Online travel platform Expedia Group (EXPE -0.09%) reported mixed third-quarter earnings on Thursday, Nov. 7. Adjusted earnings per share of $6.13 surpassed the expected $6.05 while revenue for the quarter of $4.06 billion fell short of the $4.11 billion consensus estimate. Several metrics were somewhat restrained by a negative foreign exchange effect of 2%.
Despite these challenges, the quarter went relatively well, supported by significant growth in its B2B segment and a rise in net income by a substantial 61% year over year to $684 million. Investors should also be encouraged by Expedia management's raised outlook for the year.
| Metric | Q3 2024 | Analysts Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $6.13 | $6.05 | $5.41 | 13% |
| Revenue | $4.06 billion | $4.11 billion | $3.9 billion | 3% |
| Net income | $684 million | - | $305 million | 61% |
| Gross bookings | $27.5 billion | - | $25.7 billion | 7% |
Source: Expedia. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Overview of Expedia Group
Expedia Group is a global travel technology company offering a wide array of services, including lodging reservations, flight bookings, and travel packages. Its operation encompasses multiple brands like Hotels.com, Vrbo, and its primary brand, Expedia, harnessing a unified platform for efficiency and innovation.
Recently, the company has focused on unifying its technology infrastructure to streamline operations and enhance user experience. Its pivotal initiative, the "One Key" loyalty program, aligns with its goal of bolstering consumer retention while optimizing its B2B services to expand globally and leverage the $2 trillion travel industry.
Quarterly Performance Highlights
Expedia Group noted substantial progress in its B2B segment in Q3 with gross bookings soaring 19% year over year, propelling a revenue increase of 18% to $1.2 billion. This reflects strong corporate partnerships and elevated demand from business clients.
In the B2C segment, gross bookings edged up by 3%, spurred by platform improvements. Brand Expedia saw mid-teens growth in room nights, indicating successful consumer strategies. Lodging, a key revenue source, achieved gross bookings of $20 billion, up 8%, with hotel bookings climbing 10%.
However, foreign exchange headwinds affected overall revenue growth, which was limited to 3% at $4.06 billion. Adjusted earnings per share, nonetheless, exceeded expectations, highlighting robust underlying net income growth.
Operationally, the company repurchased 12 million shares for $1.6 billion year-to-date, enhancing shareholder value. Strategically, the integration of brands into a unified platform is progressing, simplifying operations and facilitating an agile rollout of new features. The "One Key" loyalty program is strengthening customer ties, bolstering repeat bookings and a higher repeat rate from app and loyalty members.
Looking Ahead
Challenges remain, including fierce market competition and macroeconomic stresses, which require adaptability. Additionally, the upcoming transition of the Chief Financial Officer might introduce temporary uncertainties; however, management has planned a streamlined process.
The management of Expedia Group remains optimistic, reflected by an uplifted full-year guidance. Management expects gross bookings growth of 5% for the full year, a rise from the prior outlook, thanks to stronger trends in its air business. It aims to mitigate currency fluctuations and market pressures through continued investment in technology and loyalty initiatives.
Investors should monitor the company's advances in technology integration, its strategic bet on the "One Key" program, and the potential impact of management transitions. Furthermore, scrutinizing shifts in consumer spending and travel trends will be crucial for anticipating future performance.
