Booking Holdings Inc.

Welcome to Booking Holdings' fourth quarter and full year 2023 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. 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 Statement 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 at www.bookingholdings.com. And now, I'd like to introduce Booking Holdings speakers for this afternoon, Glenn Fogle and David Goulden. Please go ahead, gentlemen.

Thank you, and welcome to Booking Holdings' fourth quarter conference call. I'm joined this afternoon by our CFO, David Goulden. I am pleased to report a solid finish to 2023, as fourth quarter room nights slightly exceeded our expectations and grew a bit more than 9% year over year, or 11% if one excludes Israel from both periods. When compared to 2019, our room nights grew 21% versus our expectations of 20%. We delivered record fourth quarter revenue of $4.8 billion and record adjusted EBITDA of $1.5 billion, which were both ahead of our expectations. Finally, non-GAAP earnings per share in the quarter grew 29% year-over-year, helped by the reduction in our share count versus last year. At the start of 2024, we continue to see resiliency in global leisure travel demand. As we look to the year ahead, we see strong growth on the books for travel that's scheduled to take place in 2024, which gives early indications of potentially another record summer travel season. As we've noted previously, a high percentage of these bookings are cancelable, What is on the books today for the summer period represents a small percentage of the total bookings that we expect to ultimately receive. David will provide further details on our fourth quarter results and on our thoughts about the first quarter and full year 2024. Looking back at the full year of 2023, I am proud of our efforts to drive more benefits to our travelers and supply partners while also delivering record-setting, industry-leading financial results. We reached a significant milestone last year with our customers booking an all-time high of over 1 billion reunites on our platforms, which was an increase of 17% versus 2022. Gross bookings of $151 billion increased 24% versus 2022. In 2023, we reached a new revenue record of over $21 billion, which was 25% higher than 2022. We achieved this strong top line result while improving our profitability with record adjusted EBITDA of $7.1 billion. an increase of 34% versus 2022, and our adjusted EBITDA margin expanded by over two percentage points year-over-year. Our non-GAAP earnings per share of about $152 increased 52% year-over-year and was 48% higher than our prior full-year all-time high back in 2019. Of course, all of our key metrics in 2023, we were a meaningfully larger and faster growing business than we were in 2019. Our ambition going forward in a normalized growth environment for the travel industry is to continue to grow our gross bookings, revenue, and earnings per share faster than we did in 2019. We are confident we will achieve these objectives because we've invested in building a stronger business and better product offerings for our travelers and partners than we had back then. We can see this in many areas, but I will highlight a few examples of where we have strengthened our offering relative to 2019. We now have a scaled-up merchant platform at Booking.com. which processed about half of Booking.com's gross bookings in 2023. Our merchant offering brings many benefits to our travelers and partners, as well as new strategic benefits to us, including the ability to merchandise. On flights, we have continued to scale up our offering at Booking.com since launching in 2019, with total company air tickets booked in 2023 up more than 400% over that timeframe, primarily driven by Booking.com. We see this vertical bringing new customers to our platform while delivering a more complete offering to our existing customers, making travel planning and booking easier for them and creating opportunities to provide more value to them. And alternative accommodations. We continue to increase the mix of our alternative accommodation room nights, which reached 33% of Booking.com's room nights in 2023 as we improve our product offering and increase our supply choices with further opportunities ahead, particularly in the U.S. Early, we are pleased that for Booking.com, we have created the foundations necessary to offer insurance, attractions, and ground transportation options and expect These are offerings to add value to our connected trip vision. On marketing, we've improved our abilities in using performance marketing channels even more effectively and are now better focused on our brand spending. On loyalty, we've expanded and enhanced our Genius Loyalty Program at Booking.com to deliver more benefits to more of our traveler customers with more of our property and rental car partners participating. And lastly, We are continuing to strengthen the direct relationship with our travelers as our mobile room nights and total direct room nights continue to increase in our mix. We remain confident in our long-term outlook for the travel industry, which we believe will grow faster than GDP growth across our core markets. With that foundation of industry growth and the improvements we've made to strengthen our offerings, we are positive about our future and believe we are well positioned to deliver attractive growth across our key metrics in the coming years. With our long-term positive outlook, solid financial performance, and strong balance sheet, we returned over $10 billion to shareholders during 2023 by repurchasing our shares. Returning capital shareholders will remain a high priority for the company going forward. And today, we are taking another important step in that journey by announcing that our board of directors has declared a quarterly dividend to complement our existing share repurchase program. David will provide further thoughts on our approach to capital returns in his remarks. In addition to our strong financial results in 2023, We made meaningful progress against our key strategic priorities, which include advancing our Connected Trip vision, further integrating AI technology into our offerings, supporting our supply partners and growing alternative accommodations, and building more direct relationships with our traveler customers. Let me address the progress we have made in each of these areas. On the Connected Trip, We continue to take steps towards our long-term vision to make planning, booking, and experiencing travel easier, more personal, and more enjoyable while delivering better value to our travelers and supplier partners. We believe this is important because we know the current travel experience is much more complicated, fragmented, and frustrating to travelers than it should be. The Connected Trip vision aims to greatly improve that experience for consumers which we believe will drive further differentiation of our offerings and lead to improved loyalty, increased direct bookings, higher frequency, and a greater share of total travel spend on our platform over time. This is good, not only for our travelers, but also for our partner suppliers, who will be able to utilize different elements of the connected trip to obtain additional business in an efficient, lower-cost way. As we continue to make progress in developing the Connected Trip, you will see incremental improvements and enhancements to our platform that moves us closer to this long-term vision. This approach allows us to realize benefits while we are building towards that future state. In fact, some of the key improvements to our platform over the last few years that I spoke about earlier were driven by our work on the Connected Trip. For example, our merchant platform. at Booking.com is a foundational base to the connected trip, and it helps deliver a more seamless and frictionless booking experience for our travelers. Plus, it enables us to smartly merchandise a variety of partner and self-supplied offers when appropriate. Another example would be the development of flights at Booking.com, with flights being one of the most important elements of travel outside of accommodations. Air tickets booked on our platforms increased 58% year-over-year, driven primarily by the growth of Booking.com's flight offering. We continue to see a healthy number of new customers to Booking.com through the flight vertical and are encouraged by the rate that these customers book other services on our platform. Outside of flights and accommodations, We made solid progress in expanding the breadth of our attraction supply that is available to our travelers. While we don't expect attractions to be a major financial contributor on its own, we see benefits from a strong attractions offering given the potential bundling opportunities, as well as the ability to increase traveler engagement with the app while travelers are in destination overall. We believe we have made great progress in building towards our connected trip vision, and we are starting to see early signs of the benefits. We continue to see a growing percentage of transactions, which we count as connected trips, though these are still a small percentage of our total transactions today. Importantly, we see these types of customers returning to us more frequently, and we plan to experiment with expanding our Genius program to include all travel verticals in 2024, which we expect will drive more valued travelers across the different elements of the Connected Trip. We plan to continue to build out our Connected Trip vision, which we believe will result in increased traveler and supplier engagement with our platforms. In order to achieve the easier and more personalized experience of the connected trip, we have always envisioned AI technology playing a central role. Over the last few quarters, I have discussed the hard work our team has been doing to integrate generative AI into our offerings in innovative ways, including Booking.com's AI Trip Planner and Priceline's generative AI travel assistant named Penny. After launching Booking.com's AI Trip Planner in the US last summer, we expanded the rollout to the UK market in the fourth quarter. At this early stage, the team remains focused on learning more about customers' wants to interact with the tool and what types of questions they will ask. We see the AI Trip Planner is getting better at answering customers' inquiries, and we are excited to start testing other verticals outside of accommodations. At Priceline, Last week, they announced their winter product release, which included several enhancements to Penny following six months of real-world interaction with users that resulted in valuable learnings for the Priceline team. Priceline's AI Travel Assistant product can now help travelers beyond just the hotel category, as it now covers flights, car rentals, and vacation packages. While planning was initially launched at the end of the booking funnel on the checkout page, it is now available on the Priceline homepage where it can help with travel planning, booking, and modifying a trip after it's been booked. This is a clear example of how our teams iterate and enhance our AI-powered products as we learn more through user interactions. We continue to see encouraging signs. that Priceline's penny product helps lower customer service contact rates across travel verticals, and we believe improves the customer experience. Beyond improving customer service contact rates, we believe that over time, we can leverage generative AI technology to help make our customer service agents more efficient across our entire organization. Outside of customer service, We continue to explore areas where we believe we can use generative AI tools to increase productivity. We have early indications that using generative AI enhances the productivity of our software developers and are encouraged by the results so far. We look forward to experimenting with these and other ways gen AI tools might make our business more efficient in the future. Turning to our supply partners. We strive to be a trusted and valuable partner for all accommodation types on our platform, and we look to add value for our partners by delivering incremental bookings and developing products and features to help support their businesses. The majority of our partners are small independent businesses, and we are pleased to see many are reporting significantly improved business performance over the last year. We believe that helping our smaller partners thrive contributes to the long-term diversity and sustainability of our sector. One area in which we work with many small independent businesses is through our alternative accommodation offering at Booking.com. This is an area in which we have continued to strengthen our business by increasing supply and raising product awareness among travelers. Our alternative accommodation room nights grew 19% year-over-year in the fourth quarter and 24% for the full year, which was faster than our traditional hotel category. We saw meaningfully higher growth in our U.S. alternative accommodation room nights, though this is all a relatively small base. Globally, alternative accommodations represented about 33% of Booking.com's total room nights in 2023. which was three percentage points higher than in 2022. Our strong alternative accommodation reunites growth is benefiting from having more listings available on our platform for travelers to choose from, We are seeing continued momentum in any alternative combination supply both globally and in the U.S., with global listings reaching about 7.4 million by the end of 2023, which is about 12% higher than the 6.6 million last year. We're focused on continuing to build on this progress by furthering improving the product for our supply partners and travelers, particularly in the U.S. For our travelers, We remain focused on building a better experience that leads to increasing loyalty, frequency, spend, and direct relationships over time. I'm encouraged that in 2023 at Booking.com, we had strong growth in our base of repeat bookers, demonstrating strong retention, while we're also pleased with the increase in the number of new users to our platform versus 2022. They're also strengthening the direct relationship with our travelers as our mix of customers booking directly on our platforms continue to increase year-over-year in the fourth quarter and when measured for the full year. We see a very high level of direct bookings in the mobile app, which is an important platform as it allows us more opportunities to engage directly with travelers. Our mix of room nights booked through our mobile apps increased year-over-year by about 5 percentage points for the full year to 49%. Booking.com remained the number one downloaded travel app in the world in 2023. In Asia, Booking.com and Agoda are top five travel apps. And in the U.S., Booking.com, Priceline, and OpenTable are all in the top 10 travel apps. We will continue our efforts to enhance the app experience to build on the recent success we have seen here. Finally, I want to briefly address a regulatory matter that's impacting the financial results we are reporting today. The Spanish Competition Authority has issued a draft decision alleging infringement by Booking.com of Spanish competition law, and they intend to issue a fine of $530 million. We could not disagree more with this draft decision and the arbitrarily large fine that they have proposed, which is completely disproportionate to the alleged conduct. If the draft decision were to become final, we plan to appeal. The success of our business is built on a mutually beneficial and balanced partnership with our millions of hotels and other accommodation partners around the world. We provide exceptional choice, value, and service for travelers, and we provide a marketplace for hotels and other partners that allows them to attract travelers from around the world at lower costs than many other marketing channels. We have a clear track record of cooperating with many competition and consumer authorities to find amicable and workable solutions to their concerns, including working with the European Commission on the Digital Markets Act. As we have previously disclosed, we plan to file our notification for designation under the DMA soon, and we believe the main concerns raised by the Spanish Authority overlap with the DMA. We will continue to work closely with these regulatory bodies to maintain consistent rules, and most importantly, we will continue to ensure that we are offering the best possible platform to our partners and our customers. In conclusion, I am encouraged by the strong fourth quarter results and the continued resilience of leisure travel demand. Our teams continue to execute well against our key strategic priorities, which helps position our business well for the long term. We continue our work to deliver a better offering experience for our supply partners and our travelers. We are confident in the long-term growth of travel and in the opportunities ahead for our company. I will now turn the call over to our CFO,

David Gordon. Thank you, Glenn, and good afternoon.