Booking Holdings Inc.

Welcome to the Booking Holdings First Quarter 2020 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 guaranteed 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 facts are intended to identify forward-looking statements or 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 the 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 Fogle and David Goulden. Please go ahead.

Thank you, and welcome to Booking Holdings' first quarter conference call. I am joined this afternoon by our CFO, David Goulden. We are living in difficult times. Since our last call in February, the spread of COVID-19 has grown exponentially, bringing uncertainty, turmoil, and to too many people, tragedy all over the world. What started as a regional outbreak that we had hoped would be contained We follow the paths of other new viruses like SARS or H1N1 has grown into a global pandemic of unprecedented proportions. We join the global community in our sadness at this horrific suffering and loss of life and recognize the tremendous economic toll on so many people in so many countries. This virus has wreaked havoc on industries across the world. And this is, without a doubt, the biggest disruption to modern global travel the world has ever seen. Billions of people have been under stay-at-home orders, and there have been and continue to be closures of borders, government-enforced travel restrictions, and strict guidelines regarding social distancing. These actions have profoundly affected our industry in every corner of this earth. While our Q1 reported room nights declined 43% year over year, We did not see the virus's full negative force on our business until mid to late March. So the 43% decline does not truly reflect the state of our business nor the travel industry today. In March, our reported room nights declined over 100%, meaning we received more cancellations during that month than new bookings. Looking at things a different way, our newly booked room nights, which exclude the impact of cancellations, We're down over 60% year-over-year in March and down over 85% in April. This gives you a clearer indication of how much our business is currently impacted by this crisis. That being said, while the virus' impact on travel is unprecedented, I am confident that this crisis will eventually end and people will travel again. Travel is fundamental to who we are, and while it may take some time to return to pre-COVID-19 level, We will get there eventually. And then we'd expect travel to continue to grow thereafter. So what are we doing now as we wait for effective treatments for a successful vaccine? During the first quarter, when it became clear that the virus impact was going to be more significant than anyone initially anticipated, we quickly developed a series of plans to help us navigate through these challenging times. One, stabilize the business from the immediate shock of the crisis. Two, optimize the business for the expected decrease in travel demand over the next few years, and three, position the business to capture travel demand when it returns so we can emerge from this crisis on strong footing and extend our leadership position. As we entered the stabilization phase at the beginning of the crisis, our employees' health and safety was a top priority. Although we have a few offices currently open in Asia, the vast majority of our employees are now working from home, including our customer service teams, which is no small accomplishment considering the technology requirements and the huge increase in change requests and cancellations that we experienced. I am very proud of our teams and pleased to say that we are functioning well in this new distributed environment. Another immediate priority was helping our customers and our supply partners. For a number of weeks, we were fielding a significantly higher number of daily inbound calls than we typically receive. For our customers, this entailed supporting them as they sought refunds for bookings that were no longer possible due to government regulations or made requests to modify their travel plans. For our partners, many of whom do not have the ability to process such a large volume of customer service calls, we supported them by handling the unprecedented level of cancellations and date modifications requests. Looking ahead. We'll be working with our travel partners to create plans to stimulate travelers to book again once this crisis is behind us. We know how critical it will be to bring demand to our supply partners in a cost-effective way. Also, as part of our stabilization plan, we took immediate steps to conserve cash and increase liquidity, such as halting stock buybacks, dramatically reducing marketing spend worldwide, cutting nonessential costs, implementing a general hiring freeze and reducing executive compensation with our brand CEOs and I foregoing salaries during this crisis and the other senior managers throughout the company voluntarily reducing their base salaries and our board of directors foregoing their cash fees. In addition to reducing costs, we bolstered our liquidity by raising over $4 billion in debt. These measures have enabled us to have sufficient liquidity to weather a long period of significantly reduced travel demand, and to have the necessary resources to invest in securing demand when people are ready to travel again. We've now begun to refine or execute our optimized plan in which we will adapt to the new reality that assumes it will likely be years, not quarters, before we witness a full recovery of global travel demand. We believe that either a vaccine or effective treatment is needed before people will feel fully comfortable traveling the way they did before the pandemic started. And even after a vaccine or treatment is declared safe and effective, we believe it may be some time before there is sufficient quantity and distribution of them to give people and governments confidence for people to travel freely. Furthermore, as in pre-COVID-19 days, travel will be dependent on the overall economy, consumers' financial health after having gone through a very deep recession, and consumers' confidence in their own economic futures. For these reasons, we expect travel to fully recover later than many other industries. However, when travel demand does start to recover, we believe there will be attractive growth opportunities. We are in the process of assessing the cost structure of our entire company and developing plans to align it with expected market demand. As part of these efforts, we're also evaluating our strategic initiatives and the timing of significant expenditures. We intend to continue to invest in our key projects, such as payments and the connected trip that we believe will position us well for the future. But we are also reexamining all areas of the company to see where can we reduce or delay costs where possible. Fortunately, our financial strength allows us to make strategic decisions oriented towards the long-term interests of the business. We recently completed a strategic evaluation at OpenTable and Kayak, announcing last week a series of actions to reduce operating costs. Unfortunately, this included the decision to lay off and furlough some employees. As a principal during this crisis, we have not reached first for employee reductions to lower costs. But after making adjustments in other operating expense areas, we made the tough decision to ensure the size and scope of our business is proportionate to the new realities of the travel market. We are now working with the other brands to examine their cost structures, and we will be thoughtful and deliberate in our evaluations. In an attempt to minimize the impact on our employees during these difficult times, we have been evaluating and employing various governmental financial support programs. Booking.com recently announced that it would participate in the employee aid program offered by the United Kingdom. and we were able to place employees on furlough there, which has enabled employees to receive a significant portion of their full-time salary. We have also applied to the Dutch government to T&E under their recently enacted program to support employment in the Netherlands. This program provides funds to Dutch companies impacted by this crisis and covers a portion of employee salaries for a three-month period with the requirement that companies which receive this aid maintain employment during the time the aid is provided. These programs, along with all the other steps we have taken, will help us support employees and maintain jobs as we continue to fully evaluate the operating environment. We will continue to look at other available options that might help us mitigate near-term headcount reductions during this period of significantly reduced revenue. The actions we are taking in our stabilization and optimization phases are being done so that we can capitalize quickly and efficiently on travel demand when it becomes safe for people to travel again. We want to emerge from this crisis as a strong organization that is equipped to deliver for our customers and our partners, will capitalize, and in a position to increase our market share when the world is ready to travel again. On a smaller but somewhat positive note, we are seeing some stability in our newly booked room night growth trends. We hope that this is the beginning of the road back to recovery, but it is simply too early to say with certainty. Some governments have seen progress in limiting or reducing the pandemic. They have slowly begun to reopen their economies, and we have seen new bookings primarily for domestic travel, although still at very low levels. Some or many of these reservations may ultimately be canceled but we believe it does show that travel for essential business and personal reasons will slowly return as society makes progress against the pandemic. As travel returns, we expect to see improvement in our revenue. We are also prepared for disruption in that progress, as relaxation of social distancing in some geographies may lead to a resurgence of infections and reinstatement of government restrictions. Our aim is to optimize the business to participate in the ultimate return of demand.

Please continue, sir.