Expedia Group (EXPE 1.33%), a major online travel platform with brands like Expedia, Hotels.com, and Vrbo, reported earnings on August 7, 2025. The company's results surpassed Wall Street expectations, with non-GAAP EPS and GAAP revenue both exceeding analyst estimates, posting non-GAAP EPS of $4.24 against the consensus of $3.97, and GAAP revenue of $3,786 million, ahead of the estimated $3,707.9 million. Adjusted EBITDA and profit margins also expanded. Performance highlights included robust growth in the business-to-business and advertising segments. However, challenges persisted in the core US business-to-consumer travel market. Despite a notable drop in free cash flow and lower GAAP net income, management raised its full-year guidance for FY2025, reflecting strength in international markets and newer business lines.
| Metric | Q2 2025(Actual) | Q2 2025 Estimate1 | Q2 2024(Actual) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $4.24 | $3.97 | $3.51 | 21 % |
| Revenue | $3,786 million | $3,707.92 million | $3,558 million | 6.4 % |
| Adjusted EBITDA | $908 million | $786 million | 16 % | |
| Free Cash Flow | $921 million | $1,307 million | -30 % | |
| Gross Bookings | $30,409 million | $28,837 million | 5.5% |
Source: Analyst estimates for the quarter provided by FactSet.
Expedia Group’s Business and Strategic Focus
Expedia Group operates a portfolio of online travel brands that connect travelers with hotels, vacation rentals, flights, cars, and activity bookings worldwide. Its primary offerings include the Expedia online travel agency, Hotels.com hotel bookings, and Vrbo vacation rentals. The company also powers travel for businesses and powers ad solutions for travel suppliers through its business-to-business (B2B) and advertising units.
In recent years, the company has emphasized a platform operating model, consolidating its brands onto a unified technology stack to accelerate innovation and efficiency. Expedia aims to differentiate through its vast supply network, data-driven loyalty program (One Key), and investments in artificial intelligence to improve product features and marketing. The key factors for its performance include the ability to scale its B2B partnerships, drive innovation, deliver operational efficiency, and respond to changing travel trends in both consumer and business travel sectors.
Quarter Highlights: Segment Performance and Operational Developments
The company’s second quarter saw notable divergence among its business lines. The B2B segment, which provides white-label travel solutions and technology for other companies, drove most of the group's growth. Year over year, B2B gross bookings rose 14% to $8.84 billion. Segment revenue increased 15% to $1.21 billion, while B2B adjusted EBITDA margin expanded by 2.27 percentage points, reaching 27.3%. The segment’s robust growth in Q1 2025 reflected increased demand in Asia and a broader customer base, helping offset consumer softness.
In contrast, the B2C business, covering Expedia’s direct-to-consumer travel products, showed modest growth in Q1 2025. B2C gross bookings edged up only 1% to $21.56 billion. Hotels.com continued to lag in Q1 2025 due to earlier changes in loyalty programs and international headwinds, while Vrbo matched market trends and Brand Expedia outperformed within B2C in Q1 2025. The segment remains sensitive to soft US travel demand and strong competition. Management acknowledged these headwinds and pointed to ongoing tweaks in consumer product and marketing actions, including brand relaunches and refined loyalty incentives.
Advertising and media provided an additional boost. Revenue from EG Media Solutions grew 19%, and trivago, Expedia’s travel search engine, posted a 28% year-over-year increase in revenue. These results helped the group’s overall revenue (GAAP) exceed analyst targets.
Booked room nights rose 7% to 105.5 million, driven by increased international travel. Lodging gross bookings increased 6%. However, air revenue fell 5%. Geographic data showed a split: revenue from US points of sale (GAAP) grew 2.5%, while non-US points of sale revenue (GAAP) increased 13.1%. This highlights a shift in momentum toward international markets, partially counterbalancing the sluggish US domestic and inbound travel environment.
On the cash flow side, free cash flow declined 29% year over year to $921 million. Operating cash flow also dropped, impacted by lower demand from the core US market. Despite the decrease, the company continued its capital return policy, repurchasing $627 million of shares and maintaining a quarterly dividend of $0.40 per share. At quarter-end, cash and equivalents stood at $6.3 billion, while The leverage ratio (adjusted debt to Adjusted EBITDA) was 2.0x for the trailing twelve months.
Profitability trends were mixed. Adjusted EBITDA improved 16% to $908 million, and Adjusted EPS, which strips out certain non-operational items, jumped 21% year-over-year. However, reported (GAAP) net income dropped 14% to $330 million. GAAP diluted EPS slipped 11%. The gap between non-GAAP and GAAP results underscores the ongoing impact of restructuring, stock-based compensation, and other one-time charges. Operating efficiency initiatives delivered additional cost savings, with management expecting $75 million in added EBITDA in the next three quarters from recent job reductions and process changes. The company is also making heavy use of artificial intelligence in operations, marketing, and product development to drive faster innovation and cost savings.
Looking Ahead: Guidance and Priorities for Investors
Management raised its full-year guidance for fiscal year 2025, now expecting gross bookings to grow 3–5% for FY2025. EBITDA margin expansion of 100 basis points for FY2025. For the third quarter, the company projected gross bookings growth of 5–7% for Q3 2025, revenue growth (GAAP) of 4–6% for Q3 2025, and further margin improvement. This outlook reflects optimism in the international and B2B businesses but also signals continued softness in US consumer demand and challenges in ramping up core brands.
Leadership continues to focus on execution of its “platform operating model,” increased efficiency, targeted international expansion, and innovation through artificial intelligence applications and loyalty program refinement. Investors should watch for sustained B2B and advertising momentum. There were no major changes to the capital return plan this quarter. The company’s established dividend policy remains in place at $0.40 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
