Expedia Group (NASDAQ:EXPE) reported second-quarter results above the high end of its outlook, citing healthy consumer travel demand, continued momentum in its business-to-business segment and improved marketing efficiency. The company also raised its full-year guidance for gross bookings, revenue and adjusted EBITDA margin expansion.
CEO Ariane Gorin said gross bookings rose 12% year over year, revenue increased 14%, and adjusted EBITDA grew 23%. The company has exceeded the high end of its top- and bottom-line expectations for five consecutive quarters, she said.
Room Nights, Regional Trends and B2B Growth
Total booked room nights increased 6% during the second quarter. Growth was in the mid-single digits in the U.S., low single digits in Europe, the Middle East and Africa, and low double digits in the rest of the world.
Gorin described the U.S. consumer environment as healthy, with Expedia’s consumer bookings increasing 8% and U.S. growth reaching its fastest pace in 15 quarters. Active loyalty members rose by a low-single-digit percentage, with faster growth among higher-tier members.
Europe remained pressured, especially for outbound travel, as macroeconomic headwinds and reduced air capacity weighed on demand. Asia-Pacific rebounded from disruption connected to the Middle East, according to Gorin. She also said U.S.-Mexico travel had normalized following a security incident discussed during the prior quarter.
The company’s B2B operation posted its 20th consecutive quarter of double-digit growth. Gorin said Expedia continues to pursue a strategy of becoming a “one-stop travel shop” for partners, providing supply, technology and servicing across travel categories.
To support that effort, Expedia previously announced its intent to acquire B2B car rental and insurance platform CarTrawler. CFO Derek Andersen said the company’s earlier acquisition of Tiqets contributed to B2B expenses during the quarter as Expedia integrates the business and builds out additional lines of business.
Financial Results and Capital Returns
Andersen said second-quarter gross bookings growth was driven primarily by 6% room-night growth and a 5% increase in average daily rates on an FX-neutral basis. Foreign exchange contributed nearly half a percentage point to gross bookings growth and four percentage points to revenue growth.
- Adjusted EBITDA was $1.1 billion, representing a 25.9% margin.
- Adjusted EBITDA margin improved by nearly two percentage points from the prior year.
- Adjusted earnings per share rose 36% year over year.
- Trailing 12-month free cash flow reached $4.5 billion.
The margin improvement reflected cost efficiencies, marketing leverage and higher volumes, Andersen said. He noted that overhead costs were flat year over year despite a 14% increase in revenue.
During the quarter, Expedia repurchased approximately 880,000 shares for $200 million, or an average price of $226 per share. Year-to-date share repurchases totaled $900 million. Andersen said the company’s capital-allocation priorities remain organic investment, disciplined mergers and acquisitions, dividends and opportunistic share repurchases.
AI, Supply and Marketing Initiatives
Gorin highlighted product and operational initiatives involving artificial intelligence. Expedia launched natural-language search on the Vrbo homepage and updated tools including Property Expert and AI Compare in its hotel-shopping flow. She said AI-driven recommendations, rankings and personalization are producing immediate conversion benefits.
Conversational tools that are not yet driving conversion are providing more information about traveler intent, according to Gorin. She said these experiences can generate more than 60% additional information about traveler intent, which Expedia expects could support deeper customer engagement over time.
The company is also investing in AI-based search and social channels. Gorin said answer engine optimization, or AEO, is among Expedia’s fastest-growing channels, although it remains small. Traditional search engine optimization has been soft but has stabilized in recent quarters, she said, while organic traffic overall was stable to slightly higher.
Expedia recently acquired Layla, an AI conversational planning app, and has expanded work with AI platforms including ChatGPT and Google services. The company also deployed an agentic voice solution on Vrbo for partner inquiries, with early results showing faster resolutions and lower contact propensity, Gorin said.
On supply, Expedia became the first online travel agency to distribute Allegiant flights in July, giving it full coverage of U.S. commercial airlines, according to Gorin. More than 40% of Vrbo bookings included supplier-funded offers during the quarter, while the company’s May sale generated more than $1 billion in bookings for participating properties.
Outlook Raised
For the third quarter, Expedia expects gross bookings of $32.2 billion to $32.8 billion, representing year-over-year growth of approximately 5% to 7%. The company expects revenue of $4.65 billion to $4.75 billion, up about 5% to 8%, and adjusted EBITDA of $1.51 billion to $1.56 billion.
The company expects bookings and room-night growth to moderate from the second quarter as it faces tougher comparisons from the second half of the prior year. Its third-quarter outlook assumes an approximately one-point foreign-exchange headwind to bookings growth and an approximately one-point benefit to revenue growth.
For the full year, Expedia raised its outlook to gross bookings of $129.5 billion to $130.8 billion, representing 8% to 9% growth, and revenue of $16.05 billion to $16.22 billion, representing 9% to 10% growth. The company now expects adjusted EBITDA margin expansion of 150 to 175 basis points from the prior year.
Andersen said margin expansion is expected to moderate in the third quarter due to tougher comparisons against prior-year cost actions, B2B investments and unfavorable net foreign-exchange effects. He said the pace of expansion should improve in the fourth quarter as some of those pressures ease and efficiency initiatives continue.
About Expedia Group (NASDAQ:EXPE)
Expedia Group (NASDAQ: EXPE) is a global travel technology company that operates an online marketplace connecting consumers, travel suppliers and third‑party partners. The company’s platform enables search, comparison and booking of travel products and services, including hotels, airline tickets, vacation rentals, car rentals, cruises and packaged travel. Its portfolio comprises consumer-facing travel brands as well as corporate travel solutions and technology services that serve both leisure and business travelers.
Key offerings include consumer booking platforms and mobile apps that aggregate inventory from hotels, vacation rental managers, airlines and car rental companies, alongside ancillary travel services such as trip insurance and activities.
