BKNG Booking Holdings 10-Q 2026-09-30 section summaries

Booking Holdings (BKNG) — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 revenue fell 1.3%, but included a $900 million reduction related to the FTC matter; excluding it, revenue would have been $9.793 billion, up 8.7% year over year. 9M revenue grew 5.9%. The FTC matter also included a $100 million accrued loss, making the total recorded charge $1.0 billion. The 9M net-income improvement was strongly affected by the swing in other income/expense, including unrealized foreign-exchange gains on euro-denominated debt of $655 million versus losses of $1.407 billion in 9M 2025.

Revenue categories

Merchant revenue grew 14.1% in Q3, while agency revenue declined 4.1%; advertising and other revenue rose 7.8%. About 90% of the combined merchant, agency, and advertising/other revenues related to online accommodation reservations in Q3 and 9M 2026.

Segment measure and selected expenses

Segment Adjusted EBITDA less Capex increased 9.1% in Q3 and 10.4% in 9M. “Other segment items” shifted from $535 million of income in Q3 2025 to a $273 million expense in Q3 2026. The transformation program, begun in Q4 2024, is expected to incur most costs and accelerated investment through the end of 2027. The 2025 comparison included $457 million of impairment charges—$180 million of goodwill and $277 million of intangible assets, related to KAYAK—with no such charges in 2026.

Cash flow and capital returns

Operating cash flow benefited from a $2.600 billion increase in deferred merchant bookings and other current liabilities, versus $1.377 billion in 9M 2025; accounts receivable used $907 million of cash, compared with $828 million. Financing cash outflow was $8.746 billion, including $9.900 billion of cash repurchases and $978 million of dividends, partly offset by $2.975 billion of debt issuance.

The 25-for-1 stock split took effect April 2, 2026; share and per-share data are retroactively adjusted. Of the Board’s $20 billion repurchase authorization, $12.4 billion remained at quarter-end. Authorized-program repurchases were $2.116 billion in Q3 and $9.570 billion in 9M 2026, versus $663 million and $3.780 billion, respectively, in 2025. The 9M 2026 share-based compensation expense was $426 million; 7.833 million unvested RSUs and PSUs remained, with an estimated $840 million of future compensation expense over a weighted-average 1.9 years.

Balance sheet, debt and liquidity

Tangible common equity, calculated as equity less goodwill and intangible assets, was a deficit of $13.837 billion. Short- and long-term debt carrying values were $1.987 billion and $18.074 billion, respectively. Senior notes had $20.2 billion of aggregate principal and $20.061 billion of total carrying value; $2.0 billion principal was payable within 12 months. Euro-denominated debt was $19.0 billion principal and $18.8 billion carrying value, versus $17.4 billion and $17.2 billion at year-end. Total debt fair value was $19.3 billion versus $18.9 billion. The $2 billion unsecured revolving facility was undrawn.

May 2026 debt issuances included euro notes due 2030, 2034 and 2039, and $750 million of 5.375% notes due 2036; the company also repaid $1.0 billion of 3.6% notes at maturity in June. Increased debt and euro exposure contribute to financing and foreign-exchange sensitivity. Deferred merchant bookings largely represent traveler payments subject to cancellation refunds and amounts payable to travel suppliers. The receivables allowance for expected credit losses was $153 million, up from $137 million; 9M credit-loss provision was $165 million versus $139 million.

Taxes, legal matters and other exposures

The effective tax rate was 20.6% in Q3 versus 20.8%; for 9M it rose to 22.1% from 20.0%, reflecting a valuation allowance for U.S. federal interest-expense carryforwards, higher discrete tax expense and unrecognized tax benefits, partly offset by lower U.S. tax on international earnings. Unrecognized tax benefits were $308 million, of which $297 million would affect the effective tax rate if recognized.

The FTC matter concerns disclosures, fees, customer support and billing; settlement discussions continue, and greater penalties, restitution or litigation remain possible. The European Commission opened a Digital Services Act investigation in October 2026. Competition reviews and litigation also involve parity provisions, ranking, commissions and consumer practices. The Spanish CNMC liability was $469 million, down from $485 million at year-end, with the decision and fine suspended pending appeal. Booking.com also reported unauthorized access to certain guests’ booking information in April 2026; the matter was remediated, though follow-on claims or investigations are possible. Standby letters of credit and bank guarantees totaled $973 million, primarily for litigation and regulatory purposes.

Other 9M developments included $89 million of G&A benefit from favorable settlements in litigation where Booking was plaintiff, and a $112 million net other comprehensive loss, leaving accumulated other comprehensive loss of $402 million.

Booking Holdings — Q3 and first nine months of 2026

Consolidated results

A $900 million FTC matter adjustment affected both Q3 and 9M results. It was excluded from gross bookings and was the primary reason revenue as a share of gross bookings declined. Revenue was down 1.3% in Q3 but up 5.9% for 9M. Merchant revenue growth reflected accommodation services and Booking.com’s continued shift from agency to merchant bookings; agency revenue declined with that shift. Advertising growth came from Booking.com and OpenTable.

Gross bookings and travel activity

Total gross bookings grew 9.6% in Q3 and 11.3% in 9M, to $159.177 billion from $143.074 billion. Merchant bookings rose 13.9% in Q3 and 17.4% in 9M; agency bookings fell 1.3% and 2.6%, respectively. Q3 growth reflected more room nights, approximately 3% higher constant-currency ADRs and increased flight bookings, partly offset by about a 1% FX headwind. For 9M, growth also reflected approximately 2% higher constant-currency ADRs and a 2% favorable FX impact. Q3 global ADRs rose about 3% on a constant-currency basis, mainly due to higher European ADRs.

For 9M, room nights were 1,007 million versus 951 million; rental car days were 67 million versus 70 million; and flight tickets were 58 million versus 50 million. Room-night growth accelerated from 5% in Q2 to 7% in Q3, following 6% in Q1, primarily as international travel originating in Europe and Asia improved. International growth remained slower than domestic growth. The Middle East conflict’s direct demand effects had largely normalized, though elevated airfares continued to weigh on long-haul travel. Rental car declines reflected lower partner volume and softer demand, partly offset by higher prices. Flight growth reflected expanded offerings, partly offset by elevated prices, reduced capacity on some routes and weaker long-haul demand.

The shift toward merchant bookings supports payment flexibility and the Connected Trip strategy, but adds payment-processing, fraud, chargeback and personnel costs. For the trailing 12 months ended September 30, 2026, incremental payment-facilitation revenue exceeded associated incremental variable expenses. Merchant gross bookings were 75% of the Q3 total, compared with 72% a year earlier.

Costs, cash flow and liquidity

Marketing expense growth reflected investment to drive bookings and revenue, including higher affiliate costs; marketing was 4.8% of gross bookings in Q3 versus 4.7%. Merchant transaction costs increased $72 million in Q3 and $221 million in 9M, partly offset by customer-service efficiencies. Lower SEO traffic is expected to require more paid marketing in the short to medium term. Personnel expense was nearly flat in Q3 as lower bonus accruals offset salary growth; headcount was up 4% to approximately 25,850. Higher cloud, software-license and generative-AI costs contributed to IT expense growth. Q3 depreciation and amortization included a change in an intangible asset’s estimated useful life. No impairment was recorded in 2026, versus $457 million in 2025, which included KAYAK goodwill and intangible-asset impairment charges.

Operating cash flow included $5.8 billion of net income in 2026 versus $4.0 billion in 2025. The 2026 period also benefited from $670 million of non-cash and other adjustments and $1.7 billion from working capital and other liabilities. Deferred merchant bookings and other current liabilities increased $2.6 billion, while receivables increased $907 million, primarily reflecting higher business volume; the liability increase also reflected the FTC matter. Financing outflows included $9.9 billion of repurchases, $1.0 billion of debt repayment and $978 million of dividends, partly offset by $3.0 billion of long-term debt issuance. Remaining repurchase authorization was $12.4 billion.

At September 30, cash, cash equivalents and investments totaled $16.2 billion, including approximately $14.4 billion held by international subsidiaries. Deferred merchant bookings were $6.5 billion and mostly subject to customer refunds. Senior notes carried $6.3 billion of cumulative coupon interest to maturity, with $750 million payable within 12 months. Non-cancellable purchase obligations totaled $1.2 billion ($359 million due within 12 months); lease obligations were $743 million ($138 million due within 12 months). The $2 billion revolving credit facility was available, and the company was in compliance with its maximum-leverage covenant. In November, the Board declared a $0.42-per-share dividend payable December 31, 2026.

Strategy and risks

Booking Holdings is developing an AI-powered Connected Trip experience spanning personalized trip planning, booking, payment and in-trip services, supported by loyalty. Management sees potential long-term benefits to loyalty, booking frequency, direct mix, revenue growth and marketing efficiency, while cautioning that a higher share of lower-margin non-accommodation services could weigh on margins. Mobile-app room nights increased from a mid-fifties to a high-fifties share of the trailing-12-month mix; direct bookings remained in the mid-fifties share over both trailing-12-month periods. Mobile transactions can generate less revenue because they tend to involve shorter stays and lower accommodation ADRs. Booking.com listed approximately 4.2 million alternative-accommodation properties and more than 500,000 hotels, motels and resorts.

The Transformation Program generated approximately $250 million of savings in 2025 and enabled approximately $550 million of annual run-rate savings by year-end 2025. Expected annual run-rate savings increased to approximately $650 million in Q2 2026, with most incremental savings above $550 million expected in 2027. Restructuring costs and accelerated investments are expected to be largely incurred by the end of 2027 and in aggregate to be less than one times expected annual run-rate savings.

Competition, discounting and couponing—particularly in Asia—can pressure ADR and revenue as a share of gross bookings. Digital-services taxes range from 1.5% to 10% of locally deemed revenue. EU DMA and DSA designations may increase compliance costs or constrain operations; U.S. tax-law changes could affect the effective tax rate and cash flows. Other risks include supplier withdrawal, generative AI enabling alternative supplier-to-consumer channels, higher customer-acquisition costs and regulatory action.

Market risks

BKNG is exposed to interest-rate, foreign-exchange and equity-price movements. Because businesses outside the U.S. generate a substantial majority of its financial results, foreign exchange is a material exposure; the euro and British pound are the principal currencies.

Foreign-exchange effects on growth

Currency effects differed by period: they weighed on reported Q3 growth but supported reported 9M growth.

Sensitivity analysis

• At September 30, 2026, a hypothetical 100-basis-point decline in interest rates would have increased the estimated fair value of outstanding debt by approximately $1.1 billion.
• A hypothetical 10% decline in the September 30, 2026 fair values of publicly traded and private equity-security investments would have resulted in an approximately $45 million pretax loss recognized in net income.

Item 4 — Controls and Procedures

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2026. No change in internal control over financial reporting during Q3 2026 materially affected, or was reasonably likely to materially affect, those controls. The company continues to monitor changes to systems and processes for potential internal-control impacts.

Item 1A adds no new risk-factor details or financial metrics in this section. It refers readers to the risk factors in Booking Holdings’ 2025 Form 10-K, as supplemented by the risk factor in its Form 10-Q for the quarter ended March 31, 2026. The company cautions that risks and uncertainties could adversely affect its business, financial condition, results of operations, cash flows, and the trading price of its common stock.

Booking Holdings — Q3 and nine months ended September 30, 2026

Results and revenue mix

Q3 revenue declined 1.3%, principally because of the $900 million FTC matter item; excluding the item, the underlying revenue mix reflected strong merchant growth and lower agency revenue. For 9M, total revenue increased 5.9%. Merchant growth and agency declines reflect Booking.com’s continuing shift from agency to merchant transactions. Revenue as a percentage of gross bookings was 16.3% versus 18.1% in Q3 and 13.7% versus 14.4% in 9M, principally affected by the FTC item, which did not reduce gross bookings.

Operating activity and gross bookings

Room nights grew 6.7% in Q3 and 6.0% in 9M (1,007M versus 951M). Global room-night growth accelerated from 5% in Q2 and 6% in Q1 to 7% in Q3; improved international demand originating from Europe and Asia contributed, while long-haul travel remained pressured by elevated airfares and Middle East conflict effects. Constant-currency ADRs rose about 3% in Q3. Flights increased 19.4% in Q3 and 17.2% in 9M, supported by expanded offerings; high ticket prices, capacity limits on some routes, and weaker long-haul demand were offsets. Rental car days declined 0.7% in Q3 and 4.1% in 9M.

Total gross bookings grew 9.6% in Q3 and 11.3% in 9M: $159.177B versus $143.074B. Q3 growth reflected room-night growth, higher ADRs and flights, partly offset by roughly 1% negative foreign-exchange impact. Merchant bookings rose 13.9% in Q3 and 17.4% in 9M, while agency bookings declined 1.3% and 2.6%, respectively. Merchant bookings were 75% of Q3 gross bookings, up from 72%, as Booking.com continued its shift in transaction mix. Flight gross bookings grew 21% in Q3 and 19% in 9M; rental-car gross bookings rose 1% and 2%, respectively.

Selected expenses and non-operating items

Marketing rose 10.6% in Q3 and 12.3% in 9M, reflecting investment to drive bookings, increased affiliate marketing and other channels. It was 4.8% of Q3 gross bookings versus 4.7%; the 9M ratio remained 4.4%. Sales and other expense included $72M of additional merchant transaction costs in Q3 and $221M in 9M from the agency-to-merchant shift. Personnel expense rose 8.0% in 9M to $2.737B from $2.534B; headcount increased 4% to approximately 25,850, and the prior-year comparison included a $170M pension-fund accrual reduction. IT expense increased 21.8% in 9M to $805M from $661M, driven by cloud, software-license and generative-AI costs. No impairment was recorded in 2026, compared with $457M in Q3 and 9M 2025, when KAYAK-related impairment charges were recognized.

Other income improved substantially in 9M, to $448M from a $1.181B expense, chiefly because prior-year foreign-currency losses on non-hedged Euro-denominated debt reversed: currency results were gains of $589M in 9M 2026 versus losses of $1.440B in 9M 2025. The prior-year period also included a $163M gain on a convertible-note conversion option. The effective tax rate was 20.6% versus 20.8% in Q3 and 22.1% versus 20.0% in 9M; 9M net income was $5.8B.

The transformation program generated approximately $250M of savings in 2025 and reached about $550M in annual run-rate savings by year-end. Expected run-rate savings were raised to approximately $650M in Q2 2026, with most incremental savings expected in 2027. Costs and accelerated investments are expected largely by end-2027 and in aggregate to be less than one times expected annual run-rate savings.

Cash flow, liquidity and capital allocation

2026 operating cash flow benefited from $670M of noncash and other adjustments and $1.7B from working-capital and other balance changes. Deferred merchant bookings and other current liabilities increased $2.6B, and accounts receivable rose $907M, primarily with higher business volume; current-liability growth also reflected the FTC matter. Deferred merchant bookings were $6.5B and are mostly subject to traveler refunds for cancellations. Financing cash use included $9.9B of share repurchases, $1.0B of debt maturities and $978M of dividends, partly offset by $3.0B of long-term debt issuance. In 9M 2025, financing cash use included $5.0B of debt maturities and redemptions, $4.3B of repurchases and $941M of dividends, partly offset by $2.0B of debt issuance.

Cash, cash equivalents and investments totaled $16.2B at September 30, 2026, including approximately $14.4B at international subsidiaries. The $2B revolving credit facility was available subject to a maximum-leverage covenant, which the company was meeting. Senior notes had $6.3B of cumulative coupon interest to maturity, with $750M payable within 12 months. Purchase obligations over $10M totaled $1.2B ($359M due within 12 months); lease obligations were $743M ($138M due within 12 months). The company repurchased 11.503766M shares in Q3, including 11.482647M under its public program; $12.4B remained under the program’s $20B authorization. The Board declared a $0.42-per-share dividend payable December 31, 2026.

Business outlook, risks and controls

Booking.com listed approximately 4.7M properties, including 4.2M alternative accommodations; alternative accommodations represented about 37% of its Q3 room nights versus 36% a year earlier. Merchant mix, alternative accommodations and non-accommodation services support growth but can bring higher transaction, service and partner costs; non-accommodation services generally have lower margins. Performance and brand marketing expense was $2.6B in Q3, up 11%. Direct bookings remained a mid-fifties percentage of room nights, while app room nights increased from a mid-fifties to a high-fifties percentage. The company is investing in an AI-powered Connected Trip experience; it expects near-term SEO traffic declines may require additional paid marketing. Intense price competition, particularly in Asia, and discounts or loyalty offers can pressure ADR and revenue yield.

Key exposures include travel disruption and fuel costs; regulatory and tax changes, including EU platform rules and U.S. tax provisions; and potential effects of generative AI, competition and travel-provider decisions on customer acquisition and platform value. A hypothetical 100-basis-point decline in interest rates would increase estimated debt fair value by approximately $1.1B; a 10% decline in equity-investment fair values would produce an approximately $45M pretax loss. Management concluded disclosure controls were effective at period-end, with no material Q3 change in internal control over financial reporting.