Booking Holdings Inc. (NASDAQ:BKNG)

The common-size income statement reveals significant shifts in the company’s revenue mix and expense structure over the five-year period. A notable trend is the increasing contribution of merchant revenues to overall revenues, while agency revenues demonstrate a consistent decline. Operating income and net income both show improvement over time, though with some fluctuations influenced by non-operating items.

Revenue Composition

Merchant revenues increased substantially from 33.73% of revenues in 2021 to 65.96% in 2025, indicating a strategic shift or increased success in this segment. Conversely, agency revenues decreased from 60.80% in 2021 to 29.60% in 2025. Advertising and other revenues remained relatively stable, consistently representing around 4-5% of total revenues.

Expense Management

Marketing expenses, while substantial, decreased as a percentage of revenues from -34.69% to -30.41%. Sales and other expenses also increased as a percentage of revenues, from -8.04% to -12.83%. Personnel expenses decreased from -21.12% to -12.64%, suggesting potential efficiencies in labor costs or a change in the company’s operational model. General and administrative expenses also decreased, though with a spike in 2023 before declining to -3.18% in 2025. Overall, operating expenses decreased from -77.22% to -67.21%.

Profitability

Operating income improved from 22.78% to 32.79% of revenues, demonstrating enhanced operational efficiency. Net income followed a similar trajectory, increasing from 10.63% to 20.08%. However, fluctuations in other income (expense), net, impacted the overall profitability picture, particularly due to significant swings in foreign currency transaction gains/losses and net gains/losses on equity securities.

Non-Operating Items

Interest expense increased as a percentage of revenues, from -3.05% to -6.01%, potentially reflecting increased debt levels or higher interest rates. Interest and dividend income also increased significantly, from 0.15% to 3.42%, partially offsetting the increased interest expense. The emergence of impairment charges and transformation costs in later years, at -1.70% and -0.76% respectively, suggests potential restructuring or asset write-downs. The change in fair value of the conversion option related to convertible senior notes also introduced volatility, particularly in 2024 and 2025.

Tax Rate

The income tax expense as a percentage of revenues remained relatively consistent, fluctuating between -2.74% and -5.94%. This suggests a stable effective tax rate throughout the period.

In summary, the company experienced a significant shift in its revenue mix towards merchant revenues, coupled with improvements in operating and net income margins. While expense management showed some positive trends, non-operating items introduced volatility. The increasing interest expense warrants monitoring, and the emergence of impairment and transformation costs suggests potential strategic adjustments.