Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Expedia Group Inc (EXPE, Financial) exceeded expectations on gross bookings and earnings, with revenue landing in line despite weather and currency headwinds.
- The company saw a 25% increase in package bookings in the third quarter, driven by new product features and targeted promotional activity.
- Vrbo returned to growth with improved app performance and expanded supply, adding nearly 1 million units previously only available on Brand Expedia.
- The advertising business delivered strong growth with revenue up 32%, driven by more advertisers and new product capabilities.
- B2B bookings grew 19% year on year, with new partnerships and solutions contributing to the growth.
Negative Points
- Despite revenue growth, the third quarter saw a slight margin deleverage of approximately 16 basis points.
- Vrbo faced challenges due to Hurricane Milton, impacting October performance.
- The company experienced pressure on revenue growth from soft Vrbo bookings in the first half of 2024.
- Direct sales and marketing expenses increased by 11% year over year, primarily due to higher commissions in the B2B business.
- Hotels.com performance was stable but has not returned to growth, impacted by migration and changes in the loyalty program.
Q & A Highlights
Q: How should we think about your ability to deliver aggregate marketing leverage on a go-forward basis, particularly with investments in Vrbo and international markets?
A: Julie Whalen, CFO: From a marketing leverage perspective, B2B sales and commissions are in that line, which puts pressure due to their growth. However, excluding investments in Vrbo and international markets, we have seen leverage in our B2C business. As these businesses return to expected levels, we anticipate achieving marketing leverage.
Q: What is driving the strong growth in your media solutions, and how large do you see this business becoming over time?
A: Ariane Gorin, CEO: Growth is driven by more partners participating in sponsored listings and display business. We've simplified the sign-up process and are testing new capabilities like video ads, which enhance effectiveness and pricing. There's significant white space compared to other big retail companies, indicating potential for growth.
Q: What is required for Vrbo to accelerate growth further and match the results of other alternative accommodation providers?
A: Ariane Gorin, CEO: Vrbo needs to continue improving product features, expanding supply, and executing effective marketing. Recent efforts include adding urban inventory and launching successful marketing campaigns. We are confident that these strategies will drive growth.
Q: Can you discuss the opportunity to integrate Vrbo with B2B and provide an update on Hotels.com's performance?
A: Ariane Gorin, CEO: We see a long-term opportunity to integrate Vrbo with B2B, though it's not a top priority currently. Hotels.com has strong brand recognition but hasn't returned to growth yet. We're optimistic about its future with a new General Manager in place.
Q: How do you view the impact of recent regulatory updates in the US alternative accommodations market?
A: Ariane Gorin, CEO: We work with local governments to comply with regulations while recognizing the significant market for alternative accommodations. These regulations do not impact our growth potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
