Booking Holdings Q2: Growth Slows, Marketing Costs Bite, WAIT Thesis Holds

What happened

Booking Holdings' Q2 results showed revenue up 8% and EPS up 15% YoY, but growth decelerated sharply from Q1’s pace, and marketing expenses grew 11%, outpacing revenue. The results underscore the persistent pressure on customer acquisition costs, particularly from Google, and validate our earlier concerns about marketing efficiency. Despite the headline beat, the underlying trend of slowing room-night growth and rising marketing intensity keeps the investment case in a wait-and-see zone. The company’s wide moat and shareholder returns remain intact, but the near-term risk/reward is unattractive at current levels. Overall, the quarter was in line with our cautious expectations, and we see no reason to change our WAIT rating.

Implication

BKNG’s Q2 results confirmed the growth deceleration we expected, with marketing spend outpacing revenue and raising doubts about customer acquisition efficiency. While the business remains fundamentally strong with a wide moat, the near-term outlook is clouded by competitive threats from Google and macro uncertainty. The stock’s valuation at ~24x P/E does not yet offer a compelling discount given these headwinds. We would need to see a stabilization in marketing ROI and evidence of a 2H recovery before turning more constructive. Until then, we recommend waiting for a better entry near $170 or a confirmed positive catalyst.

Thesis delta

The Q2 print showed revenue and EPS growth but deceleration and rising marketing costs, aligning with our WAIT thesis that the stock lacks a margin of safety until 2H recovery evidence emerges. No change to cautious rating; concerns over competitive pressure and marketing inefficiency remain.