Booking Holdings Inc. (NASDAQ:BKNG)

The income tax expense exhibited a generally increasing trend over the five-year period, although with some fluctuations. Current income tax expense consistently increased, while deferred income tax expense (benefit) demonstrated more volatility. The overall income tax expense reflects the combined effect of these two components.

Current Income Tax Expense

Current income tax expense increased steadily from US$745 million in 2021 to US$1,944 million in 2025. This represents a significant increase, suggesting a rise in taxable income over the period. The increase from 2022 to 2023 was particularly notable, growing from US$1,122 million to US$1,670 million. A slight decrease occurred between 2023 and 2024, followed by a further increase in 2025.

Deferred Income Tax Expense (Benefit)

Deferred income tax expense (benefit) showed considerable variation. It began as an expense of US$445 million in 2021, transitioned to a smaller expense in 2022 (US$257 million), and then increased as an expense in 2023 (US$478 million). A substantial shift occurred in 2024, resulting in a benefit of US$98 million. This trend reversed in 2025, returning to a significant expense of US$516 million. This volatility suggests changes in temporary differences between book and tax values of assets and liabilities.

Total Income Tax Expense

Total income tax expense increased from US$300 million in 2021 to US$1,428 million in 2025. The largest single-year increase occurred between 2021 and 2022, rising to US$865 million. While there was a moderate increase from 2022 to 2023 (US$865 million to US$1,192 million), the growth slowed between 2023 and 2024 (US$1,192 million to US$1,410 million), with a minimal increase from 2024 to 2025. The overall trend indicates a growing tax burden, largely driven by the increase in current income tax expense, despite the offsetting effects of the deferred tax component.

The interplay between current and deferred tax components significantly influences the overall income tax expense. The increasing current tax expense suggests improved profitability or changes in taxable income, while the fluctuating deferred tax expense indicates evolving temporary differences impacting future tax liabilities or assets.

The effective income tax rate exhibited fluctuations over the five-year period. While the U.S. federal statutory income tax rate remained constant at 21.00%, the effective income tax rate varied annually.

Effective Income Tax Rate - Overall Trend

The effective income tax rate began at 20.48% in 2021, increased to 22.05% in 2022, then decreased to 21.80% in 2023. A notable decline to 19.30% occurred in 2024, followed by a rise to 20.90% in 2025. This suggests the company’s tax burden is influenced by factors beyond the standard corporate rate.

The initial increase from 2021 to 2022 indicates a potential shift in the company’s earnings mix, possibly with a greater proportion of profits originating from jurisdictions with higher tax rates, or a reduction in tax benefits. The subsequent decrease in 2024 suggests the opposite – a change in earnings composition towards lower-tax jurisdictions or an increase in tax-reducing items.

Effective Income Tax Rate - Variance from Statutory Rate

Throughout the period, the effective income tax rate generally remained below the U.S. federal statutory rate, except for 2022. This implies the company benefits from tax credits, deductions, or a significant portion of its income is earned in lower-tax jurisdictions. The largest deviation from the statutory rate occurred in 2024, where the effective rate was 1.70 percentage points lower.

The return towards a rate closer to the statutory rate in 2025 suggests a potential lessening of these benefits or a change in the geographic distribution of earnings. Continued monitoring of the effective income tax rate is recommended to understand the underlying drivers of these fluctuations and their impact on overall profitability.

The composition of deferred tax assets and liabilities exhibits significant fluctuations over the five-year period. A notable shift occurs from net deferred tax liabilities to net deferred tax assets, indicating a changing tax profile for the company.

Net Operating Loss Carryforwards

Net operating loss carryforwards, both in the U.S. and internationally, generally increased from 2021 to 2023. The U.S. carryforward experienced a decrease in 2024 and 2025, while the international carryforward decreased in 2024 before increasing slightly in 2025. These carryforwards represent future tax benefits that can offset taxable income.

Deferred Tax Assets - Gross

Gross deferred tax assets demonstrate a consistent upward trend, increasing from US$536 million in 2021 to US$1,173 million in 2025. This growth is primarily driven by increases in components like accrued expenses, stock-based compensation, unrealized losses on investments, and tax credits.

Valuation Allowance

The valuation allowance against deferred tax assets remained substantial throughout the period, though it decreased slightly from US$120 million in 2022 to US$111 million in 2023 before increasing to US$126 million in 2025. This allowance reflects uncertainty regarding the realization of certain deferred tax assets.

Deferred Tax Liabilities

Deferred tax liabilities decreased substantially over the period, moving from negative US$850 million in 2021 to negative US$124 million in 2025. This reduction is largely attributable to the diminishing impact of unrealized gains on investments and the installment sale liability. The introduction of a significant liability related to Euro-denominated debt in 2025 partially offsets this decline.

Key Liability Components

Unrealized gains on investments were a significant contributor to deferred tax liabilities in 2021 and 2022, but their impact diminished significantly in subsequent years. The installment sale liability also decreased steadily, indicating a reduction in related deferred tax obligations. The emergence of a US$299 million liability related to Euro-denominated debt in 2025 represents a new factor influencing deferred tax liabilities.

Net Deferred Tax Position

The company transitioned from a net deferred tax liability position of negative US$351 million in 2021 to a net deferred tax asset position of US$923 million in 2025. This shift suggests improved tax efficiency or changes in the timing of taxable and deductible items. The most significant change occurred between 2022 and 2023.

Other Components

Accrued expenses and stock-based compensation consistently contributed to deferred tax assets. The impact of foreign currency translation adjustments fluctuated, while tax credits showed a steady increase. The embedded derivative liability and other miscellaneous items had a relatively minor impact on the overall deferred tax position.

Overall, the changes in deferred tax assets and liabilities reflect a dynamic tax landscape. The reduction in deferred tax liabilities, coupled with the growth in deferred tax assets, has resulted in a substantial improvement in the company’s net deferred tax position.

The deferred tax asset balance exhibited an overall increasing trend throughout the observed period. Conversely, deferred tax liabilities demonstrated a significant decline. These movements suggest evolving temporary differences between the book and tax bases of assets and liabilities, or changes in the realizability of deferred tax assets.

Deferred Tax Assets

The deferred tax asset balance increased from US$554 million in 2021 to US$613 million in 2022, representing a growth of approximately 10.6%. Further growth was observed in 2023, reaching US$675 million. A slight decrease to US$662 million occurred in 2024, before a substantial increase to US$940 million in 2025. This final increase indicates a potentially larger expectation of future taxable income to utilize these assets, or the recognition of new deductible temporary differences.

Deferred Tax Liabilities

The deferred tax liability balance decreased substantially from US$905 million in 2021 to US$685 million in 2022, a decline of approximately 24.3%. This downward trend continued in 2023, with the balance falling to US$258 million. A modest increase to US$289 million was noted in 2024, but the balance experienced a dramatic reduction in 2025, settling at US$17 million. This significant decrease suggests a reduction in taxable temporary differences, potentially due to reversals of prior taxable differences or changes in tax laws.

The combined effect of these trends is a narrowing of the net deferred tax liability position. In 2021, the net deferred tax liability was US$351 million (US$905 million - US$554 million). By 2025, this had transformed into a net deferred tax asset of US$923 million (US$940 million - US$17 million). This shift could indicate improved future profitability or a change in the composition of the company’s balance sheet regarding taxable and deductible temporary differences.

The financial information reveals a consistent pattern of adjustments related to income taxes, specifically involving the removal of deferred tax assets or liabilities, impacting reported financial statement figures between 2021 and 2025. These adjustments result in lower reported asset, liability, and equity values when compared to the adjusted figures. The impact on net income is also notable, with adjusted net income consistently lower than reported net income throughout the period.

Total Assets

Reported total assets increased from US$23,641 million in 2021 to US$29,264 million in 2025. However, the adjusted total assets show a smaller increase, moving from US$23,087 million to US$28,324 million over the same period. The difference between reported and adjusted assets widens over time, indicating a growing impact from the removal of deferred tax items. The largest absolute difference is observed in 2025, at US$940 million.

Total Liabilities

Reported total liabilities demonstrate a substantial increase, rising from US$17,463 million in 2021 to US$34,842 million in 2025. The adjusted total liabilities also increase, but to a lesser extent, from US$16,558 million to US$34,825 million. Similar to assets, the gap between reported and adjusted liabilities expands annually, peaking at US$917 million in 2025. This suggests the adjustments are reducing the reported magnitude of liabilities.

Stockholders’ Equity (Deficit)

Reported stockholders’ equity transitions from a positive value of US$6,178 million in 2021 to a deficit of US$5,578 million in 2025. The adjusted stockholders’ equity also shows a decline, moving from US$6,529 million to a deficit of US$6,501 million. The adjustments exacerbate the decline in equity, resulting in a larger deficit in the adjusted figures. The difference between reported and adjusted equity is relatively consistent, ranging from US$350 to US$972 million.

Net Income

Reported net income increases from US$1,165 million in 2021 to US$5,882 million in 2023, before decreasing slightly to US$5,404 million in 2025. The adjusted net income follows a similar trend, increasing from US$720 million to US$5,980 million in 2023, and then decreasing to US$4,888 million in 2025. The adjustments consistently reduce the reported net income, with the largest absolute difference observed in 2023 at US$478 million. The percentage reduction in net income due to the adjustment remains relatively stable, generally between 15% and 20%.

Overall, the consistent adjustments downward to assets, liabilities, equity, and net income suggest a significant impact from the removal of deferred tax items. The widening differences between reported and adjusted figures over the five-year period indicate that this impact is becoming increasingly material to the company’s financial position and performance.

The financial metrics demonstrate a consistent divergence between reported and adjusted values following the removal of deferred tax impacts. This adjustment generally results in lower profitability and return ratios, though the impact on asset efficiency metrics is less pronounced. A general upward trend is observed in most ratios between 2021 and 2024, followed by a slight decline in 2025 for several key indicators.

Profitability

Reported net profit margin exhibited substantial growth from 10.63% in 2021 to 24.78% in 2024, before decreasing to 20.08% in 2025. The adjusted net profit margin, while lower in absolute terms, mirrored this trend, increasing from 6.57% to 25.19% in 2024 and then declining to 18.16% in 2025. The difference between reported and adjusted net profit margin narrowed from 4.06 percentage points in 2021 to 5.11 percentage points in 2024, before widening to 1.92 percentage points in 2025. This suggests a diminishing impact from deferred taxes on reported profitability in the most recent year.

Asset Efficiency

Reported total asset turnover increased steadily from 0.46 in 2021 to 0.88 in 2023, then experienced a slight decrease to 0.86 in 2024, and a further increase to 0.92 in 2025. The adjusted total asset turnover followed a similar pattern, remaining consistently close to the reported value. The difference between the reported and adjusted ratios remained minimal throughout the period, indicating that deferred taxes have a limited effect on the assessment of asset utilization.

Financial Leverage

Reported financial leverage increased significantly from 3.83 in 2021 to 9.12 in 2022, with values missing for 2023, 2024, and 2025. The adjusted financial leverage mirrored this increase, moving from 3.54 to 8.67 over the same period. The difference between reported and adjusted leverage remained relatively stable, suggesting a consistent impact from deferred taxes on the company’s capital structure.

Returns

Reported ROE experienced dramatic growth from 18.86% in 2021 to 109.92% in 2022, with subsequent values unavailable. The adjusted ROE also increased, but to a lesser extent, from 11.03% to 98.14% in 2022. Similar to ROE, reported ROA increased from 4.93% in 2021 to 17.62% in 2023, peaking at 21.23% in 2024 and decreasing to 18.47% in 2025. The adjusted ROA followed a similar trajectory, increasing from 3.12% to 16.10% in 2023, peaking at 22.11% in 2024, and decreasing to 17.26% in 2025. The adjustments consistently lowered the ROE and ROA values, highlighting the influence of deferred taxes on reported returns.

In summary, the removal of deferred tax effects results in a more conservative assessment of profitability and returns. While asset efficiency appears largely unaffected, the adjustments significantly reduce reported ROE and ROA. The observed trends suggest a period of strong growth between 2021 and 2024, followed by a slight moderation in performance in 2025.

The period under review demonstrates significant fluctuations in both reported and adjusted net income, consequently impacting associated profit margins. Reported net income increased substantially from 2021 to 2024, before experiencing a decline in 2025. Adjusted net income mirrored this trend, though the magnitude of the increase and decrease differed.

Reported Net Profit Margin

The reported net profit margin exhibited a consistent upward trend from 10.63% in 2021 to a peak of 24.78% in 2024. This indicates increasing profitability relative to revenue during this period. However, the margin decreased to 20.08% in 2025, suggesting a reduction in profitability despite remaining at a relatively high level.

Adjusted Net Profit Margin

The adjusted net profit margin showed a more volatile pattern. It began at 6.57% in 2021 and increased to 16.39% in 2022. Further growth was observed, reaching 17.84% in 2023. A substantial increase occurred in 2024, with the margin reaching 25.19%. Similar to the reported margin, a decline was noted in 2025, with the adjusted net profit margin falling to 18.16%.

The divergence between reported and adjusted net income, and their respective margins, suggests the presence of significant non-recurring items or adjustments impacting the reported results. The adjusted net profit margin generally remained lower than the reported net profit margin throughout the period, indicating that these adjustments consistently reduced the overall profitability picture. The larger increase in the adjusted net profit margin in 2024, compared to previous years, warrants further investigation into the nature of the adjustments made during that period.

The decline in both reported and adjusted net profit margins in 2025, despite continued high levels of net income, suggests potential increases in operating costs or a shift in revenue mix. Further analysis of the underlying revenue and expense components is recommended to understand the drivers behind this recent trend.

The reported and adjusted total asset turnover ratios demonstrate an increasing trend over the observed period, with some fluctuation. Both metrics generally indicate improving efficiency in asset utilization. A comparison of the reported and adjusted figures reveals a consistently small difference, suggesting that the adjustments to total assets do not materially alter the overall interpretation of asset turnover performance.

Reported Total Asset Turnover

The reported total asset turnover ratio increased from 0.46 in 2021 to 0.67 in 2022, representing a substantial improvement in the generation of revenue per dollar of assets. This upward momentum continued into 2023, reaching 0.88. A slight decrease to 0.86 was noted in 2024, followed by a further increase to 0.92 in 2025, indicating a sustained level of efficient asset utilization.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio mirrors the trend observed in the reported ratio. It rose from 0.47 in 2021 to 0.69 in 2022, then to 0.90 in 2023. Similar to the reported ratio, a minor decline to 0.88 occurred in 2024, before concluding at 0.95 in 2025. The consistency between the reported and adjusted ratios suggests that the asset adjustments are not significantly impacting the overall assessment of asset efficiency.

Asset Base Trends

Reported total assets increased from US$23,641 million in 2021 to US$29,264 million in 2025, with a dip observed in 2023. Adjusted total assets followed a similar pattern, moving from US$23,087 million in 2021 to US$28,324 million in 2025, also with a decrease in 2023. The increase in asset base, coupled with the rising turnover ratios, suggests that the company is effectively deploying additional assets to generate revenue.

Overall, the observed trends indicate a positive development in asset utilization efficiency. The slight fluctuations in 2024 do not appear to disrupt the overarching pattern of improvement. The close alignment between reported and adjusted turnover ratios provides confidence in the reliability of the assessment.

An examination of the financial information reveals notable shifts in both asset and equity positions between 2021 and 2025. These shifts subsequently impact calculated financial leverage ratios. Reported total assets initially increased from 2021 to 2022, then decreased in 2023 before recovering and continuing to grow through 2025. Adjusted total assets follow a similar pattern, though the magnitude of the decrease in 2023 is less pronounced.

Stockholders’ equity experienced a significant decline throughout the period, transitioning from a positive value in 2021 to a substantial deficit by 2025. This trend is mirrored in the adjusted stockholders’ equity, which also demonstrates a worsening deficit over the same timeframe. The rate of decline appears to accelerate in later years.

Reported Financial Leverage

Reported financial leverage increased substantially from 3.83 in 2021 to 9.12 in 2022. Values for 2023, 2024, and 2025 are not presented. This initial increase correlates with the rise in total assets and the concurrent decrease in stockholders’ equity.

Adjusted Financial Leverage

Adjusted financial leverage exhibits a similar trend to the reported ratio, increasing from 3.54 in 2021 to 8.67 in 2022. Like the reported ratio, values are unavailable for 2023, 2024, and 2025. The adjusted leverage ratio consistently remains lower than the reported leverage ratio across the available years, suggesting that the adjustments made to total assets and equity have a moderating effect on the calculated leverage.

The consistent decline in stockholders’ equity, coupled with the growth in total assets, is the primary driver of the increasing financial leverage observed between 2021 and 2022. The absence of leverage ratio values for the later years prevents a complete assessment of the trend, but the continued deterioration of equity suggests that leverage likely continued to increase.

The difference between reported and adjusted figures indicates that the adjustments to assets and equity are reducing the calculated leverage. Further investigation into the nature of these adjustments would be necessary to fully understand their impact on the company’s financial risk profile.

Reported net income demonstrated a substantial increase from 2021 to 2023, peaking at US$4,289 million before continuing to rise to US$5,882 million in 2024, and then decreasing slightly to US$5,404 million in 2025. Adjusted net income followed a similar trajectory, though at lower levels, increasing from US$720 million in 2021 to US$3,811 million in 2023, then US$5,980 million in 2024, and finally decreasing to US$4,888 million in 2025. Stockholders’ equity exhibited a significant shift from positive values in 2021 and 2022 to negative values beginning in 2023, with the deficit widening each subsequent year. Both reported and adjusted stockholders’ equity followed this pattern of decline into negative territory.

Reported Return on Equity (ROE)

Reported ROE increased dramatically from 18.86% in 2021 to 109.92% in 2022. Values for 2023, 2024, and 2025 are not presented. The substantial increase in 2022 appears to be driven by the increase in reported net income combined with a decrease in reported stockholders’ equity.

Adjusted Return on Equity (ROE)

Adjusted ROE also increased significantly from 11.03% in 2021 to 98.14% in 2022. Values for 2023, 2024, and 2025 are not presented. Similar to the reported ROE, this increase is attributable to the growth in adjusted net income and the decline in adjusted stockholders’ equity. The difference between reported and adjusted ROE narrowed in both 2021 and 2022.

The consistent decline in stockholders’ equity, both reported and adjusted, is a notable trend. While net income increased substantially over the period, the offsetting decrease in equity resulted in increasingly negative equity positions. The absence of ROE figures for 2023, 2024, and 2025 hinders a complete assessment of the return on equity trend, but the negative equity positions suggest potential limitations in calculating meaningful ROE values for those years.

Reported net income demonstrates a generally increasing trend over the five-year period, rising from US$1,165 million in 2021 to US$5,882 million in 2024 before decreasing slightly to US$5,404 million in 2025. Adjusted net income follows a similar pattern, increasing from US$720 million in 2021 to US$5,980 million in 2024, and then decreasing to US$4,888 million in 2025. Reported total assets increased from US$23,641 million in 2021 to US$29,264 million in 2025, with a slight decrease observed in 2023. Adjusted total assets show a similar trajectory, increasing from US$23,087 million in 2021 to US$28,324 million in 2025, also with a decrease in 2023.

Reported Return on Assets (ROA)

Reported ROA exhibits a consistent upward trend from 4.93% in 2021 to a peak of 21.23% in 2024. A slight decrease is then observed in 2025, with ROA falling to 18.47%. This suggests increasing profitability relative to total assets over most of the period, followed by a modest decline in the most recent year.

Adjusted Return on Assets (ROA)

Adjusted ROA mirrors the trend of the reported ROA, increasing from 3.12% in 2021 to 22.11% in 2024, before decreasing to 17.26% in 2025. The magnitude of the increase is substantial, indicating a significant improvement in profitability when considering adjustments to net income and total assets. The decrease in 2025, while present, remains at a relatively high level compared to earlier years.

The difference between reported and adjusted ROA widens over time, suggesting that the adjustments made to net income and total assets have an increasingly significant impact on the overall profitability assessment. The decline in both reported and adjusted ROA in 2025 warrants further investigation to determine the underlying causes, such as changes in operational efficiency, asset utilization, or the impact of specific adjustments made to net income and total assets.