Welcome to Booking Holdings First Quarter 2022 Conference Call. Booking Holdings would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied, or forecasted in any such forward-looking statements. Expressions of future goals or expectations and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. For a list of factors that could cause Booking Holdings' actual results to differ materially from those described in the forward-looking statements, please refer to the safe harbor statements at the end of Booking Holdings' earnings press release, as well as Booking Holdings' most recent filings with the Securities and Exchange Commission. Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. A copy of Booking Holdings' earnings press release, together with an accompanying financial and statistical supplement, is available in the For Investors section of Booking Holdings' website, www.bookingholdings.com. And now I'd like to introduce Booking Holdings speakers for this afternoon, Glenn Fogel and David Goulden. Go ahead, gentlemen.

Thank you, and welcome to Booking Holdings’ first quarter conference call. I'm joined this afternoon by our CFO, David Goulden. I am pleased to begin by reporting that our first quarter was a record. Our customers booked $27 billion in gross bookings, the highest quarterly amount ever. The continued improvement in our room night trends, increased accommodation ADRs and significant growth in our global flights product all contributed to achieving this gross bookings record. In our accommodations business, we saw meaningful improvement from last year, with first quarter room nights declining only 9% versus Q1 2019 which was an improvement of 12 percentage points from our fourth quarter 2021 results. Our bookings continued to strengthen in April, with roommates increasing 10% and gross bookings up over 30% versus 2019, making April a record month for gross bookings and our first month that global room nights exceeded 2019 levels. @Booking.com, I'm encouraged by the strong gross bookings already recorded for the summer period, which are over 15% higher than at this same point in 2019. In Western Europe and North America, gross bookings for the summer period are now over 30% ahead of where we were at this point in 2019. Though, I know that a high percentage of these bookings are cancelable. Of course, our brands or other brands, we are seeing the benefits of a global recovery from the pandemic with strong travel demand in the US for Priceline, a rapid recent improvement and trends in Asia for Agoda and uptick in international flight searches at KAYAK and the return of diners to restaurants for OpenTable. In many countries, especially across Europe and Asia, travel restrictions were eased in the first quarter, which we believe has contributed to the strengthening of travel demand trends. As we have said before,…

Thank you, Glenn and good afternoon. I'll review our results for the first quarter and provide some color on trends we've seen so far in the second quarter. All growth rates for ‘22 relative to the comparable period in 2019 unless otherwise indicated. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. Now on to our results for the first quarter. On our February earnings call we discussed the improved in trends we've seen so far in 2022. With room nights getting back to about flat versus 2019 in the first half of February after declining 21% in January just hours after our earnings call on February 23, the terrible news broke the Russia invaded Ukraine. As a result, we saw an immediate negative impact on room night trends, particularly in Eastern Europe. Despite this impact towards end of the month, room nights for the full month of February came in about in line with 2019 levels. In early March, we suspended the booking of travel services in Russia and Belarus. This led to a loss of new bookings, as well as significantly elevated levels of cancellations of reservations for these countries. Additionally, we saw some slowdown in booking trends within Europe, as travelers took in the news of the invasion. We disclosed that total room nights for the week ending March 6, were down about 10%. And that slowdown was driven by Eastern Europe, primarily Russia, and to a lesser extent by Western Europe, which remained mostly above 2019 levels. I'm pleased to say that compared with the first week in March, we saw our overall trend improve during March driven mainly by Europe, resulting in room nights been down about 4% for the month, which is only a modest pullback from…

[Operator Instructions] Our first question comes from the line of Lloyd Walmsley with UBS.

Alright, thanks for taking the question, two, if I can, first, on the April trends in bookings in room nights, those sound nicely ahead of where street estimates are for the whole quarter. So is there any reason to think that you won't continue to build from April in terms of kind of thinking about monthly comps or anything else we should keep in mind, pull forward or pent-up demand. And then secondly, helpful color on the revenue take rates and the EBITDA impact from timing, I guess, how do we think about that as we work into next year. Should take rates at least kind of like for like accommodation normalized to 2019 levels next year? And does that EBITDA headwind of few points on timing does all of that unwind you think as we get into 2023, any help you can give us on the kind of margins and how they progress further would be great. Thanks.

Hi, Lloyd. While I’ll take that first one, I'll let David go back over the timing issues that you just asked about. So your question really is trying to predict the future, which is always an interesting adventure, particularly over the last couple of years that we've all gone through. As I've said, David was saying, we're very pleased with where we are. And we're happy with what's happening. I think everybody around the world is happy about travel coming back. And we've mentioned how some of the trends that we're like -- that we like seeing in Asia where things are getting better, we know they're not as good as they are in Europe or in the US. That's a good positive sign. Hopefully that will continue. We're also pleased with the things that we've been saying that throughout Europe and Western Europe and Eastern Europe coming back that so we're all very happy where we are, but we never know. We never know what's going to happen. You know that we've done this. We had a call, our last call. And then there was a terrible, terrible news shortly thereafter, what happened in Ukraine and if you recall going back a quarter before that, COVIND omicron came out of nowhere. So we all know that the world is, let's say volatile right now. But I will say I am happy where we are. And I'm pleased with the incredible good job of execution our team has done. And, David, I'm not sure you want to add any more than that.

Maybe, Glenn, just maybe a couple extra points on what we're seeing in April and March, we did see a steady progression from that first week in March where things were minus 10, up through March and April on a fairly steady basis, week on week. But as Glenn said, there's still a lot out there and the environment it’s hard to predict. I would call it this Easter happened in April in both periods. So there's no Easter effect there relative to the growth rates versus 2019 August 2021 for that matter, either. Relative to longer term take rates. And I explained on the call, take rates are the impact timing on take rates is a mathematical impact of the difference between the amounts that you spill into the year from the prior year, and the amount you still out in the current year into the next year. And of course, that can be variable based upon effects. We saw this year, we said that there was a hurting Q1 on timing effects on take rates, because that's when Omicron basically came up with into Q4, and that results in less booking still into Q1 than we would expect. So it's really going to be a function of how the recovery develops in total in terms of how rapidly things recover, and also just the timing of that recovery. So as growth rate starts to normalize, and get back to more normal level, you expect the impact upon the take rea, the timing impact on take rates to come down. But then there could be some additional factors that could impact those specific things relative to what happens about the prior Q4 going into Q1, and the next Q4 going into the future Q1. So normally, and as the growth rates start to normalize the roles of revenue growth rates and booking growth rates start to align more, there will be less effect. But there could still be unusual effects they have, like what we've seen before that could impact the specific timing of Q1 and Q4, and the relative difference between those quarters across the years.

Our next question comes from Brian Nowak with Morgan Stanley.

Great. Thanks for taking my questions, guys. I have two, first one, David, I think last quarter, you talked about some like shape of the year comments, you talked about marketing as a percentage of gross bookings be a little higher than was in ‘19, et cetera. And sales and other expenses and sort of thoughts about that as far as your bookings? Yes, I know there was a lot of pieces with ADRs, moving around and et cetera. But can you just sort of maybe tell us your latest thoughts about some of those metrics on marketing spend for the year and sales and other for the year, however, you want to kind of help us think about it a little bit. And then Glenn, good to hear about traction you're making on payments and flights, et cetera. I guess, talk to us about on the connected trip front, which of the initiatives you think is most likely to really have a meaningful impact on the P&L as soon as maybe 2023 from an incremental dollar perspective. Thanks.

David, you want to do that first one?

Yes, Brian, let me go first. So with the exception of the mechanical movements, I'll talk about how they impact things little bit, the mechanical moves relative to Majorelle, which are basically just P&L geography movements. We're not, I'm not changing what we said last time. We do expect some deleverage in marketing to gross bookings for the year. We said we expected in Q1 to be relatively flat, we were a little bit better that we were actually 50 points – 50 bps leveraging in Q1 due to a higher ROI, but we did say we'd be leaning into the busy travel season more in Q2 and Q3. So we're still expecting to see some level of deleverage during the year and also increased spending on merchandising, sales and others, we still expect that to be about 50 bps for the year that’s tied to payments, the mechanics of the Majorelle adjustment with moving those additional expenses into [Indiscernible] would be less than 10 bps although that are adjustments again as to TGV. So essentially, with the exception of the mechanical movements, what we talked about for the last, what we talked about quarter go for how we see the year shaping up, we still expect to see the shaping up the same way. And of course, I've given you some additional color on take rates we didn't provide last quarter so that gives you a little bit more color than we gave you on quarter because we now know what happened in Q1 so we can give you a bit more guidance around that.

And, Brian, talking about connected trip. So connected trip is a long term vision. And it's going to take some time before we get to where I believe we need to be in terms of a truly step functional change in the way people are currently, by exploring going through travel, I think we all know how difficult it is. And we all know that it should be better. So that's the goal down the road. In 2023, we're still going to be pretty early in this, I think I would think it's, we're still in the base level of just getting great verticals up and running, so that they by themselves are fantastic, good product for people to use. And then just the basic-cross selling things that we think is a first step to get towards that connected trip. And if you ask me one of the biggest things for 2023. Well, the things I just talked about right now flights right now, I really liked the fact again, the new customers coming in, and they're coming in, they're buying a meaningful number of buyer combinations. And we haven't optimized this yet. That's something important. Then on top of that, I mentioned in my prepared remarks about just beginning small experiments with other types of verticals, and how putting these things together can give a better experience to a customer. The great thing about these things is trying to build a belief that coming to us to Booking.com is the best way to go. So getting more repeat business and getting this do it on the app, so that we don't pay for that person to come and increase that loyalty. So there's a lot of ways trying to increase this flywheel. So people know the products better and coming to us. And as we continue to do that, get more information, be able to provide a better proposal to them a better offer to them that they can work more easily. And it continues to build on its own. It's going to take time, though. And in 2023, I don't think you're going to see huge numbers from all things I just talked about. But you will see incremental improvement.

Our next question comes from Kevin Kopelman from Cowen.

Great, thanks a lot. I was hoping to just dig in a little bit more on the April trends. The improvements is nice there to plus 10% is obviously a big acceleration. Could you -- what exactly are you seeing there in terms of changes? And if we relate that back to your ad spend, you had some leverage versus GBB in Q1, but you're spending more in Q2, how much of that is a reaction to what you're seeing versus strategically pulling on a lever in the start of Q2? Thanks.

So let me tell you in general, and David, I'm not sure you want to talk in terms of any sort of numbers and levers or whatever. But yes, we are very pleased with what we're seeing. But I believe it's a combination of many things that we're working on is really is a game of execution in the small details, means you're working with partners and getting the right price, the right inventory. And then it's making sure we're showing it to the customer at the right time in the right way. And it means also doing things we're talking about with alternative accommodations, bring in a few, bringing in some incremental more supply there, making sure we're working to come up with ways that works better, so that the customers having a better experience and their payments are more smooth, et cetera. I can go through a lot of little things that we're working on. And each one builds on its own. It makes it a better experience. Now, yes, we have a brand effort in the US, as you hopefully remember back from our Super Bowl, we, I believe a very good ad and we're continuing this is not just a one and done. It's a campaign. And we tie that with some efforts in social and we're doing a lot of different things to try to increase our awareness getting that top of mind awareness in the US, for example, helping build that. But this is a global effort really, in terms of trying to build our business by doing all the little things that make it a better product, because in the long run, the better product is what's going to win. And David, I don’t know, if you want to speak anything specific in terms of ROIs or levers right there and nature.

I think, Glenn, let we go where you went, because this is just not one geography. We're seeing all geographies improve in April, which for us is very encouraging. So we mentioned that Europe is now April back into high teen growth versus 2019. That is really encouraging and really the first time we've been able to talk about growth over 2019 in Europe, this is for room nights, US back to very strong growth versus 2019, which we think is well ahead of the market. And Glenn mentioned some of the factors, the APAC recovering nicely, down, still down but down IT is not, again the best result we've seen since the start of pandemic, and the rest of world backup to double digits, so all nice improvements from Q1, all nice improves to March, so it's not just one reason we're seeing it across the world, which I think is a positive sign, I mentioned that we will be leaning a little bit more, expect to leaning in more in Q2 than in we did in Q1, relative to the amount of spending and the ROI. But as we said, that is really in response to the opportunity to capture demand. When we see demand, and we see traffic on this site, that's when we can start increasing our marketing spend. So we're really responding to the opportunity of recovering travel. And whereas we see travel for that's when we can lead in sort of leaning in, particularly in Q3 of last year, you saw us do that in prior quarters. So it's early during the quarter, but that's why we said we expect it to be at a small level of deleveraging this quarter in marketing, but the impact we're seeing and the change we're seeing from March to April is very positive.

Great and could you touch on currency with the 30% GBV figure for April? Is that reported or constant currency and the dollar has strengthened since the last call. So I wanted to ask about that.

Yes, that's a reported number. And currency is an impact for what it is worth when we did our guidance, and we did our calculations here we had your [Indiscernible] come down a little bit doesn't make a huge amount of difference. But the numbers we gave you or reported unless we call some out specifically as constant currency, for example, we call our constant currency ADRs. For example, everything else is reporting.

Our next question comes from Justin Post from Bank of America.

Great, thank you. I guess I'm just trying to think about market share. Can you give us any indication of how much share US nights were back in ‘19? And what that looks like now? And then one question on take rates, I know your merchant, sorry, your payments platform is handling 34% versus 13%. I would think that would be increasing your overall take rates. But you said take rates about flat. So just talk, maybe you can help us understand how the merchant business is affecting take rates? Thank you.

Dave, why don’t you take that? And I’ll just turn my [indiscernible]…

Yes, I talked about, so when we talk about the underlying take rates, we're talking about the basic take rate on the -- or the commission on the room. We're not factoring in payments to that at all, or motion the next. As I said, the biggest impact on timing is, sorry, these impact on take rate is timing. And we talked about it being raised significantly, but you're right, we are getting an increase in the overall take rate from our mix towards payments and from the fact that we gain additional revenue from payments. As I mentioned in 2021, for example, that was somewhat offset by the merchandising that we cannot do, because we couldn't merchandise and participate in pricing actions ourselves. And so we have on the payments platform, and in 2022, that again, will be largely offset by the merchandising activities. Now bear in mind, merchandising is also like marketing, we can turn up and turn it down. We think that this year in a recovering travel marketplace, there's a potentially once in a generation opportunity to really lean into both marketing and merchandising. But we are seeing improvements in take rates from the payment platform. And again, the number of, when I talked about the underlying accommodation take rate being a very constant that does not include the additions for things like payments or things that go on top payments, nor does it impact anything that we do on top of that, or does include anything we do on top of that with our merchandising activities. So hopefully, that clarifies the movements there.

Great. And then on US share of nights, any help there?

David, I think we don't reveal that granularity.

I think our view just as being that shared data, and we should look at share medium term basis, single quarter, very difficult to predict. We certainly believe that last year with our growth in the US being strong versus 2019. We certainly covered a lot faster than the market did in 2021.We were strong again in Q1 in the US market versus 2019. And very strong here in April so difficult to give you an individual share points. But when we look at the overall accommodations markets, which is a way to think about things, we know we picked up some share points in 2021. And we know -- we continuing to stay above where the market is in 2022, from a recovery point of view.

Yes, and I'd just say, look, I'm very pleased with what we've done over the last 2.5 years since this pandemic started. What we've been doing in building out our business in the US, and I made the point of how important was strategically to do better in the US because we had been under indexed in the US. And we've been doing a lot of blocking tackling over these 2.5 years in the midst of this pandemic. And we're beginning to see it come through, and I'm very pleased with the results up through Q1.

Our next question comes from Mark Mahaney from Evercore ISI.

I am here. Sorry about that. David, a question for you. And then one for Glenn. David, you'd set talked about take rates this year being I think, just below 15%, or something like that. And you said that'd be a few points higher, if not for timing. So I want to ask you is does that mean that once we get beyond these unusual timing issues for a variety of factors this year, that kind of the normalized take rate is a couple of points higher like 17%, you haven't done that, your booking has done that in the past, but that's going back 5, 6, 7 years. But is that the implication of your -- of that statement? And then Glenn, about the connected trip? I wondered if you think that there's something that's structurally changed, that makes connected trip more attractive, more viable, or more impactful than it has been historically, I think about the history of online travel, and there was a connected trip company, but they never would large package business, but they never generated as many room nights as you did. And you were solo lodging company. Is there something that's changed now maybe it's much greater use of mobile or mobile apps that just makes the connected trip a greater, needle mover today than it was historically? Thanks a lot.

Glenn, why don’t you go first?

Do you want me to go first? So, Mark, here's the thing. I have seen over two decades, people have been talking about a connecting trip, because travel in this problem since we started buying travel online, and no human being do it for us. Certainly, the technological landscape has changed significantly, since we first started doing this when I first joined this company in 2000. And now we have so many new things that we can use to make this better, the idea of mobile apps, but even more so all the machine learning, AI to be able to do better types of predictability. What's happening, what can be better for a person, how we can see is there a potential problem in the future, we can fix it before it happens. So many things, I believe this can be done will be done, and we are the ones we're going to do. Okay, but we're not there yet. So to say it hasn't happened, it hasn't happened yet. Because we've been built all this yet. I believe it will happen. And I do believe it's necessary, because I don't believe that people should have to suffer the way they do right now in trying to do a simple family trip. That being said, though, it is going to take time, we're going to get there. But we're not going to show up next quarter or the next year to say here's the incredible increase in our business, it is going to be incremental. It's going to take time, but I absolutely believe this is where it's going to be. And David, I’ll let you take yours.

Yes, right. Thank you, Mark. So yes, let's not confuse the difference between impact on EBITDA margin and actual take rates, take rate percentages, what we talked about is the fact that let's go back to numbers so in 2019, and take rates blended across the year was 15.6%. In 2021, we said it was 14.3%. We said last quarter, it was somewhere between those two, this quarter, we gave you a bit more guidance, because we know more about the timing impact in Q1. So we said just below 15%. We said that impacts on the timing impact on take rates was causing a few points of EBITDA margin compression, so it will take a few so we said last quarter, and we still maintain that our EBITDA margin rates for the year will be a few points higher than it was in 2021. And what we said at the last call we clarify again today. If it wasn't for the impacts of timing the EBITDA margin would be a few points higher again on a normalized basis. So the fact that take rates are being hurt for the full year is causing us to have a few points of compression on our EBITDA margin this year, which is timing related. We did not say the take rates [Indiscernible] seen, we said that they were, would be below 15. And if you normalize from just below 15%, back to 15.6%, something like that, then that will give you those few points EBITDA margin that we talked about.

Okay, yes, sorry, that was my mistake, and it can confuse you. Thanks, David. And thank you, Glenn.

We will now take our next question comes from Eric Sheridan of Goldman Sachs.

Thank you for taking the questions. So I want to come back to the comment you made in the prepared remarks on investing in supply as we go deeper into 2022. Can we talk about what kind of investments you feel you need to make? And also, as you look at the base of gross bookings in the booking window, you have now deeper into the year? Where do you find yourself with elements of supply demand imbalance on either the shared accommodation side or the hotel side that you're trying to sort of unlock or think about not only just for summer of ‘22, but beyond it to 2023? Thank you.

Sure. So may be talk a little bit about trying to build our supply areas where we think we need it. And I've talked about this in the past in the alternative accommodations area, where we think we are not as well positioned as some of our competitors, stating the fact particularly in the US, so we absolutely need to go out. And firstly, sure we got a product that people own properties want to put on our platform. That's kind of the new things I talked about in terms of the liability insurance, in terms of payment system that is actually workable and works well even that. But then we have to make people aware of this. And that's going out, we mentioned we have a new campaign out, we're spending money. And it's more than just marketing out there. It's actually individuals talking with the big owners of multiple, multiple properties, make sure they understand what we can bring to them. That's how we start to bring in more of that because we don't have the supply. You've never becoming business. So we do that. And then we obviously have the second the other side of this two sided marketplace, make sure that consumers are aware of this too and make sure they're coming to it. That's how we're going to do this over time. And it's obviously something that I've been talking about for a long time, I'm sure people will get a little tired of me saying it. But it's this is where we're going. I mentioned how we are, we did have a net increase in alternative accommodations, very pleased about that. And we are going to keep on building this. And it builds on itself. This is again, it's one of those things where it's like a snowball, and you need to get it rolling. And then it will build more and more faster and faster. It's going to take some time. I'm pleased with where it is, in terms of the window and may repeat that part of the question.

I'm just kind of curious, like where you do see supply demand imbalances based on what you've seen in the forward booking window going into the summer and other elements of this, where maybe there are disconnects in supply versus demand by product type looking out deeper into the year.

Yes, so right now, we're not seeing any shortage of supply from demand, people come in, and it's not, so they're not -- they can't find anything [Indiscernible] or the rates right now. That doesn't mean and peak summer that there won't be some shortages of inventory. But that happens every normal year when there's peak summer travel in the northern hemisphere. The most popular places will fill up and most popular low key -- and most low key properties in most popular locations are going to fill up. One of the great things that we've been doing for some time is being very flexible in offering customers when they come in, and we're not having enough inventory, we think because things are filled up there. We're offering an alternative place that they could go and stay or different locations to your property all different ways. We are doing so working more different experiments to do that. But we're not the only one to do that. That's important. You have a customer in your store, you want to sell them you don't have enough of what they want you show them something else that probably he is just like, that's what we're doing. Clearly over time what I want to do, though, is not have to have this conversation about the US that we don't have enough of the single properties on the beach and XYZ. And that's something that really what we're working on, but right now I don't see an issue right now we're having insufficient supply.

And now we will now take our last question comes from Doug Anmuth from J.P. Morgan.

Great. Thanks for taking the question. I just wanted to ask about international recovery. It seems like you're suggesting it's coming more from short haul. Just curious what you're seeing in terms of long haul and how you're thinking about none of that coming back. Thanks.

Sure. I’ll start --

You got, Dave, start.

Go on Glenn. I’ll stop.

You start.

So yes, so you're right. International recovery in total international bookings in total across borders, we define it in April is down a little bit short haul report or within Europe actually up decently, but long haul, still down, not too surprisingly, I mean total to see the international booking number close to flat for April, I think is a great step forward, not surprisingly, inter region is going to recover fast, fastest, most European countries and now relax all restrictions for travelers within Europe, which is great. And long haul still down, but also rapidly improving and we see strong growth from travelers from the US, for example, obviously travel into and from Asia is still down. And that's an important destination for both US and European people when you look at long haul routes.

And David you basically said what I was going to say, basically, we have a situation that is very tied somewhat to restrictions and is countries that are typical long haul destinations, some of them in Asia, for example, as they'll begin to lighten up and feel more confident they can go without having to do a lot of different things don't have to quarantine before, don't have to go to get a test they have done test before as these things go away, then people will travel more and more of these long haul trips. So I definitely and positive on the continued trend in this area.

Good, thank you both.

Okay. Was that the final question?

Yes, that is our final question. So I will now turn the call back to Glenn Fogel for the closing remarks. Please go ahead.

Okay, thank you. As always, I want to thank our partners, but I really want to thank all of our partners who have generously contributed to our refugee platform. Also, of course, want back to customers, our dedicated employees and our shareholders. We appreciate your support as we continue to build on the long term vision for our company. Thank you all and good night.

Thank you. And that concludes today's conference call. Thank you, everyone for participating. You may now disconnect.