Expedia Surpasses Expectations in Q2 Earnings Call with Strong B2B and Advertising Performance

Expedia Group has reported Q2 2025 earnings that exceed expectations, with a 5% growth in gross bookings, a 6% increase in revenue, and a 2 percentage point expansion in adjusted EBITDA margins. The B2B segment grew 17%, and advertising revenue increased 19%. International bookings showed mid-single-digit growth in EMEA and nearly 20% in Asia. However, the US travel market faced challenges, impacting Vrbo and Hotels.com. AI was highlighted as a potential driver of future efficiency gains.

Expedia Group (EXPE) reported its second-quarter 2025 earnings, which exceeded expectations. The company achieved a 5% growth in gross bookings, a 6% increase in revenue, and a 2 percentage point expansion in adjusted EBITDA margins. The B2B segment grew by 17%, and advertising revenue surged by 19%. International bookings showed mid-single-digit growth in EMEA and nearly 20% in Asia. However, the U.S. travel market faced challenges, impacting Vrbo and Hotels.com. AI was highlighted as a potential driver of future efficiency gains.

The company's adjusted earnings per share (EPS) of $4.24 surpassed the Zacks Consensus Estimate by 2.42%, marking a 20.8% year-over-year (YoY) increase. Revenues reached $3.79 billion, a 6.4% YoY increase that beat the Zacks Consensus Estimate by 1.94%. B2C revenues grew by 2% to $2.48 billion, while B2B revenues increased by 15% to $1.21 billion. Advertising revenues jumped 19% to $343 million.

Total gross bookings were $30.4 billion, a 5% YoY increase. B2C gross bookings grew by 1% to $21.6 billion, while B2B gross bookings rose by 17% to $8.8 billion. Lodging gross bookings grew by 6% to $22.07 billion, with hotel bookings climbing by 8%. Booked room nights rose by 7% to 105.5 million.

Adjusted EBITDA was $908 million, up 15.5% YoY, representing a 24% adjusted EBITDA margin. Direct sales and marketing expenses were $1.92 billion, up 7.1% YoY, while overhead expenses were $637 million, up 5.1% YoY. Adjusted EBIT increased by 22.7% YoY to $583 million, with the adjusted EBIT margin improving by 200 basis points (bps) to 15.4%.

As of June 30, 2025, Expedia's cash and cash equivalents and short-term investments stood at $6.7 billion, up from $6.1 billion as of March 31, 2025. Long-term debt was $4.466 billion, up from $4.465 billion as of March 31, 2025. The gross leverage ratio of 2x matched the target, with debt levels maintained to uphold an investment-grade rating.

Expedia expects gross bookings to be in the 5-7% range for the third quarter of 2025 and revenue growth in the band of 4-6%. It expects third-quarter adjusted EBITDA margins to increase by 50-100 bps YoY. For 2025, Expedia expects gross bookings and revenue growth in the 3% to 5% range, with adjusted EBITDA margin expansion of more than 100 bps YoY.

Currently, EXPE carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Retail-Wholesale sector are Performance Food Group (PFGC), Worksport (WKSP), and WilliamsSonoma (WSM), each carrying a Zacks Rank #2 at present.

References:
[1] https://finance.yahoo.com/news/expedia-q2-earnings-revenues-beat-153500172.html
[2] https://seekingalpha.com/news/4482183-expedia-raises-2025-guidance-projects-3-percent-5-percent-full-year-gross-bookings-growth-as