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    EXPE
    Earnings call· Mar 2025(Q1 FY25)

    Expedia Group Q1 FY25 earnings call EXPE

    May 8, 2025 Source

    Executive summary

    Expedia Group Q1 FY25 — Strong B2B and Advertising Growth Amidst Soft US Demand

    Expedia Group navigated a soft U.S. travel demand environment in Q1 FY25, delivering strong bottom-line growth driven by robust B2B and Advertising segment performance and disciplined cost management. The company continues to focus on strategic priorities including enhancing traveler value, investing in high-growth areas, and driving operational efficiencies, with AI amplifying these efforts. Management raised its full-year EBITDA margin expansion guidance, reflecting confidence in ongoing cost controls.

    Highlights

    5

    • Adjusted EBITDA grew 16% year-over-year to $296 million.

    • Non-GAAP EPS increased 90% year-over-year to $0.40.

    • B2B gross bookings grew 14% year-over-year, significantly outperforming the market.

    • Advertising revenue grew 20% year-over-year to $174 million.

    • Adjusted EBITDA margin expanded by over 1 point to 9.9%.

    Concerns

    4

    • Overall bookings grew 4% and revenue 3%, landing at the lower end of guidance due to weaker-than-expected travel demand in the U.S. and into the U.S.

    • U.S. demand was soft, driven by declining consumer sentiment, resulting in B2C bookings growing only 1%.

    • Hotels.com slipped back into negative territory due to softer U.S. demand and foreign exchange headwinds.

    • Inbound travel into the U.S. was down 7%, with inbound bookings from Canada falling nearly 30%.

    Guidance & targets

    6
    CategoryTargetConfidence
    Gross bookings growth
    2% to 4%
    high materiality
    High
    Revenue growth
    3% to 5%
    high materiality
    High
    Adjusted EBITDA margin expansion
    75 to 100 basis points
    high materiality
    High
    Gross bookings growth
    2% to 4%
    high materiality
    High
    Revenue growth
    2% to 4%
    high materiality
    High
    Adjusted EBITDA margin expansion
    75 to 100 basis points
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    B2C
    Deceleration from Q4 was driven by pull-in of demand into Q4, foreign exchange, leap year impact, and U.S. market softness. Easter timing shift to Q2 also impacted revenue. EBITDA margins were roughly in line with last year.
    Gross bookings: $22.6BGross bookings growth: 1%Booked room nights growth (Brand Expedia): 7%
    		Declined 2%-2%—11.1% EBITDA margin
    B2B
    Materially above market, benefiting from strong product differentiation, solid execution, and stronger international exposure, particularly in APAC. EBITDA margins were up over 200 basis points mainly driven by volume growth.
    Gross bookings: $8.8BGross bookings growth: 14%Booked room nights growth: 20%APAC room nights growth: 30%
    		Grew 14%14%—22.8% EBITDA margin
    Advertising
    Continues to be a powerful growth engine with strong growth prospects ahead as new ad solutions are launched and adoption increases. Saw a 2x increase in click-through rates for video ads.
    $1M+ deals signed: record numberActive hotel partners and sponsored listings growth: 22%
    		$174M20%——

    Operational metrics

    34
    Booked room nights
    108 millionUp 6%
    Q1 FY25

    Overall booked room nights for the quarter.

    Gross bookings
    $31.5 billionUp 4%
    Q1 FY25

    Total gross bookings for the quarter.

    Revenue
    $3 billionUp 3%
    Q1 FY25

    Total revenue for the quarter.

    Adjusted EBITDA
    $296 millionUp 16%
    Q1 FY25

    Adjusted EBITDA for the quarter.

    Adjusted EBITDA margin
    9.9%Expanded >1 point
    Q1 FY25

    Adjusted EBITDA margin for the quarter, driven by B2B.

    Non-GAAP EPS
    $0.40Up 90%
    Q1 FY25

    Non-GAAP earnings per share for the quarter, driven by B2B, Advertising growth, and share repurchases.

    Average daily rates (ADR)
    $214Down 1%
    Q1 FY25

    Average daily rates for the quarter.

    Lodging bookings
    $23 billionUp 5%
    Q1 FY25

    Lodging bookings for the quarter.

    Lodging revenue
    $2.3 billionUp 3%
    Q1 FY25

    Lodging revenue for the quarter.

    Nonlodging bookings
    $8.4 billionUp 2%
    Q1 FY25

    Nonlodging bookings for the quarter.

    Cost of revenue
    $354 millionFlat year-over-year
    Q1 FY25

    Cost of revenue, reflecting ongoing efficiencies, particularly in customer service.

    Direct sales and marketing expense
    $1.8 billionUp 6%
    Q1 FY25

    Commissions paid to B2B partners are included. B2C marketing leverage was nearly flat.

    Overhead expenses
    $604 million1% decrease
    Q1 FY25

    Overhead expenses benefiting partly from restructuring actions taken late last year and earlier this year.

    Unrestricted cash and short-term investments
    $6.1 billion
    Q1 FY25

    Balance at the end of the quarter.

    Total debt
    $6.3 billion
    Q1 FY25

    Total debt after $1 billion debt refinancing in February.

    Leverage ratio
    2.1x
    Q1 FY25

    Leverage ratio maintained after debt refinancing.

    Quarterly dividend
    $0.40
    Q1 FY25

    Reinitiated and continued quarterly dividend.

    Share repurchases
    $330 millionAccelerated versus prior quarter
    Q1 FY25

    Share repurchases in the first quarter.

    Employee restructuring
    Approximately 4%
    Since last year

    Percentage of employees restructured since last year.

    Contractor reduction
    Approximately 7%
    Since last year

    Percentage reduction in contractor population.

    EBITDA benefit from restructuring
    $75 million
    Next 3 quarters

    Expected EBITDA benefit from restructuring actions over the next three quarters.

    Southwest Airlines bookings from new customers
    1/3
    Q1 FY25

    Proportion of travelers booking Southwest tickets on Expedia who are new customers.

    Ryanair bookings from new customers
    ~75%
    Q1 FY25

    Proportion of travelers booking Ryanair on Expedia who are new customers.

    Vrbo growth from multiunit inventory
    Nearly 1/3
    Q1 FY25

    Contribution of multiunit inventory added last year to Vrbo's growth.

    Active loyalty members growth
    mid-single digits
    Q1 FY25

    Growth rate of active loyalty members.

    Inbound travel into U.S.
    Down 7%
    Q1 FY25

    Decline in demand for inbound travel into the U.S.

    Inbound bookings from Canada
    Fell nearly 30%
    Q1 FY25

    Decline in inbound bookings from Canada into the U.S.

    FX headwind to Q1 gross bookings
    1 point better than anticipated
    Q1 FY25

    Foreign exchange impact on Q1 gross bookings, as U.S. dollar strength softened.

    Macro headwind to Q1 gross bookings
    couple of points
    Q1 FY25

    Impact from the macro environment, particularly U.S. market softness.

    Easter timing headwind to Q1 revenue
    1 point
    Q1 FY25

    Impact on Q1 revenue growth from the Easter timing shift to Q2.

    FX headwind to Q1 revenue
    3 points1 point worse than expected
    Q1 FY25

    Foreign exchange impact on Q1 revenue, driven by gross bookings from prior quarters and current quarter.

    Easter timing tailwind to Q2 revenue guidance
    1 point
    Q2 FY25

    Expected benefit to Q2 revenue growth from Easter timing.

    FX headwind to Q2 revenue guidance
    2 points
    Q2 FY25

    Estimated foreign exchange headwind to Q2 revenue guidance at current rates.

    FX headwind to FY revenue guidance
    1 point
    FY25

    Expected foreign exchange headwind to full-year revenue guidance at current rates.

    Industry KPIs

    1
    MetricValueDetails
    Gross bookings value room nights$31.5 billionUSD

    Product announcements

    4
    ProductTypeDetails
    Southwest Airlines inventory on Expedialaunch
    Ryanair across most points of salelaunch
    Expedia trip matching on Instagramlaunch
    Hotels.com new visual identity and product capabilitieslaunch

    Deals & partnerships

    5
    Southwest AirlinesListing Southwest Airlines inventory on Expedia Group platforms.

    Expedia Group became the first online travel agency to list Southwest Airlines' inventory in February.

    RyanairListing Ryanair inventory across most points of sale in Europe.

    Launched Ryanair across most points of sale in Europe in Q1 FY25.

    OpenAIIntegration with OpenAI's operator.

    Partnering with AI search companies to ensure Expedia brands show up well across customer queries and build new experiences.

    MicrosoftLaunch partner with Microsoft's Copilot Actions.

    Building new experiences to connect with travelers outside the Expedia ecosystem.

    InstagramLaunching Expedia trip matching in early access.

    Allows travelers to seamlessly build an itinerary based on an Instagram reel and then book directly on Expedia.

    Risks & headwinds

    4
    Weaker-than-expected travel demand in the U.S. and into the U.S.Q1 FY25, continuing into Q2 FY25 and full year

    Q1 bookings and revenue at lower end of guidance (4% and 3% respectively); U.S. demand soft; inbound U.S. travel down 7%; inbound Canada bookings down nearly 30%.

    Mitigation: Disciplined cost management, focus on strategic priorities, variable cost structure to adapt to market demand, leveraging B2B's international diversity.

    Declining consumer sentimentQ1 FY25

    Drove soft U.S. demand.

    Mitigation: Offering member rates, deals, flexible rates, and packaging options to attract demand.

    Foreign exchange headwindsQ1 FY25, Q2 FY25, FY25

    3-point headwind to Q1 revenue; 2-point headwind to Q2 revenue guidance; 1-point headwind to FY revenue guidance.

    Mitigation: Diversifying geographic mix through B2B growth.

    Shift to lower ADR rate plans and increased hotel discountsQ1 FY25

    Observed shift from refundable to nonrefundable rates; hotel partners providing more discounts.

    Mitigation: Leveraging packaging strength (opaque rates) and data to help partners fill rooms without impacting public revenue management strategy.

    What to watch in Q2 FY25

    5

    B2C bookings growth

    Next quarter
    Current1%
    TargetImprovement from Q1, path to mid-single-digit growth

    Why it matters

    B2C is a significant portion of the business, and its recovery is key to overall growth, especially given U.S. market softness🌐.

    B2C was more pressured given its U.S. heavy mix and saw bookings up 1%.

    Q&A highlights

    6

    Are you at your ROI frontier for marketing spend, and can you discuss the Hotels.com turnaround efforts and optimism?

    Marketing spend is focused on profitable growth, with investments made where opportunities exist and costs reduced where they do not. For Hotels.com, management is optimistic about the turnaround, citing a new visual identity, mascot, and product capabilities launched in late April, with more positive developments expected in the second half of the year, despite Q1 softness.

    “I mean, I've always believed that this is a brand that travelers love. This is a brand that was heavily impacted from the period a couple of years ago when we did a migration and we changed the loyalty program.”

    asked by Justin Post · answered by Ariane Gorin

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Priorities and AI Integration

    Expedia Group is executing on three strategic pillars: delivering traveler value, investing in growth opportunities, and driving operational efficiencies. AI is a key accelerator across all these areas, from enhancing product features like AI-powered property Q&A and filters to streamlining internal operations and enabling new partnerships with AI search companies. The company is actively exploring how to leverage AI to improve the traveler shopping funnel and drive traffic to its brands, while also making internal teams more effective.

    02

    Supply and Product Enhancements

    The company expanded its flight inventory by listing Southwest Airlines and Ryanair, which brought in new customers (1/3 for Southwest, 75% for Ryanair). Lodging supply was enhanced with more member rates and deals, leading to a record number of hotels participating in a March sale. New product features like flight deals and property price insights, along with AI integration, aim to simplify the shopping and booking experience. Expedia also launched 'Trip Matching' on Instagram, allowing users to build itineraries from Reels.

    03

    B2B and Advertising as Growth Engines

    The B2B segment continued its strong performance with 14% bookings growth, driven by its diverse geographic presence (especially APAC with 30% growth) and product differentiation. Advertising revenue grew 20%, fueled by new partners, optimized products, and innovations like video ads and AI-driven bid optimization, signing a record number of $1M+ deals. These segments are seen as powerful growth engines with significant future opportunities.

    04

    Consumer Business Performance and Turnaround Efforts

    While overall consumer bookings grew only 1% due to U.S. market softness🌐, Brand Expedia showed strong growth in multi-item trips and attach rates. Vrbo grew modestly, benefiting from multiunit inventory for shorter stays. Hotels.com, impacted by U.S. demand and FX, is undergoing a refreshed value proposition with a new visual identity and product capabilities launched in late April, with further developments expected later in the year.

    05

    Cost Management and Margin Expansion

    Expedia Group achieved over 1 point of EBITDA margin expansion in Q1 through disciplined cost management, including organizational simplification and role eliminations. Generative AI is being deployed to streamline operations across technology, commercial, and marketing teams. The loyalty program is also being tuned, with changes like removing always-on-earn for Vrbo Blue tier members to optimize returns and ensure investments drive sufficient repeat behavior.

    06

    Capital Allocation and Shareholder Returns

    The company maintains a strong balance sheet with $6.1 billion in unrestricted cash and short-term investments. It successfully refinanced $1 billion in debt, maintaining a 2.1x leverage ratio. Expedia reinitiated its quarterly dividend of $0.40 per share and repurchased $330 million (1.7 million shares) in Q1, with plans to offset dilution and opportunistically repurchase additional shares, consistent with prior years' levels.

    AI-generated summary of the company’s earnings call. Not investment advice.