Expedia Group, Inc.

Good day everyone and welcome to the Expedia Group Q4 2024 Financial Results teleconference. My name is Alex 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, Corporate Development Strategy and Investor Relations, Arshit Bash. Please go ahead.

Good afternoon and welcome to Expedia Group's fourth quarter 2024 earnings call. I'm pleased to be joined on today's call by our CEO, Aryan Goren, and our incoming CFO, Scott Schenkel. As a reminder, our commentary today will include references to certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in our earnings release. Unless otherwise stated, all growth rates are on a year-over-year basis and any reference to expenses exclude stock-based compensation. We will also be making forward-looking statements during the call, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict. Actual results could materially differ due to factors discussed during this call and in our most recent forms 10-K, 10-Q, and other filings with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. Our earnings release, SEC filings, and a replay of today's call can be found on our investor relations website at ir.expediagroup.com. And with that, let me turn the call over to Ariane.

Thanks, Harshit, and thank you all for joining us today. I want to start by welcoming Scott Schenkel as our new CFO. It's great to have him on board, and you'll hear from him shortly. Our fourth quarter results exceeded our expectations. with room nights, gross bookings, and revenue all growing double digits. This top line strength reflects our continued strong execution along with better than expected travel demand. Our disciplined cost management and top line out performance resulted in strong EBITDA growth with margin expansion. Bookings for the consumer business accelerated for the third consecutive quarter to 9%, up five points sequentially. Each of our core brands, Brand Expedia, Hotels.com, and Vrbo, saw bookings growth. Our B2B business had a stellar quarter, with bookings growth increasing five points sequentially to 24%. And our advertising business posted yet another strong quarter with 25% revenue growth. Travel demand remained healthy in Q4, despite price increases in hotels, vacation rentals, and air. Like last quarter, international demand was stronger than the US, with booked room nights growing high single digits in the US, low double digits in Europe, and high teens in the rest of the world. Our B2B business continues to benefit from this strong international demand, especially in APAC. And in our consumer business, our global expansion efforts continue to show solid progress. with bookings growth outside the U.S. accelerating four points sequentially. Within our consumer business, brand Expedia remains strong, with room nights growing mid-teens. Air on Expedia notably improved, driven by higher ticket prices, continued package product improvements, and new merchandising capabilities. For Hotels.com, bookings returned to slight growth, driven by momentum in international markets. And for Vrbo, bookings growth accelerated sequentially as well, with improved traffic and conversion. Global active membership in our loyalty program grew 7% in Q4, and our 12-month member repeat rate was also up over 300 basis points year over year. Across our three core brands, nearly 50% of room nights came from silver, gold, or platinum members. These higher-tier members receive additional benefits, such as member discounts, which are funded by our supply partners and help to drive loyalty to our brands. Our strong fourth quarter results contributed to a solid full year 2024. When I stepped in as CEO last year, we set an ambition to bring Vrbo and Hotels.com back to growth while extending our strengths in brand Expedia, B2B, and advertising, and being disciplined in our costs. While we have more work ahead, I'm proud of how our teams delivered against this call to action and built momentum over the course of the year. Bookings growth in our consumer business accelerated every quarter in 2024, from negative 3% in Q1 to 9% in Q4. B2B bookings grew 21% for the full year. We've grown bookings from existing partners through strong account management, great inventory, and new product features and had our best year ever in production from new partners. Overall, B2B accounted for 27% of our bookings last year, and we've cemented our leadership here. Our advertising revenue grew 32% in 2024 and drove 5% of our overall revenue. We onboarded more advertisers to our platform. launched new ad types like video, and introduced new tools for partners to manage their campaigns, all of which are resonating strongly with our advertisers. As a reminder, advertising is a high margin, high growth business, and we see a lot more opportunity to innovate. Supply is at the heart of our business, and we made great strides last year in improving our supply through technology investments, stronger partner relationships, and everyday efforts from our commercial teams. We're sourcing more traveler benefits, whether through member deals or package discounts. We've released new functionality around merchandising and have improved the quality of our vacation rental supply. All of these are great for travelers while delivering valuable and targeted demand to our supply partners. As we move into 2025, we have three overarching priorities building on our progress from 2024. First, deliver more value for travelers. Second, invest where we see the greatest opportunity to drive growth in each part of our business. And third, continue driving operating efficiencies and expanding our margins. I'll share more color on each and then talk about how AI will help us across all three. Let's start with our first priority of delivering more value for travelers. Already today, we create effortless, personalized, and rewarding experiences for customers. We do this through our supply with deals travelers can only get through us and bundles and savings that we can uniquely create. We also do it through our industry-leading customer service and innovative products and features that travelers want. And in 2025, we're going to do even more. In supply, more member rates beyond hotels and more targeted offers. In servicing, more self-service options both in the product flows and in the virtual agent experience. And of course, in product, all powered by deep insights and data that enable personalized experiences that travelers trust. Moving next to our second priority, we'll invest where we see the greatest opportunity to drive growth in each part of our business. In our consumer business, This means focusing on our three biggest brands, having clear, sharp value propositions for each of them. For Expedia, for example, that's building on our strength as a one-stop shop and focusing on differentiators like packages while scaling newer products like vacation rentals. Our consumer business is still heavily weighted to the U.S., and while we made progress in 2024, looking ahead, we'll continue to push internationally in a targeted way. In our loyalty program and marketing, we'll be even more targeted in our spending. For example, looking deeply at where we see the biggest impact from our loyalty earn. And in B2B, it's about sourcing unique supply for our B2B partners, testing new products, and signing new deals, and deepening our commercial partnerships. And finally, our third priority is to continue driving operational efficiencies and expanding our margins. We were disciplined in our cost management in 2024, and that allowed us to expand profit margins while reinvesting in strategic areas. We believe we still have room to deliver further efficiencies across our variable costs and fixed cost base to expand our margins even farther. AI is an accelerator for all three of these priorities, and we've only scratched the surface. As we look ahead, We're exploring the many ways AI will unlock even more value in our products. We're already seeing evidence of how AI is driving better experiences across the discovery, shopping, and post booking journey, which in turn are driving loyalty and growth. Going forward, we'll continue to test and release AI generated features to further personalize our traveler experience. AI also opens new possibilities to drive traffic to our brands. as consumers increasingly search in new gen AI native experiences, and we're ensuring that we meet them where they are. And for our B2B business, the AI native travel startups that will inevitably emerge present new partnership opportunities for us. Finally, we see tremendous opportunity to use AI to allow our teams to move faster and be more productive. It's not just about cost reduction. What's even more exciting is how it will enable our teams to spend more time where they can have the biggest impact. We're excited about the potential and are seeing early results across customer support, technology, marketing, and our commercial teams, really across all parts of how we operate our business. So in closing, we're pleased with our fourth quarter performance and the momentum we've built over 2024. And we believe that in 2025 and beyond, we have a substantial opportunity to drive even greater value for our travelers, partners, and shareholders. With that, over to you, Scott.