Expedia Group, Inc.

Good day, everyone, and welcome to the Expedia Group Q3 2021 Financial Results Teleconference. My name is Charlie, and I'll be the operator for today's call. If you wish to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two to cancel your request. For opening remarks, I will turn the call over to SVP and CFO Retail, Patrick Thompson. Please go ahead.

Good afternoon, and welcome to Expedia Group's Financial Results Conference Call and our CFO, Eric Hart. The following discussion, including responses to your questions, reflect management's views as of today, November 4th, 2021 only. We do not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward-looking, typically preceded by words such as we plan, we expect, we believe, we anticipate, we are optimistic or confident that, or similar statements. please refer to today's earnings release and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements. You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in our earnings release, which is posted on the company's investor relations website at ir.expediagroup.com. And I encourage you to periodically visit our IR website for other important content. with that, let me turn the call over to Peter.

Thanks, Pat. Thank you all for joining us today. Eric and I will make some brief comments and then, of course, take questions. Let me begin by saying we're very pleased with the quarter we had in Q3, nearly matching our adjusted net income in the EBITDA from 2019, but I would add that, but for Delta, this would have been our most profitable quarter ever, and I think it's a tremendous milestone for technology, and to run the business more efficiently. And with that performance and what we're seeing in the market, we have the confidence to further pay down our preferred stock, which we did a few weeks ago, as you would have noted, which, of course, is another big milestone for us, putting COVID behind us. As far as the trends for the quarter go, I'll do high level and Eric will give a little more detail, but we went into the quarter following a strong Q2 and good momentum, but as we remarked last quarter, Delta had begun to have impact. We saw it impact cancellations. We saw it impact booking trends. But as we got through August and into September, the Delta fears, particularly in the US, began to wane and we ended stronger in the back half of September and that has continued through We've seen improvement across all segments, really. Well, leisure and domestic have led, even though segments which have been harder hit, like corporate and international travel, have been coming back. Cities have been returning as well. And so, all in all, it's been a broad-based recovery, but it has been led, obviously, still by leisure and domestic travel. And for us, Vrbo has been a particular highlight and beneficiary of that. A few highlights on Vrbo, since you always ask. We've seen a strong share growth in our focus markets, and in particular in the U.S. About half our customers so far in 2021, more than half have been new customers. We expect to book in excess of $2 billion of earnings for new Vrbo hosts who came on the platform this year. And looking ahead, we're already seeing better bookings for next summer than we saw this time last year. So the trends continue to be quite strong there. And while the story will continue to be impacted greatly by mixed effect, which I've talked about before, we are feeling more and more confident. And as international vectors open up, which you've no doubt all read about, this is a particular strength of ours historically. And we think, again, that is a mixed effect, which will generally benefit us. And COVID recovery, of course, remains somewhat bumpy and is unpredictable, to say the least. But we are feeling good and at every turn we are seeing demonstrated that when people can travel, they will travel for business, for pleasure and everything in between. And we are looking forward to seeing the rest of our business return. In terms of some of the details in the business, on the marketing and brand side, our focus continues to be on bringing customers efficiently back to the platform and retaining those customers for the long term. and building those long-term direct relationships. Obviously, the better our product is, the better our customer experience is, and the proposition, all those things add to that direct relationship, and we are feeling confident about the work we're doing on all fronts, but marketing, of course, is the tip of the spear, and with our new focus on being a family of brands, we have announced that we will be launching one loyalty program, which will actually cross all our brands and all our products. We think it will be the most powerful loyalty program in the industry. And we are really excited about bringing that extra usability and added value to our customers through that loyalty plan because when we get to a place where people can use it across all brands, across all products, we think that just adds tremendous value to the customer. And you should expect to see us do more of that. We will be looking for more ways to unify our brands in a united front of bringing value to the customer in every way we can. We spent the better part of the last six quarters building out the organization and in particular in the last few months building our creative organization. We've improved, as I've talked about before, all our performance marketing tools and technology and we're very excited about our position right now. We pulled back somewhat, and now again, we are seeing things growing and the recovery building again. We are leaning back in. We intend to go on the offense with all the new tools we have in our arsenal and our marketing group, and we expect to go on offense and expand share across the world. On the B2B front, which we haven't talked about a lot in the past quarters, I just want to highlight a few things here. We brought our groups together, as I remarked last quarter, our supply team and our business called Expedia Partner Solutions, which is a business we have used to power other partners in the travel industry. We brought those together officially in the last few months, and we're seeing lots and lots of opportunity for those businesses to build on the relationships we have with our supply partners, with our B2B partners, and find increasing ways to drive their business and drive their success on our platform. But in particular, UPS itself has done well Even during COVID, we've won wallet share with our partners. We've had many new signings. And for the first time in late October, we actually booked more business than we did in 2019 in that business. And that has continued into November. So great signs there. And then finally, on the Agencia front, you've all seen earlier this week, we announced the conclusion of our transaction with Amex GBT. We have merged Agencia into Amex GBT. We will retain a significant equity interest. we believe will be coming roaring back. And Agencia, even during this time of transition, had its highest signings this year that it's ever signed in terms of new clients in the first half. So lots of good signs there. But I think that deal is also emblematic, as I said before, of our desire to power more of the industry. We want to power MXGBT with our Expedia Partner Solutions business, with our technology, with our supply, and that is something we will continue to build on as the months and years unfold. So very exciting, and I just want to thank the Agencia team who did a tremendous job building that business, getting it to a place where we could find such a great transaction to put it together with someone else, and working through the time we had during the transaction and doing just a terrific job. So I thank them and our Agencia team that helped close that transaction. And then finally, while I've talked a lot about technology in the past, and I will keep this brief, I am as excited as I've ever been since I started about 18 months ago about where we are in terms of our technology evolution. We certainly have a lot of work left to do, but it can't be understated the importance of finally being aligned on our technology, on our roadmap, on our architecture. We have one plan and everybody is rolling together and our velocity is increasing and I think delivery, most importantly to the customer, will increase along with it. But just for clarity, on the front end, we're focused on being at first data and design driven and focused really on personalization and using all the data and machine learning and the opportunities to create better and better experience on one pool of data that serves all the outcomes, all our partners, all our customers, and it's really getting exciting. And finally, I just want to say this moment for us is really important as we move into 2022. Getting all of this aligned, getting the work streamlined, getting everybody on the same roadmap is a really powerful opportunity, and it reminds us that we're finally getting to what we wanted to be getting to, which is delivering new value to the But we are now in a position where the entire company is aligned. We can see the light at the end of the tunnel in terms of COVID. And the opportunity to innovate for the customer and bring great new products and value are really exciting to us. And we're looking forward to doing that. And with that, I will pass it over to Eric. All right.