Booking Q2 2025: Revenue Up, Profit Down on Forex Loss

Booking Holdings, the powerhouse behind travel giants like Booking.com, Priceline, and Kayak, just released its financial results for the second quarter of 2025. At first glance, the numbers present a puzzle: revenues are climbing, but profits have taken a steep fall. Let's dive into their latest 10-Q filing to unpack what’s driving these divergent trends.

A Tale of Two Revenue Streams

Booking's total revenue for the quarter ending June 30, 2025, rose an impressive 16% to $6.8 billion, up from $5.9 billion in the same period last year. This growth was fueled by continued strong travel demand, with total gross bookings—the total dollar value of all travel services booked—climbing 12.8% to $46.7 billion.

However, the real story lies in the mix of these revenues:

• Merchant Revenues: This segment, where Booking collects payment directly from the customer at the time of booking, surged by 29% to $4.5 billion. This model is clearly the company's growth engine.
• Agency Revenues: In contrast, the agency model, where customers pay the travel provider (e.g., the hotel) directly and Booking earns a commission, saw revenues decline by 4.7% to $2.0 billion.

This shift indicates a strategic focus on the merchant model, giving Booking more control over the transaction and customer relationship, even as the traditional agency business softens.

Decoding the Profit Drop

While revenues were up, net income told a drastically different story, falling 41% from $1.52 billion in Q2 2024 to just $895 million in Q2 2025. To understand how revenue gets from the top line to the bottom line, the following flow chart can be very helpful.

So, what caused such a significant drop in profitability? The main culprit wasn't a flaw in the core business operations. Instead, it was a huge swing in the "Other income (expense), net" line item, which went from a $37 million gain last year to a $962 million loss this quarter.

Digging into the report's notes reveals this was overwhelmingly driven by a $989 million foreign currency transaction loss, primarily related to the remeasurement of the company's large holdings of Euro-denominated debt. In simple terms, fluctuations in the U.S. Dollar-to-Euro exchange rate created a large, non-cash accounting loss on its balance sheet. Higher interest expenses, which grew 58.6% to $418 million due to increased debt, also contributed to the pressure on profits.

Strong Cash Flow and Shareholder Returns

Despite the accounting loss, the underlying health of Booking's business appears robust. For the first six months of 2025, net cash provided by operating activities was a very strong $6.5 billion, a significant increase from $5.2 billion in the first half of 2024. This demonstrates that the core travel business continues to be a powerful cash-generating machine.

The company is putting this cash to work for its shareholders. In the second quarter alone, Booking repurchased $1.37 billion of its own stock, and it still has a massive $24.6 billion authorized for future buybacks.

The Takeaway

Booking Holdings' latest quarter highlights a company successfully capitalizing on strong travel demand, particularly through its growing merchant business. The sharp decline in net income, while alarming on the surface, is primarily due to non-operating foreign currency effects on its debt rather than a weakness in its core operations. The strong operating cash flow confirms the business's fundamental strength. For investors, the key will be to look past the headline profit number and focus on the company's ability to continue growing its bookings while managing its significant exposure to global currency markets.