The operator introduces the participants and explains the use of non-GAAP measures and forward-looking statements. The CEO, Peter Kern, thanks everyone for joining and announces that this will be his last earnings call before handing over to incoming CEO, Ariane Gorin, who will share her thoughts after CFO, Julie Whalen.

The company has been preparing for Ariane to take over as leader and is excited for her and the team to move the company forward. The first quarter of 2024 saw a normalized market environment for travel, with North America showing slower growth compared to other markets. Revenue and EBITDA exceeded expectations, but gross bookings were not as strong due to slower growth in Vrbo after its technical migration. As a result, the company has lowered its full-year guidance for top line growth and expects margins to be similar to last year.

In the third paragraph, the speaker discusses the expected improvement in the company's B2C business in the coming years, particularly in the areas of conversion rates and international growth. They express confidence in the team's ability to maximize the potential of their recent transformations and thank shareholders and investors for their support. The following speaker then provides key metrics for the first quarter, including a 3% increase in total gross bookings driven by strong growth in the hotel business but offset by ongoing challenges in the Vrbo business.

In the first quarter, Expedia saw an 8% increase in revenue, driven by higher margins and increased advertising revenue. Cost of sales decreased by 13%, leading to a 310 basis point leverage. Direct sales and marketing expenses increased by 11%, primarily due to commissions paid to B2B partners. Overhead expenses increased by 4%, but were still below revenue growth. The company remains focused on driving efficiencies across its P&L.

In February, the company announced cost actions that will impact 1,500 employees and result in substantial savings. Despite this, the company delivered strong first quarter EBITDA of $255 million, higher than expected due to higher revenue and lower costs. The company also made the decision to invest more in pricing actions rather than direct marketing, which will impact future quarters. The company also provided additional disclosure around their EBIT performance, which showed a negative $59 million with a margin of negative 2.1%, an improvement from last year. The company generated $2.7 billion in free cash flow, with the decline associated with timing changes in working capital.

The company has a strong balance sheet with high liquidity and low debt. They have been using their cash to repurchase shares and plan to continue doing so. However, due to lower-than-expected growth in bookings and trends in their B2C business, they have lowered their full year guidance for top line growth and expect mid-single digit growth in the second quarter. They will continue to invest in marketing for Vrbo and international markets.

The company expects lower revenue growth in the second quarter due to various factors, but remains committed to long-term growth and shareholder returns. The new CEO, Ariane Gorin, has a strong background in the industry and will focus on accelerating growth and refining the strategy for the Consumer Business. She has spent time getting to know the business and acknowledges the challenges it has faced in recent years.

Expedia has faced challenges in its development capacity due to building new capabilities like its common front end. This has affected the competitiveness of some of its brands, with Expedia benefiting the most and Hotels.com and Vrbo falling behind. To see growth in its consumer business, Expedia needs to focus on driving traffic, increasing conversion, and expanding margins. While their platform allows for innovation at scale, they are still learning to use it effectively. Moving forward, they will dedicate more development capacity to building great traveler experiences. Despite a longer wait for results, the investments made in rebuilding the consumer business will pay off, as they have a strong foundation and other strengths to build on, such as their B2B segment and advertising business.

The speaker discusses the company's strong relationships with supply partners and their leading position in the consumer market. They also mention their focus on driving efficiencies and their excitement for future potential. The speaker then addresses a question about Vrbo and their strategy for investing in the asset. They clarify that Vrbo does not compete with shared accommodations or certain competitors in certain areas.

The company's main focus is on excelling in the whole home space in specific markets where they have a strong brand and supply. They acknowledge that the migration they went through last year had a lingering impact on their product, but they are seeing improvements and are investing in marketing to get it back on a growth trajectory. They also have confidence in their other brands, Expedia and Hotels.com, which also offer alternative accommodations.

Lee Horowitz asks about the company's previous guidance for the full year and if there have been any changes given the more cautious outlook. He also asks about the acceleration in the non-Vrbo B2C business and how the company is ensuring it can sustain through the year. Peter Kern responds by mentioning product improvements and wins across the platform, giving them confidence in the non-Vrbo business. He also addresses the question about share gains, mentioning that he came back to it after discussing the non-Vrbo business.

The company is seeing good share gains in their core hotel business and is making strong product gains. They are also investing more in pricing rather than marketing, as they see it as a more efficient way to drive consumer behavior. This includes modifying prices to acquire more customers and increase velocity. Vrbo has given up share, but the company is confident in their gains in the hotel lodging market.

The company has made a strategic decision to rebalance its pricing and invest in different areas, such as loyalty and marketing, to drive growth. The One Key program includes tiered member discounts, which are supplier-funded, and also allows for discounts and incentives to be given to customers. This approach is similar to some of the company's competitors and is expected to create more activity and shopping for One Key customers.

The main focus of the company is on pricing and core loyalty programs, as they provide the best return on investment. The decision to prioritize these areas has created some noise in the P&L, but it is seen as the most effective strategy. The CEO also mentions that Hotels.com is not performing as well as they would like due to product migration and changes in the loyalty program. The company is constantly looking for areas of growth and opportunities, such as experiences and AI in the future.

The speaker expresses excitement about the potential of One Key, but acknowledges that it has resulted in a bigger change in the loyalty program for Hotels.com with less earning opportunities. Hotels.com has also been impacted by a shift away from international markets. However, the speaker is optimistic about the potential for growth through improved conversion rates and a focus on international markets. They also highlight the potential for personalized experiences through AI and the unified platform. When asked about what they are most excited about, the speaker mentions the potential for advertising and B2B, but emphasizes the importance of technology in delivering personalized experiences for travelers.

The speaker, Ariane Gorin, discusses the slower than expected results in Vrbo and Hotels.com, and the potential implications for the slower ramp of international expansion. However, she notes that the One Key loyalty program has seen a 40% increase in new membership and good repeat rates, with 25% of Vrbo's new customers coming from other Expedia brands. The program will be rolled out internationally later this year. The next speaker, Naved Khan, asks about the issues being addressed at Vrbo and the timeline for seeing results from international expansion. Peter Kern responds that the main issue is traffic, and they are starting to spend more on advertising in new markets, with the expectation of seeing P&L contribution in the near future.

The migration to a single stack has caused a decrease in conversion and awareness for Vrbo, but the product is improving quickly and conversion rates are improving. The One Key program is a key differentiator for Vrbo, but it takes longer to accumulate benefits for customers who only travel once a year. International markets are showing good returns, but the focus is on long-term growth and winning back share. Short-term wins have been seen.

The speaker, Peter, agrees with another person's point about it taking time to see the effects of investments in the P&L. However, they have seen double-digit growth in international markets. In response to a question about the B2B business, Ariane mentions that they have a well-balanced mix of customers and partners. She also mentions that there are no noticeable benefits from regulatory changes regarding Google in Europe.

Google is still trying to push back and monetize SEO traffic, but there has been no noticeable impact. About two thirds of the business comes from direct traffic, with a focus on improving the app. The company is excited about the potential of Gen AI products and expects them to change the way users search for travel, but no specific timeline for release has been given.

The company has been experimenting with Gen AI in various areas, including customer service and efficiency. The impact on conversion and consumer behavior is still modest, but the company has learned a lot and will be announcing new developments at their upcoming conference. They are also exploring ways to use Gen AI to benefit their partners, such as improving inventory and advertising. The company's customer support and development teams are also looking into ways to use Gen AI more effectively.

The speaker discusses how the company's new technology will impact various aspects of the organization, including how travelers search and book. They also answer a question about cost management and mention that they are still in the process of making changes. The second question is about the percentage of bundled products sold and the potential impact of AI and mobile apps on cross-selling. The speaker mentions ongoing cost-cutting efforts and projects to improve efficiency.

Expedia Group believes there are opportunities to drive cost efficiencies and bring down costs as they migrate systems. They do not disclose the percentage of business that comes from bundled packages or cross-selling, but they have seen good results from their package path and plan to use machine learning to improve cross-selling and attachments. There have been transient benefits to the B2B business, such as the recovery of corporate travel and exposure to Asia Pacific, but the company does not disclose a long-term growth rate for B2B.

The speaker responds to a question about long-term projections for the B2B business, stating that there is a large market for travel and the company has ambitious goals for growth. They mention partnerships with various types of companies and investments in technology, supply, and relationships with partners. Another question is asked about recent cost reductions and the speaker explains that they have not broken down the impact on each line, but it can be seen in cost of sales, overhead, and capital expenditures. They also mention that the reductions are due to capital labor.

The company is seeing growth in its hotel segment, particularly outside of the U.S. due to favorable macro conditions. However, the U.S. market is still growing and the company is gaining market share in most focus markets. The B2B business is benefitting from geographical diversity, particularly in Asia and Latin America. There was also a question about Vrbo's performance, with the company noting a surge in customers during the pandemic but not meeting expectations in terms of app distribution and reactivating customers. No details were provided on the mix of Vrbo versus core business.

Peter Kern discusses the impact of the pandemic on the Vrbo business, stating that there was a surge in customer acquisition and the category is still above 2019 levels. However, he also mentions that the company had to go through a period of product changes and migration, which affected their ability to invest in marketing. As a result, they are now focused on winning back customers and utilizing tools like One Key to attract customers from other Expedia brands. They are confident in their product and supply, and are now able to focus on improving the customer experience.

Ariane Gorin, CEO of Expedia Group, is focused on helping the team get back to the basics of traffic and conversion in order to deliver the acceleration implied in their guidance. She will also be listening and learning in order to make any necessary adjustments for long-term growth. Meanwhile, Julie, the CFO, is expecting margins to be similar to last year due to cost savings from head count reduction and tech stack migration, but there will also be investments made for future growth.

The speaker discusses their schedule and the time they spend with their team and partners. They mention their motivated team and their upcoming plans. The speaker also talks about their margins and how they will invest in Vrbo and international markets to support their growth initiatives. The call ends with the speaker thanking everyone and ending the call.

This summary was generated with AI and may contain some inaccuracies.