Booking Holdings reported a strong first quarter with resilient growth, though tempered by geopolitical risks and a cautious outlook. Management highlighted robust demand in key markets, expanding margins, and record capital returns. Room nights increased by 6% year over year to 338 million, despite an estimated 2-point impact from the Middle East conflict. The U.S. and Asia showed solid growth, with intra-Asia travel performing well.

Gross bookings rose 15% to $53.8 billion, and revenue climbed 16% to $5.5 billion. Adjusted EBITDA reached approximately $1.3 billion, up 19%, while adjusted EPS grew 14% to $1.14, supported by share buybacks. The merchant model and other travel verticals, including airline tickets and attractions, also saw significant growth. The company is leveraging AI for product and cost efficiencies, with early AI features showing promising results. Booking generated $3.1 billion in free cash flow and returned $4.0 billion to shareholders, including a record $3.6 billion in share repurchases.

Despite these positive results, the company faces headwinds. The Middle East conflict is estimated to have reduced Q1 growth by 2 percentage points and is projected to cause a 3-point drag in Q2. March saw a sharp slowdown in room-night growth to 1%, partly due to increased cancellations. Marketing expenses rose, slightly outpacing revenue growth, impacting efficiency. For Q2, Booking expects room nights to increase by 2-4% and gross bookings, revenue, and adjusted EBITDA by 4-6%. The company reiterated its long-term growth targets, aiming for high-single to low-double-digit gross bookings growth and up to 25 basis points of margin expansion by 2026.