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    EXPE
    Earnings call· Jun 2025(Q2 FY25)

    Expedia Group Q2 FY25 earnings call EXPE

    Aug 7, 2025 Source

    Executive summary

    Expedia Group Q2 FY25 — Exceeds Expectations Amidst Soft US Market, Raises Full-Year Guidance

    Expedia Group delivered strong Q2 FY25 results, surpassing both revenue and adjusted EBITDA margin expectations, driven by robust B2B and international performance despite a soft U.S. travel market. The company is leveraging AI across its operations to enhance traveler value, optimize growth investments, and drive margin expansion, leading to a raised full-year guidance.

    Highlights

    5

    • Gross bookings grew 5% and revenue grew 6%, exceeding top-line expectations.

    • Adjusted EBITDA margins expanded by nearly 2 points, beating guidance by 1 point.

    • B2B bookings grew 17%, marking the 16th consecutive quarter of double-digit growth.

    • Advertising revenue grew 19% with a record number of active partners.

    • Booked room nights grew 7% overall, with Asia growing almost 30%.

    Concerns

    3

    • U.S. travel market was muted in Q2, with lower-end consumers taking a cautious approach to discretionary spending.

    • Vrbo bookings declined in a softer environment, impacted by lower daily rates, shorter length of stay, and higher cancellations.

    • Q4 growth is expected to moderate due to tougher prior-year comps (bookings up 13%, revenue up 10% in Q4 FY24) and continued U.S. consumer uncertainty.

    Guidance & targets

    7
    CategoryTargetConfidence
    Q3 Gross Bookings Growth
    5% to 7%
    medium materiality
    High
    Q3 Revenue Growth
    4% to 6%
    medium materiality
    High
    Q3 Adjusted EBITDA Margin Expansion
    50 to 100 basis points
    medium materiality
    High
    Full-Year Gross Bookings Growth
    3% to 5%
    high materiality
    High
    Full-Year Revenue Growth
    3% to 5%
    high materiality
    High
    Full-Year Adjusted EBITDA Margin Expansion
    a full point
    high materiality
    High
    Share Repurchase Program
    roughly in line with levels over the last couple of years
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    B2C
    Revenue growth driven by increased hotel demand, particularly from Brand Expedia, reflecting growth in advertising and additional stays from past period bookings. EBITDA margins up nearly 3 points from last year, driven by volume growth in higher-margin products like advertising and disciplined cost management in direct sales and marketing. High single-digit growth outside the U.S. was partially offset by softness in the U.S. market.
    Gross bookings: $21.6BGross bookings growth: 1% YoY
    		$2.5B2%—29.4%
    B2B
    Revenue growth driven by strong growth in Asia and Europe, as well as a shift in the timing from Easter. EBITDA margins up more than 2 points year-over-year, driven by volume leveraging on the cost of sales and overhead. Benefits from increased volume due to solid execution and a higher mix of business outside of the U.S.
    Gross bookings: $8.8BGross bookings growth: 17% YoY
    		—15%—27.3%

    Operational metrics

    32
    Booked room nights
    105Mup 7%
    Q2 FY25

    Overall growth, primarily driven by B2B with strong international performance.

    Booked room nights growth
    mid-single digits
    Q2 FY25

    Growth in EMEA region.

    Booked room nights growth
    mid-teens
    Q2 FY25

    Growth in Rest of the World, including Asia.

    Booked room nights growth
    nearly 20%
    Q2 FY25

    Strong growth in Asia.

    Booked room nights growth
    almost 30%
    Q2 FY25

    Specific strength in Asia for B2B, particularly Rapid API product.

    Booked room nights growth
    low single digits
    Q2 FY25

    Maintained leadership in the U.S. despite softer market.

    Booked room nights growth
    5%
    Q2 FY25

    Benefiting from international growth, partially offset by softer U.S. consumer spending.

    Average Daily Rate (ADR)
    $209essentially flat with prior year
    Q2 FY25

    U.S. travel market experienced continued pressure on inbound travel.

    Gross Bookings FX benefit
    1 point
    Q2 FY25

    Benefit from foreign exchange on gross bookings growth.

    Revenue FX impact
    8%
    Q2 FY25

    Revenue growth on an FX-neutral basis.

    International Revenue Growth
    13%
    Q2 FY25

    Outperformed bookings and revenue guidance due to strength outside the U.S.

    Adjusted EBITDA
    $908M
    Q2 FY25

    Total adjusted EBITDA for the quarter.

    Adjusted EBITDA Margin
    24%up 2 points
    Q2 FY25

    Expansion driven by revenue growth in both segments, particularly advertising, and 0.25 point benefit from FX.

    Adjusted EPS
    $4.24grew 21% versus prior year
    Q2 FY25

    Driven by higher revenues, leverage of costs, and share repurchase activity.

    Cost of Revenue
    $373M
    Q2 FY25

    Reflected ongoing efficiencies, particularly in customer service.

    Direct Sales and Marketing Expenses
    $1.9Bup 7%
    Q2 FY25

    Leverage seen in B2C business was offset by B2B. Commissions to partners included for B2B.

    Overhead Expenses
    $637M
    Q2 FY25

    Cost reduction actions did not fully impact Q2 and are expected to further benefit H2.

    Total Liquidity
    $9.2B
    Q2 FY25 end

    Strength in balance sheet.

    Unrestricted Cash and Short-Term Investments
    $6.7B
    Q2 FY25 end

    Part of total liquidity.

    Undrawn Revolving Credit Facility
    $2.5B
    Q2 FY25 end

    Part of total liquidity.

    Leverage Ratio
    2x
    Q2 FY25 end

    In line with target, committed to maintaining debt levels consistent with investment-grade rating.

    Share Repurchase Program Remaining Authorization
    $2.3B
    Q2 FY25 end

    Remaining authorization after utilizing funds in the quarter.

    Shares Repurchased (Q2 FY25)
    3.8M
    Q2 FY25

    Utilized from the share repurchase program.

    Total Shares Repurchased (last 3 years)
    42M
    last 3 years

    Reduced share count by 21%.

    AI-powered developer assistance cycle time reduction
    more than 20%
    Q2 FY25

    Seen in some teams, leading to faster feature delivery.

    Active Loyalty Members Growth
    high single digits
    Q2 FY25

    Continued momentum in the loyalty program.

    Vrbo Bookings on Promotional Rates
    nearly 10%
    Q2 FY25

    Result of new vacation rental promotions capabilities launched in May.

    Southwest Airlines Partnership Contribution
    approximately 5%
    Q2 FY25

    Contributed to Expedia outpacing total U.S. air ticket sales.

    Brand Expedia Bookings Growth
    13%
    Q2 FY25

    Part of overall high single-digit growth outside the U.S. for consumer business.

    Bookings Growth
    over 20%
    Q2 FY25

    Outsized growth in focused international markets.

    Bookings Growth
    strong double digits
    Q2 FY25

    Fueled in part by new supply.

    Adjusted EBITDA Margin Expansion (H1 FY25)
    over 1.5 points
    H1 FY25

    Good start in the first half of the year.

    Industry KPIs

    1
    MetricValueDetails
    Gross bookings value room nights$30.4BUSD

    Product announcements

    6
    ProductTypeDetails
    Vacation Rental Promotions Capabilitieslaunch
    Car APIlaunch
    New Ad Formats (Video)launch
    Automated Campaign Optimization Toolsupdate
    Hotels.com Price Alerts and Insightsupdate
    Vrbo Categorical Recommendationslaunch

    Deals & partnerships

    3
    Southwest AirlinesSupply partnership

    Recent partnership that brought new customers to both Expedia and Southwest, contributing to outperforming U.S. air ticket sales.

    Premier InnSupply partnership

    Added Premier Inn, a leading European hotel chain, strengthening value proposition in Europe.

    RyanairSupply partnership

    Added Ryanair earlier this year, strengthening value proposition in Europe.

    Risks & headwinds

    5
    Soft U.S. travel marketQ2 FY25

    Muted in Q2 FY25

    Mitigation: Focused execution and continued progress on strategic priorities; observed uptick in demand since July.

    Lower-end consumer cautionQ2 FY25

    More cautious approach to discretionary spending

    Mitigation: Leveraging supplier-driven promotions and optimizing own promotional activity.

    Vrbo performanceQ2 FY25

    Bookings declined; lower daily rates, shorter length of stay, higher cancellations

    Mitigation: Filling foundational supply gaps, unlocking last-minute deals, catering to more trip types, and improving app features like categorical recommendations.

    Q4 growth moderationQ4 FY25

    Implies roughly flat GMV and revenue for Q4 FY25

    Mitigation: Management expects to be on the upside of the higher end of the range; focus on balancing marketing investments and cost management.

    B2B rev share rate pressureOngoing

    Can put some pressure on revenue rate

    Mitigation: Constantly iterating product to bring more value and stickiness to partners, optimizing tech integrations, and focusing on merchandising.

    What to watch in Q3 FY25

    5

    B2C Marketing Leverage

    Second half of the year
    CurrentFlat or leveraged against direct marketing spend for past 3 quarters
    TargetImproved productivity and leverage

    Why it matters

    Improved marketing leverage is key to driving profitability and efficient growth in the consumer business.

    In the second half, we will benefit from the cost actions we announced with our first quarter results. In addition, we expect to deliver additional EBITDA margin expansion from our B2C marketing leverage.

    Q&A highlights

    5

    How do strategic priorities and growth investments align with traffic dynamics, conversion, and inventory scaling over the medium to long term?

    Expedia is well-positioned with a diversified portfolio (consumer brands, B2B) and is integrating AI into products and apps to capture shifting traffic. The focus is on direct traffic, app growth, and leveraging B2B's geographic and partner diversity. Strategic priorities include delivering traveler value, investing in B2B/advertising/international consumer growth, and expanding margins.

    “We're well positioned to make sure we're capturing that traffic. Of course, with our work on supply, with our work on our products, with our work on our loyalty program, our goal would be to have as much direct traffic as possible into our brands.”

    asked by Eric Sheridan · answered by Ariane Gorin

    2 min read6 chapters

    Detailed Narrative

    01

    U.S. Travel Market Dynamics and Demand Trends

    The U.S. travel market experienced a muted Q2, characterized by resilient demand from higher-income consumers but cautious spending from the lower end. Despite this, Expedia Group believes it outgrew the market in air and hotel segments. Since early July, an uptick in overall travel demand, particularly in the U.S., has been observed, influencing the company's raised annual guidance. Booking windows shortened in Q2, with re-bookings occurring from cancellations as Q3 began.

    02

    Strategic Priorities and AI Integration

    Expedia Group's strategy focuses on three pillars: delivering value for travelers through supply, loyalty, and products; investing in high-growth areas like B2B and advertising; and driving operating efficiencies for margin expansion. AI is a key enabler across all priorities, from personalizing product experiences and customer service to improving internal engineering workflows. The company is actively partnering with major tech players like Google, OpenAI, Meta, and Microsoft to integrate with GenAI searches and agentic AI.

    03

    B2B and Advertising Segment Strength

    The B2B segment continued its strong performance with 17% bookings growth, marking its 16th consecutive quarter of double-digit growth, significantly outpacing the market. This growth was driven by strong international performance, particularly in Asia, and solid execution. Advertising revenue also saw robust growth of 19%, supported by a record number of active partners and new ad formats like video, with about half of partners now using automated optimization tools.

    04

    Brand Performance: Expedia, Hotels.com, and Vrbo

    Brand Expedia was the largest and fastest-growing consumer brand, with multi-item attach rates at post-pandemic highs and 13% growth outside the U.S. Hotels.com, following a brand relaunch in April, saw accelerated room night growth from Q1 and positive trends in brand awareness and direct traffic. Vrbo's bookings declined in a softer environment, impacted by lower daily rates, shorter length of stay, and higher cancellations, though room nights grew roughly in line with the market.

    05

    Marketing Leverage and Cost Discipline

    The company has maintained flat or leveraged direct marketing spend in its consumer business for the past three quarters. Efforts to improve marketing leverage are tied to product enhancements, increased direct traffic, better retention, and sharper brand value propositions. Cost actions initiated in Q2 are expected to provide further benefits in the second half of the year, contributing to continued adjusted EBITDA margin expansion.

    06

    Loyalty Program and Supply Partnerships

    The One Key loyalty program showed continued momentum, with active loyalty members growing high single digits, and Silver members and above growing fastest. Recent supply partnerships, such as with Southwest Airlines, contributed approximately 5% of Southwest's total passenger volume in Q2, helping Expedia outpace U.S. air ticket sales. New vacation rental promotion capabilities on Vrbo have led to nearly 10% of bookings utilizing these rates.

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