Q4 2024 Earnings Summary
- Strong growth in the B2B segment, especially in the APAC region, driven by existing and new partnerships. Partners are growing in line or faster than the market, allowing Expedia to win share with them.
- Recovery and improvement in Vrbo and Hotels.com brands due to significant efforts in product, supply, and marketing in 2024. Expedia has exciting plans for these brands in 2025, and there is confidence in the sustainability of their growth.
- Commitment to margin expansion through cost efficiencies and disciplined investments, with guidance for EBITDA margin expansion of 50 basis points in 2025, while maintaining the ability to invest in long-term growth areas.
- The company expects only slight margin expansion in 2025, with flat margins in Q1, and acknowledges that margins are lower than peers, suggesting limited profitability improvements compared to competitors.
- Guidance implies a deceleration in the B2B segment, which previously showed strong growth, potentially impacting overall company growth.
- The loyalty program rollout has been paused after the UK, with the program being a drag on bookings for Hotels.com, and the company is still assessing its impact on Vrbo, indicating uncertainty around its effectiveness.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +10% (to $3,184M) | Driven by robust lodging and B2B demand, with stable North American travel and expanded partnerships supporting growth. This momentum offsets foreign exchange headwinds and sets a positive trajectory for future quarters. |
B2B Revenue | +21% (to $1,042M) | Fueled by new partner deals, technology enhancements, and strong performance in lodging-based solutions. Ongoing partner expansions and increased wallet share suggest continued double-digit growth potential in upcoming periods. |
Lodging Revenue | +10% (to $2,543M) | Reflects increased room nights and favorable market demand, especially in core hotel bookings. The continued shift toward higher-margin lodging products positions the company to capture profitable growth going forward. |
Agency Revenue | -99% (to $7M) | Primarily due to a strategic shift from agency to merchant models for lodging and packages, significantly reducing agency-based transactional volume. While this change shrinks agency revenue, it aligns with a higher-margin merchant focus long term. |
Net Income | +22% (to $299M) | Benefited from cost discipline, growing revenue base, and lower impairment charges versus prior periods. Continued improvement in operating leverage and expense management underpins a healthy outlook for profitability. |
Diluted EPS | +134% (to $2.20) | Boosted by 22% net income growth and share repurchases, which reduced the average share count. These factors magnify profitability gains and position EPS for further upside if operational efficiencies remain strong. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Gross Bookings Growth | Q1 2025 | no prior guidance | 4% to 6% | no prior guidance |
Revenue Growth | Q1 2025 | no prior guidance | 3% to 5% | no prior guidance |
EBITDA Margins | Q1 2025 | no prior guidance | flat to slightly better y/y | no prior guidance |
Gross Bookings Growth | FY 2025 | no prior guidance | 4% to 6% | no prior guidance |
Revenue Growth | FY 2025 | no prior guidance | 4% to 6% | no prior guidance |
EBITDA Margin Expansion | FY 2025 | no prior guidance | +50 bps y/y | no prior guidance |
Dividend | FY 2025 | no prior guidance | $0.40 per share | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue Growth (YoY) | Q4 2024 | 5%–7% YoY growth | 10% YoY growth (2,887Vs. 3,184) | Beat |
EBIT Margin | Q4 2024 | Expected to be relatively in line with last year | Increased from 3.6% in Q4 2023 (104 ÷ 2,887) to 6.8% in Q4 2024 (216 ÷ 3,184) (,) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
B2B Segment Growth & Potential Deceleration | The B2B segment grew 25% in Q1 2024, 20% in Q2, and 19% in Q3, with some caution around deceleration due to travel normalization. | B2B gained 24% in Q4 but faces a potential slowdown in 2025 from FX headwinds and seasonal shifts. | Ongoing strong growth with rising concerns about future moderation. |
Vrbo Brand Recovery, Migration Challenges | Slow recovery after tech migration in Q1; improved to modest growth in Q2 and Q3. | Q4 showed meaningful recovery, reinstated lost features, but still more work ahead. | Improving sentiment after disruptions, with continued focus on product and supply. |
Leadership Changes | CEO transition in Q1; CFO changes discussed in Q2 and Q3. | Scott Schenkel introduced as new CFO, emphasizing priorities. | Consistent mention of leadership shifts, indicating ongoing realignment at the top. |
One Key Loyalty Program | Rolled out in Q1 with mixed reactions; partial pause and evaluation in Q2 and Q3. | Q4 pause continues; positive for Expedia but drag on Hotels.com, with Vrbo cross-sell impact under review. | Mixed brand impact; remains a key lever for cross-shopping and retention. |
Margin Expansion Goals (50 Basis-Point Guidance) | Q1 mentioned a 50+ bps increase in revenue margins but no full-year expansion; limited details in Q2 and Q3. | Q4 explicitly guides for 50 bps of margin expansion in 2025, supported by cost structure optimization. | Reintroduced target with a more defined plan for 2025. |
Hotels.com Brand Improvements & Marketing Focus | Underperformed after loyalty changes in Q1; some gains from international push in Q2; stable but not back to growth in Q3. | Returned to modest growth in Q4, with plans to reinvigorate the brand in 2025. | Ongoing revival; focus on product and marketing to fuel rebound. |
Advertising Business Momentum | Strong in Q1, growing at high 20% range in Q2, up 32% in Q3. | Q4 advertising revenue up 25%, noted as a high-margin, high-growth area. | Consistently strong across calls; a major driver of profitability. |
Shifting Guidance & Macro-Driven Demand Concerns | Lowered 2024 outlook in Q1, revised again in Q2, cautiously improved in Q3. | Q4 expects 7%–9% adjusted growth in early 2025, with softness in January partially due to timing and FX. | Continued caution on macro factors but stable overall demand. |
Integration of Expedia Supply into Vrbo | Q3 noted 1 million Expedia units added to Vrbo, focusing on urban properties. | Mentioned 1 million urban properties in Q4 but not explicitly tied to Expedia supply. | Progress continues, though less emphasis in latest update. |
Cross-Brand Synergies for Future Growth | Q1 and Q2 emphasized One Key cross-shopping; Q3 showed ~30% of Vrbo redeemers earned rewards on other brands. | Q4 focused on refining marketing across brands, with less direct talk of synergy. | Still relevant but not explicitly highlighted in Q4. |
APAC Partnerships Supporting B2B Expansion | Limited mention in Q1 and Q2; Q3 highlighted broad B2B growth but not specifically APAC. | Q4 noted strong APAC performance driven by long-standing partnerships and high-quality supply. | Reemerged focus with APAC flagged as a growth driver. |
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Q1 Guidance and Travel Demand
Q: Are there any headwinds early in Q1 impacting guidance?
A: Scott Schenkel explained that bookings growth in Q1 is expected to be 4% to 6%, factoring in a 2-point FX headwind and about 1 point from lapping a leap year, translating to roughly 7% to 9% growth excluding those factors. He noted that nothing appears structurally different in the travel environment, but they've seen some softening relative to Q4, possibly due to strong holiday promotions in December pulling some bookings forward into Q4. -
Margin Outlook
Q: How are you thinking about longer-term margins versus your peers?
A: The company aims to improve margins by 50 basis points year-over-year, achieving this through a balance of growth investments and cost discipline. They focus on reducing overhead and gaining leverage in the cost structure while continuing to invest where they see the best returns. -
Capital Returns and Dividend
Q: How are you approaching capital returns, share repurchases, and the dividend?
A: Expedia remains committed to capital returns. In 2024, they repurchased 12 million shares for $1.6 billion and have over $3 billion remaining in their repurchase authorization. They plan to be opportunistic with buybacks. They've reinstated a dividend, starting at $0.40 per share, aiming to provide income for investors and show commitment after suspending it during COVID. -
B2B Growth Drivers
Q: What's driving the strength in the B2B segment, particularly in APAC, and what are the growth drivers for 2025?
A: The strength in APAC is driven by partnerships and market growth. Expedia is adding new partnerships and deepening relationships with existing ones, winning share as partners grow faster than the market. In 2025, growth will come from existing partners, signing new ones, testing new products, and focusing on high-quality supply. -
Vrbo Recovery and Outlook
Q: Can you discuss the recovery of Vrbo and its sustainability into 2025?
A: Vrbo saw acceleration in 2024 due to efforts in product, supply, and marketing. They've acknowledged past disruptions from replatforming, leading to lost travelers they're still winning back. In 2025, they plan to focus on product improvements and supply enhancements, with exciting plans ahead. They believe Vrbo has a differentiated value proposition as a vacation rental pure play with whole homes and no hosts. -
Marketing Leverage and Strategy
Q: Could you discuss the tactical changes in marketing and their impact on growth?
A: The company has been optimizing marketing, loyalty, and promotional spend to improve returns. Teams are better at understanding where to act decisively, which contributed to leverage on the marketing side. International growth was aided by improvements in package offerings and promotions, as travelers buying multiple items are more likely to repeat. -
AI Strategy
Q: How are you incorporating AI into your business and partnering in AI?
A: Expedia approaches AI in three ways: using AI to enhance products for travelers and partners; ensuring their brands appear where travelers use GenAI-native search; and potentially partnering with native AI travel startups to power them. They see opportunities across all areas and aim to stay at the forefront of AI developments. -
Advertising Revenue Growth
Q: Is the strong advertising revenue growth sustainable in 2025?
A: With 25% growth in advertising revenue, they see significant potential ahead. Plans include attracting more advertisers, innovating ad products for better returns, introducing new ad types across brands, and driving value for partners while ensuring a positive traveler experience. -
Loyalty Strategy Update
Q: Any updated thoughts on your loyalty strategy in 2025, especially outside the U.S. and U.K.?
A: They paused the rollout of One Key after the U.K. and are assessing learnings by brand and geography. One Key has been a net positive for Expedia but a drag on bookings for Hotels.com. They're evaluating the impact of always-on earning on Vrbo and will adjust their loyalty approach accordingly. -
Impact of U.S. Dollar Appreciation
Q: What's the impact of the stronger U.S. dollar on your business?
A: The stronger dollar creates FX pressure but, over time, makes international travel more attractive for Americans. Expedia leverages these opportunities by helping travelers find good deals when currency movements are favorable. -
M&A Perspective
Q: Does improved performance in core brands change your M&A outlook?
A: While focusing on running and growing existing brands, Expedia remains open to M&A opportunities. They believe that a company of their scale and technology base should actively explore potential acquisitions as opportunities arise. -
Despegar Acquisition Impact
Q: How does Despegar potentially getting acquired affect your outlook in Latin America?
A: It doesn't change their perspective on Latin America. Despegar is a great partner, and Expedia continues to operate its own brands and maintain partnerships in the region.