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    EXPE
    Earnings call· Sep 2025(Q3 FY25)

    Expedia Group, Inc. EXPE

    Nov 6, 2025 Source

    Executive summary

    Expedia Group Q3 FY25 — Strong Performance Driven by B2B and Marketing Efficiency

    Expedia Group delivered a strong Q3 FY25, surpassing expectations with robust bookings and revenue growth, particularly in its B2B segment. The company achieved significant EBITDA margin expansion through disciplined execution and improved marketing productivity, while leveraging AI across its products and operations. Management is confident in its strategic priorities, though it remains agile in monitoring a dynamic macro environment and anticipates a moderation in Q4 growth due to challenging prior-year comparisons.

    Highlights

    5

    • Bookings grew 12% and revenue 9%, exceeding top and bottom line expectations.

    • B2B bookings increased 26%, marking the 17th consecutive quarter of double-digit growth.

    • Adjusted EBITDA margin expanded by over 2 points, driven by revenue and expense leverage.

    • Adjusted EPS of $7.57 grew 23%, faster than EBITDA due to share repurchases.

    • Booked room nights were up 11%, with U.S. room nights growing high single digits, the fastest in over 3 years.

    Concerns

    3

    • Q4 growth is expected to moderate due to tougher year-over-year comparisons, lapping a 6-point bookings and 7-point revenue acceleration from Q4 last year.

    • Canada volume into the U.S. remains pressured, though it improved as the quarter progressed.

    • The company is monitoring economic indicators and a dynamic macro environment, including potential impacts from a government shutdown.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q4 Gross Bookings Growth
    6% to 8%
    high materiality
    High
    Q4 Revenue Growth
    6% to 8%
    high materiality
    High
    Q4 Adjusted EBITDA Margin Expansion
    approximately 2 points
    high materiality
    High
    Full-year FY25 Gross Bookings Growth
    approximately 7%
    high materiality
    High
    Full-year FY25 Revenue Growth
    approximately 6% to 7%
    high materiality
    High
    Full-year FY25 EBITDA Margin Expansion
    approximately 2 points
    high materiality
    High
    FY26 Margin Expansion
    further margin expansion, albeit at a more moderated pace
    medium materiality
    Medium
    Share Repurchase Pace
    roughly in line with levels over the last couple of years
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    B2C
    Performance driven by improved market demand, advertising, and insurance. EBITDA margin expansion was due to significant marketing leverage through optimization, discipline in managing cost of sales and overhead, and growth in high-margin advertising and insurance revenues.
    Gross bookings: $21.3BGross bookings growth: 7% YoYEBITDA margin change: Up ~4 points YoY
    		$2.9B4%—41%
    B2B
    Broad-based growth across all regions. Rapid API was the fastest-growing product and largest contributor to growth. ARC Travel business grew 25%. Revenue growth was below bookings growth primarily due to book-to-stay timing. EBITDA margins were flat as the company prioritized investments to support continued growth.
    Gross bookings: $9.4BGross bookings growth: 26% YoYEBITDA margin change: Flat YoY
    		—18%—29%

    Operational metrics

    25
    Gross Bookings
    $30.7BUp 12% YoY
    Q3 FY25

    Exceeded expectations.

    Revenue
    $4.4BUp 9% YoY
    Q3 FY25

    Exceeded expectations. Bookings growth exceeded revenue growth primarily due to book-to-stay timing.

    Booked Room Nights
    11%Up YoY
    Q3 FY25

    Driven by strongest U.S. night growth in over 3 years and sequential acceleration across all main regions and core brands.

    U.S. Room Nights Growth
    high single digitsUp YoY
    Q3 FY25

    Fastest growth in over 3 years, across both consumer and B2B businesses.

    EMEA Room Nights Growth
    low double digitsUp YoY
    Q3 FY25

    B2C hotel room night growth in Europe was the highest since Q1 2023.

    Asia Room Nights Growth
    high teensUp YoY
    Q3 FY25

    Strong growth in the region.

    Advertising Revenue
    16%Up YoY
    Q3 FY25

    Posting another double-digit quarter with a record number of active partners.

    Adjusted EBITDA
    $1.4B
    Q3 FY25

    Driven by revenue and expense leverage, particularly within direct sales and marketing in B2C segment.

    Adjusted EPS
    $7.57Up 23% YoY
    Q3 FY25

    Grew faster than EBITDA due to share repurchases.

    Cost of Revenue
    $373MDown 3% YoY
    Q3 FY25

    Driven by efficiencies in payments and customer service.

    Total Direct Sales and Marketing Expenses
    $2BUp 7% YoY
    Q3 FY25

    Driven by B2B. Commissions paid to partners are included and recorded at time of stay.

    B2C Direct Sales and Marketing Expenses
    Down 4%YoY
    Q3 FY25

    Significant leverage achieved.

    Overhead Expenses
    $620MUp 3% YoY
    Q3 FY25

    Benefiting from actions to reduce cost structure earlier in the year.

    Unrestricted Cash and Short-Term Investments
    $6.2B
    Q3 FY25

    Balance at quarter end.

    Share Repurchase Program Remaining Authorization
    $1.8B
    Q3 FY25

    Remaining balance after utilizing $451M in the quarter.

    Shares Repurchased in Quarter
    $451M
    Q3 FY25

    Part of the ongoing share repurchase program.

    Total Shares Repurchased (last 3 years)
    44M
    Last 3 years

    Reduces share count by 22% net of dilution.

    Consumer Direct Business Bookings
    about 2/3
    Q3 FY25

    Includes bookings from loyalty program and returning direct travelers. Conversion in direct channels has started to tick up.

    Air Revenue
    $101M
    Q3 FY25

    Revenue for Q3. Air remains a major priority for expansion and bundling.

    Air Revenue
    $300M
    YTD

    Year-to-date Air revenue.

    Air Revenue Run Rate
    $100M
    Q4 FY25

    Estimated Q4 run rate. Even a significant reduction should be absorbable within the Q4 outlook.

    Vrbo Bookings on Partner-Funded Promotional Rates
    >20%
    Q3 FY25

    A new capability launched in the spring, illustrating the power of the flywheel.

    Active One Key Members Growth
    mid-single digitsUp YoY
    Q3 FY25

    One Key is driving more repeat and direct bookings, growing fastest with Silver members and above.

    Travel Agency Business Bookings
    $3B
    YTD

    Grown number of agencies, expanded agent loyalty program, and added features like new payment options.

    Virtual Agents Resolving Traveler Queries
    >50%
    Q3 FY25

    AI-powered virtual agents improve resolution speed and reduce service cost per transaction.

    Industry KPIs

    1
    MetricValueDetails
    Gross bookings value room nights$30.7BUSD

    Product announcements

    8
    ProductTypeDetails
    Vrbo Recommendation Experiencesupdate
    Expedia Design Flowsupdate
    AI Filters, Property Q&A, Guest Review Summaries, Service Agentupdate
    Vrbo Member Dealslaunch
    Hotels.com Save Your Waylaunch
    New Ad Portallaunch
    Loved by Guests badgelaunch
    Vrbo Careexpansion

    Deals & partnerships

    3
    GoogleForging tight partnerships with leading tech companies for AI-driven search.

    Part of strategy to ensure brands show up wherever travelers are, leveraging AI-driven search.

    OpenAILaunch partner with ChatGPT's apps and forging tight partnerships for AI-driven search.

    Experimenting with new Gen AI experiences and keeping at the leading edge of evolving technology and customer behavior.

    PerplexityForging tight partnerships with leading tech companies for AI-driven search.

    Part of strategy to ensure brands show up wherever travelers are, leveraging AI-driven search.

    Risks & headwinds

    4
    Moderation in Q4 GrowthQ4 FY25

    Lapping 6-point bookings and 7-point revenue acceleration from Q4 last year.

    Mitigation: Monitoring economic indicators, remaining focused and agile amidst dynamic macro environment.

    Canada Volume into U.S. PressureQ3 FY25 (improved as quarter progressed)

    Canada volume into the U.S. remains pressured.

    Mitigation: No specific mitigation stated, but monitoring trends.

    Dynamic Macro EnvironmentOngoing

    Not quantified, but includes economic indicators.

    Mitigation: Keeping a close eye on economic indicators, remaining focused and agile.

    Government ShutdownNear-term (next few weeks)

    Potential impact on travel demand, particularly Air revenue.

    Mitigation: Factored into Q4 guidance; Air revenue is a smaller portion of total revenue, making impact absorbable. Company is prepared to support travelers if issues arise.

    What to watch in Q4 FY25

    5

    Q4 Gross Bookings Growth

    Q4 FY25
    Current6% to 8% guidance
    TargetAchieve 6% to 8% growth

    Why it matters

    Verifies the company's ability to navigate tougher comps and maintain growth momentum.

    For Q4, we expect gross bookings and revenue growth of 6% to 8%.

    Q&A highlights

    6

    How should we think about the building blocks for medium-term growth in B2B, considering existing supply/partnerships and competitive environment?

    B2B growth is driven by signing new partners and growing existing ones, expanding product offerings beyond lodging to car rentals, advertising, and insurance. The business is diversified geographically (65% outside U.S.) and by partner type (offline/online travel agents, corporate, airlines, banks). The company is confident in its value proposition and continues to innovate despite competition in the over $3 trillion travel industry.

    “The performance is driven by a combination of great supply, strong technology and a base of long-term partners who rely on us and who trust us as they're building their businesses.”

    asked by Eric Sheridan · answered by Ariane Gorin

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Priorities and AI Acceleration

    Expedia Group's strong Q3 performance reflects progress on its three strategic priorities: delivering value to travelers, investing in growth opportunities, and driving operating efficiencies. AI is accelerating all these areas, with new AI-powered features like filters, property Q&A, guest review summaries, and a service agent driving engagement. The company is also leveraging AI in marketing and partner tools to enhance relevance and targeting, and in internal operations to improve efficiency.

    02

    Brand Repositioning and Product Innovation

    The company's efforts to sharpen the value propositions of its core brands are paying off. Expedia remains the largest and fastest-growing brand, while Hotels.com and Vrbo showed sequential improvement in room nights and bookings. Vrbo introduced new recommendation experiences, improved property comparison tools, member deals, and 'Loved by Guests' badge, alongside 'Vrbo Care' for guest reassurance. Hotels.com launched 'Save Your Way' for flexible savings, solidifying its hotel-only pure play value.

    03

    B2B and Advertising Momentum

    The B2B segment delivered another exceptional quarter with 26% bookings growth, marking its 17th consecutive quarter of double-digit growth. This was driven by the Rapid API product and the ARC Travel business, which grew 25%. Advertising revenue also grew 16%, supported by a record number of active partners and the use of AI for ad relevance and improved targeting through a new ad portal. The company sees significant opportunities for continued growth in both B2B and advertising.

    04

    Benefits of Replatforming and AI in Operations

    The replatforming efforts from 2021-2024 are now enabling greater scale and efficiency across brands, including a common data platform and lodging path. The One Key loyalty program, rolled out across all three brands, leverages this platform for a unified customer identity. Internally, AI is enhancing developer productivity and improving customer service resolution speed, with virtual agents resolving over 50% of traveler queries and providing concise summaries to human agents, contributing to cost reduction.

    05

    Market Dynamics and Outlook

    The market was healthy in Q3, with an acceleration in the U.S. and continued strength internationally, particularly in Asia. Longer lengths of stay and booking windows were observed. While October showed continued momentum, the company is closely monitoring economic indicators and a dynamic macro environment. Q4 growth is expected to moderate📎 due to tougher year-over-year comparisons, but management remains confident in its ability to execute and achieve its raised full-year guidance.

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