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By Brian Nelson, CFA
On February 18, Booking Holdings (BKNG) reported better than expected fourth quarter results with both revenue and non-GAAP earnings per share exceeding the consensus marks. Room nights grew 9% in the quarter compared to 2024, while gross bookings advanced 16% on a year-over-year basis (11% on a constant currency basis). Total revenue grew 16% in the quarter, or roughly 11% on a constant currency basis. Adjusted earnings per share came in at $48.80, up 17% year-over-year, while adjusted EBITDA came in at $2.2 billion, up 19%.
Management had the following to say about the results:
We are pleased to report strong results for 2025, delivering double-digit revenue growth, expanding Adjusted EBITDA margin by 193 basis points (Net income margin was 20.1% in 2025 and 24.8% in 2024), and accelerating room night growth in every quarter. These results highlight the strength of our platform and the discipline of our execution. We remain focused on our key priorities, especially advancing our use of Generative AI to enhance the value we deliver to both travelers and partners. Savings from the Transformation Program will help us continue to reinvest strategically in the business in 2026 to support sustained, long-term growth.
During the fourth quarter, net cash provided by operating activities increased 107%, to $1.5 billion, while free cash flow advanced 120%, to $1.4 billion. For all of 2025, net cash provided by operating activities totaled $9.4 billion, up 13%, while free cash flow was $9.1 billion, up 15%. Booking Holdings’ free cash flow margin was roughly 34% in the year. Cash and cash equivalents were $17.2 billion at the end of the year, while short- and long-term debt stood at $18.7 billion.
For the first quarter of the year, room nights growth is targeted in the range of 5%-7%, with constant currency gross bookings growth of 7%-9%. Constant currency revenue growth is expected to be 7%-9% for the first quarter of 2026, while adjusted EBITDA is forecasted to expand 10%-14%. For all of 2026, adjusted EBITDA growth is expected to advance faster than revenue growth, while adjusted earnings per share growth is targeted in the mid-teens. Management expects to realize $550 million in annual run-rate savings by the end of 2026.
All told, Booking Holdings’ fourth quarter and outlook was solid, but the company is in the crosshairs of the AI “scare trade.” With shares down more than 25% year-to-date at the time of this writing, we’re not overreacting and instead are taking a “wait and see” approach. Shares will undergo a 25-to-1 stock split in early April.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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