Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Expedia Group Inc (EXPE, Financial) reported a revenue of $2.9 billion, an 8% increase compared to the previous year, driven by strong performance in B2B, Brand Expedia, and advertising businesses.
- Total gross bookings of $30.2 billion were up 3% year-over-year, with lodging gross bookings growing by 4%, led by the hotel business which grew by 12%.
- First quarter EBITDA of $255 million was up 38% year-over-year, with an EBITDA margin of 8.8%, expanding over 190 basis points year-over-year.
- Expedia Group Inc (EXPE) ended the quarter with strong liquidity of $8.2 billion, supported by an unrestricted cash balance of $5.7 billion and an undrawn revolving line of credit of $2.5 billion.
- The company continues to see broad improvement across its B2C business, with significant conversion gains driven by higher test velocity and future rollouts.
Negative Points
- Vrbo's recovery post-technical migration was slower than expected, impacting the overall performance and leading to a reduction in full-year guidance for top-line growth.
- Direct sales and marketing expenses in the first quarter increased by 11% year-over-year, leading to a deleverage as a percentage of gross bookings.
- The company expects growth to be lower than initially anticipated for 2024, prompting a revision of the full-year guidance to a range of mid- to high single-digit top-line growth.
- Despite strong EBITDA growth, first quarter EBIT was negative $59 million with a margin of negative 2.1%, although this was an improvement from the previous year.
- The company is still in the process of fully completing its tech platform, which has temporarily reduced its development capacity to build new features, impacting the competitiveness of some brands.
Q & A Highlights
Q: Wishing you the best going forward, Peter, and congrats on the new role, Ariane. Peter, maybe can we come back to Vrbo for a minute and just how do you think about that asset compared to where the competitive landscape is across travel and shared accommodation specifically?
A: Peter Maxwell Kern - Expedia Group, Inc. - Vice Chairman & CEO: Vrbo is focused on excelling in its core business of whole home rentals in specific markets where it has a strong brand and supply. The focus is not on competing directly with shared accommodations but on strengthening its position in its niche. Investments are being made to improve the product and marketing to regain momentum post-migration challenges.
Q: Great. I guess previously, your guidance for the full year seemingly expected share gains across your largest business lines. Is there any change to that view, given sort of the more cautious outlook for the full year? Or is this really all Vrbo-centric?
A: Peter Maxwell Kern - Expedia Group, Inc. - Vice Chairman & CEO: The cautious outlook is primarily due to slower-than-expected recovery in Vrbo. However, the core hotel business is seeing good share gains across major markets, and improvements in product and conversion are driving confidence in non-Vrbo businesses.
Q: Just you mentioned you're deciding now to pivot towards more price investment. Just wondering, is that backing up One Key? Is that going into the loyalty? And maybe overall, what's just leading to that decision to do that rather than more marketing?
A: Peter Maxwell Kern - Expedia Group, Inc. - Vice Chairman & CEO: The shift towards more pricing actions over direct marketing is based on seeing better returns in pricing. This involves modifying prices to drive more customer acquisition and efficiency. The decision aligns with using capital across marketing, pricing, and loyalty to drive growth where opportunities are seen.
Q: Great. Ariane, I think you commented that Hotels.com isn't where you'd like it to be. Can you expand on that a little bit and what you hope to achieve with that brand? And then bigger picture, what are the areas or opportunities you get most excited about beyond the next few years?
A: Ariane Gorin - Expedia Group, Inc. - President of Expedia for Business & Director: Hotels.com faced challenges due to product migrations and changes in loyalty programs, impacting its performance. The focus is on leveraging the platform for better conversion and international growth. Excitement lies in using AI for personalized traveler experiences, which could significantly differentiate Expedia's offerings.
Q: Just back to One Key for a second. Can you just level-set with how that's performing today?
A: Ariane Gorin - Expedia Group, Inc. - President of Expedia for Business & Director: One Key has shown promising early results with a 40% increase in new memberships year-on-year and good repeat rates. The program is helping to capture more trips from travelers by enabling cross-shopping across Expedia's brands, with plans for international rollout later in the year.
Q: So 2 questions. Maybe just on Vrbo. Can you maybe talk a little bit about if the issues you are kind of trying to solve for more of a top line -- sorry, top of the funnel traffic? Or is it conversion?
A: Peter Maxwell Kern - Expedia Group, Inc. - Vice Chairman & CEO: The main issue with Vrbo is rebuilding traffic, as the product itself is converting well and improving. The focus is on increasing awareness and traffic through marketing investments, leveraging tools like One Key to attract both new and returning customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
