Q3 2021 Expedia Group Inc Earnings Call

November 4, 2021

Yesterday.

Eric and I will make some brief comments and then of course take questions. Let me begin by saying, we're very pleased with the quarter we had in Q3. Nearly matching our adjusted net income and EBITDA from 2019, but I would add that not for delta this would have been our most profitable quarter ever and I think it's a tremendous milestone for the company to be here, while we are still in the throes of Covid and still coming out. In a testament really to the work we've done to simplify the company to focus on technology and to run the business more efficiently and with that performance and what we're seeing in the market, we had the confidence to further pay down our preferred stock, which we did a few weeks ago as you would've noted.

From 2019, but I would add that but for delta This wood.

We have been hard most.

Profitable quarter ever and I think it's a tremendous milestone for for the company to be here, while we are still in the throes of Covid and still coming out in a testament really to the work we've done to simplify the company to focus on technology and to run the business more efficiently and with that performance and what we're seeing in the market.

Had the confidence to further pay down our preferred stock, which we did a few weeks ago as you would've noted.

And which of course is another big milestone for us putting COVID-19 behind us as far as the trends for the quarter go, I'll do high level, and Eric will give a little more detail, but we went into the quarter following a strong Q2 and good momentum, but as we remarked last quarter Delta had begun to have an impact, we saw it impact cancellations, we saw an impact booking trends.

I'll do high level, and Eric will give a little more detail, but we went into the quarter.

Following a strong Q2 and good momentum, but as we remarked last quarter Delta had begun to have an impact we saw it impact cancellations, we saw an impact booking trends.

But as we got through August and into September the Delta appears particularly in the US against wane. And we ended stronger in the back half of September and that has continued through into the fourth quarter with even greater strength.

And we ended stronger in the back half of September and that has continued through into the fourth quarter with even greater strength.

We've seen improvement across all segments really well leisure and domestic have led even those segments, which have been harder hit by corporate and international travel have been coming back. Cities have been returning as well and so all in all it's been a broad-based recovery, but it has been led obviously still by Weezer and domestic travel and for us it has particular highlight and beneficiary of that.

A particular highlight and beneficiary of that.

A few highlights on verbose since you always ask, we've seen strong share growth in our focus markets and in particular in the US. About half of our customers so far in 2021, more than half have been new customers.

We expect to book in excess of $2 billion of earnings for New Verbose, who came on the platform this year.

Looking ahead, we are already seeing better bookings for next summer than we saw this time last year. So the trends continue to be quite strong there.

And while the store and we will continue to be impacted greatly by mix effect, which I've talked about before, we are feeling more and more confident. And as international vectors open up which you've no doubt all read about, this is a particular strength of ours historically and we think again that is a mixed effect, which will generally benefit us.

And Covid recovery of course remains somewhat lumpy and unpredictable to say the least.

But we're feeling good at every turn we're seeing demonstrated that when people can't travel that will travel for business or pleasure and everything in between. And we are looking forward to seeing the rest of our business return.

Looking forward to seeing the rest of our business return.

In terms of some of the details in the business on the marketing and brand side, our focus continues to be on bringing customers efficiently back to the platform.

And retain those customers for the long term and building those long term direct relationships, obviously, the better our product is, the better our customer experiences and the proposition. All of those things add to that direct relationship and we are feeling confident about the work we're doing on all fronts, but marketing of course is the tip of the spear. And with our new focus on being a family of brands. We have announced that we will be launching one of the loyalty program.

The better our customer experiences and the proposition all of those things add to that direct relationship and we are feeling confident about the work we're doing on all fronts, but marketing of course is the tip of the spear and with our new focus on being a family of brands. We have launched our announced that we will be launching one of the loyalty program.

Which will actually cross all our brands in all our products, we think it will be the most powerful loyalty program in the industry.

And we are really excited about bringing that extra usability and and added value to our customers through that loyalty plan.

Because when we get to a place where people can use it across all brands across all products. We think that just adds tremendous value to the customer and you should expect to see us do more of that.

We'll be looking for more ways to unify our brands and a united front of bringing value to the customer in every way we can.

We spent the better part of the last six quarters building out the organization and in particular in the last few months building a creative organization. We've improved as I've talked about before all our performance marketing tools and technology.

And we're very excited about our position right now. But we went into the third quarter and specific with a much more aggressive posture. Delta hit we have we pulled back somewhat and now again that we are seeing things growing in the recovery building again, we are leaning back in, we intend to go on the offense with all the new tools we have in our arsenal and our marketing group.

We went into the third quarter and specific with a much more aggressive posture Delta hit we have we pulled back somewhat and now again that we are seeing things.

growing in the recovery building again, we are leaning back in, we intend to go on the offense with all the new tools we have in our arsenal and our marketing group.

Tools, we have in our Arsenal and our marketing group.

And we expect to go on offense and expand share across the world. On the B2B front, which we haven't talked about it a lot in the past quarters I just want to highlight a few things here, we brought our groups together as I remarked last quarter, our supply team and our business. We had called Expedia partner solutions, which is a business we have used to power other partners in the travel industry.

On the <unk> front, which we haven't talked about it a lot in the past quarters I just want to highlight a few things here, we brought our groups together as I remarked last quarter, our supply team and our business. We had called Expedia partner solutions, which is a business we have used to power other partners in the travel industry.

We brought those together. It's really in the last few months and we're seeing lots and lots of opportunities for those businesses to build on the relationships we have with our supply partners with our B2B partners. And find increasing ways to drive their business and drive their success on our platform, but in particular EPS itself has done well.

It's really in the last few months and we're seeing lots and lots of opportunity for those businesses to build on the relationships, we have with our supply partners with our <unk> partners and find increasing ways to drive their business and drive their success on our platform, but in particular EPS itself has done well.

Even during Covid, we've won wallet share with our partners. We've had many new signings and for the first time in late October, we actually booked more business than we did in 2019 that business and that has continued into November.

It's in November.

Great signs there and then finally on the Egencia front, you've all seen earlier this week, we announced the conclusion of our transaction with Amex GBT, we have merged Egencia and Amex GBT.

We will retain a significant equity interest. We feel really good about that corporate we believe it will be coming roaring back and Egencia. Even during this time of transition had its highest signings this year that was ever signings in terms of new clients in the first half. So lots of good signs there, but I think that deal is also emblematic as I've said before.

Of our desire to power more of the industry, we want a power Amex GBT with our Expedia partner solutions business with our technology with our supply and that is something we will continue to build on as the months and years unfolds, so very exciting.

The months and years unfolds, so very exciting.

And I just want to thank the Egencia team, who did a tremendous job building that business, getting to a place where we could find such a great transaction to put it together with someone else. And then working through the time we had during the transaction and doing just a terrific job. So I thank them and our Expedia team that help close that transaction.

We are seeing that help close that transaction.

And then finally, while I've talked a lot about technology in the past and I will keep this brief. I am as excited as I've ever been since I started about 18 months ago about where we are in terms of our technology evolution. We certainly have a lot of work left to do. But it can't be understated the importance of finally being aligned on our technology on our road map, on our architecture, we have one plan.

Our road map on our architecture, we have one plan than.

And everybody is rowing together and our velocity is increasing and I think delivery, most importantly, to the customer will increase along with it. But just for clarity on the front end, we're focused on being at first. Data and design is driven and focused really on personalization and using all the data and machine learning and the opportunity to create better and better experiences for the customer and for our suppliers. And on the back end, we're really re-architected everything as I've talked about moving from this many technical stacks to one stack on one pool of data that serves all of the outcomes, all of our partners, all our customers and it's really getting exciting.

Data and design, driven and focused really on personalization and using all the data and machine learning and the opportunity to create better and better experience.

for the customer and for our suppliers. And on the back end, we're really re-architected everything as I've talked about moving from this many technical stacks to one stack on one pool of data that serves all of the outcomes, all of our partners, all our customers and it's really getting exciting.

And finally, I just wanted to say this moment for us is really important as we move into 2022. Getting all of this along and getting the work streamlined getting everybody on the same roadmap.

Getting all of this along and getting the work streamlined getting everybody on the same roadmap.

It's a really powerful opportunity and it reminds us that we're finally getting to what we wanted to be getting to, which is delivering new value to the customer. We've been internally focused for a lot of COVID-19. Covid was a tough thing to get through but we are now in a position where the entire company is aligned, we can see the light at the end of the tunnel in terms of Covid and the opportunity to innovate for the customer and bring great new products and value are really exciting to us and we're looking forward to doing that. With that I will pass it over to Eric.

innovate for the customer and bring great new products and value are really exciting to us and we're looking forward to doing that.

With that I will pass it over there.

Alright. Thank you. I'm also pleased as Peter mentioned with the overall recovery of our business. As you will see it includes two quarters in a row of positive adjusted EBITDA and in the in Q3, excluding <unk>. It was roughly on par with the third quarter of 2019.

I'm also pleased as Peter mentioned with the overall recovery of our business as.

As you will see it includes two quarters in a row of positive adjusted EBITDA and in the in Q3, excluding <unk>. It was roughly on par with the third quarter of 2019.

And with that I wanted to start by providing an update on the booking trends that we have seen and we are seeing.

Following the pullback, we witnessed for much of the third quarter and into the first part of September due to the Delta variant. We saw a notable broad-based improvement across GEOs and product lines. Overall total bookings for all products net of cancels were down 30% versus the third quarter of 2019, which was slightly worse than the 26% decline we saw last quarter.

Given the continued volatility of the recovery. We also want to provide additional monthly detail on our total lodging bookings net of cancels. That of course, includes both hotels and Faribault and those were down approximately 17% in July. Approximately 25% in August. 19% in September and further improved to down negative 2% in October and again that September was also down of course. The trends in October that we saw again that was a negative 2%. They did improve throughout that month. So we exited at a much improved frame relative to the start of that month.

Of course includes both hotels and Faribault and those were down approximately 17% in July <unk>.

Approximately 25% in August.

19% in September and further improved to down negative 2% in October and again that September was also down of course the <unk>.

<unk> in October that we saw again that was a negative 2%. They did improve throughout that month. So we exited at a much improved frame relative to the start of that month.

Moving to the P&L, starting with revenue and was down approximately 17% versus third quarter of 2019, which was a meaningful improvement from last quarter with revenue down approximately 33%. We saw a significant improvement in both [vrbo] and hotel revenue, which benefited from seasonally strong summer travel.

Revenue margin for the third quarter was approximately 16% up from approximately 10% last quarter. This was primarily due to the typical third quarter seasonality in the business and product mix weighted towards lodging.

On sales and marketing direct spend in Q3 was approximately $1.1 billion, which is down approximately 19% versus the third quarter of 2019 levels.

As Peter mentioned, we reduced spending given the reversal in trends, we witnessed in the third quarter. However, going forward given that more positive recent trends that we've discussed we are again looking at the marketing spend in Q4.

However, going forward given that more positive recent trends that we've discussed we are again looking at the marketing spend in Q4.

Moving onto overhead costs, they totalled approximately $530 million, a slight decrease versus last quarter and below our expectations. We saw lower than anticipated discretionary spend which was down roughly 90% versus the third quarter of 2019, as employees continue to largely work from home in the quarter.

I would also call out slower than anticipated hiring is there continues to be a high degree of competition for talent, especially for technology roles.

Looking ahead, we expect overheads increased by approximately $40 million sequentially in the fourth quarter, primarily due to lower capitalized labor, due to the holidays as well as higher anticipated headcount and people costs.

And total adjusted EBITDA was approximately $855 million, which is approximately $650 million improvement over last quarter, driven primarily by typical seasonality.

Moving on to free cash flow for shuttle negative $1.4 billion in Q3 on a reported basis. If we exclude the change in restricted cash, which is primarily driven by the change in fair enough deferred merchant bookings. Free cash flow was negative approximately $450 million. As a reminder, the third quarter is traditionally a low quarter for free cash flow seasonality.

Seasonality.

In terms of the balance sheet, we continue to be investment grade rated today and remain committed to deleveraging back to more historical levels as well as further reducing our cost of capital.

As you may recall, we refinanced some debt earlier this year, which yielded $80 million in annual interest rate savings. And last month's as Peter mentioned, given the improving trends and continued confidence in our liquidity position, we paid off the remainder of the preferred stock and total paying off all of the preferred stock this year it will save us approximately $150 million in annual dividend payout going forward.

dividend payout going forward.

Finally onto the Genocea. I want to echo Peter's comments and thank you again for your team as well as all of those Expedia employees, who are involved with the Genocea for their dedication and hard work.

Peter's comments and thank you again for your team as well as all of those Expedia employees, who are involved with the genocea for their dedication and hard work.

I would also like to point out page 17 of the earnings press release, which provides detail on the Egencia financials.

For the third quarter, Egencia generated $55 million in revenue and negative $18 million and adjusted EBITDA. But again in the third quarter.

Hence, we have generated $55 million in revenue and negative $18 million and adjusted EBITDA.

But again in the third quarter.

As it relates to Egencia costs in third quarter 2021, rough numbers, but approximately $35 million was recorded in cost of sales. $20 million in sales and marketing and it remains roughly $20 million of spread across tech content and G&A.

Main roughly $20 million of spread across tech content and G&A.

Going forward, we will report our minority stake in the combined company within the other net line of our income statement. And in terms of the tenure of logging supply agreement with our Expedia. partner services business that's entering with the combined company, we will account for it like any other standard EPS deal.

And in terms of the tenure of logging supply agreement with Expedia.

partner services business that's entering with the combined company, we will account for it like any other standard EPS deal.

As a reminder, at 2019 volumes, we expect this deal EPS that would be worth in excess of $60 million on an annualized basis for EBITDA.

In closing, as Peter and I both mentioned, we're quite encouraged by recent trends and the pace of recovery is clearly improving things are getting better.

Peter and I, both mentioned, we're quite encouraged by recent trends and the pace of recovery is clearly improving things are getting better.

And I remain truly I'm very optimistic about the future of travel and our company. And so with that Charlie, we are ready for our first question.

Truly I'm very optimistic about the future of travel and our company.

And so with that Charlie we are ready for our first question.

Of course.

As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad. If you'd like to retract your question. Please press star followed by two. Our first question comes from Naveed Khan of <unk> Securities. Your line is now open.

Our first question comes from <unk> Khan of <unk> Securities.

Your line is now open.

Hi. Thanks, a couple of questions. Maybe Peter maybe you can give us some color on your thoughts on marketing spend.

Couple of questions.

Maybe Peter maybe you can.

Give us some color on the out of it.

On the on your thoughts to that one.

Marketing spend.

Do you continue to see scope for more efficiency there [inaudible]? And then the second question I had is just around the organization structure going forward. I think you have outlined cost savings from the 750 million in fixed costs and 200 million in variable.

What efficiency.

<unk> made me stand today on that and then the second question I had is just around the organization as such when Korlym.

Ed outlined.

Cost savings from the real World.

150 million fixed costs and 200 women in Berlin.

As we think about the organization build out from here on. On a stand with respect to needs.

On a stand with respect to needs.

Sure. I'll go first and then Eric can take on the cost issues. I would say we are still working towards a better marketing world for the company overall, which yes, means more efficiently being able to get customers, but its a many-pronged attack. It is the performance marketing issues that I've talked about before, we have come a huge way in terms of the tools, the data.

Go first and then Eric can take on the cost issues.

I would say.

We are still.

Working towards a better marketing world for the company overall, which yes means more efficiently being able to get customers, but its a many pronged attack is the performance marketing issues that I've talked about before we have come a huge way in terms of the tools the data.

And the algorithms et cetera, but COVID-19 has been a bumpy time. And we have not found normalized times to really get everything tuned exactly how we want so yes. We believe there is opportunity ahead for that, we also believe there is significant opportunity for our brand teams to really be much more impactful than they have historically. And that has impact not only on driving direct customers, but it has impact on how people respond to performance marketing.

We have not found normalized times to really get everything tuned exactly how we want so yes. We believe there is opportunity ahead for that we also believe there is significant opportunity for our brand teams to really be much more impactful than they have historically and that has impact not only on driving direct customers, but it has impact on how people respond to performance marketing.

Another thing so there's many places where those teams can have more impact and ultimately be more efficient in attracting customers, but it's not entirely on them right. We've got to build better products, we've got to have better engagement circles.

Those teams can have more impact and ultimately be more efficient in attracting customers, but it's not entirely on them right. We've got to build better products, we've got to have better engagement circles.

We've got to improve our service every we need to improve in every part of our game to continue to make the customer stickier and bring them back and want them make this their place to come for travel. So marketing can be more efficient, but it's really a virtuous cycle and how we can stream marketing together with the experience. And that and with the new efficiency and get your second question goes to all of that gives us more opportunity to reinvest in more profitable long term customers and create long term value for the enterprise.

To improve our service every we need to improve in every part of our game to continue to make the customer stickier.

Stickier and bring them back and want them make this their place to come for travel so marketing can be more efficient, but it's really a virtuous cycle and how we can stream marketing together with the experience and that and with the new efficiency and get your second question goes to all of that gives us more opportunity to reinvest in more profitable long term customers in Korea.

Long term value for the enterprise.

Great. Thanks, I'll take the second part of your question regarding the costs. So just to remind everyone that the program is both fixed and variable costs on the fixed side we the most recent update that we provided was 700 to 750. And we expect it to land at the higher end of the range and on the variable side we set to achieve greater than 200 million, but remember that.

Just to remind everyone that the program is both fixed and variable costs on the fixed side. We the most recent update that we provided was 700 to 750 and we expect it to land at the higher end of the range and on the variable side, we set to.

To achieve greater than 200 million, but remember that.

That's call it normalized level in 2019 levels, because we need the volume to come back to be able to see that fall into the P&L.

I would say both of those are substantially complete. There's been a ton of work by the teams to simplify the business and I think we're feeling really good about the fixed and the variable side.

But I'll also add we are a technology company, we're going to continue to invest and improve our services for our customers and in a way that we operate this business. So while this program I think it's been a tremendous accomplishment of ours in simplifying our business.

We don't expect to stop there and we'll keep going but I think from a program perspective, I think we can put the $1 billion to keep all the rest.

$1 billion to keep all the rest.

Thank you Peter Thank you. Thank you.

Thank you.

Yeah.

Thank you. Our next question comes from Kevin Kopelman of Cowen and company. Kevin, your line is now open.

Our next question comes from Kevin Kopelman of Cowen and company Kevin Your line is now open.

Great. Thanks, so much. Could you dig in a little bit into the significant improvement that you saw booking trends in October? If you could talk about kind of key segments, geographies at all maybe bareboat versus hotels. Thanks a lot.

We did get improvement that you saw.

Booking trends in October if you could talk about kind of key segments geographies at all maybe bareboat versus hotels. Thanks a lot.

Yeah. Thanks, Kevin. I would just say generally I know it feels planned but we've seen it everywhere. Cities are picking up. International has picked up. There aren't virtually every area has seen growth. I will say that some of the benefit we've seen and I've talked about mix effects before, when cities were forbidden places, that obviously hurt us cities have been a great market for us. And as we've seen cities come back there's greatly, there's still breakthrough lagging major leisure destinations like beaches, but they're coming back and that return benefits us probably disproportionately compared to some others.

Cities are picking up.

International has picked up.

There arent virtually every area has seen growth I will say that some of the benefit we've seen and I've talked about mix effects before when cities where.

We're bidding in places that obviously hurt us cities have been a great market for us and as we've seen cities come back now Theres greatly theres still breakthrough lagging major leisure leisure destinations like beaches, but theyre coming back and that return benefits us probably disproportionately compared to some others. So.

So that mix effect thing, we have some winners and some losers as always. But we've seen cities come back more, we've seen relative to the growth we've seen in sort of the consistently strong leisure areas. And the opening of international channels. The announcements from the US, from Singapore et cetera about allowing international travel, we seen that with basically as soon as it's announced we see search queries go up.

Et cetera about allowing international travel, we see that with basically as soon as its announced we see search queries go up.

And again in places like EMEA, where we're traditionally stronger in international travel as compared to domestic.

Those openings I think augur well for us going forward. So it really is a broad-based recovery. It is every I mean not down to every country. Because there are blips in countries that have COVID-19 spikes et cetera, but down to every region.

And some regions are trailing dramatically like APAC and Latin America, but they are improving too. and so it's really broad-based and it's just what the base you're building off of and some are different than others.

Add to that is as we've talked about over multiple quarters now. There will be volatility in the recovery of the series of many stories in a lot of the intersection points that Peter just mentioned so.

As we've talked about over multiple quarters now.

There will be volatility in the recovery of the series of many stories in a lot of the intersection points that Peter just mentioned so well.

We will continue to monitor and manage our marketing spend appropriately as we did in Q3, we have the brakes on some areas of that just because of we saw a bit of a slowdown. So far so good in October and going forward.

So far so good in October and going forward.

Very helpful. Thank you.

You bet.

Perfect. Our next question comes from Deepak Mathivanan from Wolfe Research. Deepak, your line is now open.

Thanks. This is Zack on for Deepak, just two questions. First, you're kind of large main competitor in the states reported lessening. Your room nights are still lagging down 32% in the third quarter versus 2019, that's lagging kind of bookings performance. Is there any kind of guidance driving fortunate explanation. That delta in performance is it mix certain markets lagging, is there a timing delay I know there is no difference in reporting structure. So any kind of color there would be helpful. And then just until these restrictions. I know it's very dynamic and hard to predict.

Youre kind of large main competitor in the states reported lessening.

Your room nights are still lagging down 32% in the third quarter versus 2019, that's lagging.

Bookings performance is there any kind of guidance.

Driving fortunate explanation.

That delta in performance is it mix.

Mix certain markets lagging is there a timing delay I know there is no difference in reporting structure. So any kind of color there would be helpful. And then just.

Until these restrictions.

Very dynamic and hard to predict.

But are you seeing any differences in terms of travel restrictions and implications on demand when we called the cases rising now versus six or 12 months ago? Thanks.

Patients on demand when we called the cases right now.

Now versus six or 12 months ago.

Yeah. Thanks, a lot of good questions in there. I'd say first off yes, you have to remember that they report on votes, we report on stage. So it's sometimes challenging to compare but I would say as I've said before.

I'd say first off yes, you have to remember that they report on votes, we report on stage.

Sometimes challenging to compare but I would say as I've said before.

And I mentioned regarding cities you know the mix has helped them they've always been better than smaller markets long tail markets et cetera, we've always been really strong in big cities.

Cities were dragging cities get filled by international travelers and we also have been strong and long haul air for those travelers like all of those mix effects actually impact things and so.

So some of them. We won in <unk> has been a beneficiary of some of them. We lost in big cities in international travel. So it's always been a balance.

We are less focused on room nights, rather than room dollars. If you will I mean, it's a little misleading we could we could book a million more one star hotels nights and it would mean much to our P&L.

And we could book a 100005 star hotels would mean a lot so.

You have to take it all in balance but.

But we are feeling good about the recovery and in general our numbers domestically.

Running ahead and lodging of where we were two years ago. So I think we're in good shape, there and we feel good about that and again, we have had a somewhat conservative.

One the game with Covid, we've been Eric mentioned tapping the brakes, we tried to respond sometimes we get over our skis, sometimes were behind the recoveries.

It's a balancing act.

But we are getting more confident more aggressive and I think youll see us continue to lean in to gain share across the globe.

In terms of the Covid question.

It remains to be seen and every as Eric says every story has its own but I will tell you. If you look at recent news for example of the Covid cases in the U K.

Spiking from reason.

Openings and I was in London, and it was amazingly open.

I would say that we're in.

<unk> have remained elevated since the international announcements to the U S and they remain elevated and we have not seen a pullback from.

The case load news. So I think that remains strong and of course science is helping us out along the way, we just announced the kids will be able to be vaccinated in the U S, which is a great benefit for society, let alone our business and likewise the announcement today about the UK approving the Merck pill for treatment.

We continue to look tactically around the globe.

What the right vectors are to focus on in terms of supply I don't think we're feel like we're terribly deficient, but we've been a little bit peanut butter. It around the globe as we did with verbal during Covid, we're very focused on those compression markets freeing up a supply, they're making that supply really successful right out of the gate.

And that is the virtuous cycle that we think is most valuable. So we will continue to see us do that for verbal but you will also see us do that in a very targeted way around the globe and that's where the focus that's tied into where we are marketing, where we are driving our brands, where we think we have the opportunity to win and again remember.

In many markets around the globe.

<unk> business are expedient partner solutions business drives those markets more than our direct relationship with consumers and so driving the right supply to feed those businesses as well as.

Is a critical piece so.

We will continue to drive into it I would say if anything we've been relatively modest in terms of supply growth during COVID-19.

With a particular focus again on verbal which was a different use case.

We buy the international vector as opposed to perhaps what was going on in the summer.

And then Mark on the first question. It is largely in gross bookings now capsules.

Okay. Thank you both very much.

Thank you.

Yeah.

Our next question comes from Mario Lu of Barclays. Maria Your line is now open.

Great. Thanks for taking my question.

Wanted to ask you about your comment on continuing to gain share and I will turn it on accommodations in your key markets.

Can you expand on the initiatives that you guys have made on your end to allow you guys to gain share and whether you think that is sustainable.

Yes, Thanks, Mario look I think.

It's a combination of good work, we've done and popular use cases, we know that the whole home solution has been very popular.

<unk> solution during Covid and that has helped us as compared to say apartments in cities, where we might be restaurants, but on the what are we doing side, we've done a tremendous amount to.

To work on the brand to land the brand to make people really think about it is.

Our primary source of.

<unk> as a primary source of vacation options.

We've done we've invested more than ever much more than ever in the in that brand.

And we've really driven as hard and as I mentioned, you know more than half of our users. So far this year, our customers have been new customers to the experience and we think the experience is great. So we do think we have sustainably landed the.

It was up and people figuring out that they better book next summer and get better book next Christmas They better post spring break and and that's really a powerful we'll cycle that that works for us. So so.

So we're really excited that we've added so many happy customers experience and we believe there will be tremendous long term value from them.

Okay.

Thank you.

Thank you Mario on next question comes from Doug Anmuth with J P. Morgan Doug Your line is now open.

Hey, this is Danielle for Doug Thanks for taking the questions.

First Peter you talked about improving the user experience a few times in your prepared remarks, so I assume you're combining the loyalty program is one of those but curious to hear where you see the biggest opportunity looking ahead and then secondly.

Could you guys talk a little bit about how your book to stay window looks like today and how that compares to what you saw earlier in the year and historically.

Sure.

I'll take number one again and let Eric to number two.

I would say.

Frankly, we see enormous opportunities to cross sell.

<unk> swath of work to improve the customer experience some of that is yes things like loyalty.

Yes, I think that we can do to enhance.

What it means to be part of our platform, but it's also in the product. It's also in payments.

Our CRM relationship with customers, how we give them information, how we reveal and give them discovery and find the right products and the right value at the right time.

All of those things are real opportunities are ripe for innovation, we invented this industry 25 years ago and.

I wish we had done more along the way to innovate for our customers. We've done a lot, but there's a tremendous opportunity ahead for us.

Virtually everything we do from service.

On the product to have a discovery booked multiple products in a trip to how they get informed about cancer.

Cancellations or delays or other things in the trip and how the App becomes their companion in terms of the experience. We are working across all those fronts and determined to keep bringing innovation to the customer every week month quarter.

The way I would think about it as we're building every domain where we.

That we own so think royalty check out et cetera to be multitenant and to work across our brand and our partners because we have many many partners and.

In doing so we enable our brands are multiple of brands to live on one stack to live in one currency if they wish to allow you to burn that turns earn that currency and burn that currency wherever you want.

And this is one of the powerful things that we talked about new verbal customers coming on the platform, but I imagine when they're not only in the verbal product stream and enjoying that but then they're earning value that they can use across air and other things when they are different travel needs and likewise the inverse.

Speedy and hotels dot com travelers, who might want to rent a verbose for vacation so that expansion of being able to spend across all those brands that architecture for our technology, which is really building everything we do into Multitenant ultimately, having all our <unk>.

One app all on one stack and one way that doesn't mean, we won't have separate brands, but they'll run on the same technical infrastructure that will have their own differentiation for brand et cetera products, but.

But it's all going to be built for Multitenant, it's all going to be built for us and for our partners and we have the richest dataset really travelled as in the world and that dataset powers, all our machine learning all our AI and our ability to innovate constantly in terms of what the customer sees how the partners participate and that's.

Just super powerful once we get it right now there's a lot of work still to do but we can see the path now and we're all lying down that path.

And then any update on where you are in terms of adding more verbose supply on brand expedient.

Yes. It is tied up in the same questions at which is we have verbose defiber expedia, but the experiences and terrific.

Which we've been the leader in the industry for years, but honestly it could be so much better at in terms of how our checkout pass work and how we get there.

So there is I mean, and everything I just said, it's measured in the billions or tens of billions of GBP opportunity in my opinion, So I think.

They are really all over the place and many of them unlock and enable really big opportunities on the b to B front and our ability to power partners, our suppliers et cetera. So it's really I can I.

I could give a dissertation for the next two hours on it if you want to Miss the airbnb called but but in the meantime.

Suffice it to say that there are dozens of them around the company and they are big rocks and big opportunities.

As far as travel coming back in and our friends leaning into marketing.

Kept a pretty consistent model, we've leaned into brand marketing and frankly, we've been leaned into brand marketing, even when maybe our brand marketing could be better and sharper and that's why we've rebuilt that team and we're bringing that creative teams and in house now and really going at it in a different way, but we expect to be balanced we've seen our competitors.

Move around and Gyrated, a bit we've kind of kept to a balance between brand and performance.

We feel like there's opportunity to be more aggressive as our performance marketing machine gets sharper and better than all of the tools right. We're seeing vectors of opportunity that we can lean into and so so we definitely will have opportunities to lean in and I'm really excited about what our brand teams are going through our brand team Sir.

Second to none in the industry, we will be the best in the industry and our performance marketing is phenomenal and finally brought together in a way that will be really powerful. So I think what that balances will have to as I mentioned the market has got a normalized we don't exactly know yet, but but it is a virtuous cycle and the better our brand.

Marketing is the better our performance marketing will do and we believe strongly in both and we'll continue to kind of lean in in a balanced way I think our friendship gyrated, a little more than us in and out of some of those things.

Thank you.

Yeah.

Okay.

Thank you Andrew and I'll penultimate question comes from Brian Fitzgerald of Wells Fargo. Brian. Your line is now open.

Thanks, guys.

Very thorough call we wanted to ask a little more color on the mechanics of the GBT Egencia deal, we think egencia. It traditionally has gone to market with.

Hello are fees and make up for that by making margin on hotels, leveraging the supply footprint just wanted to check on the mechanics and see if the margin there would be comparable to partner solutions as a whole or any other color there. Thanks.

Hey, Brian It's Eric I'll take that thanks for the question and I don't mean to be flip. It in my response, but ultimately I think you've got to ask GBT.

And so you are going for and what their ultimate strategy is around. How they plan to monetize and develop customer solutions. I can't say that they can plan to run. It has to be a core part of their offering. In fact, they expanded into some of their existing customer base. So we see a great opportunity with that relationship that we have, we see a great opportunity in the equity component that we have. And we also see on the ETF side, not only for the business volume, but also potentially upside with some of their other volume as well. Yeah, and I would just add, Brian, that our goal long term is to continue to export more of our technology to empower more of our partners and we think that is our true advantage. And so, as a partner we find more ways to help MX GBT monetize their customers better long term and serve their customers better so we'll be working on that. Our final question comes from Dan Wasiolek of Morningstar. Or on a beach in Hawaii of Christmas Black it's can't be done so. We're going to keep seeing that I think that's why you're seeing this effect of okay. I don't want to get out in front of next summer and get the house that want.

How they plan to monetize.

Develop customer solutions.

Or on a beach in Hawaii of Christmas Black it's can't be done so.

We're going to keep seeing that I think that's why you're seeing this effect of okay. I don't want to get out in front of next summer and get the house that want.

And that's great, that's smart for the consumer and it's great for the business and it gives us a lot of confidence going into next year that this use case will continue to be highly top of mind for many consumers and we are well-positioned so.

Confidence going into next year that are there.

This use case will continue to be highly top of mind for many consumers and we are well positioned so.

With that I will thank you. Thanks, Dan Thanks, everybody I hope you all stay safe looking forward to watching travel recover and feel free to start that corporate travel and I would say about there. Thanks for your time thanks, everyone.

Ladies and gentlemen. This concludes today's call you may now disconnect your lines have a nice day.

Yes.

Okay.

[music].

Yes.

[music].

Okay.

[music].

Uh huh.

Q3 2021 Expedia Group Inc Earnings Call

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