BKNG - Booking Holdings Inc (BKNG) CEO David Goulden presents at Nasdaq 49th Investor Conference Call (Transcript)
2023-12-06 12:21:05 ET
Booking Holdings Inc (BKNG)
Nasdaq 49th Investor Conference Call
December 6, 2023 8:00 AM ET
Company Participants
David Goulden - CFO
Conference Call Participants
Brian Nowak - Morgan Stanley
Presentation
Brian Nowak
All right. Thank you everyone for joining us. From day two of the 2023 NASDAQ Investor Conference. We hope it's been a productive couple of days. We're very thrilled to have David Goulden with us, the CFO of Booking Holdings.
Before we get started, David, let me read the all-important disclosures.
David Goulden
Thank you. Please do that.
Brian Nowak
Please note that all important disclosures, including personal Holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/ researchdisclosures.
Some of the statements made today by Booking Holdings may be considered forward-looking. These statements include a number of risks and uncertainties that could cause actual results to differ material, any forward-looking statements made today by the company are based on assumptions as of today and Booking undertakes no obligation to update them.
Please refer to Booking Holdings’ Form 10-K or Form 10-Q, for a discussion of the risk factors that may impact actual results. How are you doing?
David Goulden
Good. You?
Brian Nowak
Good.
David Goulden
Great to be here.
Brian Nowak
Thanks for joining us again.
David Goulden
Very welcome.
Question-and-Answer Session
Operator
[Operator Instructions]
Brian Nowak
Our annual catch up on what is going on in the state of travel and the year ahead in travel. So maybe let's start with that. So the state of the overall travel market, and sort of you made some comments at earnings about sort of the demand resiliency and demand trends around the consumer.
What is sort of the latest commentary you're making about sort of the state of travel demand you're seeing through Booking?
David Goulden
Yes. So what we're seeing is a very healthy consumer profile right now. We look at a couple of things to understand what's happening. Obviously, the growth rate, that's kind of obvious, and the growth rates are strong. But then we look into the future and we see what are the early indicators. And typically what happens is if things do slowdown, which is kind of what's on the back of people's mind, it manifests itself in two ways. People will either trade down from a higher star to lower star property, all they'll shorten their length of stay. We're not seeing that in any of our markets. And moreover, we're actually seeing the length of stay increase, so people, sorry, the booking window increase.
So people are actually wanting to book more further ahead than they were before. It usually would be a sign of confidence. So we see the consumer demand strong. We see, obviously, if you look at the data. We see a movement towards services rather than goods. And also bear in mind that if the average traveler, if there is such a thing on a platform that's spending a few thousand euros or dollars a year on the family vacation, maybe once or twice or three times or more, they're in the upper category from an income point of view. So the balance sheets are a little stronger than the average as well. So I think that bodes positively. But we see a strong outlook. And because of the longer booking window, we actually have more visibility and more on the books in 2024 than we've had either this time, looking into 2023 or in 2019 and looking into 2020.
Brian Nowak
Got it. Okay. I want to sort of get into the regions a little bit and ask about the US. But may be before I do the US discussion, could we talk ADRs a little bit? ADRs over the course of this year, and it is macro demand linked to held in better than we thought, certainly, and a lot of different channels. So maybe to sort of talk to us about what you're seeing from an ADR perspective and how do you think about sort of reasonable ranges of outcomes for ADRs looking into 2024?
David Goulden
Yes. So obviously, ADRs have acted a little differently in this recovery than they have in prior recoveries. Typically, it's a lagging indicator. Demand comes back first, then ADRs catch up. This time around, ADRs accelerated faster than demand did, right. So ADRs have been elevated for a couple of years now. And obviously, we're only getting back to probably the total levels of travel from a volume point of view that we were in 2019. So that's a little unusual. A lot of that was driven by inflation repressure, we believe, talking to the hoteliers and property owners. They were very much in the epicenter of multiple factors around inflation whether it be labor costs or utilities, food, beverage, all those things were high cost drivers. What we're seeing right now is we're seeing a reduction in the rate of increase.
Brian Nowak
Right.
David Goulden
So it's a bit like inflation is coming down, but they're still going up, but the reduction in the rate of increase is there. And we believe that to this quarter, fourth quarter, we guide to probably about a 2% year-on-year increase in ADRs, it's lower than, it has been a more in line with inflation. We have a couple of points of geo mix against us on there because Asia's still recovering faster, so maybe four percentage points increase on a like region basis, but that's a more moderate rate. So I think going forward, that seems to be the way of thinking about ADRs into next year, assuming that there's not a big downturn. I think ADRs will be steady to increasing a little bit, probably more in line with inflation and not doing what they've been doing for the last couple of years in terms of the rate of increase.
Brian Nowak
Got it. And is there any difference in the ADR trends in your traditional hotel business versus your alternative accommodation properties?
David Goulden
Nothing appreciable, no. I mean, they're both 30% versus 2019. It seems like a big number and it is, but bear in mind, we're talking four years with a compounding impact, right? So on that basis, it doesn't look quite so crazy, but no, I've seen nothing to call out in terms of differences.
Brian Nowak
Okay. Let's talk about the US a little bit. You've made some very good progress in the US in taking more share of the overall leisure travel business, legal travel demand, post COVID. But it seems like the business has decelerated a bit based on your 3Q commentary and sort of extrapolation into 4Q, et cetera. I guess the question is, as we look into ‘24, what strategic initiatives do you have in place to sort of reaccelerate the US growth to sort of start taking share once again?
David Goulden
Yes, I think you have to separate the market from us in both these cases. I think that the US growth rate, the market growth rate has struggled a little bit this year compared to other regions because, if you remember, US had a significant rebounding growth in 2022.
Brian Nowak
Right.
David Goulden
It was way ahead of the rest of the world. So I think year-on-year there's been some digestion comparisons in the US. I think other markets in the world have recovered on a more linear basis, so maybe we'll be less of a factor there. When we look at how we're doing in our core segment in the US, which is really the business to consumer ledger segment, right? So take our business to business take out of business travel, take out group travel, et cetera. I think we've been doing well there growing faster in the market, although not gaining quite as much share as we gained in the last couple years, but still gaining share. So the path forward is not that was different the path we've been taking. It's the kind of same playbook we've worked in other markets about having a better product enabling people to find the right property, the right price, having great customer service.
That's the playbook. And then of course adding to that with the other add ones of the business, providing payments, providing flights, providing ground transportation, doing great marketing, increasing our brand awareness, building out the alternative profile, which is obviously somewhere we have a bit more lifting to do in the US than elsewhere, and ultimately pulling that altogether in the Connected Trip. I mean, that is what our playbook is, and that's how we'll continue to gain in the US.
Brian Nowak
Okay. Now there's some other data as well that sort of speaks to how some of the cross border demand trends have stayed strong, than even domestic US trends. That's part of it probably too impacting us.
David Goulden
Yes, I think people in the US who've been more exposed to domestic travel really had a tough year this year, because in the US, the big rebound we saw in growth last year was a lot of domestic travel, and then a lot of that has moved to international. Now of course, we see both sides of that.
Brian Nowak
Yes.
David Goulden
But if you've been a travel player in more, if you'll look at some of those small regional airlines that have been more exposed to domestic travel. They've had a much harder time, for example, than international airlines and the same would apply to the OTA as well.
Brian Nowak
Yes, that makes sense. Okay, so let's talk about sort of the guide posts and targets you've sort of laid out for the post COVID growth algorithm. I know in the past we sort of talked about how you think about growth 2019 versus post COVID, like how fast you're going to grow versus 2019. Walk us through again sort of your latest the way to think about KPI, bookings, revenue, EPS growth. However you think about it, going forward versus pre-COVID, and what are the initiatives to kind of drive those numbers?
David Goulden
Yes, great, Brian, so that's very helpful. So the KPI, if you look at where we were pre-COVID, let's call it 2019, right, the last clean fall of the year before COVID, and look at what the growth rates were in the business, I point you to kind of three key numbers, and this is in constant currency to make it comparable with what you might look at going forward. Bookings revenue growth going at 8%, earnings per share were growing at 15%. And our model going forward is based upon all the things we've done to invest and build upon the capabilities in the business which I'll come back to in just a second. Our model is, or the algo is, that when we get to normal market growth rates, again, whatever they are, let's call it ‘24, ‘25, let's call it ‘24, that's where the market growth rate will turn back to a more normal rate.
We believe we can grow faster than we did in those, against each of those metrics that we did in 2019. Even though the business isn't, will be that much bigger. So you may say, well, that is a defining law of physics a little bit, but it's not because we've built a lot of capabilities that didn't exist in the business. So if you go back to the business in 2019, and obviously most of our business is booking.com or was booking.com, so I'll focus there. We had got two majors, if you like, pillars to the stool that supported that growth. We had great accommodations business, very broad, and with scale out, scale advantage over anybody else globally, and we had great performance marketing. Those really were the two foundations that business was grown upon. And we've kept those, we've enhanced them, but we added a whole lot to it. So in the accommodation space, now we have a much bigger alternative offering to complement our core hotel offering. Alternatives are a third of our total business. Performance marketing is still a strong asset. We've built out a payments platform, which now accounts for over half of our TCV bookings. On the back of that payments platform, we've built a second marketing muscle called merchandising.
We weren't participating in the pricing equation at all in 2019. Now we can selectively and targetedly. So that's the second marketing engine we didn't have before. We've become much more proactive and strategic in brand. So we really now have three demand generation channels compared to only one. Back in 2019, in booking.com, we only sold accommodations. Now we have booking.com flights, attractions, ground transportation, taxi insurance. None of those existed prior to that. The app was about just over a quarter of our bookings in 2019. Now it's over half. And we have a Genius and we have a loyalty program which is now branded and very strong and well recognized with three different tiers the Genius program.
That was an internal only program only so I would, has it, I say, shame on us, if we can't grow right that new profile faster than we grew the old profile, which is kind of exactly why we believe we can support that commitment.
Brian Nowak
Yes, it's pretty layer cake, a lot of layers, that makes sense. Over the course of the last 12 months you and I have had a lot of discussions about AI.
David Goulden
When we're sitting here, it was, yes.
Brian Nowak
A lot a generative AI discussion about a year ago. We were hanging out and everyone's trying to figure out what is this ChatGPT thing, 12 months have now passed so we're 12 months since last year when all that discussion really started. Let's sort of start with the opportunities and how you think about what are the biggest opportunities for booking.com and the OTA's in general from using these large language models and generative AI capabilities over the long term.
David Goulden
Yes, I put it into three buckets. So the first would be our vision. So we, for a long time back in 2019, have been talking about this concept of a Connected Trip where we want to use technology to enable customers to plan, book, and experience travel in a fundamentally different way. That has always depended upon the availability of more sophisticated AI technologies that existed then. We've built our business on AI for decades, plus, right? Almost all the things that our platforms do are powered by AI, whether it's how we bid on paid channels, how we present offerings to customers, it's AI engines behind that. So for us, this is great because this now enables us to go forward in our vision. And so what are we doing? We're doing a couple of things. So we're already using some of these LLMs powered tools to create travel assistance inside of our own offerings. So we talked about booking.com, how important the app is now.
Brian Nowak
Yes.
David Goulden
Now, if you're in the US or in the UK, so far, it's only in those two markets, but we now have an AI-powered GenAI-powered travel assistance in the booking.com app that will let you start planning about your trip. And it's very smart because it has an abstraction layer, so we can plug in multiple large language modules in the future, but not only does it rely upon the public data, it also, through our machine learning gateways, gets to our data, so it brings up our data, which includes things like availability on properties that aren't available on the public sector.
So it lets you basically use the best of both worlds to plan and then book your trip. You don't need to leave the chat assistance to actually book. So far, it only works on accommodations, but we'll make it work across the entire set of our offerings. So we're using it, are we getting great feedback? It actually, it works. We were in Frankfort this week, I pulled out and show it to some investors and everybody was kind of impressed and so was I because I hadn't used it for a couple weeks and I think it got better.
Brian Nowak
Yes.
David Goulden
Than it did last time. We have other parts of the business where we're experimenting again in the customer booking path in price line. One of our US brands, we have again a travel assistant. We put that at the bottom of the booking funnel right where people might want to book a hotel and it's there to ask questions to it just before you make your booking. And it will and we again getting great experience so people will go in and ask maybe about locations what's nearby? Cancellation policies that go back into our data to find them out, pet policies may go back to the hotel site et cetera, these are things that people look at and interestingly enough since the productivity side we now have good data says the people who actually use that tool before the book are less likely to make a customer service call afterwards so hard.
I just save some money. I just converted a more expensive customer service call into a large language module query. So those are things we're doing instantly. We really believe that we can enhance our products and particularly a booking.com where the Connected Trip is the kind of center piece of the vision. This is what we need to get there. We need to be able to massively personalize the booking experience, the planning experience, the booking experience and we need to be able to reactively and proactively provide customer support to people based upon what happens to their booking and we also need to be able to act with them, we act with them in trip based on what's happening. Maybe you've gone to a beach vacation and it's raining. So what do we do? We can recommend places that you might want to go and by the way, here's an offer to go book it and his access to the pass on booking.com. All these things are possible with this class of technologies.
So it really plays into our strategy. And then internally I shouldn't miss up the internal side of this. There are productivity gains in multiple parts of the business. I think many parts of most business will be touched in some way shape or form by these technologies. We have our focus on two areas right now where we're running a bunch of programs and projects. One, I mentioned customer service. I talked about how we can avoid customer service calls by using these tools up front. But obviously, the customer service experience, we already have chatbots. But to make them much more intelligent and to be able to replace more the human interaction with the machine interaction, that's real.
We're doing some work there. And then the other big area I'd say for tech companies like ours is developer productivity.
Brian Nowak
Right.
David Goulden
Using these tools to help developers become more productive, convert your lower experience engineers into higher experience engineers. There's real leverage there. And we're getting some good results from the work we're doing there as well.
Brian Nowak
Okay. That's great. There's a lot there. Let me throw the AI question at you a different way.
David Goulden
Okay.
Brian Nowak
Yes, there's a point in the consumer funnel where a lot of people still start on Google to do their travel research. Even though, again, you still have a very successful performance business to buy traffic off of Google to bring to your site. We think there's a possibility that at some point Google could have a next-gen travel assistant to roll out where they could help plan my trip for the weekend in Europe. How do you sort of think about that risk of a higher percentage of people using a Google tool first instead of a booking tool to be my travel assistant? Does that impact the paid mix? So kind of how do you sort of think about that long term?
David Goulden
I think there's a few aspects to that. I mean, Google will, I'm sure, want to continue to monetize their search business.
Brian Nowak
Yes.
David Goulden
So they'll want to make sure it's attractive for people like us to want to advertise on their platform.
We spend billions of dollars a year. We're one of their biggest customers. So I'm sure as their search experience evolves, and we'll evolve with them as we have done over many years, of course, we'll be building our own through the direct chat. I talked about what we're doing on booking.com.
Brian Nowak
Yes.
David Goulden
We now, by definition, if we're well over half of our mix is directs, more than half of our bookings are starting on our platforms rather than some of the other platforms which we're paying to bring into our platform. To the extent that I'm sure there'll be people, I’m sure there will be AI-powered travel assistants, and they'll do some of the planning function, right? We'll have a great planning tool as well. But that's probably where they'll stop, because what these travel assistants won't have been the full depth of capability that we as an online travel agent have. We have active relationships with over three million properties around the world in the accommodation space where we have real-time availability. That's not available publicly. We have similar with airlines and all the other players.
We have thousands of people doing customer service. We have a payments platform where you can pay for it all in one place and manage, and I can go on and on and on. So again, how are you top to your point? What do you do at the top of the funnel and what tools can you create? We believe with our combination of our travel assistants sitting inside of our data, inside of our system, having access to public data and all the data we have, we think we can still build in totality a differentiated travel offering and we believe in that we will continue to increase our direct mix.
Brian Nowak
Yes, no you're, in this new AI world data is more valuable than ever and all the connections, the live real-time connections that you have with all the hotels is really valuable.
David Goulden
It’s huge.
Brian Nowak
It's going to be a key difference. I would agree with that. Okay, earlier you mentioned sort of the marketing muscle, the merchandising muscle and sort of the way you developed a couple multiple ways to bring people into the funnel to convert.
David Goulden
Yes.
Brian Nowak
So remind us again how we should think about marketing plus merchandising as a percentage of bookings this year and then sort of strategically into 2024. How do we think about sort of leverage or spend on marketing and merchandising in ‘24?
David Goulden
Yes, so I'll rewind a little bit to what we did during the COVID recovery years. So if you go back to 2019 again that benchmark year for the kind of the growth hurdles. That year we spent 5.5% of our total gross bookings on marketing and merchandising combined. And we actually, that was less than we spent in 2018 because the direct mix had increased so that was going down. So what we decided to do during COVID was something maybe bold but it's worked out well for us. We chose to kind of lean in and spend more because how many opportunities do you get for the travel industry to grow at 30%, 40%, 50% a year? What we did in ‘21 and ‘22 as it was recovering. So we did that proactively.
So you get to last year and that spend on marketing and merchandising went up to close to 6% of gross bookings which of course as a percentage of revenue is a really big increase, right? A pretty bold increase. But there again, back to what we were doing, back to where we are now as a result of that, let's assume that travel demand globally from a room night point of view is back to almost a breakeven. We're 25% above where we were in 2019 so we really, that's paid off for us.
Brian Nowak
Yes.
David Goulden
And this year you can see that we started against that higher. We're still leaning in because we think there's a good opportunity to continue to gain share but this year, we will spend less on marketing merchandizing than we did last year so starting to lever and still free moment in 2019 and that leverage on the marketing motion that you spend because marketing merchandizing combined is the biggest spend in our income statement.
Brian Nowak
Right.
David Goulden
That leverage we do expect to see continuing going forward. Probably driven more than anything else by the direct mix increase obviously that's a key part of our strategy and to extend that continues which we expected to then you just got a smaller piece of total business where you're having to spend on marketing merchandising and more it coming in directly.
Brian Nowak
Got it. Okay. And then and the other pieces of the OpEx, you mentioned sort of the customer service seeing some benefits from AI, assisted coding seeing some benefits from AI. Is it, are we far enough along or you could see efficiency in those lines in ‘24 yet? Or is it still too early in sort of customer service and GenAI benefits to developers to see leverage in ‘24?
David Goulden
Yes, I don't think that GenAI is going to drive a quantum change in things in ‘24. I think we're going to get incremental benefits; we'll be rolling it out more.
Brian Nowak
Yes.
David Goulden
I mean, particularly something like customer service, you have to have a build a technology in and you have to have a modern customer service platform which we now have. But that's going to take some time. We'll probably be introducing some more, some smarter bots and things, but I don't think it'll make a big difference. I think the developer productivity one may come a little quicker as we roll that out across a bigger piece of our development team. But in generally, I think our story on the more direct fixed cost, which is kind of where you're talking Brian, is that we have been investing, right? When I talk about what we did in 2019, what we do in 2024 and all the differences, you don't get that for free. There's a lot of technologies, there's a lot of investment, there's a lot of new people you need to build out these capabilities. And we have been de-levering on that more fixed cost base for a couple of years again kind of by design.
And if you think about it, they are fairly bold strategy because we were spending more on marketing merchandising and more on fixed costs, but obviously you can see the benefit in both sides, right? You see the growth on one side and you see the capabilities we've built on the other side. So I think our commitment is that next year we'll grow that fixed cost combination of G&A, IT and personnel appreciably slower than we are doing this year. And we do expect to get back to leverage over time on that fixed cost base.
Brian Nowak
Got it. Okay. That's helpful. One of the other pieces of the layer cake you mentioned earlier was Genius and loyalty. And I feel like over the years in online travel, we had this debate of is loyalty high ROI, low ROI? Where are we now in loyalty? It's sort of swung back and forth over the last 15 years. So question on Genius. One, what is sort of the latest update you have on Genius adoption, Genius penetration that you’ll share. What can you tell us about purchase behavior of Geniuses versus non-Geniuses? And then on the go forward, what are the keys to driving further Genius adoption on the platform?
David Goulden
Yes, so as I mentioned in my comments before, in ‘19 versus now, we have this thing called Genius. It was internal.
Brian Nowak
Yes.
David Goulden
It's a little story because the marketing theorists said, well, I want to make sure that I always have a holdout group of unlucky Geniuses who don't get Genius to see exactly the benefit of one versus the other. And that's a helpful thing from a marketing point of view, but it doesn't outweigh the benefit of actually bringing the program out into the wild and making a thing of it, which is what we did in 2020 and beyond. So now the Genius, so when we made Genius public, its first versions, there was basically two tiers, a Genius 1 and a Genius 2. And to get to Genius 1, you had to book and stay twice in two years, and the Genius 2, you booked to stay five times.
And then was and then that was obviously the higher end of our customer base. Now, Genius has expanded further. We in 2021 introduced a new kind of redefined Tier 1 to anybody who has a logged on account. So you don't have to have made your first booking. You get a Genius benefit and then raise the bar on the other two tiers. So now if you go in Genius level two, you have to have booked and stayed five times in two years. And Genius level 3 booked and stayed 15 times in two years. And we have millions of people who are in Genius level 3, right? So it's not just a, it's given the size of our customer base. That's a big group still.
Brian Nowak
Yes.
David Goulden
So there, and that now enables us to create tiered benefits, right? So the base Genius level 1 benefits are very attractive, but obviously you get better and better when you go up to two and three. Now where are we taking it? Not surprisingly, we're taking it in the direction of the Connected Trip. So Genius historically has been an accommodation centric program. That's where most of the benefits lay right now. By the way, the Genius for Genius is that almost all those benefits are provided by the hoteliers or by the property providers because we can show them that they're going to get incremental demand if they market themselves attractively to our top customers.
So that's really good. And also, it makes our, if you like, Genius Closed User Group more attractive than people are not in that program. But where we're taking it is now, we start to see us offering Genius benefit for rental cars inside of booking.com. And our plan would be, sometimes evolve in the next year, that all the verticals that we have will have Genius benefits. And then we'll take more of our merchandising and apply that to Genius customers. So entice our more loyal customers towards the Connected Trip, give them incentives for doing more than one thing with us. For example, if you're a Genius level, free customer, and you're making a high value accommodation booking, we may say, okay, we'll pay for your pick up drive from the airport, train station, et cetera, and use, and that's another form of merchandising.
So it's actually an important program will become more prominent as we get further down the route towards the Connected Trip.
Brian Nowak
The Genius of Genius.
David Goulden
Exactly. Genius of Genius.
Brian Nowak
It sounds like an ad campaign. If you, just basically tagline. Let's talk about alternative accommodations. So you've, another area you've made a lot of progress on alternative accommodations the last few years. So one, just started to update us. You mentioned is about a third of the business or 30% of the business. How fast is that growing at this point? Where have you made the most progress? And as you kind of look into ‘24, what geos or types of inventories are you sort of most focused on adding to the alternative accommodation business?
David Goulden
Yes. So we have made good progress. We're very pleased with it. It's now one third, not 30%. It's a third of our bookings at booking.com are from the alternative segment. That grew 24% year-on- year last year. Last quarter, sorry, in Q3 compared to 15%. In total, you do the math that meant that the hotel sector was still double digits. Slow, double digits. So twice the rate.
Brian Nowak
Yes.
David Goulden
No, I don't think we're going to have that two to one difference going forward. But we're very pleased with how things are going. I think we expect the alternative segment to grow a few percentage points faster than the total business going forward. We have been adding inventory. We now have 7.2 million listings in the alternative space. That's up 9% higher than last year. We want to continue to build that out. In terms of focus, we talk about the average being a third. The average mix being a third. In Europe, that's a fair amount higher.
Brian Nowak
Right.
David Goulden
Down third. And in the US, we've been very vocal about this. It's a fair amount lower because of many reasons. But one is that we've been doing alternative accommodations in Europe for 15 plus years. And we are several years behind that in terms of just time of evolution in the US. So we're probably seven or eight years behind that in terms of when we started building out one versus the other. Now, we don't expect it to take seven or eight years for us to catch up. We'll take advantage of the learnings. But that's a key area. So to answer your question, the US continues to be a key focus for acquisitions. The listing is grown faster in the US than any other marketplace compared to other markets when I look at that 8%, 9% growth in year-on-year listings and we continue to push to grow the listings in the business in the US the fastest.
Brian Nowak
Got it. So grow a few hundred base points faster than the other piece.
David Goulden
Than the total.
Brian Nowak
Than the total.
David Goulden
Yes.
Brian Nowak
Okay. That's helpful. And by my math I think you're adding more alternative accommodation room nights than the other leader in that category. So it's been very, very good growth. You don't have to comment, this is my math.
David Goulden
I'll let you do the math.
Brian Nowak
The last thing before the clock expires is around capital allocation.
David Goulden
Yes.
Brian Nowak
You sort of talked about the targets for ’20 going forward versus 2019 and sort of EPS growth. Just talk to us again about how you think about capital allocation, share repurchases and offsetting some of the stock-based compensation dilution.
David Goulden
Well, I mean capital allocation should more than offset stock-based compensation dilution. We view stock-based compensation as real expense.
Brian Nowak
Yes.
David Goulden
We actually view it as a more valuable currency than cash because it should go up more than cash does in value.
Brian Nowak
Yes.
David Goulden
And we don't back it out of any of our EPS numbers. So and as you've seen buybacks are making a significant difference to our share count and therefore way off setting stock-based compensation dilution. Going forward, we put our framework. We said we spend $24 billion on buybacks over the four years starting this year. We're on track to do more than that. And we also laid out a framework where between growth in the EBITDA of the business and being a little bit less conservative on our balance sheet and staying around two times gross leverage on EBITDA and going to one time net, on net leverage we can actually turbo charge the buybacks over an extended period of time. So expect us to continue to be aggressively returning capital to shareholders.
Brian Nowak
Great. All right. David, thank you.
David Goulden
Brian, thank you, rapid fire.
Brian Nowak
The Genius of Genius. It hits TV. This is very heard first. Thank you.
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Booking Holdings Inc (BKNG) CEO David Goulden presents at Nasdaq 49th Investor Conference Call (Transcript)