Expedia Group stock plummets 7.3% on weak Q1 earnings

Expedia Group shares dropped 7.3% on May 9th after the company reported weak Q1 earnings. Despite a 24% YoY increase in revenue to $1.9bn, net income fell 72% to $14m. The travel platform's revenue growth was driven by a 48% YoY increase in gross bookings to $3.3bn. However, the company's earnings were impacted by a $147m impairment charge related to its loyalty program.

Ask Aime: "Expedia's Q1 earnings reveal a 72% decline in net income despite a 24% revenue increase."

Expedia Group Inc. (NASDAQ: EXPE) shares plummeted 7.3% on May 9th following the company's weak Q1 earnings report. Despite a 24% year-over-year (YoY) increase in revenue to $1.9 billion, net income tumbled 72% to $14 million. The primary driver of revenue growth was a 48% YoY increase in gross bookings to $3.3 billion. However, the company's earnings were significantly impacted by a $147 million impairment charge related to its loyalty program.

Key Financial Highlights:
- Revenue: $1.9 billion, up 24% YoY [1]
- Net Income: $14 million, down 72% YoY [1]
- Gross Bookings: $3.3 billion, up 48% YoY [1]
- Impairment Charge: $147 million related to the loyalty program [1]

Segment Performance:
- B2B Segment: Demonstrated strong performance with 14% bookings growth, significantly outperforming the industry [1].
- Advertising Revenue: Showed robust growth, with a 20% increase in revenue and a record number of $1 million-plus deals [1].
- B2C Segment: Faced headwinds from weaker US travel demand and declining consumer sentiment, with only 1% bookings growth [1].

Strategic Initiatives:
- AI Integration: The company is leveraging AI to enhance product experiences, streamline operations, and improve marketing effectiveness [1].
- Partnerships: Strategic partnerships with airlines like Southwest Airlines and Ryanair have successfully attracted new customers and enhanced supply offerings [1].

Future Outlook:
- Q2 2025 Guidance: The company forecasts gross bookings growth of 2% to 4% and revenue growth of 3% to 5% [2].
- Full-Year Guidance: Revised to 2% to 4% growth for both gross bookings and revenue, with EBITDA margin expansion of 75 to 100 basis points [2].

Challenges:
- US Travel Demand: Weaker travel demand in the US and declining consumer sentiment have impacted the B2C segment [1].
- Macroeconomic Headwinds: Significant pressure on inbound travel to the US, with bookings from Canada falling nearly 30% [1].

Management Comments:
- Ariane Gorin, CEO: "We are optimistic about Hotels.com, having relaunched the brand with a new visual identity and mascot. We are targeting specific countries for growth." [1]
- Scott Schenkel, CFO: "We spent $1.8 billion on sales and marketing in Q1, slightly deleveraging by about 11 basis points. We focus on profitable growth, investing in marketing where opportunities exist." [1]

Conclusion:
Expedia Group's Q1 2025 results highlighted growth in B2B and advertising businesses, while the B2C segment faced headwinds from weaker US travel demand and macroeconomic uncertainties. The company remains focused on operational efficiencies, strategic partnerships, and leveraging AI to enhance customer experience and drive long-term growth. Despite the challenges, the company's strategic initiatives and cost control efforts indicate a cautious but optimistic outlook.

References:
[1] https://finance.yahoo.com/news/expedia-group-inc-expe-q1-073839130.html
[2] https://seekingalpha.com/news/4445346-expedia-targets-2minus-4-percent-revenue-growth-for-q2-2025-amid-us-travel-demand-challenges

View Source