Booking Holdings Inc.

16. COMMITMENTS AND CONTINGENCIES

Competition and Consumer Protection Reviews

The Company is and has been the subject of investigations or inquiries by national competition authorities and other authorities regarding competition law matters, consumer protection issues, and other areas, such as with respect to the scope of its contractual parity provisions with accommodation providers, pricing tools or programs offered to partners, or the ranking criteria used in displaying results to consumers, and from time to time has made commitments regarding future business practices or activities. For example, the Company has previously made voluntary commitments related to showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings, and adjusting how discounts and statements concerning popularity or availability are shown. Some investigations have resulted in fines and the Company could incur additional fines and/or be restricted in certain of its business practices in the future. To the extent that investigations or inquiries result in additional commitments, fines, damages, or other remedies or changes to its business, the Company's business, financial condition, and results of operations could be harmed.

In 2024, the Comisión Nacional de los Mercados y la Competencia in Spain (the "CNMC") imposed a fine and restricted certain of Booking.com's business practices such as those relating to contractual parity provisions and the ranking criteria that Booking.com can use to determine how to rank hotels in its display to customers. Booking.com does not agree with the rationale stated in the decision and the restrictions imposed, and has filed an appeal. In February 2025, the Spanish National Court ruled that the CNMC decision, including payment of the fine, is suspended pending the outcome of the appeal. The CNMC and certain third parties have sought to clarify the scope of the court's ruling, including its suspensory effect. Although the Company disagrees with the rationale stated in the CNMC decision, it recorded a liability for this matter with $485 million included in "Other long-term liabilities" in the Consolidated Balance Sheet as of December 31, 2025 and $428 million included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet as of December 31, 2024. The Company accrued a loss of $530 million during the year ended December 31, 2023 (reflecting the initial fine amount in the CNMC's draft decision). During the year ended December 31, 2024, to align with the CNMC's reduced final fine, the Company recorded a decrease of $78 million in its accrual. The initial accrual and subsequent decrease are reflected in "General and administrative" expenses in the Consolidated Statements of Operations.

In 2017, the Swiss Price Surveillance Office (the "Swiss PSO") opened an investigation into the level of commissions of Booking.com in Switzerland. In 2025, Booking.com received a negative decision ordering a reduction of its average commission level for hotels located in Switzerland, which Booking.com disagrees with and has appealed. The Swiss PSO order is suspended pending the outcome of the appeal, and the ordered reduction in commissions would only be effective for athree-year period after a negative final judgment. The French Directorate General for Competition Policy, Consumer Affairs, and Fraud Control ("DGCCRF") opened separate investigations into Booking.com and Agoda relating to certain business practices. Booking.com has taken the steps to comply with the DGCCRF's final order to change certain of its business practices. Agoda received a draft decision, which it has responded to, and its discussions with the DGCCRF are ongoing. In June 2025, the Hellenic Competition Commission (in Greece) opened a formal investigation into whether certain practices by Booking.com may produce adverse effects for hotels and other online travel agencies and discussions with that Commission are ongoing. In August 2025, the Hungarian Competition Authority opened an investigation into whether certain practices by Booking.com may mislead consumers and Booking.com continues to respond to the Authority's requests. If any of the investigations were to find that the Company's practices violated the respective laws, or as part of a negotiated resolution, the Company may face significant fines, restrictions on its business practices, follow-on investigations or litigation, and/or be required to make other commitments.

The Company is unable to predict how any current or future investigations or litigation may be resolved or the long-term impact of any such resolution on its business. For example, competition and consumer-law-related investigations, legislation, judgments, or issues have in the past resulted in and could in the future result in private litigation. The Company is currently involved in such litigation and/or aware of such potential litigation. For example, German hotels have also filed parity-related claims against Booking.com and that litigation is ongoing. Additionally, various hotel associations have promoted potential class actions on behalf of European hotels against Booking.com relating to the historical use of contractual parity provisions and law firms, including in Spain, France, and the UK, are promoting similar potential claims in those jurisdictions. In the Netherlands, two Dutch foundations recently filed such claims on behalf of European hotels and consumers, respectively, with the consumer claim further alleging that Booking.com and Agoda employed misleading practices. The Company has defended against and intends to continue to defend itself against such claims. However, class action litigation can be time-consuming, costly, and unpredictable, regardless of merit, and there may be evolving jurisprudence and less experience with such matters in certain of the markets where the Company is or may be involved in such litigation, making outcomes less certain and harder to forecast. If the Company were to be found liable, it could result in, among other things, payment of damages, commitments to change certain business practices, or reputational damage, any of which could harm the Company's business, results of operations, brands, or competitive position.

Tax Matters

Between December 2018 and August 2021, the Italian tax authorities issued assessments on Booking.com's Italian subsidiary totaling approximately $295 million for the tax years 2013 through 2018, asserting that its transfer pricing policies were inadequate. The Company believes Booking.com has been and continues to be in compliance with Italian tax law. In September 2020, the Italian tax authorities approved the opening of a mutual agreement procedure ("MAP") between Italy and the Netherlands for the 2013 tax year and the Italian tax authorities subsequently approved the inclusion of the tax years 2014 through 2018 in the MAP. As of December 31, 2025, the Company made prepayments of $87 million to the Italian tax authorities to forestall collection enforcement pending the appeal phase of the case. In April 2025, the Company was notified of a MAP resolution for the 2013 through 2018 tax years that resulted in additional Italian income taxes of $23 million and the Company formally accepted the results of the MAP in May 2025. This amount was reflected in unrecognized tax benefits as of December 31, 2024. The Company is entitled to a refund of the remaining portion of its tax prepayment. The tax resulting from the MAP is partially offset by a tax benefit of $10 million relating to Netherlands income tax.

In June 2024, the Guardia di Finanza ("GdF") of Rome issued a tax audit report to Booking.com, proposing a tax assessment to the Italian Tax Authorities ("ITA"). The GdF alleged that a 2017 law (the "STR Law") obliged Booking.com to withhold and remit 21% of the total transaction value for the income tax liabilities of certain short-term rental partners in Italy for the period under audit. While the Company believes that Booking.com has been and continues to be in compliance with Italian tax laws, in November 2024, the Company entered into a settlement agreement with the ITA without admitting liability and paid $332 million to resolve the matter. The settlement is reflected in "General and administrative" expenses in the Consolidated Statement of Operations for the year ended December 31, 2024.

The Company is also involved in other tax-related audits, investigations, and litigation relating to income taxes, value-added taxes, travel transaction taxes (e.g., hotel occupancy taxes), withholding taxes, and other taxes.

Any taxes or assessments in excess of the Company's tax provisions, including the resolution of any tax proceedings or litigation, could have a material adverse impact on the Company's results of operations, cash flows, and financial condition. In some cases, assessments may be significantly in excess of the Company's tax provisions, particularly in instances where the Company does not agree with the tax authority's assessment of how the tax laws may apply to the Company's business.

Other Matters

Beginning in 2014, Booking.com B.V. received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) ("BPF") claiming that it was required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme it historically participated in. BPF instituted legal proceedings against Booking.com B.V. (which were continued by BPF's legal successor, Pension Fund PGB ("PGB")) and, in January 2024, a Dutch Court of Appeal ruled that Booking.com B.V. is required to participate in the mandatory pension scheme of the PGB with retroactive effect to 1999. Although the Company disagreed with and appealed the decision, it accrued losses of $276 million and $77 million for the years ended December 31, 2023 and 2024, respectively, included in "Personnel" expenses in the Consolidated Statements of Operations. The corresponding liability is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet as of December 31, 2024. After a final ruling by the Dutch Supreme Court in March 2025, Booking.com B.V. changed its pension scheme going forward and with retroactive effect to 1999, in line with the outcome of the litigation and arrangement with PGB. During the year ended December 31, 2025, the Company paid $136 million to settle the pension liability as of December 31, 2024, reflecting the arrangement with PGB that became effective during the period. The impact of the reduction in the pension liability from December 31, 2024 of $176 million is recorded in "Personnel" expenses in the Consolidated Statement of Operations for the year ended December 31, 2025. There may be additional claims with respect to the eligibility of certain employees in scope of the scheme, which may result in additional costs.

From time to time, the Company notifies the competent data protection authority, such as the Dutch data protection authority in accordance with its obligations under the General Data Protection Regulation, of certain data security incidents. Should, for example, the Dutch data protection authority decide these incidents were the result of inadequate technical and organizational security measures or practices, it may impose a fine or require other commitments.

The Company has been, is currently, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. Such claims could result in the expenditure of significant financial and managerial resources, divert management's attention, and adversely affect the Company's business, reputation, results of operations, and cash flows.

In February 2026, the Company entered into favorable settlement agreements to resolve litigation matters in which it was a plaintiff, for which it expects to receive a benefit of approximately $90 million in the first quarter of 2026, upon completion of various conditions.

The Company accrues for certain other legal contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated. Such accrued amounts are not material to the Company's balance sheets and provisions recorded have not been material to the Company's results of operations or cash flows.

Other Contractual Obligations and Contingencies

The Company had $874 million and $650 million of standby letters of credit and bank guarantees issued on its behalf as of December 31, 2025 and 2024, respectively, including those issued under the revolving credit facility (see Note 12). These were obtained primarily in connection with certain of the litigation matters disclosed above and for regulatory purposes.

Booking.com facilitates the provision of partner liability insurance underwritten by third-party insurance providers, to protect certain alternative accommodation partners against liability claims and lawsuits for bodily injury or property damage that occur during a stay. While this partner liability insurance program, if applicable to the claim, provides coverage up to $1 million per occurrence (subject to limitations and exclusions), the Company retains certain potential financial risks and could be required to pay amounts in excess of policy limit.

17. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

See Note 1 for a description of the Company's business. The Company's portfolio of brands is organized into five operating segments. The Company determined its operating segments based on how its chief operating decision maker ("CODM"), who is the Chief Executive Officer and President, manages the business, makes operating decisions, and evaluates operating performance. The operating segments are aggregated intoone reportable segment based on the similarity in economic characteristics, other qualitative factors, and the objectives and principles of ASC 280, Segment Reporting.

The CODM reviews revenues and an adjusted measure of earnings before interest, taxes, depreciation, and amortization less additions to property and equipment ("Adjusted EBITDA less Capex") for each operating segment. The following table presents information for the Company's reportable segment. Other segment items include operating expenses such as general and administrative and information technology. See Note 2 for additional information on these expenses.

Decisions to allocate resources to each operating segment are made predominantly through the budgeting and forecasting process. The CODM reviews budget-to-actual variances for revenues and Adjusted EBITDA less Capex to assess performance of the operating segments. The information is also used as a basis for determining compensation for certain employees. Estimates and judgments are made in allocating certain revenues and Adjusted EBITDA less Capex to operating segments due to the integrated nature of the operating segments in the underlying transactions. The allocation process is consistent with the manner in which the CODM assesses the performance of the operating segments. Information on segment assets is not presented as depreciation and amortization is not included in measuring Adjusted EBITDA less Capex.

The following table presents the reconciliation of the Company's segment Adjusted EBITDA less Capex to Income before income taxes:

(1)See Note 16 for additional information.

(2)See Note 21 for additional information.

(3)See Consolidated Statements of Operations.

(4)See Note 11 for additional information.

(5)See Note 20 for additional information.

(6)See Note 18 for additional information.

(7)See Note 12 for additional information.

(8)Primarily consists of the expenses of corporate headquarters and certain other functional departments.

Stock-based compensation included in the determination of segment Adjusted EBITDA less Capex was $553 million, $522 million, and $447 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Geographic Information

The Company's revenues from its businesses outside of the U.S. consist of the results of Booking.com and Agoda 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 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 for the years ended December 31, 2025, 2024, and 2023 is as follows:

(1)Includes $21.7 billion, $18.6 billion, and $17.0 billion for the years ended December 31, 2025, 2024, and 2023, respectively, attributed to an entity domiciled in the Netherlands.

The following table presents information on the Company's property and equipment (excluding capitalized software) and operating lease assets based on location of the assets at December 31, 2025 and 2024:

18. OTHER INCOME (EXPENSE), NET

The components of other income (expense), net included the following:

(1)Foreign currency transaction (losses) gains include losses of $1.4 billion, gains of $526 million, and losses of $163 million for the years ended December 31, 2025, 2024, and 2023, respectively, related to Euro-denominated debt and accrued interest that were not designated as net investment hedges (see Note 12). Foreign currency transaction (losses) gains also include losses related to derivative contracts (see Note 6).

(2)See Note 12 for additional information.

(3)See Note 5 for additional information.

19. SUPPLEMENTAL CASH FLOW INFORMATION

As of December 31, 2025 and 2024, cash and cash equivalents reported in the Consolidated Balance Sheets differ from the amounts of total cash and cash equivalents and restricted cash and cash equivalents as shown in the Consolidated Statements of Cash Flows due to restricted cash and cash equivalents of $66 million and $29 million, respectively, which are included in "Other current assets" in the Consolidated Balance Sheets. As of December 31, 2025, the restricted cash balances are primarily related to certain cash payments received from travelers on behalf of travel service providers.

Noncash investing activity related to additions to property and equipment, including stock-based compensation and accrued liabilities, was $60 million, $55 million, and $50 million for the years ended December 31, 2025, 2024, and 2023, respectively. See Note 13 for additional information on noncash financing activity related to the excise tax on share repurchases.

During the years ended December 31, 2025, 2024, and 2023, the Company made interest payments of $1.1 billion, $953 million, and $842 million, respectively. See Note 15 for information on cash paid for income taxes.

20. TRANSFORMATION COSTS

In the fourth quarter of 2024, the Company began the implementation of the organizational changes to improve operating expense efficiency, increase organizational agility, free up resources that can be reinvested into further improving its offering to travelers and partners, and better position the Company for the long term (the "Transformation Program"). The Company currently expects that the restructuring costs and accelerated investments related to the Transformation Program will largely be incurred by the end of 2026 and anticipates these costs to primarily relate to expected and ongoing workforce reductions, technology investments, and professional fees.

Transformation Program related costs are recorded in "Transformation costs" in the Consolidated Statements of Operations. For the year ended December 31, 2025, Transformation costs include employee termination benefits of $117 million and professional fees of $82 million. For the year ended December 31, 2024, Transformation costs primarily consisted of professional fees.

21. OTHER

Terminated Acquisition

In November 2021, the Company entered into an agreement to acquire global flight booking provider Etraveli Group. The completion of the acquisition was subject to certain closing conditions, including regulatory approvals. In September 2023, the European Commission announced its decision to prohibit the acquisition and consequently a termination fee of $90 million was paid by the Company in October 2023 and is recorded in "General and administrative" expenses in the Consolidated Statement of Operations for the year ended December 31, 2023.

Benefit Plans

The Company maintains a defined contribution 401(k) savings plan covering certain U.S. employees and participates in certain defined contribution plans outside of the U.S. for which it provides contributions for eligible employees. The Company's expenses related to the defined contribution plans during the years ended December 31, 2025, 2024, and 2023 were $80 million, $59 million, and $55 million, respectively. In addition, see Note 16 for information related to the Netherlands pension fund matter, including changes in accruals.

Accrued expenses and other current liabilities

Included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets at December 31, 2025 and 2024 are accrued liabilities of $753 million and $597 million, respectively, related to marketing expenses and $775 million and $611 million, respectively, related to personnel expenses. In addition, "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet at December 31, 2024 include accruals related to the Netherlands pension fund matter (see Note 16).

CONDENSED BALANCE SHEETS

See Notes to Condensed Financial Statements.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

See Notes to Condensed Financial Statements

CONDENSED STATEMENTS OF CASH FLOWS

See Notes to Condensed Financial Statements.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

These condensed parent company-only financial statements of Booking Holdings Inc. (the "Parent") are prepared on a "parent company-only" basis and have been derived from and should be read in conjunction with the consolidated financial statements and related notes of Booking Holdings Inc. and subsidiaries included in Part IV, Item 15 of this Annual Report on Form 10-K (the "Consolidated Financial Statements"). Under a parent company-only presentation, investments in the parent's subsidiaries are accounted for under the equity method of accounting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

2. DEBT

See Note 12 to the Consolidated Financial Statements for additional information on the Parent's revolving credit facility and outstanding debt.

3. DIVIDENDS FROM SUBSIDIARIES

Cash dividends paid to the Parent by the subsidiaries were $7.9 billion, $7.2 billion, and $7.3 billion for the years ended December 31, 2025, 2024, and 2023, respectively, and are classified within "Net cash provided by operating activities" or "Net cash provided by (used in) investing activities," as appropriate, in the Condensed Statements of Cash Flows.

Noncash dividends to the Parent from subsidiaries were $1.6 billion for the year ended December 31, 2025.

4. GUARANTEES

The Parent had $809 million and $721 million of guarantees issued on behalf of the Parent's subsidiaries as of December 31, 2025 and 2024, respectively, which are primarily related to arrangements with payment processors and networks.