EXPE · Q3 2025 Earnings

Bullish

Expedia Group

Reported November 6, 2025

30-second summary

Expedia beat its own Q3 guide on every metric that matters — revenue $4.41B versus a $3.78–$4.08B guide, gross bookings +12% versus 5–7% guided, adj. EBITDA margin 32.9% versus 50–100bps expansion guided — and raised FY bookings growth to ~7% (from 3–5%), revenue to 6–7% (from 3–5%), and margin expansion to ~200bps (from 100bps). The hidden tell: Q4 is guided to 6–8% bookings growth, a sharp step-down from the 12% Q3 print, confirming the deceleration management flagged last quarter is now in the numbers. Marketing leverage finally showed up (B2C direct sales & marketing down 4%, leveraging half a point), validating the H2 thesis that had been promised for three quarters.

Headline numbers

EPS

Q3 FY2025

$7.57

Revenue

Q3 FY2025

$4.41B

+9.0% YoY

Free cash flow

Q3 FY2025

$-0.69B

Operating margin

Q3 FY2025

23.5%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$4.41B	+9.0%	$3.79B	+16.5%
EPS	$7.57	—	$4.24	+78.5%
Operating margin	23.5%	—	12.8%	+1070bps
Free cash flow	$-0.69B	—	$0.92B	-174.5%

Guidance

Company raised full-year FY2025 guidance significantly across gross bookings growth (3–5% → ~7%), revenue growth (3–5% → 6–7%), and EBITDA margin expansion (100 bps → ~200 bps) following Q3 beats on all metrics.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q3 FY2025	$3.78–$4.08 billion	$4.412 billion	+$0.332–$0.632 billion above guide	Beat
Gross Bookings Growth	Q3 FY2025	5% to 7%	12%	+5 points above guide high	Beat
Adjusted EBITDA Margin Expansion	Q3 FY2025	50 to 100 basis points	32.9%	substantially above guide range	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q4 FY2025	$1.77–$1.95 billion	—
Gross Bookings Growth	Q4 FY2025	6% to 8%	—
Adjusted EBITDA Margin Expansion	Q4 FY2025	~2 points (200 basis points)	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Gross Bookings Growth	FY2025	3% to 5%	~7%	+2 to +4 points	Raised
Revenue Growth	FY2025	3% to 5%	6% to 7%	+1 to +4 points	Raised
Revenue	FY2025	not quantified	$16.04–$16.81 billion	quantified at $16.04–$16.81B	Raised
Adjusted EBITDA Margin Expansion	FY2025	100 basis points	~2 points (200 basis points)	+100 basis points	Raised

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
B2C Gross Bookings	$21.343B	+7.0%
B2B Gross Bookings	$9.384B	+26.0%
Lodging Gross Bookings	$22.705B	+13.0%
Non-lodging Gross Bookings	$8.022B	+7.0%
B2C Revenue	$2.883B	+4.0%
B2B Revenue	$1.392B	+18.0%

Platform metrics

Q3 FY2025

Segment	Q3 FY2025
Booked Room Nights	108.2 million
Booked Room Nights YoY Growth	11%
Gross Bookings	$30.727 billion
Gross Bookings YoY Growth	12%
Average Daily Rate Booked	$209.8

Profitability

Q3 FY2025

Segment	Q3 FY2025
Adjusted EBITDA Margin	32.9%
Adjusted EBIT Margin	25.7%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
U.S. Points of Sale Revenue	$2.537B	+4.0%
Non-U.S. Points of Sale Revenue	$1.875B	+15.0%
Share Repurchases	$451 million	—

Management tone

Cautious monitoring of macro → AI experiments → confidence with selective caution → strategy validation.

Marketing flipped from confession to victory lap in one quarter. Last quarter management said directly: "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." This quarter the framing is "fourth consecutive quarter of improved marketing productivity in our consumer business" with B2C direct sales & marketing down 4% and leveraging half a point as a percentage of gross bookings. The shift from cost-center optimization to leverage engine is the single most important tonal change — the FY +200bps margin raise is mechanically dependent on it holding.

B2B has been re-promoted from "growing segment" to central pillar. Two quarters ago B2B was one of three priorities; this quarter it carries the headline with 17 consecutive quarters of double-digit growth and bookings +26%, accelerating from +17% in Q2. The Goldman exchange explicitly framed B2B as the long-duration growth engine in a $3T travel market with 65% of revenue ex-U.S. — a deliberate elevation from segment to thesis.

AI moved from emerging opportunity to embedded operating reality. Q2 framed AI as "small but high-converting" traffic with selective productivity gains. Q3 cites virtual agents resolving "50%+ of traveler queries," AI-powered ranking models, and "expert squads embedded across teams to accelerate adoption." The language signals a transition from experiment to system. Mark Mahaney's question on GenAI lead quality drew a candid answer — volume still small but quality good — which is the right level of restraint.

Macro language shifted from headwind to monitored uncertainty. Q2 described the U.S. consumer as "muted" with "continuing uncertainty." Q3 leads with "continued momentum in October" and "real confidence in our ability to execute," while keeping "monitoring economic indicators within a dynamic macro environment" as a hedging anchor. The new caveat — "further margin expansion in 2026, albeit at a more moderated pace than what we drove in 2025" — is the one cautionary note that matters; it pre-emptively manages 2026 margin expectations down from this year's 200bps.

Margin framing broadened from cost discipline to revenue mix. Management explicitly credited "growth in our high margin advertising and insurance revenues" alongside expense leverage as drivers of the two-point EBITDA margin expansion. That reframes the margin story from a finite cost-cutting cycle to a structurally accretive mix shift — important because it implies durability beyond the restructuring tailwind.

Recurring themes management leaned on this quarter:

AI-driven personalization and operational efficiencyB2B acceleration as primary growth engineMargin expansion through leverage and revenue mix shiftBrand-specific value proposition clarityAdvertising monetization expansionConsumer demand strength across segments

Risks management surfaced:

Dynamic macro environment and economic indicators requiring close monitoringBook-to-stay timing creating potential revenue recognition volatilityQ4 guidance moderation due to prior-year lapping of six-point bookings accelerationForeign exchange headwinds (though currently favorable)Potential moderation in margin expansion pace in 2026

Q&A highlights

Eric Sheridan · Goldman Sachs

How should we think about building blocks for medium-term B2B growth given existing supply and partnerships? How is the company thinking about growing the B2B array in a competitive environment over multiple years?

Management highlighted 17 consecutive quarters of double-digit growth driven by great supply, strong technology, and long-term partner relationships. Growth comes from signing new partners and growing existing ones through product expansion. Lodging is core but expanding into car rentals, advertising, and insurance. Business is geographically diverse (65% outside US) with diverse partner types. Given the $3+ trillion travel industry, significant growth potential remains.

17 consecutive quarters of double-digit B2B growth65% of B2B revenue outside of the US$3 trillion+ travel industryDiversified partner base: offline travel agents, online travel agents, corporate partners, airlines, banks, credit card companies

Mark Mahaney · Evercore ISI

What are the primary sources of margin expansion over the next couple of years? What is the quality of leads from AI search engines (ChatGPT, Perplexity, Gemini) vs. historical performance leads? Are agentic tools and personalization driving inflection in travel demand and fulfillment?

Management identified multiple margin expansion drivers: B2C sales and marketing optimization, cost of sales improvements via AI and cloud cost optimization, overhead management, and mixed dynamics from ads/insurtech. On AI-generated leads, management noted volume is still relatively small but growing with good quality. Personalization via AI is already driving growth internally through improved product flows, AI-powered recommendations, ranking models, and virtual agents resolving 50%+ of queries. AI is being deployed across customer service, marketing effectiveness, and partner experiences.

Virtual agents resolve over 50% of traveler queriesRecord Attach levels in Expedia productsAI deployment across internal customer service, marketing, and partner experiencesLead quality from GenAI search is good but volume still relatively small

Anthony Post · Bank of America

How is the replatforming effort helping competitive positioning? How are Vrbo and Hotels.com performing on the new platform, and can we expect further brand recovery next year?

Management described the 2021-2024 replatforming as enabling competitive advantages: common data platform sharing learnings across brands, unified lodging path driving conversion improvements, and cross-brand loyalty program. Management emphasized the work over the past 12-18 months tuning the platform to each brand's unique value proposition. Hotels.com and Vrbo both showed strong performance through platform benefits (unified loyalty, member rates access, Save Your Way feature) combined with brand-specific repositioning. Strong performance across all three brands (Expedia, Hotels.com, Vrbo) in Q3.

Replatforming period: 2021 through early 2024Common data platform with unified lodging path across Hotels.com and ExpediaCross-brand loyalty program launchedHotels.com and Vrbo both delivered strong Q3 performance

Lee Horowitz · Deutsche Bank

Can marketing leverage be sustained into next year given competitive pressures from two competitors investing heavily in US hotels? Is the strong B2C quarter sustainable given tough 4Q comps?

Management emphasized agility in marketing: ROI expansion depends on site/experience improvements which drive conversion and traffic. Company is ready to 'lean in' on volume if conversion improves, while also pursuing cost reduction. On sustainability, management highlighted performance across all three brands, ongoing Vrbo product improvements (promotion suite at 20% of bookings), Hotels.com relaunch traction, and Expedia brand strength with record Attach, new airline partners (Southwest, Ryanair), and new lodging path separating hotels and homes. Management noted strong traffic trends in Q3 ahead of Q1-Q2 and effective channel optimization.

Promotion suite (Vrbo): 20% of bookings rolled out in spring 2024Hotels.com: fastest growth in over two yearsExpedia: record Attach levelsSouthwest and Ryanair added as airline partners

Jed Kelly · Oppenheimer

Can you provide an update on B2B competition and what the company is seeing in contract renewals and the renewal cycle?

Management downplayed competitive concerns, stating that competition exists in every business and year. The emphasis is on delivering value to partners, staying close to them, and continuing innovation. Management acknowledged some deals won and some lost, but expressed high confidence in the long-term value proposition based on over a decade in the B2B business.

Over a decade of B2B business experienceContinuous innovation to meet partner demandsMix of wins and losses in contract renewals (typical)

Answers to last quarter's watch list

B2C direct marketing leverage in Q3 — Resolved positively. Management disclosed B2C direct sales & marketing down 4% YoY, leveraging "over half a point as a percentage of gross bookings" and citing the "fourth consecutive quarter of improved marketing productivity." This is the mechanical underpinning of the FY +200bps margin raise.

Resolved positively

Q4 implied growth math — Resolved. Q4 is now guided at 6–8% bookings growth and 6–8% revenue growth, a clear deceleration from Q3's +12% bookings print. Management attributed the moderation to lapping prior-year strength. Status: Resolved positively (relative to prior framing), but the deceleration arc is now visible.

U.S. vs non-U.S. points of sale gap — The gap widened slightly. U.S. revenue +4% (vs. +3% in Q2) versus non-U.S. +15% (vs. +13% in Q2). U.S. ticked up but the structural-not-cyclical framing of U.S. weakness remains intact; non-U.S. is doing more of the work.

Continue monitoring

Hotels.com traffic and conversion post-relaunch — Resolved positively. Management called out Hotels.com "fastest growth in over two years" and cited Save Your Way as the headline feature; combined with Vrbo product traction (promotion suite at 20% of bookings) and unified loyalty access, this validates the multi-brand recovery thesis.

Resolved positively

Advertising & media trajectory — Resolved positively. Management called out advertising revenue up 16% in the quarter and flagged "growth in our high margin advertising and insurance revenues" as a margin lever.

Resolved positively

B2B gross bookings versus +17% run rate — Resolved positively. B2B bookings accelerated to +26% from +17% — a nine-point acceleration that single-handedly powers the consolidated FY raise. 17 consecutive quarters of double-digit growth now codified as a recurring talking point.

Resolved positively

What to watch into next quarter

Whether Q4 bookings land at or above the 8% high end — Q4 guide of 6–8% versus Q3 actual of +12% bakes in deceleration; a print at the high end would suggest October momentum carried through, while sub-7% would validate the macro caution flagged in the qualitative commentary.

B2B bookings deceleration or continued acceleration off the +26% Q3 base — the entire FY raise leans on B2B. Any reading below +20% in Q4 would suggest the +26% print was partially Q3-specific (timing, comp-driven) rather than a new run rate.

2026 margin expansion pace versus the 2025 +200bps mark — management already pre-warned of "moderated pace." Watch whether the Q4 print and any preliminary 2026 framing implies +100bps, +50bps, or flat — each is a different valuation outcome.

B2C direct marketing as a % of gross bookings — leverage of "half a point" is the single-quarter print. Sustainability into Q4 and 2026 is the test of whether marketing productivity is structural or restructuring-driven.

B2B contract renewal disclosure — Jed Kelly's question went unanswered with quantitative substance. Any specific win/loss commentary or large renewal flag in Q4 would address the only structural risk to the B2B thesis.

Sources

Expedia Group Q3 2025 Earnings Release, filed with SEC: https://www.sec.gov/Archives/edgar/data/1324424/000132442425000049/earningsrelease-q32025.htm
Expedia Group Q3 2025 earnings call, prepared remarks and Q&A (Ariane Gorin, CEO; Scott Schenkel, CFO)

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