Booking Holdings Inc.
Analytical review · Report for the quarter ended June 30, 2026 (Q2 2026)
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review is based on. Booking Holdings' quarterly report on Form 10-Q for the quarter ended June 30, 2026, filed August 4, 2026; the earnings releases for Q4 2025, Q1 2026 and Q2 2026; the Q1 2026 Form 10-Q; the annual report on Form 10-K for 2025; and Form 8-K filings on the stock split, the note issuance, the annual meeting and appointments. Market data: closing price on October 9, 2026; Bank of Israel representative USD rate of October 9, 2026. On April 2, 2026 the stock was split 25-for-1; all per-share data in this review are split-adjusted.
Company Profile
Booking Holdings operates online travel agencies. Through its websites and apps, travelers book accommodation, flights, rental cars, attractions and restaurants, and the company earns a commission or margin on each booking. The five main brands: Booking.com (the largest, based in Amsterdam), Priceline (U.S.), Agoda (Asia), KAYAK (price comparison) and OpenTable (restaurant reservations). Headquarters are in Norwalk, Connecticut; at the end of June 2026 the company had about 25,550 employees.
About 90% of Q2 revenue came from accommodation bookings. At June 30, 2026, Booking.com offered about 4.7 million properties: over 4.1 million apartments, homes and other alternative accommodations, and over 500,000 hotels. In 2025, $21.7 billion of $26.9 billion in revenue (80.6%) was attributed to the group's Netherlands entity, and U.S. revenue was 9.6% of the total.
The company works under two models. In the agency model, the traveler pays the hotel directly and the company collects a commission. In the merchant model, the company collects payment from the traveler and passes it on to the provider. In Q2 2026, 73% of gross bookings were merchant, up from 69% a year earlier. The CEO is Glenn Fogel and the Board Chair is Robert Mylod. The company has no controlling shareholder.
Financial Performance
Three numbers describe the activity: room nights (volume), gross bookings (the dollar value of everything booked, including taxes and fees) and revenue (what the company keeps). Revenue is recognized when the traveler checks in, not at booking, so cancellations do not reverse revenue already recorded.
Q2 2026: above the guidance range, with slower volume
In the April–June 2026 quarter, room nights rose 5.3%, gross bookings 9% (about 8% in constant currency) and revenue 8.1% (about 7% in constant currency) to $7,352 million. In April the company guided this quarter to 2%–4% room-night growth and 2%–4% constant-currency revenue growth, so every metric came in above the range. Adjusted EBITDA rose 9% to $2,648 million and its margin rose to 36.0% (35.6%).
The quarterly trend shows a slowdown: room-night growth fell from 9.0% in Q4 2025 to 5.9% in Q1 and 5.3% in Q2. The company attributes the slowdown to the Middle East conflict since March 2026. For Q1 it estimated that without the conflict room nights would have grown about 8%. For Q2 it described indirect effects: high airfares, reduced flight capacity and lower long-haul travel, alongside steady domestic travel. Flight tickets rose only 3.7% (28.5% in Q1), and rental car days fell 6.5%.
Reported and adjusted earnings
GAAP net income rose 118% to $1,950 million. Most of the jump is not operational: the company has $19.1 billion of euro-denominated debt, which is remeasured through the income statement. Q2 2025 carried a remeasurement loss of $961 million; Q2 2026 a gain of $195 million. Adjusted net income, which excludes the remeasurement and other items, rose 8% to $1,958 million. Adjusted EPS rose 15% to $2.54; about 5.5 points of the increase come from a lower share count.
| USD millions | 2021 | 2022 | 2023 | 2024 | 2025 | TTM |
|---|---|---|---|---|---|---|
| Revenue | 10,958 | 17,090 | 21,365 | 23,739 | 26,917 | 28,241 |
| Operating income | 2,496 | 5,102 | 5,835 | 7,555 | 8,825 | 9,284 |
| Operating margin | 22.8% | 29.9% | 27.3% | 31.8% | 32.8% | 32.9% |
| Net income | 1,165 | 3,058 | 4,289 | 5,882 | 5,404 | 7,209 |
| Free cash flow | 2,516 | 6,186 | 6,999 | 7,894 | 9,087 | 9,539 |
| Diluted shares (millions) | 1,034 | 1,001 | 913 | 852 | 816 | 770 |
TTM = Q3 2025 through Q2 2026. Shares for Q2 2026. 2025 operating income includes a $457 million KAYAK impairment.
Balance Sheet & Capital
At June 30, 2026 the company held $17.2 billion in cash and cash equivalents, about $14.7 billion of it at subsidiaries outside the U.S. Debt: senior notes with principal of $20.3 billion, of which $19.1 billion in euros and $2.0 billion due within 12 months. In May 2026 the company issued four new series (euro and dollar, coupons of 3.5% to 5.375%, maturities 2030–2039), and in June it repaid a $1 billion series. A $2 billion credit facility was undrawn.
How much of the cash belongs to the company: under the merchant model the traveler pays in advance, and the money sits with the company until it is passed to the hotel. On the liability side this appears as "deferred merchant bookings" — $10.1 billion at June 30, 2026, versus $5.3 billion at the end of 2025, because of the summer season. In addition there are $5.1 billion of accounts payable to providers. A large part of the balance-sheet cash is therefore money on its way to providers, not company surplus.
Negative equity: equity shows a deficit of $10.8 billion. The reason is cumulative share repurchases of $62.1 billion, which exceed retained earnings. It is not an accumulated loss. Relative to trailing-12-month adjusted EBITDA ($10.4 billion), debt is about 1.95 times; operating income covered interest expense about 8.4 times.
Capital return: in the first half of 2026 the company repurchased $7.76 billion of stock and paid $0.66 billion in dividends, $8.42 billion together. Free cash flow in the same period was $6.75 billion, and net debt rose by about $2.0 billion. In Q2 it bought 22 million shares at an average of about $170.6. Remaining repurchase authorization: $14.5 billion. Quarterly dividend: $0.42 per share.
Segments
Booking Holdings reports one operating segment and does not disclose profitability by brand. The available split is by revenue type and by model.
| USD millions | Q2-25 | Q2-26 | Change | Share of revenue |
|---|---|---|---|---|
| Merchant revenues | 4,457 | 5,127 | +15.0% | 69.7% |
| Agency revenues | 2,044 | 1,903 | −6.9% | 25.9% |
| Advertising and other | 297 | 322 | +8.1% | 4.4% |
| Total | 6,798 | 7,352 | +8.1% | 100% |
The decline in agency revenue is not a decline in demand. It reflects Booking.com's deliberate shift from the agency model to the merchant model. Under the merchant model the company also earns card-related revenue but bears processing, chargeback and fraud costs. Per the filing, over the trailing twelve months the incremental revenue from facilitating payments exceeded the incremental costs. Revenue was 14.4% of gross bookings, versus 14.5% in the prior-year quarter; the company attributes the decline to the timing of booking versus travel.
Alternative accommodation: 37% of Booking.com room nights, unchanged year over year. Alternative-accommodation room nights rose 4%. Flights: flight gross bookings rose 12%, mainly due to higher ticket prices linked to fuel costs. Cars: rental car gross bookings fell 1%. Advertising and other: OpenTable and advertising on Booking.com.
Competitive Position
The advantage the company presents is scale: 4.7 million properties (+9% a year), operations in more than 220 countries and territories and over 40 languages, and a payments system that lets travelers pay in the currency and at the time that suits them. More properties give travelers more reason to start their search on the site; more travelers give hotels more reason to list their rooms.
The direct channel: per the company, the share of room nights booked directly (without a search engine or partner in between) was a "mid-fifties" percentage over the trailing twelve months, similar to the prior year. App bookings rose from a "mid-fifties" to a "high-fifties" share, most of them direct.
What the filings show on the other side: most marketing spend is performance marketing, primarily through Google. Marketing rose in Q2 to 4.7% of gross bookings (4.6%), which the company attributes mainly to lower organic search traffic. Per company management, this traffic will keep declining in the short to medium term and may lead to higher spending in paid channels. In the annual report the company notes that third-party platforms increasingly incorporate AI features that answer user intent themselves. The company does not disclose Google's share of its marketing spend or traffic. Competitors include other online travel agencies, providers selling directly (hotel chains, airlines), and search engines and AI services.
How to Think About This Company
Booking is a business built on the gap between two percentages. On one side, revenue: about 14.4% of the value of bookings. On the other, marketing: about 4.7% of the value of bookings in Q2. Almost everything in the filings — a 36% adjusted EBITDA margin, $9.5 billion of free cash flow, the buybacks — derives from the size of that gap. Following the company largely means following these two numbers, and the question of who controls how the traveler reaches the site.
Reported earnings are driven by the euro. $19.1 billion of the debt is denominated in euros, and since 2026 none of it is designated as an accounting hedge. Every move of the euro against the dollar flows through net income: a $961 million loss in Q2 2025, a $195 million gain in Q2 2026. Economically, the debt is matched to euro revenue. Comparing GAAP net income across quarters therefore mostly tells the story of the exchange rate. Adjusted earnings, together with cash flow, describe the activity better — provided one checks exactly what was excluded.
What gets excluded every year. The company's adjusted earnings remove, almost every year, a different regulatory or tax item: the Spanish fine ($530 million in 2023), indirect tax matters ($337 million in 2024), the Dutch pension fund matter, the Canadian digital services tax. Each item is one-off on its own; together they are a recurring cost of operating a large platform in Europe. The gap between adjusted and reported earnings is a figure to check in every report.
Growth is slowing, and guidance came down twice. In February 2026 the company targeted low-double-digit growth in full-year bookings and revenue, with adjusted EBITDA growing faster than revenue. In April and August the outlook was revised: high-single-digit growth in bookings and adjusted EBITDA. For Q3, per company management, room nights will grow 3% to 5%. On the other hand, in Q2 every metric beat the range given in April, including in constant currency. Both facts hold together: execution above guidance in the short term, and a reduced annual frame.
The Middle East conflict is the company's explanation. For Q1 the company quantified it: about 2 points off room-night growth, which would otherwise have been about 8%. For Q2 it describes indirect effects — airfares, capacity, long-haul travel — without quantification and without a regional breakdown. The question the next reports will answer is whether the slowdown reverses when the indirect effects fade, or whether part of it relates to other factors, such as changes in search-engine traffic.
Most of the balance-sheet cash is money in transit. $17.2 billion of cash looks like a large cushion, but against it stand $10.1 billion of traveler prepayments and $5.1 billion owed to providers. The shift to the merchant model grew this money over the years, and it also added to cash flow: in 2025 the increase in deferred merchant bookings contributed about $1.24 billion, about 13.6% of free cash flow. In Q2 2026, merchant gross-bookings growth fell to 14.5%, from 24.3% in Q1, and the merchant mix reached 73%. As the mix approaches its ceiling, the shift's contribution to cash flow shrinks.
Buybacks are central to the per-share story. Since 2021 the diluted share count has fallen about 25%. Over the past year it fell 5.5%, which explained almost 40% of Q2 adjusted EPS growth. In the first half of 2026, returns to shareholders exceeded free cash flow, and the gap was funded with debt. In past years, deferred merchant bookings built up in spring and summer and declined in the second half, so the first-half buyback pace depends on the season.
Regulation touches the commission itself. In the EU the company is designated a "gatekeeper" under the Digital Markets Act. In Switzerland an order was issued to reduce the average commission charged to hotels (suspended on appeal). In Spain a $472 million liability was recorded and ranking and parity practices were restricted. In July 2026 the staff of the U.S. Federal Trade Commission (FTC) told Priceline they plan to ask the Commission to file a complaint against it. In the Netherlands mass claims were filed on behalf of hotels and consumers. Letters of credit and bank guarantees issued on the company's behalf rose from $874 million to $1.3 billion in six months. Some of these risks target the level of the commission, not only display practices.
The tax rate is rising. The effective tax rate in Q2 was 23.8%, versus 18.9% a year earlier. Most income is reported in the Netherlands, where part of innovation-derived income is taxed at 9% instead of 25.8%. A new U.S. tax law limits interest deductibility, and the reserve for unrecognized tax benefits rose to $313 million. Per the company's reconciliations, the adjusted tax rate stayed around 20%. A change in the Dutch benefit would hit earnings directly.
The transformation program. Since late 2024 the company has run an efficiency program. In 2025 it saved about $250 million, and in August 2026 the target was raised to annual run-rate savings of about $650 million by the end of 2027. Per company management, the savings create room to invest in strategic priorities. Adjusted fixed operating expenses rose 6% in Q2, less than revenue; information-technology expenses rose 20%, due to cloud computing and software licenses.
This framework is intended to structure analysis, not to produce an investment conclusion. It takes no part in the decision — the decision belongs to the reader.
Risks & Monitoring
Risks arising from the filings
- Dependence on search engines and paid channels: most marketing spend is performance marketing, primarily through Google. Per company management, organic traffic will keep declining in the short to medium term.
- Third-party AI: the annual report notes that external platforms incorporate features that may answer user intent without sending the user to the site.
- Regulation and competition law: the EU Digital Markets Act, the Swiss commission order, the Spanish liability ($472 million), an order to Agoda in France by October 2026, investigations in Greece and Hungary, and mass claims in the Netherlands and Germany.
- U.S. Federal Trade Commission: in July 2026 the FTC staff told Priceline they plan to ask the Commission to file a complaint against it and a business partner over disclosures, fees, customer support and billing. No amount was disclosed.
- Data security: in April 2026 unauthorized access to certain guests' booking information was detected. The company notified data-protection authorities, and follow-on investigations or litigation may follow.
- Cyclicality and geopolitics: travel demand is sensitive to the economy, fuel prices and conflicts. The Middle East conflict affected Q1 and Q2 2026.
- Leverage and buybacks: $20.2 billion of debt; first-half capital return above free cash flow; negative equity.
- Tax: rising effective tax rate, a $313 million reserve for unrecognized tax benefits, and reliance on the Dutch benefit.
Items to monitor in the Q3 report
| # | Item | Latest reading |
|---|---|---|
| 1 | Room-night growth vs the guidance range | Per company management: +3% to +5% · Q2: +5.3% |
| 2 | Constant-currency gross bookings | Per company management: +5% to +7% · Q2: about 8% |
| 3 | Marketing as % of gross bookings | Q2: 4.7% (4.6%) · Q3 2025: about 4.7% |
| 4 | Company wording on the direct mix | "Mid-fifties", similar to the prior year |
| 5 | Revenue as % of gross bookings | 14.4% (14.5%) |
| 6 | Merchant gross-bookings growth | +14.5% (Q1: +24.3%) |
| 7 | Q4 and full-year guidance | Adjusted EBITDA: high-single-digit growth |
| 8 | Regulatory provisions, guarantees, FTC | Spain $472M · guarantees $1.3B |
| 9 | Buybacks vs cash flow; net debt | H1: $8.42B returned vs $6.75B free cash flow |
Scenario Framework
The scenarios below are descriptive, not predictive. They contain no prices, no probabilities and no ranking of outcomes. Their only purpose is to organize the conditions that would need to hold for each state to materialize, so that they can be checked against the next filings.
- If room-night growth returns to 2025 levels as the indirect effects of the conflict fade
- If marketing as a share of bookings stays stable or declines, and the company reports a rising direct mix
- If revenue as a share of bookings stays stable despite regulation
- If transformation-program savings show up as fixed costs growing more slowly than revenue
- If room-night growth stays within the company's guided range and marketing hovers around 4.5%–4.7% of bookings
- If the direct mix stays at a "mid-fifties" percentage
- If buybacks continue at a pace consistent with cash flow and debt stays at its level
- If regulatory proceedings continue without material new provisions
- If room-night growth falls below the guided range and the slowdown persists after the conflict's effects fade
- If marketing as a share of bookings rises for consecutive quarters and the company stops describing the direct mix as stable
- If regulatory decisions require commission cuts or model changes in key markets
- If debt keeps rising to fund buybacks while cash flow slows
Analytical Lens
The six questions below are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company along the same six dimensions as every other company.
Key Observations
1. In the April–June 2026 quarter Booking Holdings reported revenue of $7,352 million (+8.1%), gross bookings of $51.0 billion (+9%) and 325 million room nights (+5.3%). Every metric beat the guidance range published in April. For Q3, per company management, room nights will grow 3% to 5%.
2. GAAP net income rose 118% to $1,950 million, mainly because of the remeasurement of euro debt. Adjusted net income rose 8% to $1,958 million and adjusted EPS 15%.
3. Trailing-12-month free cash flow totaled $9.54 billion. In the first half of 2026 the company returned $8.42 billion to shareholders through buybacks and dividends, against free cash flow of $6.75 billion, and net debt rose by about $2 billion.
4. Marketing rose to 4.7% of gross bookings (4.6%). The company attributes this mainly to lower organic search traffic, and the direct mix stayed at a "mid-fifties" percentage. In July 2026 the U.S. FTC staff told Priceline they plan to ask the Commission to file a complaint against it.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held a licensed investment adviser qualification in Israel during 2008–2023. As of the publication date of this document, the firm does not hold an investment advice, investment marketing or portfolio management licence.
This document is intended for research and professional study purposes only. Nothing herein constitutes a recommendation to buy, sell, hold or carry out any transaction in securities. Nothing herein substitutes for advice that takes into account the data and needs of each person. Every decision is the sole responsibility of the investor.
Past performance is not indicative of future results. Data were drawn from official sources: the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (August 4, 2026), the Q1 2026 Form 10-Q, the earnings releases for Q4 2025 and Q1 and Q2 2026, the annual report on Form 10-K for 2025 (February 18, 2026), and the company's 2026 filings with the U.S. Securities and Exchange Commission. Filings published after this date are not included.
Review for qualified clients โ Family Office
The full analytical review of Booking Holdings (BKNG) for the quarter ended June 2026 is available to Bakshi Finance premium clients.
The review includes a 10-section analysis, "How to Think About This Company" paragraphs, a structured scenario framework, and a six-dimension Analytical Lens.
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