Booking Holdings' (BKNG Quick QuoteBKNG - Free Report) first-quarter 2026 Merchant revenues of $3.70 billion beat the Zacks Consensus Estimate by 1.88%. Merchant revenues accounted for approximately 67% of total revenues and increased 26.7% year over year.

The growth in merchant revenues in the reported quarter was driven by a combination of higher booking volumes, a clear mix shift toward the merchant model, strong accommodation demand (including alternative stays) and strategic initiatives like direct channels and Connected Trip.

BKNG reported first-quarter 2026 adjusted earnings of $1.14 per share, surpassing the Zacks Consensus Estimate by 3.64% and rising 14% year over year. Revenues reached $5.53 billion, modestly beating expectations by 0.61% and increasing 16% from the prior-year period. (Read More: Booking Holdings Q1 Earnings & Revenues Beat Estimates, Rise Y/Y).

BKNG’s Merchant Revenue Segment Drives Prospects

Booking Holdings’ merchant revenue segment is increasingly emerging as a key pillar of its growth path, reinforcing long-term investment prospects. In the first quarter of 2026, merchant revenues rose sharply to $3.7 billion from $2.9 billion a year earlier, significantly outpacing overall revenue growth and highlighting a clear mix shift toward this higher-value model.

Booking Holdings Inc. Price, Consensus and EPS Surprise

Booking Holdings Inc. price-consensus-eps-surprise-chart | Booking Holdings Inc. Quote

This momentum is underpinned by strong operating trends. Gross bookings climbed 15% year over year, while room nights increased 6%, reflecting healthy travel demand despite macro headwinds. Since merchant revenues are closely tied to transaction volumes, where Booking acts as the merchant of record, rising bookings directly translate into higher revenue capture.

A key structural advantage of the merchant model is its ability to generate upfront cash flows. Deferred merchant bookings surged to $8.19 billion as of March 2026, indicating robust future revenue visibility and reinforcing BKNG’s liquidity strength. This advance payment dynamic not only enhances working capital efficiency but also provides flexibility for reinvestment in growth initiatives.

Importantly, Merchant gross bookings grew 24.3% year over year to $38.7 billion, representing 72% of total gross bookings. The company’s dominance in accommodation reservations — accounting for nearly 89% of revenues — continues to support merchant expansion, especially as alternative accommodations grow and diversify supply. Meanwhile, strategic initiatives such as the Connected Trip ecosystem and rising direct bookings are increasing cross-selling opportunities and improving conversion, further strengthening merchant monetization.

BKNG’s Geographic Strength Lifts Merchant Mix Growth

Booking Holdings’ geographic strength in the United States and Asia is playing a key role in supporting its merchant mix and overall growth trajectory. In the first quarter of 2026, U.S. room night growth accelerated to the low-teens, driven by strong domestic demand and rising direct bookings, which structurally favor the merchant model. Meanwhile, Asia delivered high-single-digit growth, benefiting from localized supply expansion and tailored payment solutions that enhance merchant adoption.

These regions are strategic growth engines where Booking is investing in supply, payments and customer engagement. As momentum builds across both markets, the increasing scale and mix of merchant transactions are expected to strengthen revenue quality and long-term profitability.

BKNG’s Soft Q2 Outlook Raises Growth Concerns

Key operating metrics tied to the strength of BKNG’s Merchant model — gross bookings and room night growth — remained healthy in the reported quarter, rising 15% and 6% year over year, respectively, despite headwinds related to the Middle East conflict. However, the company’s forward outlook points to a clear deceleration. For the second quarter of 2026, management expects room night growth of just 2-4% and gross bookings growth of 4-6%, indicating slower sequential momentum.

The cautious stance extends to revenues. While total revenues grew a solid 16% year over year in the reported quarter, BKNG now guides for a more modest 4-6% increase in the second quarter of 2026. The Zacks Consensus Estimate for second-quarter 2026 revenues is pegged at $7.52 billion, indicating a 10.64% year-over-year rise. This conservative outlook suggests potential moderation in merchant-driven growth, making the near-term trajectory a key monitorable.

The company’s shares have declined 18.8% in the year-to-date period, significantly underperforming the Zacks Retail and Wholesale sector’s return of 5.4%.

BKNG’s Zacks Rank & Stocks to Consider

Currently, Booking Holdings carries a Zacks Rank #3 (Hold).

FIGS (FIGS Quick QuoteFIGS - Free Report) , Insight Enterprises (NSIT Quick QuoteNSIT - Free Report) and Portillo's Inc. (PTLO Quick QuotePTLO - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Retail-Wholesale. While FIGS sports a Zacks Rank #1 (Strong Buy) at present, Insight Enterprises and Portillo's carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

FIGS shares have gained 32.3% in the year-to-date period. FIGS is set to report its first-quarter 2026 results on May 7.

Insight Enterprises shares have fallen 9.7% in the year-to-date period. NSIT is set to report its first-quarter 2026 results on May 7.

Portillo's shares have gained 30.4% year to date. PTLO is scheduled to report its first-quarter 2026 results on May 5.