Expedia Q2 results beat estimates, but CEO warns of “softening” demand

Expedia Group posted better-than-expected second-quarter results on Thursday (Aug. 8) as the company benefitted from a travel demand that has remained resilient despite macroeconomic headwinds.

The Seattle-based company earned an adjusted $3.51 per share on sales of $3.56 billion for the June quarter. On average, analysts were expecting the company to post adjusted earnings of $3.18 per share on sales of $3.53 billion, according to FactSet.

For the same period last year, Expedia earned an adjusted $2.89 per share on sales of $3.36 billion.

But the positive news came with a warning from the Seattle-based company’s CEO Ariane Gorin, who suggested that the travel industry is heading towards some slight turbulence.

"We're pleased with our momentum and the sequential improvement in our consumer brands," Gorin said in a press release. "However, in July, we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year."

Expedia Group includes travel websites Expedia, Hotels.com and Vrbo (an online marketplace for vacation rentals)

The company’s B2B and B2C segment has performed well for its retail side in terms of growth. However, the Vrbo segment’s recovery post-technical migration was slower than expected, impacting sales in Q1.

Expedia now expects its full-year revenue growth to be lower than initially expected for 2024, prompting it to revise its full-year guidance to a range of mid to high single-digit top-line growth.

Expedia’s stock, meanwhile, is down 23 per cent so far. 

During a conference call with analysts yesterday, Julie Whalen, chief financial officer at Expedia Group, said she expects annual gross bookings growth at the "low end of our previously communicated range of mid- to high single digits, at approximately four per cent, and revenue growth to be two points higher at approximately six per cent.”

Expedia by the Q2 numbers

Total gross bookings across Expedia's products grew six per cent to $28.8 billion in Q2, edging past estimates of $28.7 billion.

Hotel room nights booked grew 10 per cent to 99 million, growing from eight per cent growth in Q1.

Expedia's B2B related revenue grew 22 per cent year over year to $1 billion in the quarter. Net income came in at $386 million and adjusted net income was $469 million.

“We delivered results at the high end of our expectations, driven largely by a significant improvement in Vrbo, as well as strength in Brand Expedia, our advertising business, and our B2B segment,” wrote Gorin in a post to her LinkedIn page yesterday.

International demand beats U.S.

Gorin, who assumed the role of chief executive officer at Expedia Group last May, went on to say that the travel environment was “healthy” in the second quarter.

Demand was stronger internationally compared to the U.S., particularly in Latin America and Asia, she wrote.

“Despite some recent softness in travel demand, similar to what many of our industry peers are seeing, we remain committed to execution and driving long-term value,” she wrote.

“Looking ahead, we have much work to do, and also a wealth of opportunities. We have consumer brands that travellers love, a differentiated and leading B2B business, the most diverse supply we’ve ever had, powerful technology, and an excellent team.”

“I’m encouraged by our results and grateful to all of our employees who are rallying together to fulfill our ambition – to help travellers worldwide enjoy great trips and create lasting memories.”

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