Detailed narrative
Quarter cadence and the March macro shock
Expedia entered the quarter with strong momentum carried from late 2025, posting healthy room-night and bookings growth in January and February in line with the prior quarter — its best first-quarter start in three years. In March the macro environment turned volatile: travel advisories in Mexico pressured the consumer business and the conflict in the Middle East meaningfully impacted outbound travel from multiple regions, driving elevated cancellations across Europe and Asia and hitting B2B hardest.
Middle East itself is less than 2% of total bookings, but the two events combined cost about 2 points of growth for the full quarter and roughly 5 points in March alone. Cancellations normalized in early April and booking activity reaccelerated through the month, though management expects further volatility through Q2.
Consumer brand health and marketing discipline
Consumer Brands grew bookings 10%, the fastest pace in 12 quarters (strongest post-COVID, and highest in nearly 8 years), while direct consumer sales and marketing spend was actually cut 7% — evidence of durable marketing efficiency from better incrementality measurement and channel reallocation.
Brand Expedia was the primary growth contributor with strong air ticket growth, record attach and insurance levels, and a scaling unified lodging path; Vrbo showed strong momentum on traffic, conversion and quality; Hotels.com continues its brand relaunch and loyalty-program adjustments.
Management emphasized balancing upper-funnel brand spend (e.g., a new creator partnership with YouTuber Speed targeting Gen Z) with performance marketing, and stated it did not believe it left meaningful growth on the table.
B2B momentum and partner-network expansion
B2B gross bookings grew 22% to $10.7B with revenue up 25% to $1.2B, led by acceleration in North America and double-digit growth across all core regions, with Rapid API again the largest contributor. Roughly two-thirds of B2B bookings originate outside the U.S., which is why the segment bore the brunt of the Middle East disruption and elevated cancellations in March before recovering in April.
The company announced an exclusive partnership with Bank of Montreal AIR MILES and, just last week, became the exclusive hotel partner for Uber (launching in the U.S., then expanding), with Uber also appearing inside the Expedia app. Management framed these as accretive to the B2B P&L and to supply partners, who gain incremental demand through a single connection.
EBITDA margin held roughly flat at 22.7% as the company continues prioritizing B2B investment over near-term margin.
AI strategy across product, supply, servicing and marketing
Management positioned AI as an amplifier of existing advantages rather than a threat. In product, AI drives personalization at scale using data from hundreds of millions of traveler interactions, yielding higher Vrbo conversion and record attach on Expedia; AI-powered filters and the servicing agent are the two most-adopted features.
In supply, AI accelerates onboarding across nearly 3.7 million properties (800,000 exclusive) and enriches proprietary content. In servicing, over 30% of the more than 250 million annual interactions (over half self-service) are AI-powered, cutting new-agent onboarding time by ~60% and helping absorb the Middle East cancellation surge.
In marketing, answer-engine optimization is the fastest-growing channel, ChatGPT ads went live in February and a Claude integration is live; AI-enabled tools are driving hundreds of millions of dollars in realized marketing value. On OpenAI scaling back in-chat checkout, management said it reinforces its view that AI is a discovery layer while booking/servicing is best handled by a trusted scale provider — a net positive if the market shifts toward paid advertising.
Margin expansion and cost discipline
Adjusted EBITDA reached $542M at a 15.8% margin — the highest first-quarter margin in 15 years — with nearly 6 points of expansion, of which about 1 point came from favorable FX and the balance from stronger-than-expected marketing leverage, revenue flow-through and cost efficiencies.
Cost of revenue rose only 5% (leveraging ~1 point on efficiencies in payments and customer service), total direct sales and marketing rose 6% (with consumer S&M down 7%, leveraging ~75 bps of consumer gross bookings), and overhead rose 4% (leveraging ~2 points).
Management cautioned that H2 margin expansion will moderate📎 as it laps last year's marketing cuts and larger cost actions, and as AI/token costs rise, offset by continued productivity gains across overhead and cost of sales.
Capital structure and shareholder returns
Expedia ended the quarter with $5.8B of unrestricted cash and short-term investments and generated $4.1B of trailing-12-month free cash flow. During the quarter it retired $1.75B of short-term debt (including convertible and senior notes), secured a $2.5B revolving credit facility, and — subsequent to quarter end — issued $1B of long-term debt, all consistent with maintaining its investment-grade rating.
It repurchased 3.3 million shares for $700M at an average price of $212, bringing cumulative repurchases since 2022 to nearly 49 million shares and a 24% net reduction in share count. The Board approved a new $5B repurchase authorization, with 2026 buybacks expected at a pace similar to recent years.
Outlook philosophy
For Q2, Expedia guided to gross bookings growth of 7%–9% and revenue growth of 9%–11%, with EBITDA margin up 50–100 bps. Despite the Q1 beat and April rebound, management deliberately reiterated (rather than raised) full-year gross bookings growth of 6%–8%, revenue growth of 6%–9%, and margin expansion of 100–125 bps (expected at the high end), citing recent volatility and ongoing geopolitical and macroeconomic uncertainty🌐, and committing to update the full-year view at Q2 under incoming CFO Derek Anderson.