Expedia Group, Inc.

Good day everyone and welcome to the Expedia Group Q2 2025 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'll now turn the call over to SVP Corporate Finance, Dan Simo. Please go ahead.

Good afternoon, and welcome to Expedia Group's second quarter 2025 earnings call. I'm pleased to be joined on today's call by our CEO, Ariane Gorin, 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 excludes 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 10Q, 10K, and other filings with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. We are also webcasting an earnings deck while going through prepared remarks. A copy of this deck will be posted to our website after the call. Our earnings release, earnings deck, SEC filings, and a replay of today's call can be found on our investor relations website at ir.expediagroup.com. For today's call, Ariane will begin with a review of our second quarter results and an update on our progress against our strategic priorities. Then Scott will provide additional details on our second quarter financial performance and guidance. After our prepared remarks, we will turn the call over to the operator to begin the Q&A portion of the call. And with that, let me turn the call over to Ariane.

Thank you, Dan, and thank you all for joining us today. Our second quarter results exceeded both our top and bottom line expectations. We grew gross bookings by 5%, grew revenue by 6%, and expanded adjusted EBITDA margins by nearly two points. We delivered these results in the context of a soft U.S. travel market, reflecting our focused execution and continued progress on our strategic priorities. The U.S. travel market was muted in the second quarter. Consumers at the higher end of the market remain resilient, with those at the lower end taking a more cautious approach to discretionary spending. That said, since the beginning of July, we've seen an uptick in overall travel demand, particularly in the U.S. Based on our solid first half performance and these current trends, we're raising our annual guidance, and Scott will cover this in a moment. In the second quarter, our booked room nights grew 7% overall, and we maintained our leadership in the U.S. with low single digits growth. We grew room nights mid-single digits in EMEA and mid-teens in the rest of the world, including nearly 20% in Asia. B2B and advertising continued their strong performance. B2B bookings grew 17%, outpacing the market and delivering our 16th consecutive quarter of double digit growth. Advertising revenue grew 19% with a record number of active partners and momentum across both sponsored listings and display ads. Brand Expedia was once again our largest and fastest growing consumer brand with multi-item attach rates at their highest level since the pandemic. Hotels.com bookings declined slightly, but room nights accelerated from the first quarter, helped by our brand relaunch in April. Vrbo grew room nights roughly in line with the market in the U.S., though bookings declined in a softer environment with lower daily rates, shorter length of stay, and higher cancellations. Our second quarter performance was underpinned by progress on our three strategic priorities. One, deliver more value for travelers. Two, invest where we see the greatest opportunity for growth. And three, drive operating efficiencies and expand margins. AI accelerates all of these priorities, and I'll share how we're leveraging it in each. Let me start with delivering more value to travelers through our supply, loyalty program, and products. On supply, our recent partnership with Southwest Airlines has delivered fantastic results, bringing new customers to both Expedia and to Southwest, and delivering approximately 5% of Southwest's total passenger volume in the second quarter. This contributed to us outpacing total U.S. air ticket sales in the quarter. In EMEA, we've added Premier Inn, a leading European hotel chain, and combined with adding Ryanair earlier this year, strengthened our value proposition to travelers in Europe. In May, we launched new vacation rental promotions capabilities, and in just a few months, nearly 10% of Vrbo bookings are on our new promotional rates. When we bring on more relevant supply, we drive more value for travelers and in turn more growth for our supply partners. Our loyalty program showed continued momentum even as we calibrate the program. Active loyalty members grew high single digits with the fastest growth from our silver members and above. As a reminder, higher tier members receive better member rates from our supply partners and earn accelerated rewards which together create another powerful flywheel for retention and repeat. Turning to our products, we're continually improving the foundations of our user experience, like performance, scalability, and configurability, basics that we know drive conversion and repeat. At the same time, we're using AI everywhere, leveraging our vast first-party data to create better, more personalized experiences. Our AI filters help travelers find what they're looking for faster, resulting in higher conversion rates. And our insurance products now personalize coverage, resulting in our highest insurance attach rates ever. In customer service, AI is contributing to record high net promoter scores while helping us reduce costs. This leads me to our second priority, investing where we see the greatest opportunities for growth. B2B is growing fast. We're excited about it, and we're investing behind it. We're onboarding new B2B supply and making it easier for partners to identify and surface the right deals for their travelers. We're also expanding our product portfolio. Last quarter, we launched our first partner on our car API, and later this year, we'll roll out additional lines of business. B2B is large outside the US, and as we grow, it creates another powerful flywheel for our supply partners as well as benefiting our consumer business. On advertising, we're making it simple and cost effective for advertisers to reach their goals. Our new ad formats, like video, are driving higher engagement and conversion rates. We're rolling out more automation, and about half of our partners now use our automated campaign optimization tools. We're a high return channel for our advertisers, and while the space is getting more crowded, by continuing to innovate, both on the ads themselves as well as advertiser tools, we believe there's a lot of growth potential ahead. In our consumer business, we're making progress growing outside the U.S. and capitalizing on new traveler behaviors. We grew bookings outside the U.S. by high single digits, with brand Expedia growing 13 percent. The U.K. and Northern Europe grew particularly well, in part fueled by the new supply I mentioned earlier. We continue to see opportunity to grow as we bring together marketing, product, supply, and servicing in a way that's relevant to travelers in each of our focus markets. We're also capitalizing on new traveler search behaviors, in particular with social, Gen AI searches, and agentic AI. Traffic from Gen AI searches is small but growing fast, and it's converting into bookings at higher rates than other traffic. We're working with all the large tech players, Google, OpenAI, Meta, and Microsoft, to name a few, to make sure that our brands appear prominently and their value propositions are clear. It's a fast changing space, and having the right integrations and partnerships enables us to stay ahead, all the while optimizing our own sites, apps, tech, and marketing for the future. Moving to the third pillar of our strategy, operating efficiencies and margin expansion. For the past three quarters, we've been flat or leveraged against direct marketing spend in our consumer business. There's still work to do in this area, and we're taking a rigorous approach, refining our measurement and leaning in where we see the greatest returns. As our product gets better, as we drive more direct and better retention, we will see improved marketing leverage. AI is a key enabler of productivity and effectiveness. It touches every function across our company, and all our employees have AI goals. Our engineering teams, for example, have broadly adopted AI powered developer assistance and we're seeing reduced cycle times by more than 20% in some teams and faster feature delivery. We expect the impact to compound as we integrate AI deeper into our workflows and that this work alongside our cost discipline will underpin our continued margin expansion. To conclude, Even as the U.S. travel market was tough in the first half of the year, we made tangible progress on our strategic priorities. We have much work and opportunity ahead as we continue to execute on our strategy and deliver value for all of our stakeholders. With that, over to you, Scott.