Expedia Group (EXPE)

Investment Review After Q1 2026 Earnings (stock price as of 2026.07.10)

TL;DR

Expedia runs the world's #2 online travel marketplace — Brand Expedia, Hotels.com and Vrbo for consumers, plus a fast-growing B2B arm (Rapid API) that powers other companies' travel booking. Just reported: Q1 2026 gross bookings $35.5B (+13%) and record Q1 profitability — adjusted EBITDA up 83% to $542M. The stock is up 65% over 5 years (to $271) but still trades at just 14x earnings — cheap for a deleveraged cash machine buying back stock. The risk: growth is really ~10% once you strip out currency, and AI-powered search could disintermediate travel booking.

Summary

Finding	Assessment
5-Year Stock Return	$270.83 now vs $164.23 five years ago (+65%); a deleveraging + buyback re-rating.
Business Model	World's #2 OTA — B2C brands + fast-growing B2B (Rapid API) + trivago; merchant/agency take rate ~12%.
Competitive Moat	MODERATE Supply scale + B2B tech + brands/loyalty, but #2 to Booking and AI-exposed.
Past 5-YR Drivers	COVID recovery, B2B growth, platform unification, and deleveraging + buybacks.
Recent Stock Move	$270.83 now vs $147.26 two years ago; ran to ~$284, dipped to ~$226 on Q1 macro scare, back to $271.
Revenue Trend	DECELERATING YoY revenue growth 14.7%→11.0% (Q1'26→Q2'26E).
Margin Trend	EXPANDING Margin 15.8%→25.0% (Q1'26→Q2'26E).
TTM OP Trajectory	DECELERATING TTM OP QoQ +7.0%→+3.8% (Q1'26→Q2'26E).
Key Opportunities	B2B compounding, consumer turnaround + margin, AI-as-distribution, and a cheap multiple.
Key Risks	AI / Google disintermediation, ~10% organic growth, and macro + the #2 scale gap.
Catalysts	Q2 print (possible guide raise), buyback pace, and how AI-search resolves.
P/E(ttm) Valuation	14x — a deep discount to Booking; cheap if growth and margin keep compounding.

What Just Reported

Gross bookings $35.5B (+13%) and revenue $3.4B (+15%) — a beat, with record first-quarter profitability. Adjusted EBITDA jumped +83% to $542M (a 15.8% margin, +591bps YoY — the best Q1 in 15 years), and adjusted EPS more than quadrupled to $1.96. GAAP operating income swung to +$251M from a year-ago loss.
But strip out currency and growth is ~10%. About 5 points of the +15% revenue was FX; underlying bookings grew ~+10% (room nights +6%, ADR +7%). A Middle East conflict and Mexico travel advisories cost ~2 points of Q1 growth.
B2B is the engine; the consumer business is turning. B2B revenue grew +25% (bookings +22%, ~2/3 international, led by Rapid API). B2C bookings rose +10% — the fastest consumer growth in ~8 years — even as consumer marketing spend fell 7%. Vrbo posted its strongest Q1 in four years, and trivago revenue jumped +47%.

Guidance: Q2 & Full-Year 2026

Full-year 2026 was reaffirmed, not raised, despite the Q1 beat — gross bookings +6–8%, revenue +6–9%, and adjusted EBITDA margin expansion of +100–125bps (now expected at the high end). Management flagged "potential upside" but held the outlook, citing geopolitical and macro volatility.
Q2 2026: gross bookings +7–9%, revenue +9–11% (roughly 4 points of which is FX), and margin expansion of +50–100bps as the company laps its 2025 marketing cuts.
Cash and capital return step up: trailing free cash flow reached ~$4.1B, and Expedia announced a fresh $5B buyback authorization on top of ~$700M repurchased in Q1. New CFO Derek Andersen delivers the next full-year update at Q2.

Key Takeaways from Earnings Call

Management frames AI as an opportunity, not a threat. Their thesis: "AI can be a powerful discovery layer, but the actual booking and servicing is best handled by a really trusted, scaled provider." They went live with ChatGPT ads in February and a Claude integration, and call Answer-Engine-Optimization their fastest-growing channel — while noting ~2/3 of bookings still come direct.
OpenAI's retreat from in-chat commerce was read as validation. As AI platforms lean toward advertising/CPC rather than owning the booking, the CEO said "that's a space we know well… a net positive for us."
The consumer turnaround is real. Brand Expedia drove growth with record trip attach rates; Vrbo's fixes (better traffic, quality, conversion; supplier-funded promos now >1/3 of bookings) are working; and vacation rentals on Brand Expedia crossed a $1B annualized run-rate for the first time.
Margins expanded by doing more with less. Consumer EBITDA margin rose ~9 points while marketing spend fell 7% — AI-driven efficiency (partner onboarding ~70% faster, >30% of 250M+ service interactions AI-powered) is a genuine cost lever.
Analysts pushed on the conservative guide and the AI risk. Several probed why the full-year wasn't raised after a clear beat (answer: March/April volatility) and whether AI search shifts the industry "toward CPC," echoing Google. Management leaned on trust, scale, supply quality, and the fresh Uber and BMO AIR MILES partnerships.

Key Segments and Revenue Mix (FY2025)

Segment	FY2025 Revenue	Growth	Key Details
B2C (Consumer)	$9,474M (64%)	+2%	Brand Expedia, Hotels.com, Vrbo (+ Orbitz, Travelocity). Adj. EBITDA $2.80B (+15%).
B2B (Partner Solutions)	$4,842M (33%)	+18%	Rapid API, white-label templates, TAAP — the growth engine. Adj. EBITDA $1.26B (+22%).
trivago	$417M (3%)	+33%	Majority-owned hotel metasearch (Nasdaq: TRVG).
Total	$14,733M	+8%	Gross bookings $119.6B; adj. EBITDA $3.5B (23.8% margin); lodging = 80% of revenue.

Business Model

SUPPLIERS

3.7M+ lodging properties (800K exclusive)
Airlines, car rental, cruise, activities
Ad & AI platforms (Google, ChatGPT, Claude)
Cloud & technology infrastructure

Supply / inventory →

EXPEDIA

B2C: Brand Expedia, Hotels.com, Vrbo
B2B: Partner Solutions / Rapid API
+ trivago metasearch · One Key loyalty
Merchant & agency model, ~12% take rate

Booking marketplace → $ Commissions + ads

CUSTOMERS

Travelers worldwide (B2C)
B2B partners: airlines, banks, Uber
Other travel sites embedding EXPE supply
Advertisers (EG Advertising, trivago)

Moat Assessment: MODERATE

Supply scale + a two-sided network. 3.7M+ properties (800K exclusive) and hundreds of millions of travelers create a flywheel — more supply attracts more demand and vice-versa — and decades of booking data now feed AI personalization (record attach rates, higher conversion).
B2B is the plumbing. Rapid API embeds Expedia's inventory inside other travel sites, banks and now Uber — a sticky, tech-led business (revenue +25%) that is harder to displace than consumer search traffic.
But it's the #2 OTA and AI-exposed. Expedia trails Booking on margin and B2C execution, and — uniquely among these names — depends on Google for traffic and faces genuine agentic-AI disintermediation risk. The moat is real but narrower than a monopoly, so we rate it MODERATE.

Stock vs. Earnings — 5-Year Performance

Stock $270.83, up 65% from $164.23 (5 years ago) and +84% over 2 years. It ran to ~$284 at the end of 2025, dipped to ~$226 on Q1's macro scare, and recovered to $271 — a volatile re-rating driven by the turnaround, not multiple expansion.
The business transformed underneath the stock: trailing adjusted EBITDA nearly tripled from ~$1.5B to $4,067M, the balance sheet deleveraged from 6.0x to 1.3x net debt/EBITDA, and share count fell 24% since 2022.
Yet the multiple stayed cheap: P/E sits at just 14x — a persistent discount to Booking — because the market prices in the Google / AI-search disintermediation overhang and Expedia's structural #2 position.

Chart 1: Stock vs TTM Adjusted EBITDA & Free Cash Flow

Past 5-Year Key Drivers

Post-COVID recovery + B2B growth. Travel demand rebounded and Expedia's B2B arm (Rapid API powering other sites, banks and airlines) compounded ~20%/year, becoming the primary growth engine and lifting revenue to a ~$15B run-rate.
Platform unification + Vrbo fix. A multi-year migration of all consumer brands onto one tech stack — a growth headwind during the migration — is now a tailwind, with One Key loyalty (US 2023, UK 2024) unifying the ecosystem.
Deleveraging + capital return. Net debt/EBITDA fell from 6.0x to 1.3x, the dividend was reinstated (2025), and buybacks cut share count 24% since 2022 — a self-help re-rating story under CEO Ariane Gorin.

Quarterly Key Metrics

USD	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q2'26E	Q3'26E
Quarter End	Jun 2024	Sep 2024	Dec 2024	Mar 2025	Jun 2025	Sep 2025	Dec 2025	Mar 2026	Jun 2026	Sep 2026
Stock	$124.45	$147.26	$184.21	$166.39	$169.43	$219.20	$283.78	$226.03	$255.90	$270.83
Stock QoQ	-9%	18%	25%	-10%	2%	29%	29%	-20%	13%	6%
Rev YoY	6%	3%	10%	3%	6%	9%	11%	15%	11%	9%
OM%	22%	31%	20%	10%	24%	33%	24%	16%	25%	34%
R40	28%	34%	30%	13%	30%	42%	35%	30%	36%	43%
TTM OP	$2,789M	$2,823M	$2,934M	$2,975M	$3,097M	$3,296M	$3,501M	$3,747M	$3,889M	$4,067M
TTM OP QoQ	1%	1%	4%	1%	4%	6%	6%	7%	4%	5%
FCF/OP	72%	68%	79%	80%	64%	91%	89%	109%	109%	103%
Debt/EBITDA	2.3x	2.3x	2.2x	2.2x	2.1x	2.0x	1.8x	1.3x	1.3x	1.3x
P/E	11x	13x	15x	13x	13x	15x	18x	12x	13x	14x

Recent Stock Performance & Drivers

Stock $270.83, vs. $147.26 two years ago (+84%) and +65% over five years — a re-rating on the turnaround rather than on the multiple, which is still just ~14x.
What re-rated it: deleveraging (net debt/EBITDA 6.0x → 1.3x), B2B compounding 20%+, a fixed Vrbo, expanding margins, and a share count down 24% since 2022. It ran to ~$284 at end-2025, dipped to ~$226 on Q1's geopolitical scare, and recovered to $271.
What still caps it: the market prices in Google / AI-search disintermediation and Expedia's structural #2 position behind Booking — hence the persistent discount despite record profitability and a fresh $5B buyback.

Opportunities

B2B (Rapid API). Bookings +22%, ~2/3 international, powering airlines, banks and Uber at a ~23% EBITDA margin — the durable, tech-led growth engine.
Consumer turnaround + margin expansion. B2C bookings +10% (best in ~8 years) achieved while cutting marketing 7%; Vrbo fixed; One Key scaling; full-year margin guided +100–125bps.
AI as distribution + efficiency, plus a cheap multiple. Live ChatGPT ads and Claude integration, AEO as the fastest-growing channel, AI cutting partner onboarding ~70% — against a 14x P/E and a $5B buyback.

Challenges

AI / Google disintermediation. The core risk: agentic AI and Google's own travel products could capture discovery, cut direct-booking rates and raise marketing costs — flagged as a material risk in the 10-K.
Organic growth is only ~10%. Q1's +15% revenue was ~5 points FX; the full-year guide was held at +6–9%, and B2B is decelerating off elevated Q4 promotional activity.
Macro cyclicality + the #2 gap. Geopolitical shocks (Middle East, Mexico advisories cost ~2 points in Q1), travel-demand cyclicality, and a persistent margin/scale gap versus Booking.

Next 12 Months

Q2 2026 print (early August) — the key catalyst. First under new CFO Derek Andersen; watch whether the deliberately conservative full-year guide gets raised as macro stabilizes (management hinted at "potential upside").
Execution on the two turns: B2C reacceleration and B2B durability, and whether margin expansion holds as the 2025 marketing cuts lap in the second half.
Buyback pace on the fresh $5B authorization — with share count already down 24% since 2022, continued repurchases are a direct EPS tailwind.

Next 12-24 Months

How AI-search shakes out — a shift toward advertising/CPC (which Expedia "knows well") is a tailwind; a shift toward agentic booking that bypasses OTAs is the real threat. This is the swing factor for the multiple.
New growth vectors scaling — the Uber and BMO AIR MILES partnerships, Vrbo, and One Key loyalty broadening the marketplace beyond the core.
Re-rating potential. If AI fears fade and growth + margin keep compounding, a 14x stock has room to re-rate; if disintermediation bites, the discount to Booking persists.

Core Metrics Scorecard

	Q4'21	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q2'26E	Q3'26E
	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24	Dec24	Mar25	Jun25	Sep25	Dec25	Mar26	Jun26	Sep26
R40 > 40%	✅	✅	✅	✅												✅				✅
R40 accelerate	✅						✅	✅			✅	✅			✅	✅			✅	✅
TTM OP QoQ > 10%	✅	✅	✅	✅
TTM OP QoQ accelerate			✅			✅	✅	✅					✅		✅	✅
TTM FCF/OP > 60%	✅	✅	✅	✅	✅	✅	✅	✅	✅	❌	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Debt/EBITDA < 3.5	❌	❌	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Total passes	4	3	5	4	2	3	4	4	2	1	3	3	3	2	4	5	2	2	3	4
Stock QoQ	+9%	+6%	-50%	-2%	-7%	+10%	+12%	-4%	+47%	-9%	-9%	+18%	+25%	-10%	+2%	+29%	+29%	-20%	+13%	+6%
P/E ttm	113x	62x	16x	14x	13x	13x	13x	11x	15x	13x	11x	13x	15x	13x	13x	15x	18x	12x	13x	14x

Expedia passes the balance-sheet and cash tests, not the growth-acceleration ones. Free cash flow runs above 100% of profit and net debt/EBITDA fell to 1.3x (from 6.0x in 2021) — but "R40 > 40%" and "OP QoQ > 10%" rarely fire because it's a steady ~10% grower, not hypergrowth. Passes cluster at 2–4 of 6.
The multiple stayed cheap through the whole transformation. Trailing adjusted EBITDA nearly tripled ($1.5B → $4.1B) yet the P/E held at ~12–15x — the market prices Expedia as a low-growth, AI-threatened #2, not a compounder.
The swing factor is Rule-of-40 acceleration. Seasonally strong Q3s occasionally push R40 above 40% (Q3 2025 hit 42%; Q3 2026E ~43%), but the scorecard's ceiling is capped by structural ~10% growth — so re-rating depends more on the AI narrative resolving than on the numbers.

Chart: R40 vs Stock Price (Since 2020)

Chart: Scorecard Total Passes vs Stock Price (Since 2020)

Source: SEC EDGAR annual and quarterly filings, company earnings conference calls and presentations.

Disclaimer: This report is for educational purposes only. NO investment advice.