Discuss the advantages and stickiness of B2B contracts given increasing competition, and the potential for further marketing efficiencies after significant improvements last year.

Ariane Gorin stated that the B2B space has always been competitive with a large addressable market. Expedia offers strong supply, technology, servicing, and partner accompaniment. The focus is on proving value to partners and building a one-stop travel shop, including recent acquisitions like CarTrawler and tickets. Derek Andersen noted that while marketing efficiencies will face tougher comps, structural improvements are enduring, and the company remains committed to operating efficiency, with overheads flat year-over-year despite revenue growth. “My view is we have to be proving day in and day out to our partners that they can trust us to build their business on top of us.”

How have views on Europe (pressured outbound) and APAC (rebounding) changed? Explain the moderation in Q3 margin expansion and expected improvement in Q4.

Ariane Gorin noted that Expedia has a geographically balanced business and adapts to demand shifts, with a long-term goal to grow in strong areas and identify new geographies. Derek Andersen explained Q3 margin moderation is due to lapping prior year cost reductions, ongoing B2B investments, and net FX headwinds. Q4 margin expansion is expected to improve to about 50 bps at the midpoint of guidance as Q3 pressures ease and efficiency initiatives continue. “My view is what we've always seen is over time, demand rebounds sort of across the world.”

Discuss the competitive landscape in B2B and explain the increase in B2B overhead expense.

Ariane Gorin reiterated the competitive nature of the B2B market but highlighted the large addressable market beyond core OTAs. She emphasized Expedia's value proposition and the strategy to become a one-stop travel shop. Derek Andersen clarified that the increased B2B overhead is due to investments in building out additional lines of business for the one-stop shop vision, including the digestion of the tickets acquisition in Q2, and some geography of FX hedging. “There's investments going into the B2B segment to drive that one-stop shop and build out our lines of business. And 1 aspect of that is that we had the digestion of tickets in that acquisition in Q2. And so that would weigh a little bit on the cost that you're seeing...”

EXPE

Expedia Group (EXPE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 5, 2026

Source: earnings call transcript

Executive summary

Expedia Group Q2 FY26 — Strong Performance Driven by B2B Momentum and Marketing Leverage

Expedia Group delivered a solid second quarter, surpassing expectations with strong financial results driven by robust B2B growth, improved consumer marketing returns, and disciplined cost management. The company continues to advance its strategic priorities, including product innovation with AI, expanding marketplace supply, and building a comprehensive B2B travel platform. While facing some regional pressures and tougher comparisons ahead, management raised its full-year outlook, signaling confidence in sustained operational efficiency and market demand.

Highlights

Exceeded top and bottom line expectations for the fifth consecutive quarter, with bookings up 12%, revenue up 14%, and adjusted EBITDA up 23%.
Market-leading B2B team delivered its 20th consecutive quarter of double-digit growth.
Adjusted EPS grew 36% year-over-year, reflecting strong earnings and accretive share repurchases.
Expanded adjusted EBITDA margin by nearly 2 points to 25.9% in Q2 FY26, driven by cost efficiencies and consumer marketing leverage.
Achieved full coverage of U.S. commercial airlines by becoming the first OTA to distribute Allegiant flights, reinforcing market position.

Concerns

Europe remained pressured, particularly outbound travel, due to macro headwinds and reduced air capacity weighing on demand, resulting in low single-digit room night growth in EMEA.
Q3 margin expansion expected to moderate, with adjusted EBITDA margin guided to 32.5% to 32.8%, due to lapping prior year cost actions, ongoing investment in B2B growth, and unfavorable net FX impacts.
Tougher comparisons in the second half of the year for bookings and room nights growth rates, with Q3 bookings growth guided to 5% to 7%.

Guidance & targets

Category	Target	Timeline	Confidence
Full Year Gross Bookings	$129.5B to $130.8B high materiality	FY26	High
Full Year Gross Bookings Growth	8% to 9% high materiality	FY26	High
Full Year Revenue	$16.05B to $16.22B high materiality	FY26	High
Full Year Revenue Growth	9% to 10% high materiality	FY26	High
Full Year Adjusted EBITDA Margin Expansion	150 to 175 basis points high materiality	FY26	High
Q3 Gross Bookings	$32.2B to $32.8B high materiality	Q3 · FY26	High
Q3 Gross Bookings Growth	5% to 7% high materiality	Q3 · FY26	High
Q3 Revenue	$4.65B to $4.75B high materiality	Q3 · FY26	High
Q3 Revenue Growth	5% to 8% high materiality	Q3 · FY26	High
Q3 Adjusted EBITDA	$1.51B to $1.56B high materiality	Q3 · FY26	High
Q3 Adjusted EBITDA Margin	32.5% to 32.8% high materiality	Q3 · FY26	High
Q4 Adjusted EBITDA Margin Expansion	approximately 50 basis points medium materiality	Q4 · FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
B2B Market-leading B2B team delivered its 20th consecutive quarter of double-digit growth, underscoring the durability and momentum of this business. Consecutive quarters of double-digit growth: 20	—	double-digit growth	—	—
Consumer Consumer bookings were up 8%, driven by our fastest U.S. growth in 15 quarters. U.S. growth: fastest in 15 quarters	—	8%	—	—
U.S. Total booked room nights were up 6%, with mid-single digits in the U.S.	—	mid-single digits	—	—
EMEA Total booked room nights were up 6%, with low single digits in EMEA. Europe remained pressured, particularly outbound travel as macro headwinds and reduced air capacity weighed on demand.	—	low single digits	—	—
Rest of World Total booked room nights were up 6%, with low double digits in the rest of the world. APAC rebounded from the disruption related to the Middle East.	—	low double digits	—	—

EXPE operating KPIs by quarter

EXPE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Change vs prior quarter
Gross bookings	$24.4B Total gross bookings of $24.4 billion grew 13% with a 5-point sequential acceleration in both B2C and B2B with a better-than-expected demand environment and strong operational execution. Source: earnings call transcript	$31.5B Total gross bookings of $31.5 billion were up 4%. Source: earnings call transcript	$30.4B Gross bookings were $30.4 billion, up 5%, which includes a 1 point benefit from foreign exchange. Source: earnings call transcript	$30.7B Gross bookings were $30.7 billion, up 12%, including a 1 point benefit from foreign exchange. Source: earnings call transcript	$27B Gross bookings and revenue grew 11% to $27 billion and $3.5 billion, respectively. Source: earnings call transcript	$35.5B Gross bookings were 35.5 billion, up 13%, driven by 6% room night growth and 4% ADR growth on an FX-neutral basis. Source: earnings call transcript	+31.5%
Average daily rate (ADR)	—	$214 Average daily rates were $214, down 1%, although up 1% on an FX-neutral basis. Source: earnings call transcript	$209 ADRs of $209 were essentially flat with prior year. Source: earnings call transcript	—	—	—	-2.3%
Gross bookings B2C	—	$22.6B B2C gross bookings of $22.6 billion grew 1%. Source: earnings call transcript	$21.6B B2C gross bookings of $21.6 billion increased 1% year-over-year. Source: earnings call transcript	$21.3B B2C gross bookings of $21.3 billion accelerated 6 points to 7% year-over-year, driven by performance both domestically and internationally. Source: earnings call transcript	$18.3B B2C gross bookings of $18.3 billion grew 5%, driven by sustained momentum both domestically and internationally. Source: earnings call transcript	$24.8B Consumer gross bookings of 24.8 billion grew 10%, driven by sustained momentum in the US and continued momentum in Vrbo. Source: earnings call transcript	+35.5%
Gross bookings B2B	—	$8.8B B2B gross bookings of $8.8 billion grew 14%, materially above the market, although decelerating sequentially. Source: earnings call transcript	$8.8B B2B gross bookings were $8.8 billion, up 17%. Source: earnings call transcript	$9.4B B2B gross bookings were $9.4 billion or 26% with broad-based growth across all regions. Source: earnings call transcript	$8.7B B2B gross bookings grew 24% to $8.7 billion, with continued double-digit growth across all regions. Source: earnings call transcript	$10.7B B2B gross bookings grew 22% to $10.7 billion, led by an acceleration in North America and double-digit growth across all core regions. Source: earnings call transcript	+23%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Lela AI conversational planning app

Acquisition of Lela, an AI conversational planning app, to capture new types of travelers and integrate learnings into core business.

CarTrawler leading B2B car rental and insurance platform

Announced intent to acquire CarTrawler, the leading B2B car rental and insurance platform, as part of building a one-stop B2B travel shop.

Allegiant distribution of Allegiant flights

Expedia became the first OTA to distribute Allegiant flights, achieving full coverage of U.S. commercial airlines.

Risks & headwinds

Europe outbound travel pressure Q2 FY26

low single digits

Mitigation:Geographically balanced business allows leaning into areas with more demand; long-term view of demand rebound.

Deceleration of bookings and room night growth rates due to tougher comparisons H2 FY26

Q3 bookings growth of 5% to 7%

Mitigation:Incorporated into Q3 and full year guidance; structural improvements in marketing and ongoing efficiency initiatives are expected to endure.

Moderation in Q3 adjusted EBITDA margin expansion Q3 FY26

Q3 adjusted EBITDA margin of 32.5% to 32.8%

Mitigation:Expected to improve in Q4 as specific pressures ease and efficiency initiatives continue; full year margin expansion guidance raised.

Unfavorable net FX impacts Q3 FY26

estimated 1 point FX headwind

Mitigation:Considered in Q3 guidance; full year guidance still assumes FX tailwinds.

Secondary impacts from Middle East conflict (e.g., jet fuel prices) ongoing

impacting jet fuel prices, which have an impact on airline prices and ticket prices

Mitigation:Direct business impact in the region is relatively small; overall travel market remains resilient.

What to watch in Q3 FY26

Adjusted EBITDA Margin Expansion

Q4 FY26

Current Q3 FY26 expected to moderate (32.5% to 32.8% margin)

Target Improvement in Q4 FY26 (approx. 50 bps expansion)

Why it matters

Management expects margin expansion to improve in Q4 after Q3 moderation, indicating the effectiveness of ongoing efficiency initiatives.

We expect the pace of margin expansion to improve in Q4 as some of these pressures ease and as we continue to drive operating efficiency across the business.

Find out whether EXPE delivers this. Inve re-checks your case every morning.

Q&A highlights

How does Expedia balance AI-native channels (off-platform), AI solutions on-platform, and traditional advertising for driving return on ad spend and conversion?

Ariane Gorin explained that AI is used in product for better recommendations, ranking, and personalization, showing immediate conversion impacts. AI also helps accelerate product development. New natural language experiences like Vrbo search are not yet driving conversion but provide deeper traveler intent data. Off-platform AI experiences (ChatGPT, Claude, Google AI) are seen as new opportunities for brand visibility, though it's early and fast-moving.

“There's what we're doing with AI in our product right now that is delivering results in our core business. And then the second is what we're doing in our product that's not necessarily delivering conversion right now, what we know is helping us better understand travelers and is going to have compounding benefits over time.”

asked by Eric Sheridan · answered by Ariane Gorin

2 min read 6 chapters

Detailed narrative

AI-Driven Product Innovation

Expedia Group is leveraging AI to enhance traveler experiences, introducing conversational search on Vrbo and updating AI-powered features like Property Expert and AI Compare for hotels. These innovations aim to simplify trip planning, personalize recommendations, and deepen traveler engagement, leading to improved conversion and attach rates on platforms like Expedia. The company also uses AI to accelerate product development and manage token costs thoughtfully.

Strategic Growth Investments

The company is strategically investing in high-return growth opportunities, including newer marketing channels like AI and social platforms, which are among its fastest-growing. Deepening partnerships with leading AI platforms, such as ChatGPT and Google's AI services, and the acquisition of Lela, an AI conversational planning app, are key to capturing new traveler segments and integrating learnings into core operations.

B2B Segment Momentum and Expansion

The B2B segment continued its strong performance with its 20th consecutive quarter of double-digit growth, underscoring its durability. Expedia is building a 'one-stop travel shop' for partners, exemplified by the announced intent to acquire CarTrawler, a B2B car rental and insurance platform, and the acquisition of tickets.

This expansion aims to offer a complete suite of components from supply and technology to servicing, enhancing its value proposition in a competitive market.

Operating Efficiency and Margin Expansion

Expedia Group achieved significant margin expansion in Q2, driven by tight expense management and marketing leverage. The company's focus on operating efficiency has led to a 4-point margin expansion and more than doubled trailing 12-month free cash flow over the past two years. Efforts include Agentic voice solutions for partner inquiries on Vrbo, demonstrating faster resolution and lower contact propensity.

Geographic Performance and Demand Trends

Consumer spending remained healthy, particularly in the U.S., with travelers prioritizing longer stays and booking windows despite rising prices. Total booked room nights increased 6%, with strong growth in the U.S. and rest of the world. Europe, however, faced pressure from macro headwinds and reduced air capacity, while APAC rebounded from Middle East-related disruptions, highlighting the geographically balanced nature of the business.

Marketplace Supply and Value Proposition

The company reinforced its marketplace position by becoming the first OTA to distribute Allegiant flights, achieving full coverage of U.S. commercial airlines. On lodging, supplier-funded promotions expanded, with over 40% of Vrbo bookings including such offers, and a May sale exceeding $1 billion in bookings. These initiatives demonstrate the strength of Expedia's two-sided marketplace in providing value to travelers and incremental demand to partners.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.