Expedia (EXPE) - Q2 2025 Earnings Call
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Call Details
Call Title: Expedia Group Q2 2025 Financial Results
Date Held: August 7, 2025
Management Team Members Present:
Ariane Gorin, CEO
Scott Schenkel, CFO
Dan Simo, SVP, Corporate Finance
Call Summary
Financial Performance
Gross bookings increased by 5%, while revenue grew by 6%.
Adjusted EBITDA margins expanded by approximately 2 points.
Booked room nights were up 7%, with particularly strong performance in Asia where growth approached 30%.
U.S. travel market conditions remained soft, albeit with signs of improvement starting in July.
Advertising revenue saw a 19% increase, driven by a record number of active partners.
Guidance
Expedia raised its annual guidance based on a strong start in the first half of the year.
For Q3, gross bookings growth is expected in the range of 5-7% and revenue growth between 4-6%.
Full-year guidance has been updated to reflect 3-5% growth in both gross bookings and revenue.
Adjusted EBITDA margins are projected to expand by 50 to 100 basis points in Q3, with a full-year expansion goal of one full point.
Capital Allocation
Share repurchase activity continued, with $627 million used to repurchase 3.8 million shares in the second quarter.
The remaining $2.3 billion in the share repurchase program underscores ongoing commitment to capital returns.
Planned capital allocation will sustain share repurchase activity at current levels through the remainder of 2025.
Macro & Demand Trends
Higher-end consumers remained resilient, while those at the lower end exercised caution in discretionary spending.
Demand trends improved in July, signaling potential recovery in the U.S. travel market.
Asia and Europe showed stronger performance, with particular growth seen in B2B and international segments.
International Trends
High single-digit growth in bookings outside the U.S., with Brand Expedia noting 13% growth internationally.
EMEA and Asia showed robust performance, with international revenue growth at 13%.
Expedia continues to optimize supply in regions like Japan, Brazil, and Northern Europe.
Competition
Brand Expedia was highlighted as a fast-growing consumer brand, taking market share in key regions.
In the face of competitive pressures, particularly in the advertising space, continued innovation and partnerships are strategic priorities.
AI Trends
AI is enhancing personalized traveler experiences, contributing to higher conversion rates and customer satisfaction.
Expedia is leveraging partnerships with major tech companies like Google, OpenAI, and Microsoft to optimize search traffic and branded integrations.
Internally, AI is improving productivity across teams, with reduced cycle times and faster feature delivery.
Product Updates
New features in Hotels.com, such as price alerts and insights, enhance its market positioning as a specialist.
Vrbo updates include new vacation rental promotions and last-minute deals aimed at increasing appeal for shorter trips.
Ongoing enhancements to Brand Expedia’s package offerings and multichannel capabilities are driving sales.
Expense and Headcount Trends
Overhead was reduced to $637 million, representing a slight improvement in efficiency.
Direct sales and marketing expenses were stable relative to gross bookings, with future focus on optimizing marketing leverage.
NOTABLE QUOTES:
“Our second quarter results exceeded both our top and bottom-line expectations.” - Ariane Gorin
“Adjusted EBITDA margin expansion of approximately 2 points was driven by revenue growth...” - Scott Schenkel
“AI accelerates all of our strategic priorities, and I’ll share how we’re leveraging it in each.” - Ariane Gorin
“Traffic from Gen AI searches is small but growing fast, and it’s converting into bookings at higher rates than other traffic.” - Ariane Gorin
“B2B bookings grew 17%, outpacing the market and delivering our 16th consecutive quarter of double-digit growth.” - Ariane Gorin
“We’re raising our annual guidance, based on our solid first half performance and current trends.” - Ariane Gorin
“In customer service, AI is contributing to record high net promoter scores while helping us reduce costs.” - Ariane Gorin
“We expect gross bookings growth of 5 to 7% and revenue growth of 4 to 6% for the third quarter.” - Scott Schenkel
“We delivered high single-digit growth outside the U.S., partially offset by softness in the U.S. market.” - Scott Schenkel
“Brand Expedia was once again our largest and fastest growing consumer brand with multi-item attach rates at their highest level since the pandemic.” - Ariane Gorin
Q&A SUMMARY:
Q: Eric Sheridan (Goldman Sachs) asked about strategic priorities influencing traffic dynamics and growth investments.
A: Ariane Gorin emphasized a strong portfolio mix between B2B and B2C brands, and stated a focus on integrating AI into consumer products, enhancing direct traffic, and leveraging partnerships with tech players like Google and OpenAI.
Q: Anthony Post (Bank of America) inquired about Hotels.com’s improvements and Q4 guidance.
A: Ariane Gorin noted progress with brand relaunch and new features leading to improved consumer engagement. Scott Schenkel highlighted challenging market conditions and comps affecting Q4 expectations.
Q: Lee Horowitz (Deutsche Bank) questioned marketing leverage improvements in B2C.
A: Ariane Gorin noted product improvements, efficient traffic conversion, and strategic marketing optimizations contributing to better marketing leverage.
Q: Naved Khan (B. Riley Securities) asked about the impact of promotions and all-in pricing on conversions.
A: Ariane Gorin explained increased supplier-driven promotions due to price sensitivity and noted that all-in pricing had no unexpected impact on conversions.
Q: Jed Kelly (Oppenheimer) discussed AI in B2B and Vrbo booking trends.
A: Ariane Gorin spoke on foundational supply improvements for Vrbo and early stages of AI integration in B2B to enhance service efficiency.
Q: Connor Cunningham (Melius Research) asked about international booking growth and elongation of booking curves.
A: Scott Schenkel noted shorter booking windows in Q2 and improvement entering Q3. Ariane Gorin stressed a focused international growth strategy with promising growth in key regions.
Q: Kevin Kobelman (TD Securities) inquired about B2B growth drivers and FX impacts.
A: Scott Schenkel provided FX impact guidance, and Ariane Gorin discussed geographical diversity and partnership value driving B2B growth.
Q: Doug Anmuth (JPMorgan) sought insights into Brand Expedia’s performance within B2C and revenue guidance adjustments.
A: Ariane Gorin highlighted Expedia’s strong value proposition, adding that the brand is taking share in several markets.
Q: Mark Mahaney (Evercore ISI) asked about areas of improvement over the CEO’s tenure.
A: Ariane Gorin mentioned enhanced execution in B2B, advertising, and Brand Expedia while focusing on improving traveler experiences and internal efficiencies.
Q: Tom Champion (Piper Sandler) inquired about the loyalty program and marketing discipline.
A: Ariane Gorin confirmed strong growth in higher-tier loyalty members and indicated adjustments to optimize brand value, while Scott Schenkel discussed redeploying marketing costs effectively.
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