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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-36691
Booking Holdings Inc.
(Exact name of registrant as specified in its charter)
| | | | | |
Delaware | 06-1528493 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
800 Connecticut Avenue
Norwalk, Connecticut 06854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 299-8000
Former name, former address and former fiscal year, if changed since last report: N/A
_____________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of Each Class: | | Trading Symbol(s) | | Name of each exchange on which registered: |
Common Stock par value $0.008 per share | | BKNG | | The NASDAQ Global Select Market |
| | | | |
| | | | |
0.100% Senior Notes Due 2025 | | BKNG 25 | | The NASDAQ Stock Market LLC |
4.000% Senior Notes Due 2026 | | BKNG 26 | | The NASDAQ Stock Market LLC |
1.800% Senior Notes Due 2027 | | BKNG 27 | | The NASDAQ Stock Market LLC |
0.500% Senior Notes Due 2028 | | BKNG 28 | | The NASDAQ Stock Market LLC |
3.625% Senior Notes Due 2028 | | BKNG 28A | | The NASDAQ Stock Market LLC |
4.250% Senior Notes Due 2029 | | BKNG 29 | | The NASDAQ Stock Market LLC |
3.500% Senior Notes Due 2029 | | BKNG 29A | | The NASDAQ Stock Market LLC |
4.500% Senior Notes Due 2031 | | BKNG 31 | | The NASDAQ Stock Market LLC |
3.625% Senior Notes Due 2032 | | BKNG 32 | | The NASDAQ Stock Market LLC |
4.125% Senior Notes Due 2033 | | BKNG 33 | | The NASDAQ Stock Market LLC |
4.750% Senior Notes Due 2034 | | BKNG 34 | | The NASDAQ Stock Market LLC |
3.750% Senior Notes Due 2036 | | BKNG 36 | | The NASDAQ Stock Market LLC |
4.000% Senior Notes Due 2044 | | BKNG 44 | | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of Common Stock outstanding at October 23, 2024:
| | | | | | | | |
Common Stock, par value $0.008 per share | | 33,096,713 |
(Class) | | (Number of Shares) |
Booking Holdings Inc.
Form 10-Q
For the Three Months Ended September 30, 2024
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PART I - FINANCIAL INFORMATION | |
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Item 1. Financial Statements | |
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Consolidated Balance Sheets at September 30, 2024 (Unaudited) and December 31, 2023 | |
Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2024 and 2023 | |
Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Nine Months Ended September 30, 2024 and 2023 | |
Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) For the Three and Nine Months Ended September 30, 2024 and 2023 | |
Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2024 and 2023 | |
Notes to Unaudited Consolidated Financial Statements | |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
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Item 4. Controls and Procedures | |
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PART II - OTHER INFORMATION | |
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Item 1. Legal Proceedings | |
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Item 1A. Risk Factors | |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
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Item 6. Exhibits | |
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SIGNATURES | |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Booking Holdings Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
| | | | | | | | | | | | | | |
| | September 30, 2024 | | December 31, 2023 |
| | (Unaudited) | | |
ASSETS | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 15,775 | | | $ | 12,107 | |
Short-term investments (Available-for-sale debt securities: Amortized cost of $580 at December 31, 2023) | | — | | | 576 | |
Accounts receivable, net (Allowance for expected credit losses of $131 and $137, respectively) | | 3,649 | | | 3,253 | |
Prepaid expenses, net | | 490 | | | 644 | |
Other current assets | | 615 | | | 454 | |
Total current assets | | 20,529 | | | 17,034 | |
Property and equipment, net | | 882 | | | 784 | |
Operating lease assets | | 600 | | | 705 | |
Intangible assets, net | | 1,450 | | | 1,613 | |
Goodwill | | 2,838 | | | 2,826 | |
Long-term investments | | 500 | | | 440 | |
Other assets, net | | 1,179 | | | 940 | |
Total assets | | $ | 27,978 | | | $ | 24,342 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | |
Current liabilities: | | | | |
Accounts payable | | $ | 4,065 | | | $ | 3,480 | |
Accrued expenses and other current liabilities | | 5,287 | | | 4,635 | |
Deferred merchant bookings | | 4,907 | | | 3,254 | |
Short-term debt | | 2,419 | | | 1,961 | |
Total current liabilities | | 16,678 | | | 13,330 | |
Deferred income taxes | | 191 | | | 258 | |
Operating lease liabilities | | 508 | | | 599 | |
Long-term U.S. transition tax liability | | 257 | | | 515 | |
Other long-term liabilities | | 204 | | | 161 | |
Long-term debt | | 13,793 | | | 12,223 | |
Total liabilities | | 31,631 | | | 27,086 | |
Commitments and contingencies (see Note 13) | | | | |
| | | | |
Stockholders' deficit: | | | | |
Common stock, $0.008 par value, Authorized shares: 1,000,000,000 Issued shares: 64,265,798 and 64,048,000, respectively | | — | | | — | |
Treasury stock: 31,089,462 and 29,650,351 shares, respectively | | (46,734) | | | (41,426) | |
Additional paid-in capital | | 7,635 | | | 7,175 | |
Retained earnings | | 35,749 | | | 31,830 | |
Accumulated other comprehensive loss | | (303) | | | (323) | |
Total stockholders' deficit | | (3,653) | | | (2,744) | |
Total liabilities and stockholders' deficit | | $ | 27,978 | | | $ | 24,342 | |
See Notes to Unaudited Consolidated Financial Statements.
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Merchant revenues | | $ | 4,972 | | | $ | 3,945 | | | $ | 10,806 | | | $ | 8,467 | |
Agency revenues | | 2,753 | | | 3,135 | | | 6,660 | | | 7,346 | |
Advertising and other revenues | | 269 | | | 261 | | | 802 | | | 768 | |
Total revenues | | 7,994 | | | 7,341 | | | 18,268 | | | 16,581 | |
Operating expenses: | | | | | | | | |
Marketing expenses | | 2,151 | | | 2,022 | | | 5,700 | | | 5,340 | |
Sales and other expenses | | 872 | | | 807 | | | 2,370 | | | 2,094 | |
Personnel, including stock-based compensation of $148, $128, $432, and $369, respectively | | 868 | | | 788 | | | 2,501 | | | 2,262 | |
General and administrative | | 575 | | | 305 | | | 873 | | | 821 | |
Information technology | | 194 | | | 187 | | | 564 | | | 468 | |
Depreciation and amortization | | 155 | | | 129 | | | 434 | | | 370 | |
| | | | | | | | |
| | | | | | | | |
Total operating expenses | | 4,815 | | | 4,238 | | | 12,442 | | | 11,355 | |
Operating income | | 3,179 | | | 3,103 | | | 5,826 | | | 5,226 | |
| | | | | | | | |
Interest expense | | (305) | | | (254) | | | (788) | | | (689) | |
Interest and dividend income | | 327 | | | 289 | | | 863 | | | 783 | |
Other income (expense), net | | (332) | | | 11 | | | (173) | | | (250) | |
| | | | | | | | |
Income before income taxes | | 2,869 | | | 3,149 | | | 5,728 | | | 5,070 | |
Income tax expense | | 352 | | | 638 | | | 914 | | | 1,003 | |
Net income | | $ | 2,517 | | | $ | 2,511 | | | $ | 4,814 | | | $ | 4,067 | |
Net income applicable to common stockholders per basic common share | | $ | 75.37 | | | $ | 70.62 | | | $ | 142.38 | | | $ | 111.09 | |
Weighted-average number of basic common shares outstanding (in 000's) | | 33,401 | | | 35,570 | | | 33,814 | | | 36,615 | |
Net income applicable to common stockholders per diluted common share | | $ | 74.34 | | | $ | 69.80 | | | $ | 140.45 | | | $ | 110.02 | |
Weighted-average number of diluted common shares outstanding (in 000's) | | 33,864 | | | 35,987 | | | 34,278 | | | 36,971 | |
| | | | | | | | |
See Notes to Unaudited Consolidated Financial Statements.
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Net income | | $ | 2,517 | | | $ | 2,511 | | | $ | 4,814 | | | $ | 4,067 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other comprehensive income (loss), net of tax (1) | | 21 | | | 6 | | | 20 | | | (18) | |
Comprehensive income | | $ | 2,538 | | | $ | 2,517 | | | $ | 4,834 | | | $ | 4,049 | |
(1) Primarily consists of foreign currency translation adjustments (see Note 12).
See Notes to Unaudited Consolidated Financial Statements.
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(In millions, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Treasury Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total |
| | Shares (in 000's) | | Amount | | Shares (in 000's) | | Amount | | | | |
Three Months Ended September 30, 2024 | | | | | | | | | | | | | | | | |
Balance, June 30, 2024 | | 64,259 | | | $ | — | | | (30,623) | | | $ | (44,958) | | | $ | 7,479 | | | $ | 33,527 | | | $ | (324) | | | $ | (4,276) | |
| | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | — | | | — | | | 2,517 | | | — | | | 2,517 | |
| | | | | | | | | | | | | | | | |
Other comprehensive income, net of tax | | — | | | — | | | — | | | — | | | — | | | — | | | 21 | | | 21 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Exercise of stock options and vesting of restricted stock units and performance share units | | 7 | | | — | | | — | | | — | | | 2 | | | — | | | — | | | 2 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | 154 | | | — | | | — | | | 154 | |
Repurchase of common stock | | — | | | — | | | (466) | | | (1,776) | | | — | | | — | | | — | | | (1,776) | |
Dividends | | — | | | — | | | — | | | — | | | — | | | (295) | | | — | | | (295) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance, September 30, 2024 | | 64,266 | | | $ | — | | | (31,089) | | | $ | (46,734) | | | $ | 7,635 | | | $ | 35,749 | | | $ | (303) | | | $ | (3,653) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Nine Months Ended September 30, 2024 | | | | | | | | | | | | | | | | |
Balance, December 31, 2023 | | 64,048 | | | $ | — | | | (29,650) | | | $ | (41,426) | | | $ | 7,175 | | | $ | 31,830 | | | $ | (323) | | | $ | (2,744) | |
| | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | — | | | — | | | 4,814 | | | — | | | 4,814 | |
| | | | | | | | | | | | | | | | |
Other comprehensive income, net of tax | | — | | | — | | | — | | | — | | | — | | | — | | | 20 | | | 20 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Exercise of stock options and vesting of restricted stock units and performance share units | | 218 | | | — | | | — | | | — | | | 11 | | | — | | | — | | | 11 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | 449 | | | — | | | — | | | 449 | |
Repurchase of common stock | | — | | | — | | | (1,439) | | | (5,308) | | | — | | | — | | | — | | | (5,308) | |
Dividends | | — | | | — | | | — | | | — | | | — | | | (895) | | | — | | | (895) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance, September 30, 2024 | | 64,266 | | | $ | — | | | (31,089) | | | $ | (46,734) | | | $ | 7,635 | | | $ | 35,749 | | | $ | (303) | | | $ | (3,653) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | Common Stock | | Treasury Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | |
| | Shares (in 000's) | | Amount | | Shares (in 000's) | | Amount | | | | | Total |
Three Months Ended September 30, 2023 | | | | | | | | | | | | | | | | |
Balance, June 30, 2023 | | 64,015 | | | $ | — | | | (27,974) | | | $ | (36,319) | | | $ | 6,848 | | | $ | 29,097 | | | $ | (291) | | | $ | (665) | |
| | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | — | | | — | | | 2,511 | | | — | | | 2,511 | |
| | | | | | | | | | | | | | | | |
Other comprehensive income, net of tax | | — | | | — | | | — | | | — | | | — | | | — | | | 6 | | | 6 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Exercise of stock options and vesting of restricted stock units and performance share units | | 17 | | | — | | | — | | | — | | | 13 | | | — | | | — | | | 13 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | 135 | | | — | | | — | | | 135 | |
Repurchase of common stock | | — | | | — | | | (870) | | | (2,625) | | | — | | | — | | | — | | | (2,625) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance, September 30, 2023 | | 64,032 | | | $ | — | | | (28,844) | | | $ | (38,944) | | | $ | 6,996 | | | $ | 31,608 | | | $ | (285) | | | $ | (625) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Nine Months Ended September 30, 2023 | | | | | | | | | | | | | | | | |
Balance, December 31, 2022 | | 63,781 | | | $ | — | | | (25,918) | | | $ | (30,983) | | | $ | 6,491 | | | $ | 27,541 | | | $ | (267) | | | $ | 2,782 | |
| | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | — | | | — | | | 4,067 | | | — | | | 4,067 | |
| | | | | | | | | | | | | | | | |
Other comprehensive loss, net of tax | | — | | | — | | | — | | | — | | | — | | | — | | | (18) | | | (18) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Exercise of stock options and vesting of restricted stock units and performance share units | | 251 | | | — | | | — | | | — | | | 122 | | | — | | | — | | | 122 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | 383 | | | — | | | — | | | 383 | |
Repurchase of common stock | | — | | | — | | | (2,926) | | | (7,961) | | | — | | | — | | | — | | | (7,961) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance, September 30, 2023 | | 64,032 | | | $ | — | | | (28,844) | | | $ | (38,944) | | | $ | 6,996 | | | $ | 31,608 | | | $ | (285) | | | $ | (625) | |
See Notes to Unaudited Consolidated Financial Statements.
Booking Holdings Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2024 | | 2023 |
OPERATING ACTIVITIES: | | | | |
Net income | | $ | 4,814 | | | $ | 4,067 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 434 | | | 370 | |
Provision for expected credit losses and chargebacks | | 292 | | | 224 | |
Deferred income tax benefit | | (75) | | | (409) | |
Net (gains) losses on equity securities | | (27) | | | 151 | |
Stock-based compensation expense | | 432 | | | 369 | |
Operating lease amortization | | 114 | | | 120 | |
| | | | |
Unrealized foreign currency transaction losses (gains) related to Euro-denominated debt | | 108 | | | (2) | |
| | | | |
| | | | |
| | | | |
Other | | — | | | 3 | |
Changes in assets and liabilities: | | | | |
Accounts receivable | | (651) | | | (1,506) | |
Prepaid expenses and other current assets | | 12 | | | 96 | |
Deferred merchant bookings and other current liabilities | | 2,308 | | | 2,644 | |
| | | | |
Other | | (159) | | | (129) | |
Net cash provided by operating activities | | 7,602 | | | 5,998 | |
INVESTING ACTIVITIES: | | | | |
| | | | |
Proceeds from sale and maturity of investments | | 590 | | | 1,785 | |
Additions to property and equipment | | (353) | | | (251) | |
Other investing activities | | (33) | | | (9) | |
Net cash provided by investing activities | | 204 | | | 1,525 | |
FINANCING ACTIVITIES: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Proceeds from the issuance of long-term debt | | 2,959 | | | 1,893 | |
| | | | |
Payment on maturity of debt | | (1,114) | | | (500) | |
Payments for repurchase of common stock | | (5,282) | | | (7,889) | |
| | | | |
Dividends paid | | (885) | | | — | |
Proceeds from exercise of stock options | | 11 | | | 122 | |
Other financing activities | | (36) | | | (45) | |
Net cash used in financing activities | | (4,347) | | | (6,419) | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | | 214 | | | (29) | |
Net increase in cash and cash equivalents and restricted cash and cash equivalents | | 3,673 | | | 1,075 | |
Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period | | 12,135 | | | 12,251 | |
Total cash and cash equivalents and restricted cash and cash equivalents, end of period | | $ | 15,808 | | | $ | 13,326 | |
| | | | |
| | | | |
| | | | |
See Notes to Unaudited Consolidated Financial Statements.
Booking Holdings Inc.
Notes to Unaudited Consolidated Financial Statements
1. BASIS OF PRESENTATION
Management of Booking Holdings Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by U.S. GAAP for annual financial statements. These Unaudited Consolidated Financial Statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations.
Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.
Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation. These include the reclassification of certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" in the Unaudited Consolidated Statements of Operations. See Notes 2 and 21 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
See "Recent Accounting Pronouncements Adopted" and "Other Recent Accounting Pronouncements" in Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Improved guidance to help determine transactions to be accounted for as share-based payment arrangements
In March 2024, the Financial Accounting Standards Board issued an Accounting Standards Update adding illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of the Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation. The update is effective for annual and interim financial statements beginning with the fiscal year 2025. The Company is currently evaluating the impact of the update on its Consolidated Financial Statements.
2. REVENUES
Disaggregation of Revenues
Geographic Information
The Company's revenues from its businesses outside of the U.S. consists of the results of Booking.com, Agoda, and Rentalcars.com in their entirety and the results of the KAYAK and OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the U.S. is part of the results of the Company's businesses outside of the U.S. The Company's geographic information on revenues is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Outside of the U.S. | | |
| | U.S. | | The Netherlands | | Other | | Total Company |
Total revenues for the three months ended September 30, | | | | | | | | |
2024 | | $ | 662 | | | $ | 6,614 | | | $ | 718 | | | $ | 7,994 | |
2023 | | $ | 633 | | | $ | 6,127 | | | $ | 581 | | | $ | 7,341 | |
| | | | | | | | |
Total revenues for the nine months ended September 30, | | | | | | | | |
2024 | | $ | 1,857 | | | $ | 14,416 | | | $ | 1,995 | | | $ | 18,268 | |
2023 | | $ | 1,771 | | | $ | 13,326 | | | $ | 1,484 | | | $ | 16,581 | |
Revenues by Type of Service
Approximately 90% of the Company's revenues for the three and nine months ended September 30, 2024 and approximately 89% of the Company's revenues for the three and nine months ended September 30, 2023 relate to online accommodation reservation services. Revenues from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10% of the Company's total revenues for each period.
Consumer Incentive Programs
At September 30, 2024 and December 31, 2023, liabilities of $133 million and $149 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets for incentives granted to consumers, including referral bonuses, rebates, credits, discounts, and loyalty programs.
Deferred Merchant Bookings
Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations.
3. STOCK-BASED COMPENSATION
The Company maintains equity incentive plans that include broad-based grants of restricted stock units, performance share units granted to officers and certain other employees, and stock options granted to certain employees.
Restricted stock units and performance share units granted by the Company during the nine months ended September 30, 2024 had an aggregate grant-date fair value of $627 million. Restricted stock units and performance share units that vested during the nine months ended September 30, 2024 had an aggregate fair value at vesting of $736 million. At September 30, 2024, there was $833 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 1.9 years.
The following table summarizes the activity in restricted stock units and performance share units for employees and non-employee directors during the nine months ended September 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restricted Stock Units | | Performance Share Units |
| | Shares | | Weighted-average Grant-date Fair Value | | Shares | | Weighted-average Grant-date Fair Value |
Unvested at December 31, 2023 (1) | | 291,404 | | $2,404 | | 233,026 | | $2,467 |
| | | | | | | | |
Granted (2) | | 141,702 | | $3,511 | | 35,301 | | $3,660 |
Vested | | (134,476) | | $2,328 | | (76,070) | | $2,452 |
Performance shares adjustment (3) | | | | | | 2,124 | | $3,899 |
Forfeited | | (13,019) | | $2,782 | | (5,596) | | $2,617 |
Unvested at September 30, 2024 | | 285,611 | | $2,972 | | 188,785 | | $2,709 |
(1) Excludes 4,399 performance share units awarded during the year ended December 31, 2022 for which the grant date under ASC 718, Compensation - Stock Compensation, was not established as of December 31, 2023. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.
(2) Includes 4,399 performance share units awarded during the year ended December 31, 2022 for which the grant date under ASC 718 was established.
(3) Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications, if any.
The following table summarizes the activity in stock options during the nine months ended September 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Employee Stock Options | | Number of Shares | | Weighted-average Exercise Price | | Aggregate Intrinsic Value (in millions) | | Weighted-average Remaining Contractual Term (in years) |
Balance, December 31, 2023 | | 25,523 | | | $1,411 | | $ | 55 | | | 6.4 |
| | | | | | | | |
Exercised | | (7,906) | | | $1,411 | | $ | 17 | | | |
| | | | | | | | |
| | | | | | | | |
Balance, September 30, 2024 | | 17,617 | | | $1,411 | | $ | 49 | | | 5.6 |
Exercisable at September 30, 2024 | | 17,617 | | | $1,411 | | $ | 49 | | | 5.6 |
4. NET INCOME PER SHARE
The Company computes basic net income per share by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period. Only dilutive common equivalent shares that decrease the net income per share are included in the computation of diluted net income per share.
Common equivalent shares related to stock options, restricted stock units, and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.
The Company's convertible senior notes have net share settlement features requiring the Company, upon conversion, to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. If the conversion prices for the convertible senior notes exceed the Company's average stock price for the period, the convertible senior notes generally have no impact on diluted net income per share. The Company uses the if-converted method for the convertible senior notes in the calculation of diluted net income per share.
A reconciliation of the weighted-average number of shares outstanding used in calculating diluted net income per share is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Weighted-average number of basic common shares outstanding | | 33,401 | | | 35,570 | | | 33,814 | | | 36,615 | |
Weighted-average dilutive stock options, restricted stock units, and performance share units | | 215 | | | 231 | | | 229 | | | 211 | |
Assumed conversion of convertible senior notes | | 248 | | | 186 | | | 235 | | | 145 | |
Weighted-average number of diluted common and common equivalent shares outstanding | | 33,864 | | | 35,987 | | | 34,278 | | | 36,971 | |
| | | | | | | | |
5. INVESTMENTS
The following table summarizes the Company's investments by major security type at September 30, 2024 and December 31, 2023 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cost | | Gross Unrealized Gains /Upward Adjustments | | Gross Unrealized Losses /Downward Adjustments | | Carrying Value |
September 30, 2024 | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Long-term investments: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Equity securities with readily determinable fair values | | $ | 715 | | | $ | — | | | $ | (360) | | | $ | 355 | |
Equity securities of private entities | | 111 | | | 259 | | | (225) | | | 145 | |
| | | | | | | | |
Total long-term investments | | $ | 826 | | | $ | 259 | | | $ | (585) | | | $ | 500 | |
| | | | | | | | |
December 31, 2023 | | | | | | | | |
Short-term investments: | | | | | | | | |
Debt securities: | | | | | | | | |
International government securities | | $ | 63 | | | $ | — | | | $ | — | | | $ | 63 | |
U.S. government securities (1) | | 152 | | | — | | | (1) | | | 151 | |
Corporate debt securities | | 365 | | | — | | | (3) | | | 362 | |
| | | | | | | | |
Total short-term investments | | $ | 580 | | | $ | — | | | $ | (4) | | | $ | 576 | |
| | | | | | | | |
Long-term investments: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Equity securities with readily determinable fair values | | $ | 715 | | | $ | — | | | $ | (404) | | | $ | 311 | |
Equity securities of private entities | | 78 | | | 259 | | | (208) | | | 129 | |
| | | | | | | | |
Total long-term investments | | $ | 793 | | | $ | 259 | | | $ | (612) | | | $ | 440 | |
(1) Includes investments in U.S. municipal bonds.
The Company has classified its investments in debt securities as available-for-sale debt securities. The aggregate unrealized gains and losses on the available-for-sale debt securities, net of tax, are included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheet at December 31, 2023.
Equity securities with readily determinable fair values include the Company's investments in DiDi Global Inc. and Grab Holdings Limited, with fair values of $185 million and $161 million, respectively, at September 30, 2024 and $155 million and $143 million, respectively, at December 31, 2023. Net unrealized gains related to these investments are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023. During the nine months ended September 30, 2023, the Company sold its entire investment in Meituan for $1.7 billion, resulting in a loss of $149 million included in "Other income (expense), net" in the Unaudited Consolidated Statement of Operations for the nine months ended September 30, 2023. The cost basis of the Company's investment in Meituan was $450 million.
The Company's investments in equity securities of private entities at September 30, 2024 and December 31, 2023 include $51 million originally invested in Yanolja Co., Ltd. ("Yanolja"). The Company evaluated its investment in Yanolja for impairment as of June 30, 2023 and recognized an impairment charge of $24 million during the nine months ended September 30, 2023 (see Note 6). The carrying value of the Company's investment in Yanolja was $98 million at September 30, 2024 and December 31, 2023.
6. FAIR VALUE MEASUREMENTS
There are three levels of inputs to valuation techniques used to measure fair value:
Level 1: Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.
Level 2: Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
Financial assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023 and nonrecurring basis, as applicable, are classified in the categories described in the table below (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Level 1 | | Level 2 | | Level 3 | | Total |
September 30, 2024 | | | | | | | | |
Recurring fair value measurements | | | | | | | | |
ASSETS: | | | | | | | | |
Cash equivalents and restricted cash equivalents: | | | | | | | | |
Money market fund investments | | $ | 14,258 | | | $ | — | | | $ | — | | | $ | 14,258 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Certificates of deposit | | 95 | | | — | | | — | | | 95 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Long-term investments: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Equity securities | | 355 | | | — | | | — | | | 355 | |
Derivatives: | | | | | | | | |
Foreign currency exchange derivatives | | — | | | 114 | | | — | | | 114 | |
Total assets at fair value | | $ | 14,708 | | | $ | 114 | | | $ | — | | | $ | 14,822 | |
| | | | | | | | |
LIABILITIES: | | | | | | | | |
Foreign currency exchange derivatives | | $ | — | | | $ | 65 | | | $ | — | | | $ | 65 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
|
December 31, 2023 | | | | | | | | |
Recurring fair value measurements | | | | | | | | |
ASSETS: | | | | | | | | |
Cash equivalents and restricted cash equivalents: | | | | | | | | |
Money market fund investments | | $ | 10,871 | | | $ | — | | | $ | — | | | $ | 10,871 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Certificates of deposit | | 97 | | | — | | | — | | | 97 | |
Short-term investments: | | | | | | | | |
International government securities | | — | | | 63 | | | — | | | 63 | |
U.S. government securities | | — | | | 151 | | | — | | | 151 | |
Corporate debt securities | | — | | | 362 | | | — | | | 362 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Long-term investments: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Equity securities | | 311 | | | — | | | — | | | 311 | |
Derivatives: | | | | | | | | |
Foreign currency exchange derivatives | | — | | | 62 | | | — | | | 62 | |
Total assets at fair value | | $ | 11,279 | | | $ | 638 | | | $ | — | | | $ | 11,917 | |
| | | | | | | | |
LIABILITIES: | | | | | | | | |
Foreign currency exchange derivatives | | $ | — | | | $ | 36 | | | $ | — | | | $ | 36 | |
| | | | | | | | |
Nonrecurring fair value measurements | | | | | | | | |
Investment in equity securities of a private entity (1) | | $ | — | | | $ | — | | | $ | 98 | | | $ | 98 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1) During the year ended December 31, 2023, the investment in Yanolja was written down to its estimated fair value.
Investments
See Note 5 for additional information related to the Company's investments.
The Company's investments in debt securities are measured using "Level 2" inputs as the Company has access to quoted prices for identical or comparable securities, but does not have visibility into the volume and frequency of trading for these investments. A market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.
The Company's investments measured using Level 3 inputs primarily consist of investments in privately-held entities. Fair values of these securities are estimated using a variety of valuation methodologies, including both the market and income approaches.
As of June 30, 2023, the Company evaluated its investment in Yanolja for impairment using a combination of the market approach and the income approach in estimating the fair value of the investment and recognized an impairment charge (see Note 5). The market approach estimates value using prices and other relevant information generated by market transactions involving comparable companies. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on a company's weighted-average cost of capital adjusted to reflect the risks inherent in its cash flows. The key unobservable inputs and ranges used for the June 2023 impairment evaluation, primarily using the income approach, includes the weighted average cost of capital (10.5%-14.5%) and the terminal EBITDA multiple (14x-16x). Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. A change in the assumption used for EBITDA multiples would result in a directionally similar change in the fair value, and a change in the assumption used for weighted average cost of capital would result in a directionally opposite change in the fair value.
The determination of the fair values of investments, where the Company is a minority shareholder and has access to limited information from the investee, reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding the investee's expected growth rates and operating margin, as well as other key assumptions with respect to matters outside of the Company's control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value measurement. Future events and changing market conditions may lead the Company to re-evaluate the assumptions reflected in the valuation which may result in a need to recognize additional impairment charges.
Derivatives
The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. As of September 30, 2024 and December 31, 2023, the Company did not designate any derivatives as hedges for accounting purposes.
For the Company's foreign currency exchange derivatives outstanding as of September 30, 2024 and December 31, 2023, the notional amounts of the foreign currency purchases were $8.5 billion and $4.9 billion, respectively, and the notional amounts of the foreign currency sales were $4.3 billion and $4.2 billion, respectively. The notional amount of a foreign currency exchange derivative contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets.
The effect of foreign currency exchange derivatives recorded in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Gains (losses) on foreign currency exchange derivatives | | $ | 130 | | | $ | (56) | | | $ | (32) | | | $ | (140) | |
Other Financial Assets and Liabilities
At September 30, 2024 and December 31, 2023, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments and certificates of deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities, including restricted cash, accounts payable, accrued expenses, and deferred merchant bookings, are carried at cost which approximates their fair values because of the short-term nature of these items. Accounts receivable and other financial assets measured at amortized cost are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Note 9 for the estimated fair value of the Company's outstanding senior notes, including the estimated fair value of the Company's convertible senior notes.
7. ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS
Accounts receivable in the Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 includes receivables from customers of $2.3 billion and $1.9 billion, respectively, and receivables from payment processors and networks of $1.3 billion. The remaining balance principally relates to receivables from marketing affiliates. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.
Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, including macroeconomic conditions, inflationary pressures, potential recession, and the Company's ability to collect the receivable or recover prepayments.
The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):
| | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2024 | | 2023 |
Balance, beginning of year | | $ | 137 | | | $ | 117 | |
Provision charged to earnings | | 152 | | | 103 | |
Write-offs and other adjustments | | (158) | | | (104) | |
| | | | |
| | | | |
Balance, end of period | | $ | 131 | | | $ | 116 | |
8. INTANGIBLE ASSETS AND GOODWILL
The Company's intangible assets at September 30, 2024 and December 31, 2023 consist of the following (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 | | |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Amortization Period |
Trade names | $ | 1,816 | | | $ | (985) | | | $ | 831 | | | $ | 1,812 | | | $ | (911) | | | $ | 901 | | | 3 - 20 years |
Supply and distribution agreements | 1,410 | | | (832) | | | 578 | | | 1,402 | | | (759) | | | 643 | | | 3 - 20 years |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Other intangible assets | 331 | | | (290) | | | 41 | | | 330 | | | (261) | | | 69 | | | Up to 20 years |
Total intangible assets | $ | 3,557 | | | $ | (2,107) | | | $ | 1,450 | | | $ | 3,544 | | | $ | (1,931) | | | $ | 1,613 | | | |
Intangible assets are amortized on a straight-line basis. Amortization expense for the intangible assets was $55 million for the three months ended September 30, 2024 and 2023 and $166 million for the nine months ended September 30, 2024 and 2023.
The carrying value of the Company's goodwill at September 30, 2024 and December 31, 2023 was $2.8 billion and is stated net of cumulative impairment charges of $2.0 billion. The Company tests goodwill for impairment at the reporting unit level on an annual basis as of September 30 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. As of September 30, 2024, the Company performed its annual goodwill impairment test and concluded that there was no impairment of goodwill.
9. DEBT
Revolving Credit Facility
See Note 12 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for information related to the Company's unsecured revolving credit facility that extends a revolving line of credit of up to $2 billion to the Company. In May 2024, the Company extended the maturity date of the revolving credit facility from May 2028 to May 2029 pursuant to an extension request under the credit agreement. At September 30, 2024 and December 31, 2023, there were no borrowings outstanding and $26 million and $18 million, respectively, of letters of credit issued under the revolving credit facility.
Outstanding Debt
Outstanding debt at September 30, 2024 and December 31, 2023 consists of the following (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2024 | | December 31, 2023 |
| | Outstanding Principal Amount | | Carrying Value (1) | | Outstanding Principal Amount | | Carrying Value (1) |
2.375% (€1 Billion) Senior Notes due September 2024 (2) | | $ | — | | | $ | — | | | $ | 1,105 | | | $ | 1,104 | |
3.65% Senior Notes due March 2025 (3) | | 500 | | | 500 | | | 500 | | | 499 | |
0.1% (€950 Million) Senior Notes due March 2025 (3) | | 1,060 | | | 1,059 | | | 1,050 | | | 1,048 | |
0.75% Convertible Senior Notes due May 2025 (2) (3) | | 862 | | | 860 | | | 862 | | | 857 | |
3.6% Senior Notes due June 2026 | | 1,000 | | | 999 | | | 1,000 | | | 998 | |
4.0% (€750 Million) Senior Notes due November 2026 | | 837 | | | 835 | | | 828 | | | 825 | |
1.8% (€1 Billion) Senior Notes due March 2027 | | 1,116 | | | 1,115 | | | 1,105 | | | 1,103 | |
3.55% Senior Notes due March 2028 | | 500 | | | 499 | | | 500 | | | 499 | |
0.5% (€750 Million) Senior Notes due March 2028 | | 837 | | | 835 | | | 828 | | | 825 | |
3.625% (€500 Million) Senior Notes due November 2028 | | 558 | | | 556 | | | 552 | | | 549 | |
3.5% (€500 Million) Senior Notes due March 2029 | | 558 | | | 556 | | | — | | | — | |
4.25% (€750 Million) Senior Notes due May 2029 | | 837 | | | 832 | | | 828 | | | 823 | |
4.625% Senior Notes due April 2030 | | 1,500 | | | 1,493 | | | 1,500 | | | 1,492 | |
4.5% (€1 Billion) Senior Notes due November 2031 | | 1,116 | | | 1,109 | | | 1,105 | | | 1,098 | |
3.625% (€650 Million) Senior Notes due March 2032 | | 725 | | | 720 | | | — | | | — | |
4.125% (€1.25 Billion) Senior Notes due May 2033 | | 1,396 | | | 1,381 | | | 1,381 | | | 1,367 | |
4.75% (€1 Billion) Senior Notes due November 2034 | | 1,116 | | | 1,108 | | | 1,105 | | | 1,097 | |
3.75% (€850 Million) Senior Notes due March 2036 | | 949 | | | 934 | | | — | | | — | |
4.0% (€750 Million) Senior Notes due March 2044 | | 837 | | | 821 | | | — | | | — | |
Total outstanding debt | | $ | 16,304 | | | $ | 16,212 | | | $ | 14,249 | | | $ | 14,184 | |
Short-term debt | | $ | 2,422 | | | $ | 2,419 | | | $ | 1,967 | | | $ | 1,961 | |
Long-term debt | | $ | 13,882 | | | $ | 13,793 | | | $ | 12,282 | | | $ | 12,223 | |
(1) The carrying values differ from the outstanding principal amounts due to unamortized debt discounts and debt issuance costs of $92 million and $65 million as of September 30, 2024 and December 31, 2023, respectively.
(2) Included in "Short-term debt" in the Consolidated Balance Sheet as of December 31, 2023.
(3) Included in "Short-term debt" in the Unaudited Consolidated Balance Sheet as of September 30, 2024.
Fair Value of Debt
At September 30, 2024 and December 31, 2023, the estimated fair value of outstanding debt was approximately $17.8 billion and $15.2 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. The estimated fair value of the Company's debt in excess of the outstanding principal amount at September 30, 2024 and December 31, 2023 primarily relates to the conversion premium on the convertible senior notes due in May 2025.
Convertible Senior Notes
In April 2020, the Company issued $863 million aggregate principal amount of convertible senior notes due in May 2025 with an interest rate of 0.75% (the "May 2025 Notes"). The May 2025 Notes are convertible, subject to certain conditions, into the Company's common stock at a current conversion price of $1,873 per share. The May 2025 Notes are convertible, at the option of the holder, prior to November 1, 2024, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the May 2025 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the May 2025 Notes in an aggregate value ranging from $0 to $235 million depending upon the date of the transaction and the then current stock price of the Company. Starting on November 1, 2024, holders will have the right to convert all or any portion of the May 2025 Notes, regardless of the Company's stock price. The May 2025 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the May 2025 Notes for cash in certain circumstances. Interest on the May 2025 Notes is payable on May 1 and November 1 of each year. If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. At September 30, 2024 and December 31, 2023, the estimated fair value of the May 2025 Notes was $1.9 billion and $1.6 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Based on the closing sales prices of the Company's common stock for the prescribed measurement periods, the May 2025 Notes were convertible at the option of the holder starting the second calendar quarter of 2023 and continue to be convertible during the fourth calendar quarter of 2024.
Other Senior Notes
The following table summarizes the information related to other senior notes issued in March 2024:
| | | | | | | | | | | | | | | | |
Other Senior Notes | | | | Effective Interest Rate (1) | | Timing of Interest Payments |
3.5% Senior Notes due March 2029 | | | | 3.61% | | Annually in March |
3.625% Senior Notes due March 2032 | | | | 3.71% | | Annually in March |
3.75% Senior Notes due March 2036 | | | | 3.92% | | Annually in March |
4.0% Senior Notes due March 2044 | | | | 4.15% | | Annually in March |
(1) Represents the coupon interest rate adjusted for deferred debt issuance costs and premiums or discounts existing at the origination of the debt.
The proceeds from the issuance of these senior notes are available for general corporate purposes, including to repurchase shares of the Company's common stock and to redeem or repay outstanding indebtedness.
In September 2024, the Company paid $1.1 billion on the maturity of the Senior Notes due September 2024. In March 2023, the Company paid $500 million on the maturity of the Senior Notes due March 2023. In addition, the Company paid the applicable accrued and unpaid interest relating to each of these senior notes.
Interest expense related to other senior notes consists primarily of coupon interest expense of $137 million and $391 million for the three and nine months ended September 30, 2024, respectively, and $109 million and $301 million for the three and nine months ended September 30, 2023, respectively.
The Company designates certain portions of the aggregate principal value of the Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. For the nine months ended September 30, 2024 and 2023, the carrying value of the portion of Euro-denominated debt, designated as a net investment hedge, ranged from $2.3 billion to $5.3 billion and from $5.9 billion to $8.4 billion, respectively.
10. TREASURY STOCK AND DIVIDENDS
At December 31, 2023, the Company had a total remaining authorization of $13.7 billion related to a program authorized by the Company's Board of Directors ("the Board") in 2023 to repurchase up to $20 billion of the Company's common stock. At September 30, 2024, the Company had a total remaining authorization of $8.8 billion to repurchase its common stock. The Company expects to complete the share repurchases under the remaining authorization by the end of 2026, assuming no major downturn in the travel market. Additionally, the Board has given the Company the general authorization to repurchase shares of its common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation.
The following table summarizes the Company's stock repurchase activities during the three and nine months ended September 30, 2024 and 2023 (in millions, except for shares, which are reflected in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount |
Authorized stock repurchase programs | | 464 | | | $ | 1,767 | | | 867 | | | $ | 2,616 | | | 1,345 | | | $ | 4,978 | | | 2,856 | | | $ | 7,776 | |
General authorization for shares withheld on stock award vesting | | 2 | | | 9 | | | 3 | | | 9 | | | 94 | | | 330 | | | 70 | | | 185 | |
Total | | 466 | | $ | 1,776 | | | 870 | | $ | 2,625 | | | 1,439 | | $ | 5,308 | | | 2,926 | | $ | 7,961 | |
Stock repurchases of $20 million in September 2024 were settled in October 2024.
For the nine months ended September 30, 2024 and 2023, the Company remitted employee withholding taxes of $329 million and $185 million, respectively, to the tax authorities, which may differ from the aggregate cost of the shares withheld for taxes for each period due to the timing in remitting the taxes. The cash remitted to the tax authorities is included in financing activities in the Unaudited Consolidated Statements of Cash Flows.
The Company recorded an estimated excise tax liability for share repurchases of $141 million and $96 million as of September 30, 2024 and December 31, 2023, respectively. The excise tax liability is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets.
During the nine months ended September 30, 2024, the Company paid cash dividends of $885 million. In October 2024, the Board declared a cash dividend of $8.75 per share of common stock, payable on December 31, 2024 to stockholders of record as of the close of business on December 6, 2024.
11. INCOME TAXES
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