The company reported a 4 percent increase in gross bookings to $31.5 billion and a 3 percent rise in revenue to $3 billion for the first quarter, both within guidance, the company’s earnings report released on May 8 showed.
But executives pointed to a “softer-than-expected” travel environment—particularly in the United States, which accounts for two-thirds of bookings—and revised their full-year gross bookings and revenue growth expectations to 2 to 4 percent.
Analysts noted the company’s heavy exposure to the U.S. market left it more vulnerable than peers like Airbnb or Hilton, which have also flagged cautious consumer behavior ahead of the summer travel season. At least 10 brokerages cut their price targets for the stock.
CEO Ariane Gorin said U.S. demand was soft due to declining consumer sentiment and a 7 percent decline in inbound travel. Bookings from Canada into the United States dropped nearly 30 percent.
Despite the demand headwinds, the company said Expedia delivered a strong bottom line, helped by growth in its international-facing segments and cost-cutting efforts. Adjusted earnings rose 16 percent to $296 million, with the margin expanding more than a full percentage point. Adjusted earnings per share rose 90 percent to $0.40.
The company’s business-to-business (B2B) segment remained a bright spot, with bookings up 14 percent year-over-year and earnings margins improving by more than 200 basis points to 22.8 percent. Advertising revenue jumped 20 percent, reaching $174 million, as Expedia expanded its offerings and signed a record number of large display ad deals.
In contrast, the consumer business posted just 1 percent bookings growth and a 2 percent revenue decline, reflecting its heavier exposure to the U.S. market and ongoing pressure on Vrbo and Hotels.com—other booking sites in the brand’s portfolio. Expedia.com was the fastest-growing brand, with room nights up 7 percent.
Executives emphasized margin discipline and highlighted recent restructuring actions that reduced headcount by 4 percent and contractors by 7 percent. Expedia CFO Scott Schenkel said the changes are expected to save $75 million over the next three quarters and support 75 to 100 basis points of margin expansion for the full year.
“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,” Gorin said. “I’m confident that we’re well-positioned to continue delivering for our travelers, partners, and shareholders regardless of the demand environment.”
Looking ahead, Expedia expects second-quarter bookings growth of 2 to 4 percent and revenue growth of 3 to 5 percent, aided slightly by the Easter holiday shift. Foreign exchange is expected to remain a modest headwind.