Expedia Group, Inc.

Good day, everyone, and welcome to the Expedia Group Q1 2025 Financial Results Teleconference. My name is Alex. 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. For opening remarks, I'll turn the call over to SVP Corporate Development Strategy and Investor Relations. I'll shift back to begin. Please go ahead.

Good afternoon, and welcome to Expedia Group's first quarter 2025 earnings call. I'm pleased to be joined on today's call by our CEO, Aryan Goren, and our 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. Starting this quarter, we will also be webcasting an earnings deck while going through prepared remarks. A copy of this deck will be posted online after the call. Our earnings release, earnings deck, SEC filings, and a replay of today's call can be found on our industrial relations website at ir.xpediagroup.com. And with that, let me turn the call over to Ariane.

Thank you, Harshit. And thank you all for joining us today. In the first quarter, we posted bookings and revenue within our guidance range, growing 4% and 3% respectively. This was at the lower end of our range due to weaker than expected travel demand in the U.S. and into the U.S. We beat on bottom line with 16% EBITDA growth and 90% growth in earnings per share. We delivered these results through solid execution and disciplined cost management while continuing to make progress on our strategic priorities. Booked room nights grew 6% with low single digits in the U.S., mid single digits in Europe, and mid teens in the rest of the world. U.S. demand was soft, driven by declining consumer sentiment, and we saw pressure on key inbound U.S. corridors. While in the last year we've made strides in growing our consumer business outside the U.S., our high U.S. mix resulted in 1% bookings growth for our consumer business. In contrast, our B2B business, which has a heavy international presence, posted 14% bookings growth, another strong quarter of above industry performance. Similarly, our advertising business delivered a robust 20% revenue growth. Within consumer, Expedia continued to be our fastest growing brand with room nights up 7%. Vrbo grew modestly for the third consecutive quarter and Hotels.com slipped back into negative territory due to softer U.S. demand and foreign exchange headwinds. We remain focused on what's in our control, improving every day on the basics of our business and executing against our three strategic priorities. First, deliver more value for travelers. Second, invest where we see the greatest opportunity for growth. And third, drive operating efficiencies and expand margins. As I'll discuss, AI is amplifying our efforts across all three of these. Let me start with how we're delivering more value to travelers through our supply and products. In February, we became the first online travel agency to list Southwest Airlines inventory. The early results have been great and exceeded both our and Southwest's expectations. One-third of travelers booking Southwest tickets on Expedia are new customers to us, and our hotel partners are benefiting from this new demand, offering package rates and deals to bundle with Southwest. This is a great example of our supply flywheel. When we add new supply in flights, we bring on better supply in hotel, both of which create more traveler value and translate into new customers. Similarly, in Europe, we launched Ryanair across most points of sale. We've seen strong traction so far, and around 75% of travelers booking Ryanair on Expedia are new to us. In addition, we continue to enhance our lodging supply, adding more member rates, more deals, and more flexible rates. Our March sale produced nearly twice as many bookings as last year, with a record number of hotels participating, driving value for both travelers and our supply partners. On product, we've shipped new features to help travelers identify great deals amid our broad inventory, like flight deals on Brand Expedia and property price insights on Vrbo. We continue to inject AI into our product experiences, like AI-powered property Q&A, filters, and property highlights, make shopping and booking easier we're also leveraging ai beyond our own products we're partnering with ai search companies to ensure our brands show up well across customer queries and building new experiences to connect with travelers outside our ecosystem we're live with open ai's operator and we're a launch partner with microsoft's co-pilot actions and today We're launching Expedia trip matching in early access on Instagram, allowing travelers to seamlessly build an itinerary based on an Instagram Reel and then book directly on Expedia. These innovative features, supported by our rich first-party data and coupled with our full marketplace, bring travelers back to our brand. Now moving to the second pillar of our strategy, investing where we see the greatest opportunity to drive growth. Our B2B business continues to grow by double digits, driven by our supply, technology, commercial incentives, and new partnerships. We're adding new B2B specific hotel supply and optimizing how our B2B partners ingest and sell it. This is another powerful flywheel. We're also expanding product features and points of sale, exploring partnerships with AI native companies, and selectively investing in commercial incentives to profitably drive volume and share. Finally, B2B is a geographically diverse business, so as we grow, we're diversifying our overall geographic mix. On advertising, we grew revenue 20% by adding more partners, optimizing our existing products, and shipping new products. We signed a record number of $1 million-plus deals for our display offerings and grew active hotel partners and sponsored listings by 22% to our highest level ever. Last quarter, we launched video ads and are seeing a two-times increase in click-through rates, and we're making it easier for advertisers to manage their spend with us through AI-driven bid optimization and automation. We see a lot more opportunity ahead as we continue to innovate in advertising and B2B. Turning to our consumer business, while our overall growth isn't in line with our ambitions, we are seeing good performance in our areas of focus. Brand Expedia is scaling multi-item trips and driving more attach. And in Q1, we saw record high attach rates for insurance. On Vrbo, our work over the last few quarters to improve our offering for shorter stays is paying off. Nearly a third of Vrbo growth came from the multi-unit inventory we added last year. Finally, our plan to re-inject Hotels.com with a refreshed value proposition is on track. In late April, we launched a new visual identity and new product capabilities like hotel price insights and alerts. We look forward to sharing even more later this year. Now moving to the third pillar of our strategy, driving operational efficiencies and expanding margins. In Q1, we delivered over one point of EBITDA margin expansion. We're taking a surgical approach, looking at areas where we can simplify our organization and improve our effectiveness. We've eliminated roles and removed layers, and we're seeing good results from deploying generative AI to streamline our operations across technology, commercial and marketing teams. We're also looking at every dollar of spend, including in our loyalty program. Active loyalty members grew mid-single digits, and we continue to see the fastest growth from our silver, gold, and platinum members. At the same time, we're tuning the loyalty program by brand and by geography. Last month, we removed the always-on earn for our blue-tier loyalty members on Virgo. While we see healthy returns from our discretionary loyalty spending, the base earn for blue members didn't drive sufficient repeat to justify the cost and resulting pressure on Verbo's revenue. As we closely evaluate spend, our highly variable cost structure enables us to proactively adapt to market demand and will be opportunistic about investing where we see attractive returns. In closing, while none of us can predict with certainty how the economy will evolve, we do know that people will always want to travel. I'm confident that we're well-positioned to continue delivering for our travelers, partners, and shareholders, regardless of the demand environment. Now, Scott, over to you.