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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A session indicate strong financial performance, optimistic guidance, and strategic growth plans, particularly in B2B and advertising. The raised guidance, AI integration, and international growth are positive indicators. Some concerns in B2B competition and unclear responses slightly temper the sentiment, but overall, the outlook is positive.
Bookings Increased by 12% year-over-year, driven by strong demand and higher lodging and air prices. B2B bookings grew 26%, marking the 17th consecutive quarter of double-digit growth. Consumer Brands bookings grew 7%, with double-digit growth outside the U.S. and particular strength in Europe.
Revenue Grew by 9% year-over-year to $4.4 billion, with a 2.5 point benefit from foreign exchange. Growth was primarily driven by improved market demand, advertising, and insurance.
EBITDA Margin Expanded by over 2 points year-over-year to 33%, driven by revenue and expense leverage, particularly within direct sales and marketing in the B2C segment.
Booked Room Nights Increased by 11% year-over-year, with high single-digit growth in the U.S., low double-digit growth in EMEA, and high teens growth in the rest of the world, including over 20% in Asia.
Advertising Revenue Grew by 16% year-over-year, supported by a record number of active partners and increased penetration outside North America.
B2C Gross Bookings Increased by 7% year-over-year to $21.3 billion, driven by performance both domestically and internationally.
B2B Gross Bookings Increased by 26% year-over-year to $9.4 billion, with broad-based growth across all regions. Rapid API was the fastest-growing product and the largest contributor to growth.
Adjusted EBITDA Increased to $1.4 billion, with a 23% year-over-year growth in adjusted EPS to $7.57, driven by share repurchases.
Cost of Revenue Decreased by 3% year-over-year to $373 million, leveraging 1 point as a percentage of revenue due to efficiencies in payments and customer service.
Direct Sales and Marketing Expenses Increased by 7% year-over-year to $2 billion, driven by B2B. However, B2C direct sales and marketing expenses decreased by 4%, leveraging over 0.5 point as a percentage of gross bookings.
Overhead Expenses Increased by 3% year-over-year to $620 million, while leveraging almost 1 point on revenue due to cost structure reductions earlier in the year.
Free Cash Flow On a trailing 12-month basis, reached $3 billion, reflecting the strength of the operating model and disciplined execution of strategic priorities.
AI Integration: Integrated AI into products such as AI filters, property Q&A, guest review summaries, and service agents, driving engagement and effectiveness.
Vrbo Enhancements: Introduced new recommendation experiences and improved property comparison tools for better traveler experiences.
Expedia Enhancements: Launched new design flows in lodging search and post-booking paths, leading to double-digit growth in vacation rentals and record attach rates.
Global Room Night Growth: Booked room nights grew 11% globally, with high single-digit growth in the U.S., low double digits in EMEA, and over 20% growth in Asia.
B2B Growth: B2B bookings increased 26%, marking the 17th consecutive quarter of double-digit growth.
Advertising Revenue: Advertising revenue grew 16%, with a record number of active partners.
Margin Expansion: Expanded EBITDA margins by over 2 points in Q3 due to operational discipline and volume leverage.
Marketing Productivity: Achieved the fourth consecutive quarter of improved marketing productivity in the consumer business.
Cost Efficiencies: Reduced cost of revenue by 3% and leveraged overhead expenses by almost 1 point on revenue.
AI-Driven Search: Invested in AI-driven search and partnerships with Google, OpenAI, and Perplexity to transform trip discovery and planning.
Loyalty Programs: Launched new loyalty capabilities like member deals on Vrbo and Save Your Way on Hotels.com, driving repeat and direct bookings.
B2B Investments: Expanded tools and features for B2B partners, including AI-powered trip planners and new payment options.
Economic Uncertainty: The company is monitoring economic indicators amidst a dynamic macro environment, which could impact demand and financial performance.
Competitive Pressures: The company faces competition in the travel and advertising sectors, requiring continuous investment in AI and technology to maintain its edge.
Regulatory Risks: Potential regulatory changes or compliance requirements could impact operations, particularly in international markets.
Supply Chain and Partner Risks: Dependence on supply partners and promotional rates could pose risks if partners reduce participation or funding.
Foreign Exchange Volatility: Revenue and bookings growth are influenced by foreign exchange rates, which could negatively impact financial results.
Strategic Execution Risks: The company’s ability to execute on AI-driven initiatives and strategic priorities is critical to sustaining growth and operational efficiency.
Full Year Guidance: The company is raising its full-year guidance based on results to date and ongoing trends. Gross bookings are expected to be up approximately 7%, revenue up approximately 6% to 7%, and EBITDA margins to be up approximately 2 points versus last year.
Q4 Guidance: For Q4, gross bookings and revenue growth are expected to be 6% to 8%. Adjusted EBITDA margins are expected to expand by approximately 2 points. Gross bookings include an estimated 1 point benefit, and revenue includes a 1.5 point benefit from foreign exchange at current rates.
2026 Outlook: The company expects further margin expansion in 2026, albeit at a more moderated pace compared to 2025, as it continues cost-out efforts and invests in growth initiatives.
Market Trends: The demand environment improved in Q3, with continued momentum in October. The company is monitoring economic indicators amidst a dynamic macro environment. Demand for premium travel has performed well, and resilient demand is observed at the lower end as well.
B2B Growth: The company sees further opportunities across its B2B business and will continue investing to drive growth. B2B gross bookings grew 26% in Q3, and B2B revenue grew 18%. Rapid API was the fastest-growing product and the largest contributor to growth.
Advertising Revenue: Advertising revenue grew 16% in Q3, and the company sees significant opportunities for continued growth, including increasing penetration outside of North America, B2B, and monetizing more areas of its sites.
AI and Technology Investments: The company is integrating AI into its products and operations, which is expected to drive engagement, improve efficiency, and enhance customer experiences. AI-driven search and partnerships with tech companies like Google and OpenAI are being prioritized.
Share Repurchase Program: At quarter end, we had $1.8 billion remaining in our share repurchase program after utilizing $451 million in the quarter to repurchase 2.3 million shares of our common stock. This brings our total shares repurchased in the last 3 years to 44 million, which reduces our share count by 22% net of dilution.
The earnings call summary and Q&A session indicate strong financial performance, optimistic guidance, and strategic growth plans, particularly in B2B and advertising. The raised guidance, AI integration, and international growth are positive indicators. Some concerns in B2B competition and unclear responses slightly temper the sentiment, but overall, the outlook is positive.
The earnings call summary reveals positive developments across multiple areas, including improvements in product offerings, marketing leverage, international growth, and loyalty programs. Despite some unclear management responses, the overall sentiment is bolstered by strategic initiatives in AI, B2B, and brand expansion. These factors, coupled with optimistic guidance and a shareholder return plan, suggest a positive stock price movement over the next two weeks.
The earnings call indicates strong financial performance with 13% growth in gross bookings and 10% revenue growth. The reinstated dividend and significant share repurchases are positive for shareholders. Although there are some concerns about Q1 softening and vague responses on Vrbo and advertising growth, the overall sentiment is positive due to strong financial metrics, improved EBITDA margins, and optimistic guidance.
The earnings call reflects a positive sentiment with strong financial metrics such as growth in gross bookings and revenue, and a robust liquidity position. The share repurchase program further enhances shareholder returns. Despite some challenges like soft Vrbo bookings, the optimistic outlook on marketing leverage and B2B growth, coupled with strategic inventory moves, indicates potential for future growth. The positive sentiment from analysts in the Q&A, along with a focus on improving product and supply, supports a positive stock price prediction over the next two weeks.
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