Expedia Group's Q1 2025 Results: Navigating Growth Amid Margin Expansion and Strategic Priorities

Charles HayesThursday, May 8, 2025 7:39 pm ET
14min read

Expedia Group, Inc. (NASDAQ: EXPE) reported its first-quarter 2025 earnings on May 8, 2025, offering investors a mixed but cautiously optimistic snapshot of the travel tech giant’s performance. While gross bookings and revenue grew modestly, margin improvements and aggressive capital returns signaled management’s focus on long-term resilience amid a competitive landscape.

Key Financial Highlights
- Gross Bookings: Increased 4% year-over-year to $10.2 billion, driven by strength in domestic travel and corporate bookings.
- Revenue: Rose 3% to $2.1 billion, with hotel revenue growth outpacing air and activities.
- Adjusted EBITDA Margin: Expanded by 105 basis points to 22.6%, reflecting cost discipline and pricing power.
- Net Loss: Widened to $1.56 per share, compared to an adjusted EPS of $0.40, primarily due to non-cash charges and investments in technology.

The company also returned $330 million to shareholders via buybacks in Q1, while maintaining its $0.40 per share dividend. These moves underscore management’s confidence in the business’s cash flow generation, even as net losses persist.

Margin Expansion as a Strategic Win
The 105 basis point margin improvement stands out. Expedia’s focus on optimizing marketing spend, streamlining operations, and leveraging its scale in metasearch and advertising platforms paid dividends. CEO Peter Kern emphasized during the earnings call that the company’s “platform efficiencies” are enabling it to capture more value without sacrificing volume. This bodes well for profitability in 2025, especially if bookings growth stabilizes.

Challenges and Considerations
The net loss, however, raises questions. While non-cash items like stock-based compensation and intangible asset amortization contributed to the shortfall, investors will monitor whether operational improvements can offset these headwinds. Additionally, the 4% gross bookings growth lagged behind the 6-8% guidance provided in prior quarters, suggesting potential pricing pressures or competition from upstarts like Airbnb and Booking Holdings.

Capital Allocation: A Double-Edged Sword
Expedia’s $330 million in buybacks in Q1—nearly half of its $750 million annual buyback plan—highlights a bullish stance on its stock. However, with shares down 12% year-to-date (as of May 2025), investors may question the timing. On the other hand, the dividend, now a consistent feature since reinstatement in 2023, signals financial stability.

Conclusion
Expedia’s Q1 results paint a picture of a company balancing growth with margin discipline. The 4% gross bookings growth, while modest, aligns with a maturing industry, while the EBITDA margin expansion offers a clear positive. The net loss, though concerning, appears manageable if operational efficiencies continue.

Investors should watch two key metrics:
1. Gross Booking Growth: Sustained expansion beyond 4% would alleviate concerns about market share erosion.
2. Free Cash Flow: The $400 million generated in Q1 (excluding non-cash items) must remain robust to fund buybacks and tech investments.

With Expedia’s stock trading at 18x forward EV/EBITDA—a discount to peers like Booking Holdings (22x)—the valuation appears attractive if margin trends hold. However, the path to sustained EPS growth remains unclear without stronger top-line momentum.

In sum, Expedia’s Q1 results are a reminder that in travel tech, execution on cost control matters as much as bookings growth. For now, the company’s balance of capital returns and margin gains positions it as a cautiously bullish play in a sector ripe for consolidation.