Booking Holdings Q4: What Marketers Can Learn From AI Bets and Bigger Ad Budgets
Booking Holdings beat revenue expectations in Q4 CY2025, growing sales 16% year over year to $6.35B. Adjusted EPS landed at $48.80, right in line, and adjusted EBITDA came in at $2.20B (34.6% margin). Even with the beats, the stock slipped after the print-trading at $3,923 vs. $4,308 before earnings.
The signal: management leaned into performance marketing and social in the U.S. and Asia, pushed loyalty deeper, and used generative AI to pull real cost out of operations. Short-term margins flexed with the spend; leadership is betting the payoff shows up in growth, retention, and operating leverage.
Key numbers (for your deck)
- Revenue: $6.35B (16% YoY; 3.6% above estimates)
- Adjusted EPS: $48.80 (in line)
- Adjusted EBITDA: $2.20B (34.6% margin; 3.9% above estimates)
- Operating margin: 32% (flat YoY)
- Room nights booked: 285M (up 24M YoY)
- Market cap: $136.2B
- Share price post-earnings: $3,923 (down from $4,308 pre-print)
Why the market flinched
Booking stepped on the gas in performance and social, especially in Asia and the U.S. That brings in incremental demand but can bump marketing ratios in the near term. The company is also reinvesting savings into AI, fintech, and expansion-good for durability, but it tempers short-term optics.
The Marketing Moves Worth Copying
1) Spend where returns are provable-even if ratios tick up short term
Management increased brand and social spend when returns looked attractive. That's a clear stance: chase marginal ROI by market and channel, not a fixed percentage of revenue. Temporary deleverage is acceptable if CAC-to-LTV math stays healthy.
2) Treat loyalty as a growth engine, not a discount program
The Genius program's higher tiers are doing the heavy lifting. Level 2 and 3 members now account for a high 50% share of room nights and are pulling more multi-product activity. Deeper tiers = higher frequency, higher attachment, and more direct traffic.
3) Build "Connected Trip" style cross-sell flows
Transactions that package multiple services grew at a high-20% rate and are a rising share of total. More products in a single journey means better retention, higher order value, and more defensible unit economics. Think bundles, frictionless add-ons, and proactive timing.
4) Use AI where it cuts visible cost
Generative AI in customer service drove a ~10% decline in customer service cost per booking while bookings rose. This is one of the few places AI is already measurable on the income statement. As the CFO put it, "Our absolute number in terms of customer service costs are down and our bookings are up approximately 10%."
What This Means for Your Plan
- Reallocate weekly, not yearly: Optimize budgets by market and channel with marginal ROI targets. If a region or format clears your threshold, shift dollars-fast.
- Accept near-term ratio noise for qualified growth: If LTV lift or cross-sell offsets CAC creep, keep spending. Put a line in the sand for payback and stick to it.
- Level up loyalty: Add meaningful tier benefits that grow frequency and direct traffic. Aim for half of revenue coming from members with tiered perks and status.
- Engineer cross-sell into the experience: Turn single-product sessions into multi-product orders (e.g., "trip" equivalents: bundles, add-ons, financing, timed offers).
- Deploy AI where it hits P&L now: Start with support and pre-sale automation, set a target like 10%+ lower cost per ticket or per order, and verify with holdout tests. See AI for Customer Support.
- Use savings as growth fuel: Treat operational efficiency gains as capital for performance marketing, product, and geographic tests that meet your hurdle rates.
- Tighten attribution: Combine MMM + MTA to capture brand, social, and performance effects across regions (especially U.S. and Asia) and feed those into bid/creative rules.
Where Booking Is Pointing Next
Leadership is prioritizing agentic AI tools, the Connected Trip strategy, and targeted U.S./Asia expansion. They expect these to add roughly $400M in incremental revenue next year with a net benefit to adjusted EBITDA after reinvestment. The Transformation Program aims for $500-$550M in annual run-rate savings to support growth and lift margins by ~50 bps, even with higher marketing and tech spend.
Signals to watch next quarter
- Adoption and monetization of agentic AI features in trip planning and service
- Share gains in the U.S. and Asia from increased performance/social spend
- Durability of Transformation Program savings and flow-through to margins
- Genius program engagement and direct booking mix
- Growth in alternative accommodations and non-room verticals (flights, attractions, fintech)
Useful links
Your membership also unlocks:
