Expedia’s 2026 Q2 Earnings Call: Marketing Efficiency, AI-Driven Growth, and B2B Volatility Clash

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $4.65B to $4.75B (Q3 guidance), up 5% to 8% YOY; full-year revenue guidance raised to $16.05B to $16.22B, up 9% to 10%.
• EPS: Adjusted EPS grew 36% YOY.
• Operating Margin: Adjusted EBITDA margin of 25.9% in Q2, improved nearly two points YOY; Q3 guidance of 32.5% to 32.8%; full-year guidance for EBITDA margin expansion of 150 to 175 basis points.

Guidance:

• Q3 growth bookings expected to be $32.2B to $32.8B, up 5% to 7% YOY.
• Q3 revenue expected to be $4.65B to $4.75B, up 5% to 8% YOY.
• Q3 adjusted EBITDA expected to be $1.51B to $1.56B, implying margin of 32.5% to 32.8%.
• Full-year gross bookings guidance raised to $129.5B to $130.8B, up 8% to 9%.
• Full-year revenue guidance raised to $16.05B to $16.22B, up 9% to 10%.
• Full-year adjusted EBITDA margin expansion guidance raised to 150 to 175 basis points.

Business Commentary:

Strong Financial Performance and Strategic Execution:

• Expedia Group reported a 12% growth in bookings, 14% increase in revenue, and a 23% rise in adjusted EBITDA for Q2 2026, exceeding expectations for the fifth consecutive quarter.
• This performance was driven by the company's strategic priorities, including delivering more value to travelers, investing in growth opportunities, and driving operating efficiency.

Consumer Behavior and Market Dynamics:

• Consumer spending remained healthy, particularly in the U.S., with travelers prioritizing longer lengths of stay and booking windows despite rising air ticket and hotel prices.
• Europe experienced macroeconomic pressures and reduced air capacity, impacting outbound travel, while Asia Pacific rebounded from disruptions related to the Middle East.

B2B Segment Growth and Competitive Positioning:

• The B2B segment delivered its 20th consecutive quarter of double-digit growth, highlighting its durability and momentum.
• Expedia Group is focusing on building a one-stop B2B travel shop, including the acquisition of CarTrawler, to offer comprehensive travel solutions to partners.

AI and Technology Integration:

• Expedia Group is leveraging AI to enhance product experiences, including natural language search and AI-powered personalization, which improved conversion rates and user engagement.
• The company is exploring AI-native channels and partnerships, such as with ChatGPT and Google, to reach new travelers and improve marketing efficiency.

Geographic and Operational Insights:

• The company's geographic business is balanced, with a focus on regions showing the most demand, such as the U.S. and areas recovering from Middle East disruptions.
• Margin expansion was driven by cost efficiencies and marketing leverage, with a focus on maintaining operational efficiency despite competitive pressures.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated they "had a solid second quarter, delivering strong financial results while making tangible progress on our strategic priorities." They "exceeded the high end of both our top and bottom line expectations for the fifth quarter in a row" and are "raising our full-year guidance."

Q&A:

• Question from Eric Sheridan (Goldman Sachs): Building on the prepared remarks, we'd love to go as deep as you're willing to go on how you're thinking about the interplay between AI-native channels away from the platform, some of the efforts you're making to build AI solutions that are consumer facing on the platform and traditional advertising channels as in terms of driving return on ad spend and conversion over the medium to long term.
  Response: AI is used in core product for immediate conversion benefits (e.g., recommendations, personalization) and for gathering deeper traveler intent (e.g., natural language experiences). AI-native channels like ChatGPT and Google are seen as significant long-term opportunities to bring new travelers to the platform, though early days and fast-moving.

• Question from Justin Post (Bank of America): Could you talk about the advantages you offer your partners and also the stickiness of the contracts that you have? And... how do you think about the potential for further marketing efficiencies from here?
  Response: Advantages include great supply/content, strong technology, and servicing; relationships vary (some exclusive, some not). Marketing efficiencies from last year are structural, and while lapping reductions in H2 will moderate margin expansion, ongoing efficiency initiatives will continue to drive improvement.

• Question from Doug Anmuth (JP Morgan): Can you just talk about how some of your views just around geos have changed over the past few months?... And then, Derek, if you could also just kind of walk through some of those back half dynamics on margin expansion where you talked about moderation in 3Q and then stronger 4Q.
  Response: Geos are balanced; business will lean into strength where demand is but has long-term focus. For margins, Q3 will see moderation due to lapping cost reductions, overhead progress, and FX headwinds; Q4 is expected to see ~50 bps expansion, with commitment to ongoing efficiency.

• Question from Jed Kelly (Oppenheimer and Co.): Can you just talk about where we are in the competitive landscape? And just on a follow up on B2B, It seems like that overhead expense increased a decent amount in the B2B segment. Was there anything there to call out?
  Response: Competition is healthy in large market; focus is on being better with more service offerings. B2B overhead increase is due to investments in building the one-stop shop (including CarTrawler acquisition digestion) and FX hedging geography.

• Question from Ken Gorelsky (Wells Fargo): First, could you maybe talk about your approach to the marketing landscape?... Could you just talk about what you're seeing there first, maybe, and then second, if I may, as you think about your second F outlook, maybe... could you talk about your outlook for ADRs and maybe the environment we might be in...
  Response: Organic search traffic (SEO/AEO) is stable to slightly up, with AEO as a fastest-growing channel; SEO stabilized after past softness. For H2, guide assumes healthy demand trends persist, led by U.S./domestic, with tougher comps leading to decelerating growth rates on bookings and room nights.

• Question from Lloyd Walmsley (Mizzou): ...as you dive into a new business uh was the first one and then just uh second one um you know as you all look at the the aeo channel it sounds like it's more meaningful for you you all and growing faster than... is there anything you can sort of elaborate?... Thanks.
  Response: AEO is a small but fastest-growing channel; success depends on brand value propositions, technical work, and adapting to fast-changing AI search interfaces. Early engagement is focused on ensuring brands show up effectively.

• Question from Cameron (Cantor Fitzgerald): Just one quickly on B2C. Seems like there's some nice margin expansion there this quarter. Can you just give some more color on the drivers and margin expansion here? What does the runway look like into 27?
  Response: B2C margin expansion driven by leveraging marketing spend (up only 1% vs. 8% bookings growth), product improvements, supply growth, loyalty performance, and agentic systems for personalized ads. Runway remains based on scaling efficiencies and marketplace leverage.

• Question from Mark Mahoney (Evercore ISI): One on advertising revenue. Just an update on the traction you're seeing there... And secondly, the impact of World Cup in Q2 and Q3, was it material at all to Expedia?
  Response: Advertising growth was stable; opportunities include expanding geographically and into B2B/Vrbo. World Cup impact was modest overall, more in ADR than room nights.

• Question from Kevin Copelman (TD Cohen): Could you just give us some more color on how you've seen U.S. and Mexico trips progress as we've gotten further away from the security incident... And also, could you just touch on B2B sales and marketing?
  Response: U.S./Mexico trips normalized post-security incident. B2B margin drivers include partner promotional mix and investments in long-term growth (e.g., new lines of business, product enhancements, sales growth).

• Question from Naveed Khan (B Riley Securities): One, Aryan, you mentioned you're seeing good attach rates in Expedia. Maybe just talk about what are the products that are seeing the most attach rates... And then the second question I had is just around the Uber partnership... what are you contemplating in your guidance in terms of contribution from this new partnership?
  Response: Attach rates driven by personalization and optimized UX, varying by trip element (e.g., flight starts attach lodging). Uber partnership is not commented on individually and is not material to guidance.

Contradiction Point 1

Marketing Efficiency Outlook and Structural Improvements

The outlook for marketing efficiency and margin expansion appears inconsistent between quarters.

Justin Post (Bank of America) - Justin Post (Bank of America)

2026Q2: Marketing-driven margin improvements from last year will be lapped in H2, but structural improvements remain. - Derek Anderson(CFO)

What are the key advantages for B2B partners and contract retention rates, and how do you plan to enhance marketing efficiencies after initial gains? - Justin Post (Bank of America)

2026Q1: Strong marketing discipline and efficiency were demonstrated in Q3-Q4 2025... Marketing efficiency is expected to moderate in the second half as they lap the elevated leverage from the back half of 2025. - Scott Schenkel(CFO)

Contradiction Point 2

Impact of AI on Business and AI-native Channels

The characterization of AI's role in driving growth and the business's engagement with AI-native channels has shifted.

Eric Sheridan (Goldman Sachs) - Eric Sheridan (Goldman Sachs)

2026Q2: AI is used for better recommendations, ranking, and personalization, leading to immediate conversion improvements. It also accelerates product innovation cycle times. - Ariane Gorin(CPO) "AI-native channels... are emerging channels where brands can appear. While early, they represent a significant opportunity..." - Ariane Gorin(CPO)

How do you balance AI-native channels (off-platform), AI solutions on your platform, and traditional advertising to optimize return on ad spend and conversion over the medium to long term? - Alex Brignall (Rothschild & Co Redburn)

2026Q1: The pullback of AI from commerce reinforces the view that AI is a powerful discovery layer... If the market evolves toward paid advertising, it's a net positive for Expedia, as they are an expert in that space. - Ariane Gorin(CPO)

Contradiction Point 3

B2B Business Dynamics and Growth Outlook

The description of B2B growth drivers and the business's reaction to market volatility differs between quarters.

Doug Anmuth (J.P. Morgan) - Doug Anmuth (J.P. Morgan)

2026Q2: B2B grew 22% in Q1... It was more impacted than B2C by the conflict in the Middle East... The B2B business continues to win wallet share and is building a one-stop-shop offering while managing margin expansion. - Ariane Gorin(CPO)

How have your views on geography changed recently, especially regarding Europe's pressures and APAC's rebound, and can you walk through back-half margin dynamics, including Q3 moderation and Q4 strength? - Ken Gawrelski (Wells Fargo)

2026Q1: B2B growth was driven primarily by API, with promotional activity from partners decelerating. Template and Tap also delivered mid-teens growth. The business faced volatile dynamics in March and April, informing the cautious Q2 outlook. The quarter's volatility is a factor in not providing a full-year guide at this time. - Scott Schenkel(CFO)

Contradiction Point 4

Marketing Leverage and Margin Trajectory

Guidance on the pace of future marketing leverage and margin expansion appears inconsistent.

Cameron (Cantor Fitzgerald) - Cameron (Cantor Fitzgerald)

2026Q2: There is still runway for improvement through continued product optimization and marketing efficiency. - Ariane Gorin(CPO)

What factors contributed to the B2C margin expansion this quarter and the potential for continued growth through 2027? - Mark Stephen Mahaney (Evercore ISI)

20260213-2025 Q4: B2C marketing has already leveraged about 50 basis points as a percentage of gross booking value (GBV) ... Expect more of the same in 2026. - Scott Schenkel(CFO)

Contradiction Point 5

AI's Impact on Traffic and Search

Assessment of material changes in traffic from AI-driven search features differs significantly.

Lloyd Walmsley (Mizzou) - Lloyd Walmsley (Mizzou)

2026Q2: AEO is still a small channel but is growing fastest. Success depends on brand value propositions, technical work, and understanding how to optimize visibility in AI search (e.g., through connectors/micro-apps). It's a rapidly changing landscape. - Ariane Gorin(CPO)

What surprised you most or where do you see the most opportunity in this new role, and why is AEO growing faster for Expedia than some peers? - Jacob Seed (TD Cowen)

20260213-2025 Q4: Currently, no material changes in traffic from Google are seen, but they are experimenting aggressively with AI integrations. - Ariane Gorin(CPO)