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Booking Holdings Inc. (NASDAQ:BKNG) Q4 2023 Earnings Call Transcript

Booking Holdings Inc. (NASDAQ:BKNG) Q4 2023 Earnings Call Transcript February 22, 2024

Booking Holdings Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to Booking Holdings Fourth Quarter and Full Year 2023 Conference Call. Booking Holdings would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals or expectations and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.

For a list of factors that could cause Booking Holdings’ actual results to differ materially from those described in the forward-looking statements – please refer to the safe harbor statement at the end of Booking Holdings’ earnings press release as well as Booking Holdings’ most recent filings with the Securities and Exchange Commission. Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. A copy of Booking Holdings’ earnings press release, together with an accompanying financial and statistical supplement, is available in the For Investors section of Booking Holdings’ website at www.bookingholdings.com.

And now I’d like to introduce Booking Holdings speakers for this afternoon, Glenn Fogel and David Goulden. Please go ahead, gentlemen.

Glenn Fogel: Thank you, and welcome to Booking Holdings’ fourth quarter conference call. I am joined this afternoon by our CFO, David Goulden. I am pleased to report a solid finish to 2023 as fourth quarter room nights slightly exceeded our expectations and grew a bit more than 9% year-over-year or 11% when excludes Israel from both periods. When compared to 2019, our room nights grew 21% versus our expectations of 20%. We delivered record fourth quarter revenue of $4.8 billion and record adjusted EBITDA of $1.5 billion, which were ahead of our expectations. Finally, the GAAP and earnings per share in the quarter grew 29% year-over-year, helped by the reduction in our share count versus last year. At the start of 2024, we continue to see resiliency in global leisure travel demand.

As we look to the year ahead, we see strong growth on the books for travel that’s scheduled to take place in 2024, which gives early indications of potentially another record summer travel season. As we’ve noted previously, a high percentage of these bookings are capable and what is on the books today for the summer period represents a small percentage of the total bookings that we expect to ultimately receive. David will provide further details on fourth quarter results and on our thoughts about the first quarter and full year 2024. Looking back at the full year of 2023, I am proud of our efforts to drive more benefits to our travelers and supply partners while also delivering record-setting industry-leading financial results. We reached a significant milestone last year with our customers’ booking an all-time high of over 1 billion room nights on our platform, which was an increase of 17% versus 2022.

Gross bookings of $151 billion increased 24% versus 2022. In 2023, we reached a new revenue record of over $21 billion, which was 25% higher than 2022. We achieved this strong top line result while improving our profitability with record adjusted EBITDA of $7.1 billion, an increase of 34% versus 2022, and our adjusted EBITDA margin expanded by over 2 percentage points year-over-year. Our non-GAAP earnings per share of about $152 increased 52% year-over-year and was 48% higher than our prior full year all-time high back in 2019. Across all of our key metrics in 2023, we were a meaningfully larger and faster-growing business than we were in 2019. Our ambition going forward in a normalized growth in market for the travel industry is to continue to grow our gross bookings, revenue and earnings per share faster than we did in 2019.

We are confident we will achieve these objectives because we’ve invested in building a stronger business and better product offerings for our travelers and partners that we had back then. We can see this in many areas, but I will highlight a few examples of where we have strengthened our offering relative to 2019. We now have a scaled up merchant platform at Booking.com, which processed first half of Booking.com’s gross bookings in 2023. Our merchant offering brings many benefits to our travelers and partners as well as new strategic benefits to us, including the ability to merchandise. We have continued to scale up our offering at Booking.com since in 2019, with total company air tickets booked in 2023 up more than 400% over that time frame, primarily driven by Booking.com.

We see this vertical bring new customers to our platform while delivering a more complete offering to our existing customers making travel planning and booking easier for them and creating opportunities to provide more value to them. On alternative accommodations, we continue to increase the mix of our alternative accommodations room nights, which treats 33% of Booking.com’s room rights in 2023 as we improve our product offering and increase our supply choices with further opportunities ahead, particularly in the U.S. Early, we are pleased that for Booking.com, we have created foundations necessary to offer insurance, attractions and ground transportation options and expect these offerings to add value to our connected trip vision. On marketing, we’ve improved our abilities in using performance marketing channels even more effectively and are now better focused on our brand spending.

On loyalty, we’ve expanded and enhanced our loyalty program, Booking.com to deliver more benefits to more of our traveler customers with more of our property and rental car partners participating. And lastly, we are continuing to strengthen the direct relationship with our travelers as our mobile app room nights and total direct room nights continue to increase in our mix. We remain confident in our long-term outlook for the travel industry, which we believe will grow faster than GDP growth across our core markets. With that foundation of industry growth and the improvements we’ve made to strengthen our offerings, we are positive about our future and believe we are well positioned to deliver attractive growth across our key metrics in the coming years.

With our long-term positive outlook, solid financial performance and strong balance sheet, we returned over $10 billion to shareholders during 2023 by repurchasing our shares. Returning capital to shareholders will remain a high priority for the company going forward. And today, we are taking another important step in that journey by announcing that our Board of Directors has declared a quarterly dividend to complement our existing share repurchase program. David will provide further thoughts on our approach to capital returns in his remarks. In addition to our strong financial results in 2023, we made meaningful progress against our key strategic priorities, which include: advancing our connected trip vision, further integrating AI technology into our offerings, supporting our supply partners and growing alternative accommodations and building more direct relationships with our traveler customers.

Let me address the progress we have made in each of these areas. On the connected trip, we continue to take steps towards our long-term vision to make planning, booking and experiencing travel easier, more personal and more enjoyable, while delivering better value to our travelers and supplier partners. We believe this is important because we know the current travel experience is much more complicated, fragmented and frustrating to travelers than it should be. The contribution aims to greatly improve that experience for consumers which we believe will drive further differentiation of our offerings and lead to improved loyalty, increase direct bookings, higher frequency and a greater share of total travel spend on our platform over time. This is good not only for our travelers, but also for our partner suppliers who will be able to utilize different elements of the connected trip to obtain additional business in an efficient and lower cost way.

As we continue to make progress in developing the connected trip, you will see incremental improvements and enhancements to our platform that moves us closer to this long-term vision. This approach allows us to realize benefits while we are building towards that future state. In fact, some of the key improvements to our platform over the last few years that I spoke about earlier were driven by our work on the connected trip. For example, our emerging platform at Booking.com is a foundational base to the connected trip, and it helps deliver a more seamless and frictionless booking experience for our travelers. Plus, it enables us to smartly merchandise a variety of partner and self-supply offers when appropriate. Another example would be the development of flights on Booking.com, with flights being one of the most important elements of travel outside of accommodations.

In 2023, air tickets booked on our platforms increased 58% year-over-year driven primarily by the growth of Booking.com site offering. We continue to see a healthy number of new customers to Booking.com through the flight vertical, and are encouraged by the right that these customers book other services on our platform. Outside of flights and accommodations, we need solid progress in expanding the breadth of our attraction supply that is available to our travelers. While we do not expect attractions to be a major financial contributor on its own, we see benefits from a strong attractions offering given the potential bundling opportunities as we will see ability to increase traveler engagement with the app while travelers are in destination.

Overall, we believe we have made great progress in building toward our Connected revision and we are starting to see early signs of the benefits. We continue to see a growing percentage of transactions, which we count as connectors though these are still a small percentage of our total transactions today. Importantly, we see these types of customers returning to us more frequently, and we point to experiment with expanding Genius program to include all travel verticals in 2024, which we expect will drive more value to travelers across the different elements of the connected trip. We plan to continue to build out our Connected Trip vision, which we believe will result in increased travel and supplier engagement with our platform. In order to achieve the easier and more personalized experience of the Connected Trip, we have always envisioned AI technology playing a central role.

Over the last few quarters, I have discussed the hard work our teams have been doing to integrate generative AI into our offerings in innovative ways, including Booking.com’s AI trip planner and Priceline’s generative AI travels – named Penny. After launching Booking.com’s AI trip planner in the U.S. last summer, we expanded the rollout to the UK market in the fourth quarter. At this early stage, the team remains focused. I learn more about customers who want to interact with the tool and what types of questions they will ask. We see the AI trip planner is getting better answering customers’ inquiries and we are excited to start testing other verticals out of accommodations. At Priceline, last week, they announced their weaker product release, which included several enhancements to Penny following 6 months of real-world interaction with users that resulted in valuable learnings from the Priceline team.

Priceline’s AI travel assisted product can now help travelers be on just the hotel category as it now covers flights, car rentals and vacation packages. While was nicely launched at the end of the booking funnel on the checkout page, it is now available on the Priceline homepage where it can help with travel planning, booking and modifying a trip as we booked. This is a clear example of how our teams iterate and enhance our AI-powered products as we learn more through user interactions. We continue to see encouraging signs that Priceline’s Penny product helps lower customer service contact across travel verticals, and we believe, improves the customer experience. Beyond improving customer service contact rates, we believe that, over time, we can leverage generative AI technology to help make our customer service agents more efficient across our entire Outside of customer service, we continue to explore areas where we believe we can use generative AI tools to increase productivity.

We have early indications that using generative AI enhances the productivity of our software developers and are encouraged by the results so far. We look forward to experimenting with these and other ways Gen AI tools might make our business more efficient in the future. Turning to our supply partners. We strive to be a trusted and valuable partner for all accommodation types on our platform. And we look to add value for our partners by delivering incremental bookings and developing products and features to help support their businesses. The majority of our partners are small independent businesses, and we are pleased to see many are reporting significantly improved business performance over the last year. We believe that helping our smaller partners thrive contributes to the long-term diversity and sustainability of our sector.

One area in which we work with many small independent businesses is through our alternative combination offering comp. This is an area which we have continued to strengthen our business, increasing supply and raising product awareness on many travelers. Also combination room nights grew 19% year-over-year in the fourth quarter and 24% for the full year, which was faster our traditional hotel category. We saw meaningfully higher growth in our U.S. alternative accommodation room nights, though this is all a relatively small Globally, alternative accommodations represented about 33% of Booking.com’s total room nights in 2023, which was 3 percentage points higher than in 2022. Our strong trend of accommodation room nights growth is benefiting from having more listings available on our platform were travelers to choose from.

We are seeing continued momentum in annual turn combination supply both globally and in the U.S. with global listings reaching about 7.4 million by the end of 2023, which is about 12% higher than the 6.6 million last year. We’re focused on continuing to build on this progress by further improving the product for our supply partners and travelers, particularly in the U.S. For our travelers, we remain focused on building a better experience that leads to increasing loyalty, frequency, spend and direct relationships over time. I am encouraged that in 2023 at Booking.com, we had strong growth in our base of our peak bookers, demonstrating strong retention, while we’re also pleased with the increase in the number of new users to our platform versus 2022.

We’re also strengthening the direct relationship with our travelers as our mix of customers booking directly on our platforms continues to increase year-over-year in the fourth quarter and when measured for the full year. We see a very high level of direct bookings in the mobile app, which is an important platform as it allows us more opportunities to engage directly with travelers. Our mix overnight through our mobile apps increased year-over-year by about 5 percentage points for the full year to 49%. Booking.com remained the number one downloaded travel app in the world in 2023. In Asia, Booking.com and Agoda are top five travel apps. And in the U.S. Booking.com, Priceline and OpenTable are all in the top 10 travel apps. We will continue our efforts to enhance the app experience to build on the recent success we have seen here.

A fast-paced travel agent making a bookings for a family vacation package.
A fast-paced travel agent making a bookings for a family vacation package.

Finally, I want to briefly address a regulatory matter that’s impacting the financial results we are reporting today. The Spanish Competition Authority has issued a draft decision alleging infringement by Booking.com of Spanish competition law and then intends to issue a fine of $530 million. We could not disagree more with this draft decision and the arbitrarily large fine that they imposed, which is completely disproportionate to the alleged conduct. If the draft decision were to become fine, we plan to appeal. The success of our business is built on a mutually beneficial and balanced partnership with our millions of hotels and other accommodation partners around the world. We provide exceptional choice, value and service for travelers and we provide a marketplace for hotels and other partners that allows them to attract travelers from around the world at lower cost than many other marketing channels.

We have a clear track record of cooperating with many competition and consumer authorities to find amicable and workable solutions to their concerns, including working with the year being commission on the Digital Markets Act. As we have previously disclosed, we plan to file our notification for designation under the DMA suit. And we believe the main concerns raised by the Spanish Authority overlap with the DMA. We will continue to work closely with these regulatory bodies to maintain consistent rules. And most importantly, we will continue to ensure that we are offering the best possible platform to our partners and our customers. In conclusion, I am encouraged by the strong fourth quarter results and the continued of leisure travel demand.

Our teams continue to execute well against our key strategic priorities, which helps position our business well over the long-term. We continue our work to deliver a better offering experience for our supply partners and our travelers. We are confident in the long-term growth of travel and the opportunities ahead for our company. I will now turn the call over to our CFO, David Goulden.

David Goulden: Thank you, Glenn, and good afternoon. I will review our results for the fourth quarter and provide some color on the trends we see in the first quarter and – on 2024. All growth rates are on a year-on-year basis unless otherwise indicated. We will be making some references to the comparable periods in 2019 where we think these are helpful. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. We will post our prepared remarks to the Booking Holdings Investor Relations website after the conclusion of the earnings call. One housekeeping item before discussing our results. We have reclassified digital services taxes into sales and other expenses and out of G&A expense.

Due to the highly variable nature of GSTs, which are tied to the revenue earned in the countries where GST are enacted. We have provided a table with two areas of updated quarterly financials in our earnings press release that reflects this chain P&L geography, and all of my comments on this call will also reflect the change. Now on to our quarter results. Our room nights in the fourth quarter grew 9% year-over-year and 21% versus 2019, which was slightly better than our expectations of about 9% and 20%. Excluding Israel, Q4 room rights were up 11% versus 2022 and 22% versus 2019. Looking at our year-over-year room nights by region in the fourth quarter, Asia was up mid-teens Europe was up low double digits, Rest of World was up low single digits, and the U.S. was flat.

All regions improved from October. The average booking window of Booking.com expanded in Q4 versus the same period in both 2022 and 2019, but was a bit less expanded than it was in the third quarter. In Q4, mobile app mix of about 53% was about 5 percentage points higher than the fourth quarter of 2022. We continue to see an increasing mix of our total room nights coming to us through the direct channel. The direct channel increased as a percentage of our room nights in the fourth quarter relative to the fourth quarter of 2022. The international mix of our room nights in Q4 was 50%, up from about 48% in the fourth quarter of 2022 and reaching about the same level as the pre-pandemic Q4 mix. Our cancellation rate in the fourth quarter was slightly higher than Q4 2022, impacted by the war in the Middle East.

As we expected, the higher overall cancellation in October normalized by the end of the quarter. For our alternative accommodations at Booking.com, our Q4 room night growth was 19% year-over-year, and the global mix of alternative body room nights was about 32%, which was up versus about 29% in the fourth quarter of 2022. Q4 gross bookings increased 16% year-over-year or about 15% on a constant currency basis, which was ahead of our expectations. The 16% increase in gross bookings was 7 percentage points higher than the 9% room night growth due to about 4% higher accommodation constant currency ADRs, plus over 1 percentage point of positive impact from each of FX movements and flight bookings. Our year-over-year ADR growth was natively impacted by regional mix due to higher mix of room nights from Asia.

Excluding regional mix, constant currency ADRs were up about 5 percentage points year-over-year. Despite higher ADRs in the fourth quarter, we have not seen a change in the mix of hotel star rating levels being booked or changes in the length of stay that could indicate that consumers are trading down. We continue to watch the dynamics closely. Airline tickets booked in the fourth quarter were up about 46% year-over-year, driven by the continued growth of Booking.com’s flight offering. Revenue for the fourth quarter exceeded our expectations, increasing 18% year-over-year or about 17% on a constant currency basis. Revenue as a percentage of gross bookings was 15.1%, which was about in line with our expectations. Marketing expense, which is a highly variable expense line increased 9% year-over-year.

Marketing expense as a percentage of gross bookings was about 30 basis points lower than Q4 2022 due to higher ROIs in our paid channels and a higher mix of business. Performance margin ROIs increased year-over-year, helped by our ongoing efforts to improve the efficiency of our marketing spend. Marketing and merchandising combined as a percentage of gross bookings in Q4 was about 15 basis points lower than last year, which was better than our expectation due to lower merchandising expense, higher direct mix and better performance marketing ROIs. Q4 sales and other expenses as a percentage of gross bookings were up about 20 basis points compared with last year and also about 20 basis points above our expectation normalize for the DST reclassification, due in large parts to higher accounts receivable provisions related to our decision to delay some collections during the partner payment issue we discussed last quarter.

We do not expect this to be an ongoing issue. More fixed expenses in aggregate were up 21% year-over-year, which was below our expectations primarily due to lower personnel and IT expense as well as due to the DST reclassification. 21% is calculated usually on non-GAAP expenses in both Q4 2023 and Q4 2022. Adjusted EBITDA of almost $1.5 billion was ahead of our expectation and was up 18% year-over-year and would have been about 22% on a constant currency basis. Separately, Q4 adjusted EBITDA was negatively impacted by a $37 million loss recorded in other income related to the devaluation of the Argentinian peso, which is not factored into our prior guidance. This reduced Q4 adjusted EBITDA margin by almost 1%. Non-GAAP net income of $1.1 billion resulted in non-GAAP earnings per share of $32 a share, which was up 29% year-over-year.

Our average share count in the fourth quarter was 9% below Q4 2022. Our non-GAAP results exclude $276 million or expense in personnel related to a ruling in the Netherlands pension fund matter and $530 million of expense in G&A related to a draft decision by a Spanish Competition Authority. I’d like to provide some perspective on each of these. As Glenn mentioned, we strongly disagree with the draft decision and unprecedented fine proposed by Spanish Competition Authority, which we plan to appeal if it becomes final. The appeal process could take a few years. During any appeal process, we would expect to influence some changes to our business practices in Spain, we do not currently undertake that these will have a significant impact on our business.

Turning to the Dutch pension case. In January, the court of appeal in the ruled the most Booking.com employees in the Netherlands should enroll – in a travel industry-wide pension fund. The liability we recorded in our Q4 results is for prior periods related to this pension plan. We’re working through how we align this travel industry-wide plan with the existing pension plan we offer to our employees in the Netherlands. We expect there will be some increase in our pension plan costs in the Netherlands going forward, but we do not expect these to be material. On a GAAP basis, we had net income of $222 million in the quarter. When looking at the full year, we are pleased to report that our – 2023 room nights grew 17% year-over-year, and our gross bookings grew 24% and about 25% on a constant currency basis.

Our full year revenue was over $21 million, which was up 25% year-over-year and up similarly on a constant currency basis. Full year revenue as a percentage of gross bookings was 14.2% in 2023, which is up slightly versus 14.1% in 2022. For the full year, there is more than 0.5 points of positive impact from timing as well the benefit to take rates from increased revenues associated with payments, but this was mostly offset by an increase in the mix of flights, an increase in Asia mix has really recovered and by our increased investments in merchandising. Our underlying accommodation take rates continue to be in line with 2019 levels. For the full year, our marketing plus merchandising at Booking.com as a percentage of gross bookings was 5.6%, down from 5.9% in 2022, driven by marketing efficiencies and direct mix.

The 5.6% in 2023 is still up from 5.5% in 2019 and are leading into a recovered travel market more than offset gains due to increased direct mix. For the full year, the direct channel as a percentage of our room nights, continue to increase in mix. When we exclude our B2B or business-to-business, our direct mix was in the low 60% range for the year. Our full year EBITDA was more than $7 million and was up 34% year-over-year and up about 37% on a constant currency basis. Adjusted EBITDA margin was 33%, which was 12 percentage points higher than our adjusted EBITDA margin in 2022 and in-line with our expectations at the start of the year. Our full year non-GAAP earnings per share was about $152 a share, which is up 52% year and up about 58% on a constant currency basis.

Now on to our cash and liquidity position. Our Q4 ending cash and investment balance of $13.1 billion was down versus our Q3 ending balance of $14.3 billion due to the $2.4 billion in share repurchases we completed in the quarter partially offset by the $1.3 billion of free cash flow we generated in the fourth quarter. For the full year, we generated $7 billion in free cash flow. We repurchased over $10 billion worth of shares in 2023, taking our remaining repurchase authorization down to $14 billion and reducing our year-end share count by 9% versus 2022 and by 16% versus 2021, which is just before we restarted our share repurchase program. As we think about our capital structure and allocation framework going forward, we remain focused on appropriately investing in our business and growing returns for our shareholders while maintaining our strong investment-grade credit ratings.

Given our confidence in our earnings power, strong free cash flow profile and our ability to consistently shareholders, we are announcing today that our Board of Directors declared a quarterly dividend of $8.75 per share to complement our existing share repurchase program. The dividend is payable March 28, 2024 to shareholders record on March 8, 2024. We believe the introduction of a dividend will allow us to enhance our capital return program and further expand our base of investors. In terms of composition of capital returns, we expect the share repurchases will represent the vast majority of our total capital return to shareholders going forward. We continue to expect to complete the $24 billion share repurchase authorization we announced early 2023 within 4 years where we started, which would be before the end of 2026.

We reiterate our previously stated gross leverage target 2x, and our goal to move to a 1x net leverage over time. The initiation of a dividend does not change our thinking around these targets. Now on to our thoughts for the first quarter of 2024. All growth rates are on a year-on-year basis. Given that we’re now beyond the COVID period, when granular short-term information was helpful in assessing the path – we’re returning to our historical guidance approach with outcome range for the full quarter ahead and less detail on monthly trends and individual P&L line items. Based on the solid travel demands we’ve seen so far in the first quarter, we expect Q1 room night growth to be between 4% and 6%. We expect the ongoing war in the Middle East have a negative 1% impact on Q1 room night growth.

We’re also comparing with a strong start to the year in 2023 when we started to see an expansion of the booking window. January room night growth was above the high end of that range. As we move through the quarter, every room bank growth will benefit from an extra day, our March room night growth will be hurt by Easter being in March. We expect these to roughly offset each other. We expect Q1 gross bookings growth to be between 5% and 7%, about 1 percentage point faster than room night growth due to slightly higher accommodation constant currency ADRs and faster growth from flights, partially offset by about 1 percentage point of FX pressure. We expect Q1 revenue growth will be between 11% and 13%, faster than Q1 bookings growth due in part to the Easter shift, which we expect to bear the Q1 revenue by about 3 percentage points.

We expect a similar native impact on revenue growth in Q2. We expect Q1 adjusted EBITDA to be between $680 million and $720 million, which at the midpoint would be 19% year-on-year growth and about a 1 percentage point increase in EBITDA margin. We expect EBITDA margin to bank from market expenses growing slower than revenue and growing similar to gross bookings, which we expect will more than offset our fixed OpEx growth growing slightly faster than revenue. As we set our course to the full year ahead, I want to first address our longer-term ambition for growth in our business. As we’ve discussed previously, in a more normalized market environment, we’re aiming to achieve constant currency growth rates for gross booking revenue and earnings per share that are higher than what we achieved in 2019.

This would remain growing above 8% for each of the top line metrics and about 15% for earnings per share. We believe we’ll be able to achieve these levels of growth, given the investments we made to build a stronger business and a better offering for our travelers and partners versus what we had 5 years ago. At recent FX rates, we expect changes in FX will negatively impact our reported growth rate by a little more than 1 percentage point. With that framework and with FX in mind, we expect to grow our full year 2024 slightly faster than 7% and including the assumption that the war in the Middle East will negatively impact our full year 2024 growth rate by 1%. We expect revenue for the year to grow at similar rate to our gross bookings growth.

We expect a more fixed expense in 2024 to grow in the low to mid-teens. We are planning to leverage from these more fixed expenses in 2025. We expect 2024 adjusted EBITDA will grow slightly faster than revenue, largely due to expectations for an increased direct mix. We expect adjusted EBITDA margins to expand year-over-year by a bit less than a percentage point. Lastly, we expect EPS growth to be above 40%. In closing, we are pleased with our Q4 results, our Q1 outlook and our expectation in 2024 to grow faster than 2019 across gross bookings, revenue, adjusted EBITDA and EPS with exceeding EBITDA margin year-over-year. We expect 2024 to be another strong year for us. We’ll now move to Q&A. Sarah, will you please open the lines?

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