Expedia Group(EXPE) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a 43% increase in bookings and revenue, which was at the lower end of the guidance range due to weaker travel demand in the U.S. [5][22] - EBITDA grew by 16%, and earnings per share increased by 90% [5][22] - Booked room nights grew by 6%, with low single digits growth in the U.S., mid single digits in Europe, and mid-teens growth in the rest of the world [6][22] Business Line Data and Key Metrics Changes - The B2B business posted a 14% bookings growth, outperforming the industry [7][22] - The advertising business achieved a robust 20% revenue growth [8][22] - Brand Expedia was the fastest-growing consumer brand with room nights up 7%, while Vrbo grew modestly and Hotels.com experienced a decline due to softer U.S. demand [8][22] Market Data and Key Metrics Changes - U.S. demand was soft, driven by declining consumer sentiment, with inbound travel to the U.S. down 7% and bookings from Canada falling nearly 30% [6][25] - The company noted a shift in consumer behavior, with travelers opting for lower average daily rates [61] Company Strategy and Development Direction - The company is focused on three strategic priorities: delivering more value for travelers, investing in growth opportunities, and driving operational efficiencies [9][18] - AI is being leveraged to enhance product experiences, improve marketing effectiveness, and streamline operations [13][80] - The company is expanding its B2B business and enhancing advertising solutions to drive future growth [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the macroeconomic environment but expressed confidence in the company's ability to navigate challenges and continue delivering value [21][120] - The company expects Q2 2025 gross bookings growth of 2% to 4% and revenue growth of 3% to 5%, with EBITDA margin expansion of 75 to 100 basis points [36][37] Other Important Information - The company ended the quarter with $6.1 billion in unrestricted cash and short-term investments and maintained a total debt of $6.3 billion [34][35] - The company reinitiated a quarterly dividend of $0.40 per share and accelerated stock repurchases [35] Q&A Session Summary Question: Marketing spend and ROI - Management indicated that they spent about $1 billion on marketing in Q1 and will focus on profitable growth opportunities while reducing costs where necessary [45][46] Question: Hotels.com turnaround - Management expressed optimism about Hotels.com, highlighting recent brand relaunch efforts and positive momentum [44][46] Question: Managing macro headwinds - Management noted the B2B business's geographic and segment diversity, which helps mitigate macroeconomic pressures [51][52] Question: Monthly trends and consumer behavior - Management reported that April was softer than March, with a shift towards lower average daily rates and increased discounts from hotel partners [61] Question: Experiences and attractions investment - Management acknowledged the growing importance of experiences and attractions but did not provide specific investment details [70] Question: AI investments - Management discussed the strategic importance of AI in enhancing products, driving traffic, and improving team effectiveness [76][80] Question: Booking curve and international rollout - Management noted a mixed picture in booking windows, with slight expansion for hotels and decline for vacation rentals, while the B2B business showed strong growth in Asia [88][89] Question: B2B performance and advertising impact - Management confirmed that while the B2B business faced some pressure from U.S. softness, it remained globally diversified and continued to grow [118][119]