Ewout Steenbergen
Executive Vice President and Chief Financial Officer at Booking
Thank you, Glenn, and good afternoon.
I will now review our results for the fourth-quarter and the full-year of 2024 and provide our thoughts for the first-quarter and full-year of 2025. All growth rates are on a year-over-year basis. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. We will be posting a summary earnings presentation as well as our prepared remarks to the Booking Holdings Investor Relations website after the conclusion of the earnings call.
Now let's move to our fourth-quarter and full-year results. Our room nights in the fourth-quarter grew 13%, which exceeded the high-end of our guidance by-5 percentage points. The higher-than-expected room night growth was driven by stronger-than-expected performance across all our regions with the largest impact coming from Europe. Looking at our room nights growth by region, in the fourth-quarter, Europe was up low-double-digits, Asia was up mid-teens, rest of World was up about 20% and the US was up about 10%. We are encouraged by the progress we are making in enhancing the experience for our travelers and partners as we continue to advance our strategic initiatives and build towards our connected trip fishing. This includes strengthening our offering through alternative accommodations growth, increasing the direct and mobile app mix of our bookings, expanding our Genius loyalty program and growing our other travel verticals.
For our alternative accommodations at booking.com, our fourth-quarter room night growth accelerated to 19% and continued to outpace the overall business. The global mix of alternative accommodation room nights at booking.com was 33%, which was up 1 percentage point from the fourth-quarter of 2023. We continue to strengthen our direct relationships with our travelers and increased loyalty on our platforms.
For the full-year, the mix of our total room nights coming to us through the direct channel was in the mid 50% range and increased year-over-year. When we exclude our B2B business, our full-year B2C direct mix was in the mid 60% range, which is an improvement from the low 60% range in 2023. The mobile ep mix of our total fourth-quarter room nights was in the mid 50% range, which was up from the low 50% range in 2023. We continue to see that a significant majority of bookings received from our mobile apps come through the direct channel. For our Genius loyalty program, the mix of Booking.com room nights booked by travelers in the higher genius tiers of levels two and three was in the mid 50% range in 2024, and this mix increased year-over-year.
In our other travel verticals, about 14 million airline tickets were booked across our platforms in the fourth-quarter. Airline ticket growth in the fourth-quarter was 52%, driven by the continued growth of our flight offerings at booking.com and Agoda and accelerated from the 39% growth in the third-quarter. fourth-quarter gross bookings increased 17% year-over-year and increased about 18% on a constant-currency basis, which was approximately 5 percentage points higher than the 13% room nut growth due to a few percentage points from higher flight bookings growth and an increase in constant-currency accommodation ADRs of about 2%. The year-over-year ADR increase was impacted by a higher mix of room nights from Asia. Excluding regional mix, constant-currency ADRs were up about 3% versus the fourth-quarter of 2023. The increase in growth bookings exceeded the high-end of our guidance by 8 percentage points due to stronger-than-expected room night growth as well as stronger-than-expected constant-currency accommodation ADRs and flight ticket growth, partially offset by about 1 percentage point of impact from changes in FX. fourth-quarter revenue of $5.5 billion grew 14% year-over-year, which exceeded high-end of our guidance by-5 percentage points.
Constant-currency revenue growth was about 15%. Revenue as a percentage of gross bookings of 14.7% was lower-than-expected due to impacts from timing and a higher mix of flight bookings. The timing impact was driven by the acceleration in bookings in the fourth-quarter as well as a booking window that was more extended in the quarter than expected. Revenue as a percentage of gross bookings was also lower than the fourth-quarter of 2023 due to impacts from timing and an increased mix of flights bookings, partially offset by increased revenues associated with payments. We expect the impact from timing in the fourth-quarter will benefit our revenue in 2025.
Marketing expense, which is a highly variable expense line, increased 10% year-over-year. Marketing expense as a percentage of growth bookings was 4.2%, about 30 basis-points better than the fourth-quarter of 2023 due to lower brand marketing expense and higher direct mix, partially offset by higher spend in social media channels at attractive incremental ROIs. fourth-quarter sales and other expenses as a percentage of gross bookings was 2.0%, in-line with last year despite a higher merchant mix as higher payment expenses were offset by efficiencies in customer service. Adjusted fixed operating expenses were up 9% year-over-year, which was better-than-expected due primarily to lower IT and G&A expenses.
Throughout this year, we have been very focused on carefully managing the growth of our fixed expenses. Adjusted EBITDA of $1.8 billion grew 26% year-over-year and was 12% above the high-end of our guidance range, largely driven by the higher revenue and also by the better-than-expected adjusted fixed operating expenses. Adjusted EBITDA margin of 33.8% in the fourth-quarter was up versus last year-by about 320 basis-points due primarily to leverage from adjusted fixed operating expenses and marketing expenses. Adjusted EPS of $41.55 per $0.55 per share was up 30% and benefited from a 5% lower average share count than the fourth-quarter of 2023.
On a GAAP basis, net income was $1.1 billion in the fourth-quarter and was impacted by a mark-to-market adjustment to the conversion option premium of our convertible note due May 2025. This was mostly offset by FX remeasurement gains on our euro bonds. Both items were excluded from our adjusted results.
When looking at the full-year, we are pleased to report that our 2024 room nights grew 9% year-over-year. On a regional basis, we saw full-year room night growth from Europe up high-single-digits. Asia was up mid-teens, rest of World was up high-single-digits and the US was up mid-single digits. European bookers represented about half of the room nights booked in 2024, Asian bookers were about a quarter and US bookers were a low double-digit percentage. The growth in-room nights helped drive increases in gross bookings, revenue and adjusted EPS that were above our long-term annual growth ambition. Our full-year gross bookings and revenue increased 10% and 11% respectively, and both growth rates were about 1 percentage point higher on a constant-currency basis.
Revenue as a percentage of gross bookings was 14.3% in 2024, which was up slightly versus 14.2% in 2023 due to a positive impact from increased revenues associated with payments, mostly offset by an increased mix of flights. Our underlying accommodation take rates continued to be stable year-over-year. Marketing as a percentage of gross bookings in 2024 was 4.4%, down slightly from 4.5% in 2023, driven by higher direct mix, lower brand marketing expenses and higher-performance marketing ROIs, partially offset by higher spend in social media, which became a more significant channel for us in 2024. Our full-year adjusted fixed operating expenses were up 8% versus 2023, which was better than our expectation for low-to mid-teens growth at the start of 2024 and was a source of leverage due to many management actions taken throughout the year.
Our full-year adjusted EBITDA was more than $8 billion, which was up 17% year-over-year and up about 18% on a constant-currency basis. We are proud to have generated $1.2 billion more adjusted EBITDA than in 2023, delivering profitable growth and expanding margins while investing in strategic initiatives. Adjusted EBITDA margin was 35%, which was 170 basis-points higher than our adjusted EBITDA margin in 2023 and ahead of our expectations at the start of the year. Our adjusted EBITDA margins, along with every other profit metric that we report includes the impact of stock-based compensation expense as this is a very real cost of doing business. Our full-year adjusted EPS was over $187 per share, which was up 23% year-over-year and up about 24% on a constant-currency basis. Our full-year average share count was 7% lower than in 2023 due to the impact of our share repurchase program.
Now on to our cash and liquidity position. Our fourth-quarter ending cash and investments balance of $16.7 billion was up versus our third-quarter ending balance of $16.3 billion due to about $1.9 billion of debt raised in November and about $650 million in free-cash flow generated in the quarter, partially offset by about $1.4 billion of capital return, including share repurchases and dividends. Free-cash flow-in the fourth-quarter was pressured by about $825 million from changes in working capital, driven primarily by the seasonal reduction in our deferred merchant bookings balance. For the full-year, we repurchased about $6 billion of stock and paid out $1.2 billion in quarterly cash dividends. Since restarting our repurchase program in early 2022, we have repurchased almost $23 billion of stock or 21% of our shares outstanding at the start of 2022. We ended 2024 with about $7.7 billion remaining under our existing share repurchase authorization.
As we look-ahead, we remain focused on strategically investing in our business and returning capital to shareholders while maintaining our strong investment-grade credit ratings. We are pleased to announce today that our Board of Directors approved a new $20 billion share repurchase authorization, along with a 10% increase to our quarterly cash dividend per share. These actions reflect our confidence in our earnings power, strong free-cash flow generation and our ability to consistently return capital to shareholders through both share repurchases and dividends.
Moving to our thoughts for the first-quarter, we expect the comparison to the extra day-in February 2024 to be about 1 percentage point headwind to our first-quarter growth rates. Also, we expect a calendar shift of Easter from March in 2024 to April in 2025 to be a small tailwind to room nights and growth bookings growth and a larger headwind to revenue and profitability growth in the first-quarter. We expect first-quarter room night growth to be between 5% and 7%, which includes a slight benefit from the calendar shift of Easter into April. We expect first-quarter growth bookings to increase between 5% and 7%, which includes about four percentage points of impact from changes in FX, offset by about two percentage points of positive impact from higher flight ticket growth, about 1% higher constant-currency accommodation ADRs and a slight benefit from the calendar shift of Easter. We expect first-quarter revenue growth to be between 2% and 4%, which includes a headwind of about 3 percentage points from changes in FX and about 3 percentage points from the calendar shift of Easter into April. We expect first-quarter adjusted EBITDA to be between about $800 million and $850 million, down 5% year-over-year at the high-end, which includes about 14 percentage points of year-over-year impact from the Easter shift and about 2 percentage points of impact from changes in FX.
Note that historically, the first-quarter is our seasonally lowest EBITDA quarter for the year. Normalizing for the impacts of Easter timing, changes in FX and the leap year, our expectation for our fourth-quarter gross bookings, revenue and adjusted EBITDA is for low double-digit growth at the high-end of each of those ranges. Turning to the full-year 2025, we are targeting full-year constant-currency growth rates that would reach our long-term growth ambition of at least 8% growth for gross bookings and revenue and 15% growth for adjusted earnings per share. We believe we are well-positioned to achieve these levels of growth given the investments we have made to build a stronger foundation for our business and a better product offering for our travelers and partners. At recent FX rates, we expect changes in FX will impact our reported growth rates by about 3 percentage points for gross bookings and revenue and by about 3.5 percentage points for adjusted EBITDA and adjusted EPS. As a result, we expect full-year reported growth bookings and revenue to increase mid-single digits and on a constant-currency basis to both increase high-single-digits. We expect to drive leverage in our marketing expenses.
Additionally, we expect revenue to grow faster than adjusted fixed operating expenses, in-line with our prior commitment for 2025, which we communicated at the start of last year. As a result, we expect adjusted EBITDA to grow a couple of percentage points faster than revenue and on a constant-currency basis to increase low-double-digits. We expect to continue to expand our adjusted EBITDA margins in 2025 and deliver margin growth slightly below 100 basis-points. We expect our full-year adjusted EPS to grow low-double-digits and on a constant-currency basis to grow mid-teens. Finally, we remain focused on managing our capital expenditures and we expect that CapEx will be about 2% of revenue similar to 2024.
Turning to our new transformation program, which we announced in November, our intention is to implement certain organizational changes to reduce complexity and increase agility, which we estimate will ultimately produce annual run-rate cost reductions of approximately $400 million to $450 million versus our 2024 expense base. And we expect the majority of these savings to be realized after 2025. By the end of 2024, we have already actioned over $35 million in run-rate savings. We estimate the aggregate transformation cost that we will incur over the coming two to three years to be similar to the expected annual run-rate savings. In order to provide transparency, we will report these costs separately in a transformation cost expense line and we expect that certain of these costs will be excluded from our adjusted results. Embedded in our full-year 2025 guidance is about $150 million in cost-savings related to the transformation program, the majority of which we expect to be in variable-cost.
Beyond the transformation program, we expect to drive additional efficiencies in our ongoing operations. With the capacity created by these savings and efficiencies, we are reinvesting about $170 million above our baseline investments in 2025 to support our strategic priorities for long-term value-creation, while still expanding our adjusted EBITDA margins for the year. These investments will be in areas such as progressing our Gen AI capabilities, advancing our connector trip and expanding our fintech offering. We see the potential for these investments to contribute incremental revenue growth in future years and deliver attractive returns.
In conclusion, we're pleased with our fourth-quarter results and our outlook for the first-quarter and the full-year of 2025. We're excited about our long-term vision for the Connected and enhancing our offering through technological advancements such as generative AI. Thank you to all of my colleagues across the company for their amazing work and dedication to drive new product offerings, tech innovation, speed and agility and deliver value to our shareholders, travelers and partners.
With that, we will now take your questions. Operator, will you please open the lines?
