Booking Holdings Inc. (BKNG) Earnings Call Transcript & Summary

Great. Thanks, everybody, for joining. I'm Doug Anmuth, Internet analyst at JPMorgan. It's our pleasure to have with us today Booking Holdings' CEO, Glenn Fogel; and CFO, David Goulden. So Booking Holdings is the global leader in online travel, and its mission is to make it easier for everyone to experience the world. It has more than 28 million listings for hotels, homes, apartments and other unique places to stay. It serves global travelers through 6 primary consumer-facing brands, including Booking.com, KAYAK, Priceline, Agoda, Rentalcars.com and OpenTable. And in 2019, the last year of normalcy, the company generated gross bookings of more than $96 billion. Glenn has been CEO and President since 2017 and also CEO of Booking.com for the past 2 years. He's also been Head of Worldwide Strategy and Planning and EVP of Corporate Development. And having been with the company since 2000, I think it's safe to say Glenn has seen it all. David joined Booking as EVP and CFO in early 2018, and he previously held numerous senior exec positions at EMC and Dell Technologies. So welcome, Glenn and David.

Thanks for having us.

Yes. Thank you, Doug. Great to be here.

Great. Thank you. One thing I just want to mention quickly. [Operator Instructions] And I'll do my best to work those into the conversation.

So all right. So let's start. So the past 15 months have been challenging for everybody, but especially for the travel industry and Booking. What surprised you most about the industry and your customers, both through the pandemic and as we start to now see travel come back?

Well, Doug, I definitely agree with you in terms of challenging and it's incredibly challenging for this industry. And even more so challenging for the people around the world who have suffered and we know, unfortunately, that still is continuing in some parts of the world where things are unfortunately very, very dramatically difficult for people there. So we do extend our sympathies to them. In terms of my surprises, I'll tell you, it's -- we always knew that people want to travel. But I'll say before the pandemic, I really didn't realize how incredibly it is just a basic desire. And if you remember, last year, when the restrictions started going down to travel during last year's summer, we were like, "Wow, this is interesting. No matter what the problem is, people want to travel." And we saw people are going local, they're in their cars, they couldn't get on planes or they want to get on planes, but people wanted to travel. And there weren't any vaccines as we recall, and they're still all -- you don't know where the virus is but people went and they travel. And then we had a fairly positive year considering where we looked at April or May of last year, I was like, "Wow, what a difference." That was a huge surprise to me. That's the first thing. Another surprise that I'm really pleased with is how we did in the first quarter, how things are going. And Doug, do you hear a little static right now? I'm hearing a little static or not? Are you hearing that? Are you okay? I'm not hearing at all now, Doug. [Technical Difficulty] No, I don't hear you at all. I'm just seeing your mouth move. Yes, I'm going to keep talking and you'll see it...

Better now, right?

Now I can hear you. Good. Okay.

I know what it was.

Okay. There you go. Okay. So the other thing was that seeing the strong growth in the U.S., that was pleased to see part of it is due because the U.S. coming back nicely, but I don't think it's our execution. I thank our teams. I think they've done a very good job, and I was very pleased to see that. And then another surprise in this one when the pandemic started out, I was wondering what would happen in terms of the industry and valuations and would we be able to go out and buy a lot of the high-quality companies, players buyer sale price and stuff. That did not happen. I was kind of hoping it would, but it really didn't. So that was a surprise, too.

Okay. And as travelers return to your properties, what do you think they're going to notice that's most different or improved about the experience?

Well, there are a bunch of things we've done that are improvements and things on our long strategy. We talked about connected trip, we made progress there. Our payments platform is more advanced and further along and coming along. Our Genius program, we've done some changes there. It's going better. So if you think about for new flights. So one time, Booking.com had no flights at all. And now, we have flights available in 18 countries and collectively, that's about 50% of the room nights we booked in 2019. That demographic, you can get to people to go start doing flights, and we'll keep on expanding the number of countries that we do flights. In the payments area, in 2020, it was about 22% of the gross bookings, and that was up, I think, substantially. In 2019, it was about 15%. So progress, that continues to go along, making sure that people have flexibility in how they want to pay, making sure that we can then provide new types of things. I don't know if you did this or not, Doug, maybe you [ created ] from doing it, but I hope a lot of you are back to travel campaign where we're offering a credit to people who book on our app in the U.S., and then you would get a $50 credit to book again down the road. And we're able to do that because we have a digitalized wallet, and that was something that we developed during the time while we're continuing to get through this terrible pandemic crisis. So lots of work being done to both recover from the pandemic and go forward on our long-term strategy.

Okay. Great. So let's talk a little bit more about the recovery. Your April room nights were down 43% from April '19 levels, but domestic room nights were flat actually from 2 years ago. So what's your view on the recovery thus far? And if we assume vaccination kind of continues on this current trajectory, what parts of the business could be back to 2019 levels, do you think, by this summer?

Yes. Thanks, Doug. Let me take that. So we've not changed our overall thinking that it will be years, not quarters, for global travel to fully recover to pre-virus levels with obviously, domestic travel recovering much faster than international. So it's kind of a blended situation. Your room nights -- our room nights are down 43% in April versus 2019 just to clarify the comparison points to people. Now domestic room nights were actually globally back in line with 2019 on a average basis across the whole globe. So that means that international room nights, which were the biggest percentage of our rooms pre-virus, were still very depressed. Now on the good news side, we saw very strong growth in the U.S. in March and April. That's all in. That's both the combined room nights of U.S. bookers. And we think that the rebound in travel in the U.S. is a good example of what can happen when you see a large portion of the population vaccinated and travel restrictions are eased. So we're hopeful as other regions improve in those areas, their trends will also improve and potentially look a little bit more like the U.S., but it's too early to make a call in summer at this point.

Okay. And relative to maybe 6 or, let's call it, 6 months ago, would you say you're kind of where you expected to be? Or things are returning faster than you thought?

I'd say that the -- it's a little bit of a mix picture. The U.S. has definitely returned faster than we expected, right? Back in -- we were looking -- when we were putting our plans together for last year, we certainly weren't expecting to see growth in the U.S. at this point in time. So that is a positive. On the other hand, we didn't know what was going to happen. And we weren't playing for things to start slowing down in the days either. We thought it would be more of a steady recovery. And I'd say Europe, perhaps a little bit in line with what we're expecting, although we did see some nervousness in Europe at the end of March, beginning of April when things weren't looking quite so good there and kind of what a difference a month makes because obviously, things did improve in April in Europe, but they slowed down at the end of March and first week in April. So that kind of gives you a little bit of characteristics just where we thought things would be compared to where they are.

Okay. Great. All right. So if we look kind of beyond the recovery, how do you think travel changes more broadly speaking? I mean we're seeing a number of trends that you've talked about in the past in terms of shift to non-city type of domestic travel, certainly accelerated adoption of alternative accommodations, more virtual business meetings, of course. I guess what are your thoughts just around sustainability of some of these recent trends? And what things look like another 12 or 24 months out?

Yes. No, it's interesting because we have seen some changes during the pandemic time, and the question is, how much is that a permanent shift? How much are things are going to go back to where they were before the pandemic? So for example, so look, we've seen alternative accommodations has been increasing its share of total accommodations for many, many, many years. And our -- for us, alternative accommodations was our fastest-growing segment. And that went through 2020 still happening, still going. But it's -- you may not see it because of this regional mixes so -- and we're stronger in Europe than we are in the U.S. But we know that this is now a situation where people having tried alternative accommodations is forever going to be in our consideration set. But when people feel that it's back to normal, and there's no concern about being safe in the coronaviruses, just the slowest down in terms of the growth of alternative accommodation or even a setback maybe and nobody knows this yet. We'll see how it plays out. The other thing is, it's interesting, of course, is business travel because we all know how much business travel has been really, really repressed right now. And what's going to happen next year and the year after that, the year after that and this is going to be an issue. I know David, being our CFO, I know he's looking at it like, "Oh, look at all the money we saved and stuff," something people travel and stuff. So are we going to see a significant reduction in the share of travel that is business travel that ends up being a much lower portion or how much lower? And what does that do for economics for particularly hotels that cater to the business traveler, or for the airlines that make a lot of their profits with those very expensive front-of-the-bus tickets, and how is that going to change everything? Do we end up with everything? Do a lot of the airlines start to be doing their entire seat configurations of taking out a lot of the business class and first class and putting in more coach? Interesting to see how that's going to play out. Another thing is in terms of where people want to travel. And there's some people saying "Well, people are going to love going to non-big city, and that's the way it's going to be. I think in the end, I think it's going to go back. The most popular place to visit around the world, the big cities, Paris, London, Vegas. I see people, I think they're going back when it's safer and everything starts traveling like they used to. I think it's going to go back that way. But who knows, many people haven't experienced the outdoors and being away from the big cities, maybe that'll be a higher percentage than it was previously. And then, of course, there's this flexible work environment. If people are working far from the headquarters or the office where they used to, because they then have to take more trips to go back to spend time with their colleagues in the past when they actually went to the office, so a lot of things are happening here. Nobody knows for sure how it's going to be. Our benefit is we've got flexibility. We have alternative accommodations. If we have both the alternative accommodations and we got a huge hotel, we handle it either way, we're going to have it available for people. In terms of what area you want to go, we're global. We have the big cities, we got the rural areas. So I feel, regardless of how it plays out, we're going to be well positioned.

Okay. Great. So let's dig into alternative accommodations a little bit more. It's certainly been an area of strength for Booking and then also, of course, across the broader travel industry in general, and it accounted for about 30% of your business in the first quarter. So how do you think about that mix going forward. Do you think that just continues to kind of go higher? Do you drop back down to a certain level just as traditional hotels kind of pick up and maybe things balance out a little bit more toward where they were previously?

No. As I just mentioned, it's going to be interesting how this plays out with a higher -- almost a step functional change of a pandemic of an increase in the alternative accommodations area. But what's fascinating, of course, is you start to see hotels -- the big change you're talking more about bringing in more things to make it more conducive to a traveler who goes to the alternative accommodation because maybe they want kitchens, maybe they want more space and how in the future are the large change is going to change how they do their business to try and meet up with what that demand is, what, I don't know. I don't think anybody knows. I have some thoughts but my guess is as good as anybody else, if not even better. I do though believe that what will happen in terms of how we do is we'll do well because we have both, as I just said. So I don't worry too much about, what if it ends up being a lot more alternative accommodations, let's say. We're doing -- we're building that out. I'm feeling comfortable either way.

So just in terms of your approach, in terms of differentiation, right, having all lodging types on a single platform, instantly bookable, no traveler's fee. So for a while, that's kind of been unique in the space. Maybe we're seeing a little bit more convergence around the approach. Just how do you think about the key advantages there and the path that the industry will take going forward?

Yes. Well, I like the way we do it. I like having all property types in one place, one search. You don't need to go to multiple places to look at different types of properties. I like you can compare and contrast, reviews, prices, all in one place, see what really works for you. And what we've absolutely seen, and this is fact, we watch and we see people come, they search first for one type of property and then they start looking at another type of property. You don't know which one they're going to actually choose because they're not sure themselves. They want to look at the difference between them and what the uses are and what the price will be, what they get for that price and all those things. So I think it's a very, very good way to provide customers with what they're looking for, which is information. And as a good customer experience, when you instantly book something. I've -- I'm not done. I do make sure to look at other ways to do this. I'm frustrated. My wife has been really frustrated when she's used something where you have to go back and forth in the house and we had an issue once in a place where we thought we had some and they come back when they can. No, no, no, we're not going to give to all the talking back and forth and they say not going to do it. And what about like you get an excess price at the end, there are some places that put this traveler's fee at the end or cleaning -- I'm like, really? I'm like tell me what the price is upfront. So I think we do things a lot of things that are really satisfy what the customer really likes. Now what we also agreed though, we got to make sure you have the right supply. You got to have that. If you don't have that, you're going to have an issue. We've talked in the past about wanting to have more of some property types in some geographical areas, particularly in the U.S., to build that up. Warren have talked about that. But I am pleased with what we're doing, where we're going and the way we're doing it.

Okay. And how do you feel about alternative accommodations inventory for Booking just relative to that of your competitors and then across different geos and property types?

Yes. Well, as I said, I've talked about, I'd like to have more in the U.S. about certain types of a single property primarily. I'd like to have more of that, particular in certain areas. We are very strong in Europe. We've been there a long of time. We do it. Look, we got 6 million, over 6 million, well, 6-point something million now, alternative accommodations listings around the world. That's a lot. But you always want to be getting more and you want to make sure you get the right ones. And then we're working on that, and I like where we're going. I do understand, when I talk to people in the U.S., there are people who are not aware that we have it. So that's an issue. You got people -- make people aware, too, about that. By the way, in Europe, you don't have that issue . There's somebody in Europe that say, "Where can I get a home to rent?" They're going to say Booking.com. But I understand that some people in the U.S. may not have that same answer. So we look at that and we're going to do that. I'd tell you though, it's one of those things that we've been very successful in the past, blocking and tackling, go out, get the supply, make sure people are aware of the supply. And with a better experience, the flywheel rolls.

Okay. And then just lastly on alternative accommodations. Just curious on your view whether you see any changes from a regulatory perspective going forward. And just how much time you're spending on that topic?

No, it's a very big issue. And it's important to make sure that we are cognizant that there are a lot of stakeholders in this area. And there are many governments around the world. And these governments are not only -- they're not only national, but they get regional and they get local and it's complicated because you'll have different rules and different places. And we absolutely have to be working with the regulators to make sure we come up with a fair way to do this. So everybody's rights and -- are brought into the conversation and we end up with something that is long-term sustainable. One of the things is being -- when you're bigger, one of the advantages is you could afford to have the people working on all this and making sure that if you're global where you're able to work in all different areas because one size will not fit all on this. It's going to be different in lots of different places. And again, here's an area where scale matters and scale is helpful.

Okay. Let's shift gears, talk about the U.S., in particular. It's obviously always been an important region for Booking, but it feels like it's getting renewed attention. So curious why now? What you're doing differently, perhaps in your approach in the U.S. versus some of the previous years?

Well, I think it's a little bit of just concentration and specifically looking at Booking.com has built a big business in the U.S. Of course, Priceline were -- I mean, I started my job -- my first job with this organization when I was at Priceline in 2000. Priceline has always been big in the U.S. So we're continuing to see what we have to do, Booking.com, to continue to build it out. It's a lot of blocking and tackling to just do the right things, make sure you got the right selection, the right price, make sure it's easy to use, and you're making sure you're doing whatever localization that you should do specifically for the U.S. And we didn't have things like flights in the past. We didn't have payments at all in the past. And flights let us get bookers early in the journey. Our ability to do payments enable us to go lots of creative things, different things like, for example, that back to travel campaign. So there are a lot of things we're doing step by step. There's no one silver bullet that says, "Oh, that's why." It's a lot of different things executing well.

Okay. And then how do you think about the runway for bookings growth in the U.S. relative to regions like APAC and LatAm, for example?

Well, I think it's -- I think they're all important markets that we want to grow. They're all areas. Obviously, as we all know, unfortunately, both areas, APAC and LatAm, unfortunately, right now, are having some significant problems with the virus. And it's really sad, but that's certainly hurting travel there a great deal. And the U.S. is an area where fortunately, and people who in the U.S. are very lucky to be in a place where thankfully, things are a lot different and people can travel very easily now.

Okay. So let's shift gears, talk about some of your strategic investment areas. I want to talk about payments in particular. So you mentioned 22% of Booking.com's gross bookings going through your payments in 2020, while achieving breakeven with the mix expected to move higher this year and beyond. So of all the benefits you expect to see from payments, what excites you the most here?

Doug, let me take that. First of all, kind of talk about what benefits are live now and then kind of what -- where this excites the most. So in terms of being live now, we're able to merchandise and improve value propositions to our customers. So an example of that is the back to travel campaign in the U.S. that Glenn mentioned that is facilitated by payments and actually, we're now running out a similar program in the U.K. as well. So that's the level we can use outside and marketing to drive growth. We have the ability to bundle and package and cross-sell multiple components of the connected trip. And very importantly, we can remove friction between a customer and a partner as to when they get charged or pay in what currency or method they get paid in, and that's a really important aspect of the business. And we can also help our accommodation partners in the card-not-present transactions, particularly in Europe, where PSD2 requires traditional factors of authentication, actually hard for a small independent partners how to manage that on their own system. So kind of that's what's available now. In terms of what we're excited about in the longer term, it really ties back to the long-term vision of the connected trips -- the connected trip, where payment is just foundational. And the goal here, again, is to take as much friction out of travels as possible through payments and to deliver a connected trip where multiple components are put together through artificial intelligence and machine learning with all the data now in the business and is supported by a unified payment system because you don't want to have a disconnected payment experience in a connected trip. So that's the long-term vision. It doesn't mean to say we won't see benefits from payments before then. But certainly, it is a very key element of the value proposition we want to create through this better service called the connected trip.

Okay. And just to follow up there, David, maybe you can just talk about the unit economics a little bit more there on payments. They clearly come with lower margins. I guess how do you think about that? Lots of advantage, obviously, as it relates to connected trip, of course. Some impact on the P&L. How do you think about that going forward?

Yes, a few ways. Back to the real basics in terms of taking friction out of the experience for a booker or a supplier. Even if we were basically making no margin long term, which is not the answer. But right now, we're running payments basically, close kind of breakeven from a variable cost point of view. But there are benefits to the business in terms of friction reduction on both sides of the marketplace. So that just provides a platform for growth or better growth from the business via payments. So even though from a margin rate point of view, even though when payments is kind of up at scale, it will be at a lower margin rate than the core accommodations business. It will still be accretive and additive to margin dollars. But importantly, it's an enabler for the business and that's the piece that really gets us most excited about where the payments business will take us over time. And we have experience from our other business lines, that Glenn mentioned, the Priceline, payments have been a core element of that business for many, many years. And we understand what that can bring in terms of flexibility to business, in addition to the economics.

Okay. Great. So let's shift into connected trip. So clearly, a long-term investment area here as you introduced just more pieces into the mix, including, obviously, flights, which you mentioned, with ground transportation and attractions. Maybe starting with flights, which have gone into Booking.com and Agoda fairly recently, but you saw the highest number of air tickets ever booked in a single quarter. So the consumer adoption is good, and we know it's coming off a small base. But how do you think about your flight offering relative to competitors? And how you can gain share in that part of the space?

I was very pleased to see how it's going right now. Obviously, very early for Booking.com and Agoda but been in flights forever and price slash when first -- was the first product we got running [indiscernible]. But it's totally -- price as total U.S. domestic market. And obviously, we need to be global eventually, and that's what the Booking.com or Agoda efforts there were. But even more than that, it's not just a flight offering, which, of course, we have to have it as good, at least, but we really want it better, than what the offering is to -- versus any competitor. And that means we're buying a service that's easier to use that people like using it and that's just -- as table stakes to get that going. Then it's combining it with all our other verticals and that connected trip vision that I talked about. And that's really where the goal is so that we can offer some that really is truly different than what somebody gets from anywhere else. So sure, you got to be able to do all the things on flight payment does, but it's much more than that. It's really doing something that people, "A-ha, I use Booking.com because it's just so much better." And one of the benefit that we have is to get people just to use a right off the get-go is because people trust us, because we have this enormous customer base that have been using our accommodations because they trust us. So they -- that's why we're getting this nice growth in our flight area because right from the bat. Now albeit, it's still very, very small. And I want to make sure everybody understands, still extremely small. I'm very pleased with -- it's a long-term journey to make this connected trip, what I want to pay, but we're going. We're on motion.

Okay. Great. And as part of that, I was hoping you can talk about attractions more. We've made some moves here. Certainly over the years -- you acquired FareHarbor in 2018. Recently announced the partnership with Viator from TripAdvisor. Just curious to hear about your approach toward attractions and then just how it fits into the connected trip strategy?

Well, people go somewhere. They don't go there to sit in the hotel room, they go to do stuff. So we want to be able to provide them with an easier way to be able to do things. And that's why we have FareHarbor for one segment, helpful gets -- provides a system for a longer and middle tour -- middle size of the market. But they don't do stuff for the really attractive places that like London Eye, for example. FareHarbor doesn't do that. So we need to get that into the last thing we want to do, those type of attractions, too. So we do partnerships, amusement, Viator to make sure that we have all the things somebody may want to do. And I really believe, again, this is a thing where it's so inconvenient where you go all the different sites, all different things for all the parts of a trip. I bring it all together and being able to do it in a way with a payment system that ties all together and if something goes wrong, it's so easy to fix everything, that's where we're going. And it's -- I'll tell you, again, it's early and stuff, but I've used our tractions prior in the past and I just -- I found it it's just a better way to do things.

So when you think about your connected trip offering, what inning are we in here, in your view?

Okay. So we're a global company, so we don't talk baseball because a lot of the world doesn't actually play baseball. We've actually made that mistake in -- long time...

We can pick any sports you like Glenn. Whatever...

I never do that anymore. Now it's like a -- once is like, well, of course, basketball, but a lot of basketball don't have mass. Look, it's early. Let's go that way. It's just it's very, very early. We're just still building out the basic vertical. We just got flights out of that long ago. We got only 18 chair. It covers 30% of the customer, but we kind of keep building all those things out, tying together and then using all the AI stuff, all that machine learning, all that data to be able to put it together all for our people, something that is much better, much easier. Well, again, I see it beginning to seeing those flights start going up, that's good. We just love it.

Okay. Let's shift gears to marketing. Just curious how you think about the performance advertising environment, how that could look different coming out of the pandemic?

How it may come out. Well, it's -- one of the things is, obviously, we always talk about how we want people to come direct and providing people with a better performance. I'd love for people to become as direct not having to pay in the performance marketing area to get to that. But we also know that if you want to get new customers so many times, they may be going to Google first and you want to be able to capture that. Now what's going to happen in terms of the auction, in terms of the dynamics, why would it be different in the future versus it was in the past? I'm not sure why there would be much of a difference. I'm not sure what would change the dynamics that the pricing would be so different. So I don't see a significant reason that things -- once we're out of pandemic, things should be drastically different. I don't.

And is that -- so does that mean your kind of thoughts just around performance versus brand don't necessarily change much coming out?

Well, look, we always want to do things that we believe are going to be a good spend to get us back customers who will come back direct [ and loyal ]. By the way, so we're doing new things that I like a lot like the back to travel. We've never done anything like that for Booking.com in the past ever. I think it was our first time doing it, and I like it in the U.S. And then we changed it a little bit, and we're doing in the U.K. right now, too. But these are new ways to do things, to get people to come, enjoy, experience our systems, our services and get them then to come back direct down the road. So we're definitely going to be continuing to do that going forward, and we'll continue what we've always done, which is be very, very dynamic and flexible to see what's working, what's not working. And look, we did -- I don't know if you watched the Eurovision at all, but we are the sponsor there, and we're getting some [ announcement ] out there. But again, it's being -- and if you're looking for where the best spend to get the right customers to come to us, and that's brand and of course, it's always going to be performance marketing in there.

Okay. So if we just think about all the topics we discussed, just wanted to hit on how you think they'll show up in your overall numbers, David? And I guess, would you agree that once we return to 2019 levels, margins will be lower, but your top line should be growing ahead of the industry?

Yes. Doug, there are a few factors in there. So within core accommodations, we do believe that there are opportunities for market share gains. And as we come through the crisis when the industry gets disruptive, there are pockets of opportunities, which you can take advantage of. So in the core accommodation business per se, that could create some market share gain opportunities to grow faster than the industry that could put pressure on margins. And of course, we're also going to be building out the other verticals that Glenn talked about as well, which will also add to growth rates, right, as they build up. And they will have a mix impact also on profitability. So I think it's a fair conclusion, but there are a number of factors going into. One is the kind of growth versus profitability equation in the core accommodation business and then the other is the additional growth and obviously at lower margins of the new businesses added to it.

And then just, David, how do you think about bringing back some of those costs that you have taken out over the last year or so? I think most of those have been variable costs. How do you think about the pace at which those could return?

Yes. So those costs are variable costs. We took $370 million out compared to our run rate at the time of the start of COVID. And that was -- almost the vast majority of that was in variable costs as volumes went down. So as volumes recover, the work will have to come back. Now obviously, there lies an opportunity for us to bring those costs in more efficiently through automation, potentially through global sourcing of talent, et cetera. So the work will come back. And obviously, with that, a significant chunk of the cost will have to come back again, albeit slightly more efficiently. And then, of course, since 2019, there have also been some additional cost pressure on the business, just a couple of years of inflation, the run rate of costs generally that will increase when you get back to that level, you had exactly the same level of volume from 2019, 2, 3 years later, 2, 3, 4 years later and, therefore, you just got a slightly bigger cost base. On the other hand, there are some letters and there are some variables that could offset some of those pressures. So obviously, variable cost efficiencies as we grow beyond 2019 levels is a potential benefit as well as from potential fixed-cost efficiencies, an area we started to talk about a little bit more with COVID. It's been less of the fact the last 18 months, for obvious reasons. And then, of course, from increased diet mix.

Okay. All right. And then just a real quick question on capital allocation. Just curious if anything's changed from a capital allocation perspective and if you consider more M&A opportunities?

Well, I don't think our capital allocation perspective has really changed at all. Look, we always believe that the first thing we want to think about cash is invest in our business, and you can invest in the business organically, which we are doing. You can invest in partners, chief partners, we've done that in the past. M&A, we've done that in the past. And you cover that and then excess cash, return to the shareholders, and we've done that through share repurchases. Now we stopped that, call it, early days of the pandemic, we had to stop that. But we will bring that back. We will be doing that in the future at some point. In terms of M&A, look, we're always looking, and we're always going to continue to look at what may fit our strategic vision, fit in well but it has to go against all the things that were always better. It's got be the right one with the right valuation, and we want to make sure that we believe in the way we can put it together. And all this stuff is easy, by the way. M&A is always very, very difficult. And as a guy who before I was at this group, I was an M&A banker. So I'm always cognizant that it's harder than it looks. And we are always aware that it's important to not be value destructive when we do M&A. But we do also want to take risk, too, so it's always a balance.

Got it. Okay. Great. We are going to leave it there in the interest of time. But thank you, Glenn, thank you, David. Appreciate it very much.

Thanks for having us.

Thank you, Doug.

Thank you.