In the Expedia Group Q3 2024 Financial Results Teleconference, operator Alex introduces the call and Senior Vice President Harshit Vaish provides the opening remarks. Vaish outlines that the call will discuss non-GAAP measures, forward-looking statements, and that actual results may differ due to uncertainties. Joining the call are CEO Ariane Gorin and CFO Julie Whalen. The earnings release and other materials are available on Expedia's Investor Relations website. Ariane Gorin then mentions that the company's third-quarter results were strong, exceeding expectations in gross bookings and earnings despite challenges like weather and currency fluctuations.

In the second quarter, the company's consumer business saw an acceleration in gross bookings, driven by strong performances from Brand Expedia, a rebound in Vrbo, and international sales. Their advertising and B2B sectors achieved strong double-digit growth, and they maintained cost discipline with declines in sales and overhead expenses. The third quarter travel environment was overall healthy but mixed, with softer demand early in the quarter that improved later. International demand outpaced the U.S., and there was low single-digit growth in U.S. room bookings, compared to higher growth in Europe and the rest of the world. Prices for hotels and vacation rentals remained stable, while air and car pricing saw pressure, with air ticket prices rising in September for the first time this year. The focus remains on driving direct traffic, improving product performance, expanding internationally, and enhancing supply. Gross bookings increased by 3% year-over-year, with a notable increase in global app downloads and bookings via apps. Brand Expedia performed well, and new product features were introduced to enhance the traveler experience.

The paragraph highlights key developments and achievements for Brand Expedia and Vrbo. Expedia's package product, which allows dynamic bundling of flights, hotels, and cars, saw a 25% increase in bookings due to new features and promotional activities. Vrbo reported modest bookings growth despite challenges from Hurricane Helene and has improved its app's performance and expanded its supply by adding nearly 1 million units from Brand Expedia, targeting urban areas and short stays. Despite challenges from Hurricane Milton in October, Vrbo is focused on maintaining momentum through its product and supply efforts. Additionally, there has been notable progress in international expansion, advertising, and loyalty initiatives, with accelerated bookings growth outside the U.S. in the third quarter.

The paragraph highlights Hotels.com's significant growth in Scandinavia and its international expansion efforts. The Advertising business saw a 32% revenue increase by attracting more advertisers and enhancing product features such as video ads, leading to better returns. The loyalty program experienced a 7% rise in global active membership and an increase in member repeat rates, with almost half of room nights booked by higher-tier members. In the U.S. and U.K., new member-only discounts were launched on Vrbo and expanded airline redemption options on Brand Expedia. The B2B segment reported a 19% increase in bookings, driven by broad-based growth across partner segments and regions. New solutions were introduced for partners like Hilton and Alaska Airlines, and key partnerships and renewals were secured with companies such as Despegar, Traveloka, and CIBC.

The paragraph discusses Expedia Group's recent partnership with Microsoft Bing and highlights advances in their technology and AI capabilities, which improve conversion rates and customer service. Key AI applications include summarizing reviews and enhancing customer self-service, with virtual agents handling nearly half of traveler inquiries. The paragraph also includes leadership updates, announcing Julie's upcoming departure as CFO and the appointment of Ramana Thumu as the new Chief Technology Officer, emphasizing his relevant experience for Expedia’s growth.

The paragraph highlights Expedia Group's positive third-quarter performance, with significant year-over-year growth in room nights, gross bookings, revenue, and EBITDA despite challenges like macro trends, weather events, and exchange rates. The company reports a 7% increase in total gross bookings, driven mainly by an 8% growth in lodging bookings and a 10% growth in hotel bookings, with expanded hotel booking windows toward the quarter's end providing additional support. Julie Whalen, the CFO and former Board member, expresses confidence in the management team and their strategic direction while committing to a smooth transition to her successor.

The article discusses the company's financial performance in its various business segments. The air business experienced strong recovery due to growth in multi-item packages and improved air prices, while Vrbo returned to modest growth. Overall revenue for the quarter was $4.1 billion, a 3% increase from last year, though it could have been 5% excluding FX impacts. Revenue was affected by previous pricing actions and soft Vrbo bookings earlier in the year. The quarter's revenue margin declined by approximately 50 basis points year-over-year due to the lower margin from air bookings, while advertising growth helped offset this impact. Cost of sales decreased by 6%, leading to a leverage improvement of about 90 basis points. Sales and marketing expenses increased by 11% due to higher commissions in the B2B sector, which are costlier compared to the B2C business.

The paragraph discusses the company's financial performance and strategy. It highlights guaranteed and immediate returns from state-based payments and mentions an investment back into Vrbo and international markets, leading to improved growth. Marketing leverage was seen in the B2C business, excluding these investments. Overhead expenses decreased by $15 million, driven by lower personnel costs and strong expense control, resulting in improved overhead leverage. The company reported a third-quarter EBITDA of $1.25 billion, up 3% year-over-year, with effective expense management. EBIT was $892 million, with a margin of 22%, impacted by a onetime stock-based compensation expense. Excluding this, EBIT would have shown slight leverage. Year-to-date free cash flow was robust at $2.3 billion, up 3% year-over-year, mainly due to higher EBITDA and reduced capital expenditures.

The company ended the quarter with strong liquidity of $7.2 billion, including $4.7 billion in unrestricted cash and a $2.5 billion undrawn credit line. Their debt is approximately $6.3 billion with a 3.7% average cost. A reduced gross leverage ratio of 2.2x is close to their 2x target, thanks to strong EBITDA growth. They repurchased $1.6 billion worth of shares as they view their stock as undervalued and plan to continue repurchases, with $3.2 billion still authorized. Looking ahead, they anticipate 6-8% gross bookings growth in Q4, driven by their air business, but expect slightly lower revenue growth. EBITDA and EBIT margins are expected to stay consistent due to marketing investments. For 2024, they have raised their forecast, now expecting 5% gross bookings growth and slightly improved EBITDA and EBIT margins.

The paragraph reports that the company expects approximately 6% revenue growth compared to the previous year and expresses satisfaction with its third-quarter performance, highlighting the success of its B2C and B2B segments, including Brand Expedia and advertising. It mentions confidence in achieving profitable growth and shareholder returns due to ongoing growth initiatives and a strong financial position. The speaker extends gratitude to Expedia associates and partners for their contributions to these results and invites questions. During the Q&A, Lee Horowitz of Deutsche Bank asks Julie Whalen about marketing investments at Vrbo and achieving marketing leverage. Julie responds that pressure from B2B sales and commissions affects marketing leverage, but they have observed leverage in B2C, excluding Vrbo and international market investments, and anticipate leverage as these areas reach desired levels.

In the article paragraph, Ariane Gorin discusses the strong growth of their Media Solutions, attributing it to increased participation in sponsored listings and display businesses. They have simplified the sign-up process and engaged in marketing activities to attract more partners. Additionally, they are testing new ad formats like video ads, which enhance effectiveness and influence pricing. Ariane believes there is significant growth potential in advertising compared to other big retail companies. Following this, Deepak Mathivanan from Cantor Fitzgerald asks about Vrbo's growth and potential acceleration strategies, and inquires about the cost implications and margin considerations for 2025.

The paragraph discusses Vrbo's recent developments following a migration that slowed its start for the year. The team has been enhancing product features, app speed, supply, and marketing, notably through a campaign with Nick Saban. Looking ahead, Vrbo aims to improve its product, expand supply, especially in urban and international markets, and maintain strong marketing strategies under new leadership. These efforts are expected to boost Vrbo's growth and also enhance Expedia's vacation rental sales. There will be no specific updates on 2025 plans until the next communication. The focus remains on growth and profitability.

The paragraph discusses the progress and strategies of a business, focusing on reducing costs and improving marketing efficiency. The speaker notes that as the business and its products improve, they expect to see better marketing efficiencies, as observed with Brand Expedia. During a Q&A, Trevor Young from Barclays inquires about the growth patterns of Vrbo, particularly in relation to monthly comparisons and the impact of weather issues. Julie Whalen responds, emphasizing an overall acceleration in business growth despite weather-related challenges. Trevor also asks Ariane Gorin, who has been in her role for six months, about her experiences, seeking insights into both positive surprises and challenges she has faced.

The speaker discusses their growing familiarity with the company's consumer business, noting the strong passion and awareness for their key brands: Expedia, Hotels.com, and Vrbo. They highlight both the positive surprise of brand loyalty and the challenges of integrating technology into brand value propositions. They mention the progress made in connecting technology with brand strategies, which has led to improvements in the consumer business. In response to a question about transferring 1 million rooms from Expedia to Vrbo, it's explained that this decision aims to enhance Vrbo's offerings, particularly in urban markets.

In the paragraph, the speaker discusses Vrbo's strategy to expand its inventory to include more urban and shorter-stay options, diverging from its traditional beach and mountain offerings. This shift aims to attract a different market segment while maintaining Vrbo's brand identity of providing whole homes and apartments without shared spaces. Additionally, the conversation touches on the importance of increasing the attach rate of travel products, a strategy that is integral to Brand Expedia, which specializes in offering a range of travel services like air, car, hotel, and activities. The strategy of selling multiple items in a trip is emphasized as a fundamental part of Expedia's business model.

The paragraph discusses the progress and impact of Expedia's One Key program, launched in the summer of 2023. Ariane Gorin highlights a 150 basis point improvement in repeat rates for One Key users, exceeding initial expectations. The program's tiered member deals, particularly among silver, gold, and platinum members, contribute significantly to room night bookings. Additionally, 30% of travelers redeeming One Key cash on Vrbo are new to the platform, indicating successful cross-brand engagement. The One Key technology also introduces promotional tools, such as gifting cash with an expiry date, to boost purchases within specific timeframes.

The paragraph discusses the company's ongoing efforts to refine its value proposition across different brands and regions, particularly focusing on the Vrbo platform's impact on traveler shopping decisions and loyalty spend similar to marketing expenses. They highlight the adaptability of the One Key program's technology for customization. The B2B segment also showed strong growth, albeit slightly reduced from previous quarters, driven partly by a rebound in Asia. The business has a large market opportunity, including working with various travel and financial institutions. Additionally, in response to a question, the company acknowledges its engagement with local governments to stay informed about new regulations in the U.S. alternative accommodations market, like recent updates in California and Hawaii, considering them either unique cases or potential indicators of broader trends.

The paragraph discusses the integration of Vrbo with Expedia's B2B segment, noting the complexity involved in selling vacation rentals compared to hotels. While the opportunity is recognized, it is not currently a top priority. Regarding Hotels.com, the brand has strong recognition and a large customer base, but its performance in Q3 was stable and not growing, partly due to changes in their loyalty program and international strategy. However, as they return to international markets, Hotels.com is starting to benefit.

The paragraph discusses a company's recent developments and future strategies. A new general manager is in place, expected to bring positive changes to the brand. The company experienced some impact from Hurricane Milton in October, but it was less severe than anticipated. Overall, the business is performing well as they enter the fourth quarter. Internationally, the company is adopting a strategic approach to regain market share by analyzing brand strength and implementing targeted marketing plans. Additionally, they are focusing on improving efficiencies in selling and marketing, particularly in the B2B sector, and are exploring cost reduction opportunities.

The paragraph discusses the company's strategy of reinvesting in Vrbo and international markets and highlights the efficiencies being seen in Brand Expedia. The focus is on optimizing product and supply to deliver value to travelers and encourage repeat visits. The CEO, Ariane Gorin, expresses satisfaction with Q3 results and emphasizes the company's commitment to growth in the consumer and B2B businesses, leveraging a unified tech platform for innovation, and building a strong foundation for sustainable, profitable growth. The call concludes with a thank you to participants.

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