Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, including Part I, Item 1A "Risk Factors," as well as our Unaudited Consolidated Financial Statements and accompanying notes and the Section entitled "Special Note Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q. The information on our websites is not a part of this Quarterly Report and is not incorporated herein by reference.

We evaluate certain operating and financial measures on both an as-reported and constant currency basis. We calculate constant currency based on the predominant transactional currency in each country, converting our current-year period results in currencies other than U.S. Dollars using the corresponding prior-year period monthly average exchange rates.

Overview

Our mission is to make it easier for everyone to experience the world. We aim to provide consumers with a best-in-class experience offering the travel choices they want, with tailored planning, payment, language, and other options, seamlessly connecting them with our travel service provider partners. We offer these services through five primary consumer-facing brands: Booking.com, Priceline, Agoda, KAYAK, and OpenTable. See Note 14 to our Unaudited Consolidated Financial Statements for segment reporting and geographic information.

We derive substantially all of our revenues from enabling consumers to make travel service reservations. We also earn revenues from advertising services, restaurant reservation and management services, travel-related insurance offerings, and other services.

Trends

Our global room nights in 2024 increased 9% year-over-year driven primarily by healthy travel demand in Europe and Asia. We saw the booking window expand in 2024 compared to 2023, which benefited year-over-year room night growth. In the first quarter of 2025, global room nights increased 7% year-over-year, driven primarily by increased travel demand in Europe and Asia.

While our first quarter results were strong, we are closely monitoring the uncertain geopolitical and macroeconomic environment and the potential impact it may have on global travel demand. We cannot predict how evolving conditions may affect consumer spending and behavior, travel patterns, our partners, or our ability to conduct our business. At this time, we believe our diversified global portfolio of leading travel brands, flexible platforms, and our strong financial position would help us to navigate a range of economic scenarios. We continue to take a long-term view, staying focused on delivering value to our travelers and partners, maintaining disciplined cost management, and making strategic investments as appropriate.

Quarterly Room Nights and Change versus the prior year

The cancellation rate in the first quarter of 2025 was slightly higher than the first quarter of 2024. Because we recognize revenues from bookings when the traveler checks in, our reported revenues are not at risk of being reversed due to cancellations. Increases in cancellation rates can negatively impact our marketing efficiency as a result of incurring performance marketing expenses at the time a booking is made even though that booking could be canceled in the future if it was booked under a flexible cancellation policy.

In the first quarter of 2025, our global average daily rates ("ADRs") on a constant currency basis were approximately 1% higher than the prior year. Our global ADRs were negatively impacted by a higher mix of room nights from Asia, which is a lower ADR region. Excluding the changes in regional mix, our global ADRs on a constant currency basis increased year-over-year by about 2%. The year-over-year increase in our global ADRs on a constant currency basis has resulted in constant currency accommodation gross bookings growing faster than our room nights in the first quarter of 2025. It is difficult to predict what the trend in industry ADRs will be in the future.

We focus on relentless innovation to grow our business by providing a best-in-class user experience with intuitive, easy-to-use online platforms that aim to exceed the expectations of consumers. We have a long-term strategy to create an ideal traveler experience, offering our customers relevant options and connections at the times and in the language they want them, making trips booked with us seamless, easy, and valuable. We refer to this as the "Connected Trip." The goal of our Connected Trip vision is to offer a differentiated and personalized online travel planning, booking, payment, and in-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and partners across all trips. We believe these efforts will help improve traveler loyalty, frequency, and mix of direct bookings over time. We believe these improvements will benefit revenue growth and marketing efficiency in the future, however, to the extent our non-accommodation services have lower margins and increase as a percentage of our total business, our operating margins may be negatively affected.

Our mobile app is an important platform for experiencing the Connected Trip since the app travels with the traveler. The mix of our room nights booked on a mobile app in the first quarter of 2025 was a mid-fifties percentage, up from a low-fifties percentage in the first quarter of 2024. The significant majority of room nights booked on our mobile apps are direct, and we continue to see favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with consumers. The revenues earned on a transaction on a mobile app may be less than a typical desktop transaction as we see different consumer purchasing patterns across devices. For example, accommodation reservations made on a mobile app typically are for shorter lengths of stay and have lower accommodation ADRs.

As part of our strategy to provide more payment options to consumers and travel service providers, increase the number and variety of our accommodations, and enable our long-term Connected Trip strategy, Booking.com increasingly processes transactions on a merchant basis, where it facilitates payments from travelers for the services provided. This allows Booking.com to process transactions for travel service providers and to increase its ability to offer secure and flexible transaction terms to consumers, such as the form, currency, and timing of payment. The mix of our total gross bookings generated on a merchant basis was 67% in the first quarter of 2025, an increase from 59% in the first quarter of 2024. We believe that expanding these types of service offerings will benefit consumers and travel service providers, as well as our gross bookings, room night, and earnings growth rates. However, this results in additional expenses for personnel, payment processing, chargebacks (including those related to fraud), and other expenses related to these transactions, which are recorded in "Personnel" expenses and "Sales and other expenses" in our Unaudited Consolidated Statements of Operations, as well as associated incremental revenues (e.g., payment card rebates), which are recorded in "Merchant revenues." To the extent more of our business is generated on a merchant basis, we incur a greater level of these merchant-related expenses, which negatively impacts our operating margins despite increases in associated incremental revenues. Over the trailing twelve months ended March 31, 2025, the incremental revenues from facilitating payments were greater than the associated incremental variable expenses.

We have established widely-used and recognized brands through marketing and promotional campaigns. Our total marketing expenses, which are comprised of performance and brand marketing expenses that are substantially variable in nature, were $1.8 billion in the first quarter of 2025, up 10% versus the first quarter of 2024 as a result of the year-over-year growth in travel demand in the quarter and our efforts to invest in marketing. Our performance marketing expenses, which represent a substantial majority of our marketing expenses, are primarily related to the use of online search engines (primarily Google), affiliate marketing, meta-search, and social media channels to generate traffic to our platforms. Our brand marketing expenses are primarily related to costs associated with producing and airing digital branding and television advertising.

Marketing efficiency, expressed as marketing expenses as a percentage of gross bookings, and performance marketing returns on investment ("ROIs") are impacted by a number of factors that are in some cases outside of our control. Such factors include ADRs, costs per click, cancellation rates, foreign currency exchange rates, search engine bidding algorithms, channel mix, our ability to convert paid traffic to booking customers, and the timing and effectiveness of our brand marketing and social media marketing campaigns. In recent years, we observed periods of stable or increasing ROIs. Although it is difficult to predict how ROIs will change in the future, ROIs could be negatively impacted by increased levels of competition and other factors. When evaluating our performance marketing spend, we typically consider several factors for each channel, such as the customer experience on the advertising platform, the incremental traffic we receive, and anticipated repeat rates. Marketing efficiency can also be impacted by the extent to which consumers come directly to our platforms for bookings. The mix of our total room nights booked by consumers coming directly to our platforms was a mid-fifties percentage over the trailing twelve months ended March 31, 2025 and was higher if we exclude the room nights booked through affiliate programs (i.e., business-to-business). The mix of total room nights booked by consumers coming directly to our platforms increased year-over-year, which benefited our marketing efficiency in the first quarter of 2025 versus the first quarter of 2024. See Part I, Item 1A, Risk Factors - "We face risks relating to our marketing efforts" and "We are dependent on travel service providers, restaurants, search platforms, and other third parties" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Booking.com had approximately 4.1 million total properties on its website at March 31, 2025, representing an increase from approximately 3.5 million total properties at March 31, 2024. At March 31, 2025, the total properties on Booking.com's website consisted of approximately 3.6 million alternative accommodation properties (including homes, apartments, and other unique places to stay) and approximately 500,000 hotels, motels, and resorts.

The mix of Booking.com's room nights booked for alternative accommodation properties in the first quarter of 2025 was approximately 37%, up versus approximately 36% in the first quarter of 2024. We have observed a longer-term trend of an increasing mix of room nights booked for alternative accommodation properties as consumer demand for these types of properties has grown, and as we have increased the number and variety of these properties on Booking.com. We may experience lower profit margins due to additional costs, such as increased customer service or certain partner related costs, related to offering alternative accommodations. As our alternative accommodation business has grown, these different characteristics have negatively impacted our profit margins and this trend may continue.

Although we believe that providing an extensive collection of properties, excellent customer service, and an intuitive, easy-to-use platform are important factors influencing a consumer's decision to make a reservation, for many consumers the price of the travel service is the primary factor determining whether to book. Discounting and couponing (i.e., merchandising) occurs across the major regions in which we operate, particularly in Asia. In some cases, our competitors are willing to make little or no profit on a transaction or offer travel services at a loss in order to gain market share. As a result, it is important to offer travel services at a competitive price, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. These initiatives have resulted and, in the future, may result in lower ADRs and lower revenues as a percentage of gross bookings.

Over the long term, we intend to continue to invest in marketing and promotion, technology, and personnel, as well as exploring strategic alternatives such as acquisitions, within parameters consistent with efforts to improve long-term operating results. To create room for these investments, we intend to continue to look for ways to optimize our expenses.

In November 2024, we announced our intention to implement certain organizational changes, including modernizing processes and systems, initiating an expected workforce reduction, optimizing procurement, and seeking real estate savings (the "Transformation Program"). We continue to believe it is important to make these organizational changes in order to drive further expense efficiency, create room for reinvestment in projects and initiatives that will support the growth of our business over the long run, and further improve our organizational agility. Since the announcement of the Transformation Program, we have initiated actions that we expect will result in savings in future quarters and years. As we are in the early stages of this program and we expect the majority of the run rate savings to be achieved after 2025, such savings were not material to our first quarter results. We continue to expect the Transformation Program to ultimately deliver about $400 to $450 million in annual run rate savings over the next three years as compared to our 2024 expense base. We continue to expect that restructuring costs and accelerated investments related to the Transformation Program will be incurred in the next two to three years and are estimated to be, in the aggregate, approximately one times the expected annual run rate savings.

Many taxing authorities seek to increase tax revenues and have targeted large multinational technology companies in these efforts. Many jurisdictions, particularly in the EU, have implemented or are considering the adoption of a digital services tax or similar tax that imposes a tax on revenues earned from digital advertisements or the use of online platforms, even when there is no physical presence in the jurisdiction. Rates for these taxes range from 1.5% to 10% of revenues deemed generated in the jurisdiction. We record the applicable digital services taxes in "Sales and other expenses" in the Unaudited Consolidated Statements of Operations. For more information, see Part I, Item 1A, Risk Factors - "We may have exposure to additional tax liabilities" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Increased regulatory focus on large technology companies could result in increased compliance costs or otherwise adversely affect our business. For example, the European Commission designated the Company as a gatekeeper under the Digital Markets Act in 2024 and Booking.com as a "Very Large Online Platform" under the Digital Services Act in 2023. As a result of these designations, we are subject to additional rules and regulations that may not be applicable to our competitors. For more information, see Part I, Item 1A, Risk Factors - "Our business is subject to various competition, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify" in our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 13 to our Unaudited Consolidated Financial Statements.

Our businesses outside of the U.S. represent a substantial majority of our financial results, but because we report our results in U.S. Dollars, we face exposure to movements in foreign currency exchange rates as the financial results and the financial condition of our businesses outside of the U.S. are translated from local currency (principally Euros and British Pounds Sterling) into U.S. Dollars. See Note 14 to our Unaudited Consolidated Financial Statements for information related to revenues by geographic area. As a result of movements in foreign currency exchange rates, both the absolute amounts of and percentage changes in our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income as expressed in U.S. Dollars are affected. Our total revenues increased by approximately 8% in the first quarter of 2025 as compared to the first quarter of 2024, but without the impact of changes in foreign currency exchange rates our total revenues increased year-over-year on a constant currency basis by approximately 10%. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations.

We generally enter into derivative instruments to minimize the impact of foreign currency exchange rate fluctuations, such as foreign currency exchange derivative contracts to hedge our exposure to the impact of movements in foreign currency exchange rates on our transactional balances denominated in currencies other than the functional currency. See Note 6 to our Unaudited Consolidated Financial Statements for additional information. We designate certain portions of the aggregate principal value of our Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument for accounting purposes are recognized in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations (see Notes 9 and 15 to our Unaudited Consolidated Financial Statements). Such foreign currency transaction gains or losses are dependent on the amount of net assets of the Euro functional currency subsidiaries, the amount of the Euro-denominated debt that is designated as a hedge, and fluctuations in foreign currency exchange rates. For more information, see Part I, Item 1A, Risk Factors - "We are exposed to fluctuations in foreign currency exchange rates" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Outlook

While we have seen stable travel demand trends globally in our business so far in the second quarter, these trends could be negatively impacted by the increased uncertainty in the geopolitical and macroeconomic environment, and the potential impact it may have on consumer spending and behavior, travel patterns, our partners, or our ability to conduct our business.

Taking into account the above, for the second quarter of 2025, on a year-over-year basis we currently expect:

• growth in room nights will be between 4% and 6%;

• growth in gross bookings will be between 10% and 12% on a reported basis and between 6% and 8% on a constant currency basis;

• growth in revenues will be between 10% and 12% on a reported basis and between 6% and 8% on a constant currency basis; and

• operating income will increase on both a reported basis and a constant currency basis.

Due to the increased uncertainty in the geopolitical and macroeconomic environment, we are widening the range of our full year 2025 expectations for constant currency growth relative to our prior expectation. For the full year 2025, on a year-over-year basis we currently expect:

• growth in gross bookings on a constant currency basis will be in a mid to high single digit percentage range;

• growth in revenues on a constant currency basis will be in a mid to high single digit percentage range; and

• operating income will increase on a constant currency basis.

Critical Accounting Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Unaudited Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain of our accounting estimates are important to our financial position and results of operations and require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We use our judgment to determine the appropriate assumptions to be used in the determination of certain estimates and we evaluate our estimates on an ongoing basis. Estimates are based on historical experience, terms of existing contracts, our observance of trends in the travel industry, and on other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. For a discussion of our critical accounting estimates for the valuation of investments in private entities, income taxes, and contingencies, see the "Critical Accounting Estimates" section of Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

Valuation of Goodwill and other Long-lived Assets

We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. In the accounting for business combinations, the excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination. When the composition of one or more reporting units is changed, goodwill is reassigned to the affected reporting units using a relative fair value approach. A substantial portion of our intangible assets and goodwill relates to the acquisitions of OpenTable, KAYAK, and Getaroom.

We test 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. We test goodwill at a reporting unit level and our annual goodwill impairment tests are performed as of September 30. As of September 30, 2024, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill.

The estimation of the recoverable values of asset groups and the fair values of our reporting units reflect numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding each reporting unit's expected growth rates and operating margin and with respect to matters outside of our control, such as discount rates and market comparables. Generally, changes in the assumptions used for comparable company multiples would result in directionally similar changes in the fair value and changes in the assumptions used for discount rates would result in directionally opposite changes in the fair value. The estimation of fair value requires significant judgments and estimates and actual results could be materially different than the judgments and estimates used. Future events and changing market conditions may lead us to re-evaluate the assumptions used to estimate the fair values of our reporting units. Such changes may include travel service providers reducing or withdrawing from our services, such as those offered by KAYAK, generative AI better enabling or offering alternatives for travel service providers to reach consumers or competitors affecting our ability to market to and reach customers in a cost-efficient way.

Recent Accounting Pronouncements

See Note 1 to our Unaudited Consolidated Financial Statements, which is incorporated by reference into this Item 2, for details regarding recent accounting pronouncements.

Results of Operations

Three Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024

Operating and Statistical Metrics

Our financial results are driven by certain operating metrics that encompass the booking and other business activity generated by our travel and travel-related services. See "Results of Operations" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on our Operating and Statistical Metrics, including room nights, rental car days, airline tickets, and merchant and agency gross bookings.

Room nights, rental car days, and airline tickets reserved through our services were as follows:

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Room nights																								319						297						7.2		%
Rental car days																								22						21						7.7		%
Airline tickets																								16						11						44.8		%

Room nights reserved through our services increased year-over-year for the three months ended March 31, 2025 driven primarily by increased travel demand in Europe and Asia. Rental car days reserved through our services increased year-over-year for the three months ended March 31, 2025 driven primarily by growth in rental car days reserved on Booking.com and Priceline. Airline tickets reserved through our services increased year-over-year for the three months ended March 31, 2025 driven primarily by the expansion of flight offerings at Booking.com and Agoda.

Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our merchant and agency categories were as follows (numbers may not total due to rounding):

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Merchant gross bookings																								$	31,170					$	25,761					21.0		%
Agency gross bookings																								15,500						17,774						(12.8)		%
Total gross bookings																								$	46,669					$	43,535					7.2		%

Merchant gross bookings increased year-over-year and agency gross bookings decreased year-over-year for the three months ended March 31, 2025 due primarily to the ongoing shift from agency bookings to merchant bookings at Booking.com. The year-over-year increase in merchant gross bookings during the three months ended March 31, 2025 was also due to strong growth in gross bookings from merchant accommodation reservation services at Agoda and merchant flight reservation services at Booking.com and Agoda.

The year-over-year increase in total gross bookings for the three months ended March 31, 2025 was due primarily to the increase in room nights, as well as the positive impact from year-over-year growth in flight gross bookings and an increase in constant currency accommodation ADRs of approximately 1%, partially offset by a negative impact of foreign exchange rate fluctuations.

Flight gross bookings increased 30% year-over-year for the three months ended March 31, 2025, due to airline ticket growth, partially offset by lower average airline ticket prices. Rental car gross bookings increased 5% year-over-year for the three months ended March 31, 2025, due primarily to rental car days growth, partially offset by lower average daily car rental prices.

Revenues

See "Results of Operations" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on our revenues, including merchant, agency, and advertising and other revenues. Substantially all of our revenues are generated by providing online travel reservation services, which facilitate online travel purchases by travelers from travel service providers.

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Merchant revenues																								$	2,918					$	2,388					22.2		%
Agency revenues																								1,564						1,763						(11.3)		%
Advertising and other revenues																								280						264						6.0		%
Total revenues																								$	4,762					$	4,415					7.9		%
% of Total gross bookings																								10.2		%				10.1		%

Merchant revenues increased year-over-year while agency revenues decreased year-over-year for the three months ended March 31, 2025 due primarily to the ongoing shift from agency revenues to merchant revenues at Booking.com. Advertising and other revenues increased year-over-year for the three months ended March 31, 2025 due to growth at OpenTable and growth in advertising revenues at Booking.com and Agoda. The year-over-year growth in total revenues was negatively impacted from the shift in the timing of the Easter holiday relative to last year.

Total revenues as a percentage of gross bookings increased year-over-year for the three months ended March 31, 2025 due to an increase in revenues related to facilitating payments, partially offset by an increase in the mix of flight gross bookings, which have lower revenues as a percentage of gross bookings, and a negative impact from differences in the timing of booking versus travel. The negative impact from differences in timing of booking versus travel was driven by the shift in the timing of the Easter holiday relative to last year.

Operating Expenses

See Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information about the components of our operating expenses and the related accounting policies.

Marketing Expenses

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Marketing expenses																								$	1,777					$	1,610					10.4		%
% of Total gross bookings																								3.8		%				3.7		%
% of Total revenues																								37.3		%				36.5		%

Our marketing expenses, which are substantially variable in nature, increased year-over-year for the three months ended March 31, 2025, to help drive additional gross bookings and revenues. Marketing expenses as a percentage of total gross bookings in the three months ended March 31, 2025 were higher than in the three months ended March 31, 2024 due to lower performance marketing ROIs, which was driven by changes in paid traffic mix, and increased spend in social media channels. This was partially offset by an increase in the share of room nights booked by consumers coming directly to our platforms as well as lower brand marketing expenses.

Sales and Other Expenses

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Sales and other expenses																								$	702					$	678					3.4		%
% of Total gross bookings																								1.5		%				1.6		%
% of Total revenues																								14.7		%				15.4		%

Sales and other expenses, which are substantially variable in nature, increased year-over-year for the three months ended March 31, 2025 due primarily to an increase in merchant transaction costs of $27 million. Merchant transactions increased year-over-year for the three months ended March 31, 2025 due primarily to the ongoing shift from agency to merchant transactions at Booking.com. Sales and other expenses as a percentage of total revenues decreased year-over-year in the three months ended March 31, 2025 due to lower provisions for expected credit losses as well as efficiencies in third-party customer service costs, partially offset by the impact of increased merchant transactions, which grew faster than total revenue.

Personnel

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Personnel																								$	693					$	826					(16.1)		%
% of Total revenues																								14.6		%				18.7		%

Personnel expenses decreased year-over-year for the three months ended March 31, 2025 primarily due to a $170 million reduction during the three months ended March 31, 2025 in the accrual related to the Netherlands pension fund matter. Salary expenses increased year-over-year for the three months ended March 31, 2025 due to a 2% increase in employee headcount to 24,500 employees, from approximately 24,000 as of March 31, 2024.

General and Administrative

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
General and administrative																								$	142					$	186					(23.4)		%
% of Total revenues																								3.0		%				4.2		%

General and administrative expenses decreased year-over-year for the three months ended March 31, 2025 due to a decrease in certain transaction taxes, as well as decreases in personnel-related expenses, occupancy and office expenses, and fees for certain outside professionals.

Information Technology

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Information technology																								$	200					$	187					7.1		%
% of Total revenues																								4.2		%				4.2		%

Information technology expenses increased year-over-year for the three months ended March 31, 2025 due to an increase in expenses related to cloud computing costs and outsourced data center costs, as well as software license and system maintenance fees.

Depreciation and Amortization

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Depreciation and amortization																								$	154					$	137					13.1		%
% of Total revenues																								3.2		%				3.1		%

Depreciation and amortization expenses increased year-over-year for the three months ended March 31, 2025 due primarily to increased depreciation of computer equipment, as well as amortization expense related to internally-developed and purchased software.

Transformation Costs

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Transformation costs																								$	32					$	—					*
% of Total revenues																								0.7		%				—%

• Not meaningful

See "Trends" above for additional information on the Transformation Program. For the three months ended March 31, 2025, program related costs, which primarily consist of professional fees, are recorded in "Transformation costs" in the Unaudited Consolidated Statement of Operations. See Note 17 to our Unaudited Consolidated Financial Statements.

Interest Expense and Interest and Dividend Income

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Interest expense																								$	(649)					$	(219)					196.8		%
Interest and dividend income																								241						243						(0.8)		%

Interest expense increased year-over-year for the three months ended March 31, 2025 primarily due to the amortization of debt discount related to the convertible senior notes due in May 2025 (the "May 2025 Notes") (see Note 9 to our Unaudited Consolidated Financial Statements) and the issuance of senior notes in 2024.

Other Income (Expense), Net

												Three Months Ended March 31,
(in millions)																		2025						2024
Foreign currency transaction (losses) gains																		$	(420)					$	136
Change in fair value of the conversion option of the convertible senior notes																		158						—
Other																		4						(14)
Other income (expense), net																		$	(258)					$	122

Foreign currency transaction (losses) gains for the three months ended March 31, 2025 and 2024 include losses of $437 million and gains of $167 million, respectively, related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges, and gains of $59 million and losses of $85 million, respectively, on derivative contracts.

See Note 9 to our Unaudited Consolidated Financial Statements for additional information on our convertible senior notes.

Income Taxes

																		Three Months Ended March 31,												Increase (Decrease)
(in millions)																					2025						2024
Income tax expense																								$	63					$	161					(61.1)		%
% of Income before income taxes																								15.8		%				17.1		%

Our 2025 effective tax rate differs 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, U.S. federal and state tax associated with our international earnings, and non-deductible expenses related to the May 2025 Notes. Our 2024 effective tax rate differed from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax, partially offset by higher international tax rates, certain non-deductible expenses, and U.S. federal and state tax associated with our international earnings.

Our effective tax rate for the three months ended March 31, 2025 was lower compared to the effective tax rate for the three months ended March 31, 2024, primarily due to certain higher discrete tax benefits, certain lower non-deductible expenses, and lower international tax rates, partially offset by a decrease in the benefit of the Netherlands Innovation Box Tax, and higher U.S. federal and state tax associated with our international earnings.

During the three months ended March 31, 2025 and 2024, a majority of our income was reported in the Netherlands, where Booking.com is based. Under 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 months ended March 31, 2025 and 2024 qualified for Innovation Box Tax treatment, which had a beneficial impact on the effective tax rates for these periods. For additional information, see Part I, Item 1A, Risk Factors - "We may not be able to maintain our 'Innovation Box Tax' benefit" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Liquidity and Capital Resources

Our primary source of funds for operations is the cash flow that we generate from operations. We use our cash for a variety of needs, including ongoing investments in our business, share repurchases, dividends, repayment of debt, and capital expenditures. Our continued access to sources of liquidity depends on multiple factors. See Part I, Item 1A, Risk Factors - "Our liquidity, credit ratings, and ongoing access to capital could be materially and negatively affected by global financial conditions and events" in our Annual Report on Form 10-K for the year ended December 31, 2024. Our financial results and prospects are almost entirely dependent on facilitating the sale of travel-related services. Marketing expenses, personnel expenses, and sales and other expenses are the most significant operating expenses for our business. See our Unaudited Consolidated Statements of Operations and "Trends" and "Results of Operations" above for additional information on marketing expenses, personnel expenses, and sales and other expenses. We believe that our existing cash balances, liquid resources, and access to capital markets will be sufficient to fund our operating activities and other obligations in the short term and into the foreseeable future.

Cash, cash equivalents, and investments

At March 31, 2025, we had $16.1 billion in cash, cash equivalents, and investments, of which approximately $11.3 billion is held by our international subsidiaries. Cash, cash equivalents, and long-term investments held by our international subsidiaries are denominated primarily in Euros, U.S. Dollars, and British Pounds Sterling. Our investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. See Notes 5 and 6 to our Unaudited Consolidated Financial Statements.

Deferred merchant bookings

Deferred merchant bookings of $6.9 billion at March 31, 2025 includes cash payments received from travelers in advance of us completing our performance obligations and are comprised principally of amounts estimated to be payable to travel service providers as well as our estimated future revenue for our commission or margin and fees. The amounts are mostly subject to refunds for cancellations.

Debt

Our revolving credit facility extends a revolving line of credit up to $2 billion to us. We are in compliance with the maximum leverage ratio covenant under the facility, which is a condition to our ability to borrow.

The holders of our May 2025 Notes are entitled to repayment of the principal amount of the notes in cash, and if they exercise their option to convert, they are entitled to cash payment for the conversion value in excess of the principal amount, settled at maturity. At March 31, 2025, the fair value of the May 2025 Notes was $1.9 billion.

Our outstanding senior notes at March 31, 2025 had cumulative interest to maturity (based on coupon interest rates) of $4.5 billion, with $573 million payable within the next twelve months.

See Note 9 to our Unaudited Consolidated Financial Statements for additional information.

Share repurchases and dividends

In the first quarter of 2025, our Board of Directors (the "Board") authorized a program to repurchase up to $20 billion of our common stock. At March 31, 2025, we had a total remaining authorization of $25.9 billion related to share repurchase programs authorized by the Board.

In April 2025, the Board declared a cash dividend of $9.60 per share of common stock, payable on June 30, 2025 to stockholders of record as of the close of business on June 6, 2025.

See Note 10 to our Unaudited Consolidated Financial Statements for additional information.

Commitments, contingencies, and other

At March 31, 2025, we had, in the aggregate, $1.1 billion of non-cancellable purchase obligations individually greater than $10 million, of which $227 million is payable within the next twelve months. Such purchase obligations relate to agreements to purchase goods and services that are enforceable and legally binding and that specify significant terms, including the quantities to be purchased, price provisions, and the approximate timing of the transaction. At March 31, 2025, we had lease obligations of $737 million, of which $162 million is payable within the next twelve months.

At March 31, 2025, we had a remaining transition tax liability of $486 million as a result of the U.S. Tax Cuts and Jobs Act (the "Tax Act"), which included $257 million reported as "Long-term U.S. transition tax liability" and $229 million included in "Accrued expenses and other current liabilities" in the Unaudited Consolidated Balance Sheet. This liability will be paid over the next two years. Due to the 2024 U.S. Tax Court decision in Varian Medical Systems, Inc. vs. Commissioner, a portion of our total transition tax liability may be refunded. In accordance with the Tax Act, generally, future repatriation of our international cash will not be subject to a U.S. federal income tax liability as a dividend, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by us.

See Note 13 to our Unaudited Consolidated Financial Statements for information related to the standby letters of credit and bank guarantees issued on our behalf.

See Note 13 to our Unaudited Consolidated Financial Statements and Part I, Item IA, Risk Factors - "Our business is subject to various competition, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify" in our Annual Report on Form 10-K for the year ended December 31, 2024 for information related to certain regulatory matters and our other contingent liabilities.

See Note 13 to our Unaudited Consolidated Financial Statements and Part I, Item IA, Risk Factors - "We may have exposure to additional tax liabilities" in our Annual Report on Form 10-K for the year ended December 31, 2024 for information related to certain tax assessments and other tax matters.

See "Trends" above for information on the Transformation Program that we announced in November 2024 to implement certain organizational changes, including the estimated annual run rate savings and restructuring costs and accelerated investments required for the program.

Cash Flow Analysis

See our Unaudited Consolidated Statements of Cash Flows for additional information related to our cash flows.

						Three Months Ended March 31,
(in millions)						2025						2024
Net cash provided by operating activities						$	3,283					$	2,704
Net cash (used in) provided by investing activities						(118)						69
Net cash (used in) provided by financing activities						(3,967)						784

Net cash provided by operating activities for the three months ended March 31, 2025 resulted from net income of $333 million, a favorable net impact from adjustments for non-cash and other items of $899 million, and a favorable net change in working capital and other assets and liabilities of $2.1 billion. Non-cash and other items were principally associated with unrealized foreign currency transaction losses related to Euro-denominated debt, adjustments related to the convertible senior notes, depreciation and amortization, deferred income taxes, and stock-based compensation expense. For the three months ended March 31, 2025, deferred merchant bookings and other current liabilities increased by $1.9 billion, primarily due to higher business volumes. Merchant revenues increased while agency revenues decreased year-over year for the three months ended March 31, 2025 due to the ongoing shift from agency revenues to merchant revenues at Booking.com.

Net cash provided by operating activities for the three months ended March 31, 2024 resulted from net income of $776 million, a favorable net impact from adjustments for non-cash and other items of $224 million, and a favorable net change in working capital and other assets and liabilities of $1.7 billion. Non-cash and other items were principally associated with unrealized foreign currency transaction gains related to Euro-denominated debt, stock-based compensation expense, depreciation and amortization, provision for expected credit losses and chargebacks, operating lease amortization, and deferred income taxes. For the three months ended March 31, 2024, deferred merchant bookings and other current liabilities increased by $2.1 billion and accounts receivable increased by $185 million, primarily due to increases in business volumes.

Net cash used in investing activities for the three months ended March 31, 2025 resulted from payments for property and equipment. Net cash provided by investing activities for the three months ended March 31, 2024 resulted principally from the maturity of certain investments of $218 million, partially offset with payments for property and equipment of $130 million.

Net cash used in financing activities for the three months ended March 31, 2025 resulted principally from the repurchase of common stock of $2.2 billion, payments on the maturity of debt of $1.5 billion, and dividend payments of $319 million. Net cash provided by financing activities for the three months ended March 31, 2024 resulted from the issuance of long-term debt of $3.0 billion, partially offset by payments for the repurchase of common stock of $1.9 billion and dividend payments of $299 million.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Part I, Item 2, and the documents incorporated by reference contain forward-looking statements. These statements reflect our views regarding current expectations and projections about future events and conditions and are based on currently available information. They are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict including the Risk Factors identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024; therefore, our actual results could differ materially from those expressed or described in the forward-looking statements.

Expressions of future goals and expectations and similar expressions, including "may," "will," "should," "could," "aims," "seeks," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," and "continue," reflecting something other than historical fact are intended to identify forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the reports and documents we file or furnish from time to time with the Securities and Exchange Commission, particularly our Annual Report on Form 10-K for the year ended December 31, 2024, our subsequent Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K.