Expedia (EXPE) - Q3 2025 Earnings Call
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Call Details
Call Title: Expedia Group Q3 2025 Financial Results Teleconference
Date held: November 6, 2025
Management team members present:
Ariane Gorin, CEO
Scott Schenkel, CFO
Rob Befegny, VP Investor Relations
Call Summary
Financial Performance
Expedia Group reported a 12% increase in bookings and a 9% rise in revenue for Q3 2025, exceeding expectations. Ariane Gorin stated, “Our third quarter results exceeded both our top and bottom line expectations.”
EBITDA margin expanded by over two points, attributed to strong operational execution and market conditions. Scott Schenkel highlighted that “our outperformance was driven by solid execution across our company and a stronger than expected U.S. market.”
Total gross bookings reached $30.7 billion, benefiting from a one-point contribution from foreign exchange rates. According to Schenkel, “Revenue of $4.4 billion grew 9% and had a two-and-a-half point benefit from foreign exchange.”
B2C gross bookings stood at $21.3 billion, reflecting a 7% increase driven by a healthy market demand, mentioned as “performance both domestically and internationally.”
Adjusted EBITDA was recorded at $1.4 billion, contributing to a 33% margin, with Schenkel noting, “The two points of adjusted EBITDA margin expansion was driven by revenue and expense leverage.”
The company highlighted productive marketing initiatives leading to B2C EBITDA margins of 41%, an uptick of approximately four points from last year.
Free cash flow over the trailing 12 months totaled $3 billion, a strong indication of operational efficiency. Schenkel stated, “Free cash flow on a trailing 12-month basis reflects the strength of our operating model.”
Guidance
For Q4 2025, Expedia anticipates gross bookings and revenue growth of 6% to 8%. Schenkel indicated, “Our outlook already reflects the stable trends we saw in October.”
The full-year gross bookings are expected to rise by approximately 7%, with revenue growth forecasted to be between 6% to 7%.
Adjusted EBITDA margins are expected to expand by approximately two points compared to the prior year.
Schenkel informed, “Looking ahead to 2026, we expect further margin expansion, albeit at a more moderated pace than what we drove in 2025.”
The company remains vigilant regarding economic conditions impacting guidance, emphasizing ongoing monitoring of market trends.
Capital Allocation
As of the end of Q3 2025, Expedia held $6.2 billion in unrestricted cash and short-term investments. This positions the company well for opportunistic investments and maintaining its investment-grade rating.
During the quarter, Expedia repurchased 2.3 million shares, amounting to $451 million, and has $1.8 billion remaining in its share repurchase program.
Schenkel articulated, “We have built strong momentum on margin expansion with the year-to-date adjusted EBITDA margins up close to two points, enabling us to drive the highest margin expansion we’ve had in three years.”
The capital allocation strategy for 2025 includes continuing share repurchases consistent with previous years, signaling confidence in the company’s stock value.
The focus on maintaining a balanced capital structure suggests a commitment to long-term shareholder value.
Macro & Demand Trends
The third quarter experienced strong market momentum with longer booking windows and lengths of stay. Gorin noted, “We saw longer lengths of stay and longer booking windows, both signs of a stronger consumer.”
U.S. room nights grew by high single digits, marking the fastest growth in over three years. This performance was echoed globally, with high teens growth in international markets, including over 20% in Asia.
The travel landscape is characterized by resilient demand for premium travel, combining high-end preferences with budget-conscious options, described as “bolstered by resilient demand at the lower end as well.”
Social and economic indicators continue to affect travel patterns, notably with inbound travel to the U.S. almost recovering to last year’s levels.
The performance of the B2B segment was particularly strong, with bookings increasing by 26%, a trend expected to persist given the ongoing evolution of travel partnerships.
Competition
In the context of competition, particularly in the B2B space, Gorin emphasized the importance of strong technology and long-term partnerships. She remarked, “Our team needs to go out there and put our best foot forward, make sure that we’re delivering a lot of value to our partners.”
The company views competition as an opportunity for continuous improvement and innovation, with Gorin confirming, “There will be some deals that you win and some deals that you don’t,” emphasizing a long-term perspective on partner relationships.
Advertising revenue showed a notable increase of 16%, with the company poised to capture more market share through focused advertising strategies and AI enhancements.
The strategic use of AI has also become a differentiator, enhancing customer experience and engagement in a competitive landscape.
NOTABLE QUOTES
“Our third quarter results exceeded both our top and bottom line expectations.” – Ariane Gorin
“The market was healthy in the quarter with an acceleration in the U.S. and continued strength in the rest of the world.” – Ariane Gorin
“We grew bookings 12% and revenue 9%, while expanding our EBITDA margin meaningfully.” – Ariane Gorin
“Our outperformance was driven by solid execution across our company and a stronger than expected U.S. market.” – Scott Schenkel
“Lodging continues to be the core of our business.” – Ariane Gorin
“We are building strong momentum on margin expansion...” – Scott Schenkel
“The two points of adjusted EBITDA margin expansion was driven by revenue and expense leverage.” – Scott Schenkel
“We expect further margin expansion, albeit at a more moderated pace...” – Scott Schenkel
“Active members were at mid-single digits, and across the board, OneKey is driving more repeat and more direct bookings.” – Ariane Gorin
“The performance of Hotels.com and Vrbo was strong in this quarter, coming from platform work and repositioning.” – Ariane Gorin
Q&A SUMMARY
Q: Eric Sheridan (Goldman Sachs), [asked about growth trends and competitive positioning in B2B].
A: Gorin noted, “We’ve been consistently growing faster than the market, 17th consecutive quarter of double-digit growth,” attributing success to excellent supply and strong partnerships, emphasizing growth opportunities in various B2B sectors.
Q: Mark Mahaney (Evercore ISI), [inquired about margin expansion sources and the impact of AI on personalized services].
A: Schenkel explained that ongoing optimization in sales and marketing for B2C will contribute to future margin expansion, while Gorin added that AI is driving better personalization and conversions, with existing products already yielding improved engagement.
Q: Anthony Post (Bank of America), [sought clarification on the replatforming benefits and performance of Vrbo and Hotels.com].
A: Gorin responded that the replatforming provides scalability across brands and noted strong performances for both Hotels.com and Vrbo, bolstered by new loyalty and product offerings.
Q: Lee Horowitz (Deutsche Bank), [asked about direct marketing efficiencies and sustainability].
A: Schenkel indicated that conversion rates have been improving in direct channels, “which is positive,” and both teams are ready to leverage increased traffic and conversion rates.
Q: Jacob Copelman (TD Securities), [query regarding U.S. room night acceleration].
A: Schenkel confirmed that the 11% growth in U.S. room nights was attributed to both consumer and B2B satisfaction, with Gorin highlighting the broader market trend where “it was across the board.”
Q: Naved Khan (B Reilly Securities), [asked about Vrbo’s market growth compared to industry].
A: Gorin stated, “We believe we maintained or perhaps even grew our market share in the U.S.,” indicating strong internal metrics against the market backdrop.
Q: Connor Cunningham (Mellius Research), [inquired about B2C direct bookings and targets for growth].
A: Gorin discussed that two-thirds of bookings are now direct, bolstered by their loyalty program and improved marketing efficiencies.
Q: Tom Champion (Piper Sandler), [questioned the travel dynamics from Canada and overall international performance].
A: Gorin remarked that inbound travel from Canada remains challenged but progressively improving, and noted solid performance across other international corridors.
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