023		$	(716)		$	122		$	422		$	(107)		$	(279)			$	(8)		$	2		$	(6)		$	(285)























Three Months Ended September 30, 2022
Balance, June 30, 2022	$	(717)	$	112	$	470	$	(119)	$	(254)	$	3	$	(1)	$	2	$	(252)



OCI for the period	(402)		51		293		(69)		(127)		(16)		4		(12)		(139)

Balance, September 30, 2022	$	(1,119)	$	163	$	763	$	(188)	$	(381)	$	(13)	$	3	$	(10)	$	(391)

Nine Months Ended September 30, 2022
Balance, December 31, 2021	$	(276)	$	67	$	91	$	(28)	$	(146)	$	3	$	(1)	$	2	$	(144)



OCI for the period	(843)		96		672		(160)		(235)		(16)		4		(12)		(247)

Balance, September 30, 2022	$	(1,119)	$	163	$	763	$	(188)	$	(381)	$	(13)	$	3	$	(10)	$	(391)

(1) Net investment hedges balance at September 30, 2023 and earlier dates presented above, includes accumulated net losses from fair value adjustments of $35 million ($53 million before tax) associated with previously settled derivatives that were designated as net investment hedges. The remaining balances relate to foreign currency transaction gains (losses) and related tax benefits (expenses) associated with the Company's Euro-denominated debt that is designated as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries (see Note 9).

(2) The tax benefits relate to foreign currency translation adjustments to the Company's one-time deemed repatriation tax liability recorded at December 31, 2017 and foreign earnings for periods after December 31, 2017 that are subject to U.S. federal and state income tax, resulting from the enactment of the U.S. Tax Cuts and Jobs Act.

13. COMMITMENTS AND CONTINGENCIES

Competition and Consumer Protection Reviews

At times, online platforms, including online travel platforms, have been the subject of investigations or inquiries by various national competition authorities ("NCAs") or other governmental authorities regarding competition law matters, consumer protection issues, or other areas of concern. The Company is and has been involved in many such investigations. For example, the Company has been and continues to be involved in investigations related to whether Booking.com's contractual parity arrangements with accommodation providers, sometimes also referred to as "most favored nation" or "MFN" provisions, are anti-competitive because they require accommodation providers to provide Booking.com with room rates, conditions or availability that are at least as favorable as those offered to other online travel companies or through the accommodation provider's website. To resolve and close certain of the investigations, the Company has from time to time made commitments to the investigating authorities regarding future business practices or activities, such as agreeing to narrow the scope of its parity clauses, in order to resolve parity-related investigations. These investigations have resulted in fines and the Company could incur additional fines in the future. In addition, in September 2017, the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland and the investigation is ongoing. If there is an adverse outcome and Booking.com is unsuccessful in any appeal, Booking.com could be required to reduce its commissions in Switzerland. In October 2022, the Comisión Nacional de los Mercados y la Competencia in Spain opened an investigation into whether certain practices by Booking.com may produce adverse effects for hotels and other online travel agencies. In July 2023, the Polish Office of Competition and Consumer Protection opened an investigation into Booking.com's identification of private and

professional hosts and its messaging in relation to obligations owed to consumers. If any of the investigations were to find that Booking.com practices violated the respective laws, Booking.com may face significant fines and/or be required to make other commitments. Some authorities are reviewing the online hotel booking sector more generally through market inquiries, and the Company cannot predict the outcome of such inquiries or any resulting impact on its business, results of operations, cash flows, or financial condition.

The Company is and has been involved in investigations or inquiries by NCAs or other governmental authorities involving consumer protection matters, including in the United Kingdom and the European Union. The Company has previously made certain voluntary commitments to competition authorities to resolve investigations or inquiries that have included showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings on or before the search results page and making certain adjustments to how discounts and statements concerning popularity or availability are shown to consumers. In the future, it is possible new jurisdictions could engage the Company in discussions to implement changes to its business in those countries. The Company is unable to predict what, if any, effect any future similar commitments will have on its business, industry practices or online commerce more generally. To the extent that any other investigations or inquiries result in additional commitments, fines, damages or other remedies, the Company's business, financial condition, and results of operations could be harmed.

The Company is unable to predict how any current or future investigations or litigation may be resolved or the long-term impact of any such resolution on its business. For example, competition and consumer-law-related investigations, legislation, or issues could result in private litigation and the Company is currently involved in such litigation. More immediate results could include, among other things, the imposition of fines, payment of damages, commitments to change certain business practices, or reputational damage, any of which could harm the Company's business, results of operations, brands, or competitive position.

Tax Matters

Between December 2018 and August 2021, the Italian tax authorities issued assessments on Booking.com's Italian subsidiary totaling approximately 251 million Euros ($266 million) for the tax years 2013 through 2018, asserting that its transfer pricing policies were inadequate. The Company believes Booking.com has been and continues to be in compliance with Italian tax law. In September 2020, the Italian tax authorities approved the opening of a mutual agreement procedure ("MAP") between Italy and the Netherlands for the 2013 tax year and the Italian tax authorities subsequently approved the inclusion of the tax years 2014 through 2018 in the MAP. Based on the Company's expectation that the Italian assessments for 2013 through 2018, and any transfer pricing assessments received for subsequent open years, will be settled through the MAP process, and after considering potential resolution amounts, 18 million Euros ($19 million) have been reflected in net unrecognized tax benefits, the majority of which is recorded to "Other assets, net" in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022. As of September 30, 2023, the Company made prepayments of 74 million Euros ($78 million) to the Italian tax authorities to forestall collection enforcement pending the appeal phase of the case. The payments do not constitute an admission that the Company owes the taxes and will be refunded (with interest) to the Company to the extent that the Company prevails. The payments are included in "Other assets, net" in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022.

In June 2021, the investigative arm of the Italian tax authorities issued a Tax Audit Report recommending that a formal tax assessment of 154 million Euros ($163 million), plus interest and penalties, be made on Booking.com BV for value-added taxes ("VAT") related to commissions charged to certain Italian accommodation providers from 2013 to 2019. In connection with the Tax Audit Report, the Genoa Public Prosecutor has requested certain Booking.com tax information and related data. The Company is cooperating with regard to that request. While the Company continues to believe that Booking.com has been compliant with applicable VAT laws, in July 2023, the Company entered into an agreement with the Italian tax authorities and paid approximately 93 million Euros ($103 million) to settle the issues raised in the Tax Audit Report for the periods 2013 through 2022.

The Company is also involved in other tax-related audits, investigations, and litigation relating to income taxes, value-added taxes, travel transaction taxes (e.g., hotel occupancy taxes), withholding taxes, and other taxes. Any taxes or assessments in excess of the Company's tax provisions, including the resolution of any tax proceedings or litigation, could have a material adverse impact on the Company's results of operations, cash flows, and financial condition.

Other Matters

Beginning in 2014, Booking.com received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) ("BPF") claiming that Booking.com is required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme in which Booking.com is currently participating. BPF instituted legal proceedings against Booking.com and in 2016 the District Court of Amsterdam rejected all of BPF's claims. BPF appealed the decision to the Court of Appeal, and, in May 2019, the Court of Appeal also rejected all of BPF's claims, in each case by ruling that Booking.com does not meet the definition of a travel intermediary for purposes of the mandatory pension scheme. BPF then appealed to the Netherlands Supreme Court. In April 2021, the Supreme Court overturned the previous decision of the Court of Appeal and held that Booking.com meets the definition of a travel intermediary for the purposes of the mandatory pension scheme. The Supreme Court ruled only on the qualification of Booking.com as a travel intermediary for the purposes of the mandatory pension scheme and did not rule on the various other defenses brought forward by the Company against BPF's claims. The Supreme Court referred the matter to another Court of Appeal that will have to assess the other defenses brought forward by the Company. The Company intends to pursue a number of defenses in the subsequent proceedings and may ultimately prevail in whole or in part. While the Company continues to believe that Booking.com is in compliance with its pension obligations and that the Court of Appeal could ultimately rule in favor of Booking.com, given the Supreme Court's decision, the Company believes it is probable that it has incurred a loss related to this matter. The Company is not able to reasonably estimate a loss or a range of loss because there are significant factual and legal questions yet to be determined in the subsequent proceedings. As a result, as of September 30, 2023, the Company has not recorded a liability in connection with a potential adverse ultimate outcome to this litigation. However, if Booking.com were to ultimately lose and all of BPF's claims were to be accepted (including with retroactive effect to 1999), the Company estimates that as of September 30, 2023, the maximum loss, not including any potential interest or penalties, would be approximately 405 million Euros ($428 million). Such estimated potential loss increases as Booking.com continues not to contribute to the BPF and depends on Booking.com's applicable employee compensation after September 30, 2023.

From time to time, the Company notifies the competent data protection authority, such as the Dutch data protection authority in accordance with its obligations under the General Data Protection Regulation, of certain incidental and accidental personal data security incidents. Should, for example, the Dutch data protection authority decide these incidents were the result of inadequate technical and organizational security measures or practices, it could decide to impose a fine.

The Company has been, is currently, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention from the Company's business objectives and adversely affect the Company's business, reputation, results of operations, financial condition, and cash flows.

The Company accrues for certain other contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated. Such accrued amounts are not material to the Company's balance sheets and provisions recorded have not been material to the Company's results of operations or cash flows.

Other Contractual Obligations and Contingencies

The Company had $690 million and $452 million of standby letters of credit and bank guarantees issued on behalf of the Company as of September 30, 2023 and December 31, 2022, respectively, including those issued under the revolving credit facility. These are obtained primarily for regulatory purposes. See Note 9 for information related to letters of credit issued under the revolving credit facility.

Booking.com offers partner liability insurance that provides protection to certain accommodation partners ("home partners") in instances where a reservation has been made via Booking.com. The partner liability insurance may provide those home partners (both owners and property managers) coverage up to $1.0 million equivalent per occurrence, subject to limitations and exclusions, against third-party lawsuits, claims for bodily injury, or third-party personal property damage that occurred during a stay booked through Booking.com. Booking.com retains certain financial risks related to this insurance offering, which is underwritten by third-party insurance companies.

14. OTHER INCOME (EXPENSE), NET

The components of other income (expense), net for the three and nine months ended September 30, 2023 and 2022 were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Interest and dividend income	$	289	$	61	$	783	$	88
Net gains (losses) on equity securities (1)	16		(336)		(151)		(1,142)

Foreign currency transaction (losses) gains (2)	(1)		(34)		(102)		12

Other	(4)		4		3		2
Other income (expense), net	$	300	$	(305)	$	533	$	(1,040)

(1) Includes loss of $149 million related to the sale of Meituan during the nine months ended September 30, 2023. See Note 5 for additional information related to net gains (losses) on equity securities and Note 6 for additional information related to impairments of an investment in equity securities.

(2) Foreign currency transaction (losses) gains include gains of $36 million and $2 million for the three and nine months ended September 30, 2023, respectively, and gains of $2 million and $70 million for the three and nine months ended September 30, 2022, respectively, related to Euro-denominated debt and accrued interest that were not designated as net investment hedges (see Note 9).

15. OTHER

Unaudited Consolidated Statements of Cash Flows: Additional Information

The following table reconciles cash and cash equivalents and restricted cash and cash equivalents reported in the Consolidated Balance Sheets to the total amounts shown in the Unaudited Consolidated Statements of Cash Flows (in millions):


	September 30, 2023		December 31, 2022
	(Unaudited)
As included in the Consolidated Balance Sheets:
Cash and cash equivalents	$	13,294	$	12,221
Restricted cash and cash equivalents (1)	32		30

Total cash and cash equivalents and restricted cash and cash equivalents as shown in the Unaudited Consolidated Statements of Cash Flows	$	13,326	$	12,251

(1) Included in "Other current assets" in the Consolidated Balance Sheets and principally consist of amounts relating to the Company's travel-related insurance business.

Noncash investing activity related to additions to property and equipment, including stock-based compensation and accrued liabilities, was $39 million and $33 million for the nine months ended September 30, 2023 and 2022, respectively. See Note 10 for additional information on noncash financing activity related to the excise tax on share repurchases.

Restructuring, Disposal, and Other Exit Activities

During the year ended December 31, 2022, the Company transferred certain customer service operations of Booking.com to Majorel Group Luxembourg S.A. resulting in a loss of $40 million included in "Restructuring, disposal, and other exit activities" in the Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2022.

Acquisition - Termination Fee

In November 2021, the Company entered into an agreement to acquire global flight booking provider Etraveli Group. The completion of the acquisition was subject to certain closing conditions, including regulatory approvals. In September 2023, the European Commission announced its decision to prohibit the acquisition and consequently a termination fee of 85 million Euros ($90 million) became payable to the sellers. The termination fee was paid in October 2023 and is recorded in "General and administrative" expense in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023. The related payable is included in "Accounts payable" in the Unaudited Consolidated Balance Sheet as of September 30, 2023.

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