Expedia raises 2025 full-year guidance as bookings rise 12% and margin expands

Earnings Call Insights: Expedia Group, Inc. (EXPE) Q3 2025

MANAGEMENT VIEW

* CEO Ariane Gorin opened by stating, "Our third quarter results exceeded both our top and bottom line expectations, reflecting an improved demand environment, disciplined execution and progress on our strategic priorities." Gorin highlighted 12% bookings growth, 9% revenue growth, and significant EBITDA margin expansion. She noted, "We're building solid momentum across the company with clear proof points that our strategy is working."
* Gorin reported an acceleration in the U.S. and continued strength globally, with longer booking windows and increased lengths of stay. The company raised its full-year guidance based on year-to-date results and ongoing trends.
* Booked room nights grew 11% in Q3, with high single-digit growth in the U.S., low double digits in EMEA, and high teens elsewhere, especially over 20% in Asia. B2B bookings rose 26%, marking the 17th straight quarter of double-digit growth. Consumer Brands bookings increased 7%, with strong international performance. Gorin said, "Expedia remained our largest and fastest-growing brand, while Hotels.com and Vrbo both improved sequentially."
* Strategic progress was emphasized across three priorities: delivering more value to travelers, investing in growth opportunities, and driving operating efficiencies. Gorin cited product improvements, AI integration, expanded supply, and loyalty program enhancements as key drivers.
* Gorin mentioned, "We expanded margins by over 2 points in the quarter, thanks to our continued operational discipline and volume leverage...AI provides an opportunity for step function improvement in our team's efficiency and effectiveness over time."
* CFO Scott Schenkel stated, "Our third quarter performance...beat the high end of our guidance range with bookings up 12%, revenue up 9% and EBITDA margin expansion of over 2 points."

OUTLOOK

* The company increased Q4 and full-year guidance. For Q4, gross bookings and revenue are expected to grow 6% to 8%. Adjusted EBITDA margins are projected to expand by approximately 2 points. For the full year, gross bookings are expected to be up approximately 7%, revenue up 6% to 7%, and EBITDA margins up about 2 points versus last year.
* Schenkel commented, "Looking ahead to 2026, we expect further margin expansion, albeit at a more moderated pace than what we drove in 2025 as we continue our cost-out efforts and invest behind our growth initiatives."

FINANCIAL RESULTS

* Gross bookings reached $30.7 billion, up 12%, with a 1 point benefit from foreign exchange. Revenue was $4.4 billion, growing 9% and benefiting from FX as well. Bookings growth exceeded revenue growth due to book-to-stay timing.
* B2C gross bookings were $21.3 billion, up 7%, with revenue of $2.9 billion and EBITDA margins at 41%. B2B gross bookings were $9.4 billion, up 26%; B2B revenue grew 18% with EBITDA margins at 29%.
* Adjusted EBITDA was $1.4 billion with a margin of 33%. Adjusted EPS was $7.57, up 23% year-over-year.
* The company ended the quarter with $6.2 billion in unrestricted cash and short-term investments. Free cash flow on a trailing 12-month basis was $3 billion. $451 million was used to repurchase 2.3 million shares in the quarter.

Q&A

* Eric Sheridan, Goldman Sachs: Asked about B2B medium-term growth and competition. Gorin responded that future growth will come from signing new partners and growing with existing ones, highlighting geographic and partner type diversification and stating, "We think that there's a lot of growth potential ahead, and we'll continue to invest in it."
* Mark Mahaney, Evercore ISI: Inquired about sources of margin expansion and agentic commerce. Schenkel explained, "It's really on the legs of a number of different initiatives...sales and marketing for B2C, cost of sales...overhead is also key...ads, insurtech and things like that, that help out as well."
* Justin Post, BofA: Questioned benefits of replatforming and brand performance. Gorin described leveraging a common data platform and loyalty program, noting recent strong performance from Hotels.com and Vrbo.
* Lee Horowitz, Deutsche Bank: Asked about sustainability of B2C marketing leverage and B2C growth. Schenkel emphasized agility and readiness to lean in, while Gorin cited product and promotional suite improvements, especially for Vrbo.
* Ken Gawrelski, Wells Fargo: Asked about alternative accommodation market and integration of hotels into search. Gorin described measured integration of vacation rentals and good results so far.
* Jed Kelly, Oppenheimer: Requested B2B competition updates. Gorin noted ongoing competition but confidence in Expedia’s value proposition.
* Conor Cunningham, Melius Research: Asked about direct bookings in B2C. Gorin reported that "about 2/3 of our bookings in our consumer business come direct."
* Jacob Seed, TD Cowen: Sought details on U.S. room nights acceleration. Schenkel confirmed high single-digit growth in the U.S., the strongest in over 3 years.
* Deepak Mathivanan, Cantor Fitzgerald: Asked about OpenAI partnership and 2026 investments. Gorin highlighted partnerships as ways to attract new customers; Schenkel said investment priorities will remain focused on the current three strategic areas.
* Naved Khan, B. Riley: Inquired about Vrbo growth and Q4 risks. Gorin said Vrbo maintained or grew U.S. market share; Schenkel detailed Q4 guidance and impact of potential government shutdown.
* Thomas Champion, Piper Sandler: Asked about international vs. U.S. travel. Gorin reported inbound travel to the U.S. nearly back to last year’s levels, with international corridors showing improvement.

SENTIMENT ANALYSIS

* Analysts' tone was positive to slightly positive, focusing on sustainability of margin gains, brand recovery, competitive dynamics, and technology investments, with multiple questions on future growth and margin expansion.
* Management maintained a confident and optimistic tone during both prepared remarks and Q&A, frequently citing operational discipline, successful strategic progress, and positive demand trends. Schenkel and Gorin used assertive language such as "we feel good" and "we're very optimistic."
* Compared to Q2, management's tone showed increased confidence, especially with the demand environment improving and stronger financial results. Analysts appeared more constructive, with fewer questions about market softness and more on expansion and investments.

QUARTER-OVER-QUARTER COMPARISON

* Guidance increased for both Q4 and the full year, compared to last quarter’s more cautious outlook, with expectations for higher growth in bookings, revenue, and margins.
* B2B growth accelerated from 17% in Q2 to 26% in Q3, and Consumer Brands saw sequential improvement, particularly for Hotels.com and Vrbo.
* Management expressed greater confidence in consumer demand, citing an improved U.S. market versus Q2’s softness.
* Analysts shifted focus from concerns about U.S. market weakness and promotions to questions about sustainability and expansion of current gains.
* Management’s confidence in AI-driven efficiencies and product enhancements has increased, with more specific examples cited this quarter.

RISKS AND CONCERNS

* Management flagged ongoing monitoring of economic indicators and described the macro environment as dynamic.
* Schenkel discussed the potential impact of a U.S. government shutdown and related air travel disruptions, stating these factors were considered in Q4 guidance.
* The company continues to monitor competitive dynamics in B2B and alternative accommodations, emphasizing continued investment to maintain value proposition.

FINAL TAKEAWAY

Expedia Group management conveyed that Q3 results reflected robust demand and successful execution of strategic priorities, prompting an upward revision to full-year guidance. With margin expansion, strong B2B and Consumer Brand performance, and ongoing investments in AI and operational efficiency, the company expressed strong confidence in its ability to drive further growth and value for stakeholders amid a dynamic environment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/expe/earnings/transcripts]

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