Q4 2023 Expedia Group Inc Earnings Call

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Operator: Thank you for your patience. The Expedia Group Q4 2023 financial results teleconference will begin in approximately one minute. ?? Good day, everyone, and welcome to the Expedia Group Q4 2023 Financial Results Teleconference. My name is Lauren, 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 start later by 1 on your telephone keypad. If you change your mind, please press start mode by 2 to cancel your request.

Thank you for your patience the Expedia group Q4, 2023, why not sure results teleconference will begin in approximately one minute.

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Speaker Change: Good day, everyone and welcome to the Expedia Group Q4, 2023 financial results teleconference.

Lauren: My name is Lauren and I'll be your pricing for today's call.

Lauren: If you wish to ask a question at the end of the presentation. Please press star they spoke on your telephone keypad.

Lauren: If you change your mind, please stop me, but two to come to your request.

Harshit Bash: For opening remarks, I will turn the call over to SVP, Corporate Development Strategy and Investor Relations, Harshit Bash. Please go ahead. Good afternoon, and welcome to Expedia Group's fourth quarter 2023 earnings call. I'm pleased to be joined on today's call by our CEO Peter Kern and our CFO Julie Whalen. 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, any reference to expenses excludes stock-based compensation.

Lauren: <unk> remarks, I will turn the call as its SVP corporate development strategy and Investor relation Horseshit Boucher. Please go ahead.

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Horseshit Boucher: Good afternoon, and welcome to Expedia group's fourth quarter.

Horseshit Boucher: Earnings call.

Speaker Change: Used to be joined on today's call by our CEO, Peter Garden, and our CFO Julie Whalen.

Horseshit Boucher: 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.

Horseshit Boucher: Unless otherwise stated any reference to expenses exclude stock based compensation.

Harshit Bash: 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 10-K, 10-Q, and other filings with the SEC. Except as required by law, we do not undertake any obligation to update these forward-looking statements.

Horseshit Boucher: We will also be making forward looking statements during the call, which are predictions projections or other statements about future events.

Horseshit Boucher: These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict.

Horseshit Boucher: Actual results could materially differ due to factors discussed during this call and in our most recent forms 10-K, 10-Q and other filings with the SEC.

Horseshit Boucher: Except as required by law, we do not undertake any responsibility to update these forward looking statements.

Harshit Bash: Our earnings release, SEC filings, and the replay of today's call can be found on our industrial relations website at ir.expediagroup.com. And with that, I will turn the call over to Peter. Thank you, Harshit, and good afternoon, and thank you all for joining us today. First of all, I just want to acknowledge the news that I will be stepping down in May as CEO after my contract ends and will be passing the baton to Ariane Gorin, who currently heads our Expedia. As many of you know, when I started this unexpected journey during COVID, travel was at a standstill, and money was flowing out of the company faster than we could replace it. And our people, our shareholders, and most of the world were unsure how and when we would ever come back. Strangely, those days never really worried me.

Horseshit Boucher: Our earnings release, and SEC filings and a replay of today's call can be found on our Investor Relations website at IR at <unk> Dot com and with that let me turn the call over to Peter.

Peter C. Stabler: Thank you Harsha and good afternoon, and thank you all for joining us today.

Peter C. Stabler: First of all I, just want to acknowledge the news that I'll be stepping down in may as CEO. After my contract ends and will be passing the baton to Ari on Gorgon.

Peter C. Stabler: Currently heads our expedia for business.

Peter C. Stabler: As many of you know when I started this unexpected journey during Covid travel was at a standstill money was flowing out of the company faster than we can replace it.

Peter C. Stabler: And our people our shareholders and most of the world were onshore how and when we would ever come back.

Peter C. Stabler: Aynsley those days never really worried me, maybe I'm, an optimist, but I always believed we'd get back to life and travel would follow.

Peter Kern: I'm an optimist, but I always believed we'd get back to life and travel would follow. While you might assume that COVID was the defining part of my tenure, in reality, we quickly saw an opportunity to use our COVID time. Thank you very much. It was always my hope that we would finish this massive task by now, but I'd be lying if I didn't say that was sometimes in doubt. We had many fits and starts as we took on this massive overhaul, but when you do something as bold as we were attempting, you have to be prepared to deal with some mess. And as much as anything, I'm proud that we were not afraid of the mess, and we pushed. And as the work began to accelerate in the back half of last year, I could finally see that we would in fact meet my time. Over the last four years, we built a tremendous team who, in turn, accomplished amazing things. I have to say that what started in an unlikely and difficult way turned out to be one of the most compelling and challenging opportunities of my career. So, I'm not going anywhere yet.

Peter C. Stabler: While you might assume that Covid was the defining part of my tenure in reality, we quickly saw an opportunity to use our COVID-19 time.

Peter C. Stabler: To embark on one of the most audacious and ambitious transformations I think a company of our size has ever attempted.

Peter C. Stabler: It was always my hope that we would finish this massive SaaS by now, but I'd be lying if I didn't say that was sometimes in doubt.

Peter C. Stabler: We had many fits and starts as we took on this massive overhaul, but when you do something as bold as we were attempting you have to be prepared to deal with some mess.

Peter C. Stabler: And as much as anything I am proud that we were not afraid of the mess and we pushed through.

Peter C. Stabler: And as the work began to accelerate in the back half of last year I can finally see that well.

Peter C. Stabler: Fact that we would in fact mean my timetable over the last four years, we built a tremendous team who in turn accomplish amazing things.

Peter C. Stabler: I have to say that what started in an unlikely and difficult way it turned out to be one of the most compelling and challenging opportunities of my career.

Peter C. Stabler: Now I'm, not going anywhere yet and I intend to spread through the finish line on the way out among my important to ask between now and then is ensuring an absolutely seamless transition to Oregon, and making sure none of our team in Mississippi.

Peter Kern: I intend to sprint through the finish line on the way out. Among my important tasks between now and then is ensuring an absolutely seamless transition to Ariane. Not one of our team. Not one of our team.

Peter Kern: I just want to say that I've had the pleasure of working with Ariane closely for the last four years, and I believe she is a terrific choice www.expedia.com, Jason Leiter, with a very successful track record, including most recently as head of our market. I look forward to working with Arianna over the next few months, and I will not be going far as I return to my perch as Vice President.

Peter C. Stabler: I just wanted to say that I've had the pleasure of working with the Oregon closely for the last four years and I believe she is a terrific choice to take the company forward and build on what we have created.

Peter C. Stabler: She is a seasoned leader with a very successful track record of Expedia group, including most recently as head of our market leading <unk> business.

Speaker Change: I look forward to working with our eye on over the next few months and I will not be going far as I return to my parts as Vice chairman.

Peter Kern: Now that I've addressed that, let's move on to our results. I was generally very pleased with our performance in 2020. We met our guidance despite what was a tremendous year. It's really difficult to fully appreciate the breadth of change and the volatility that such change creates. We discussed this many times, but when you have to willingly take steps backward to go forward, it creates a lot of inherent unpredictability. And yet, despite that, we delivered and landed. In the fourth quarter, we saw strong revenue and EBITDA performance, but we did As you all know, hair does not impact revenue or profitability very much, but it does have an outsized impact on our overall gross product.

Speaker Change: Now that I've addressed that let's move on to our results I was generally very pleased with our performance in 'twenty three.

Speaker Change: Met our guidance, despite what was a year of tremendous change.

Speaker Change: Really difficult to fully appreciate the breadth of change in the volatility that such change can create we've discussed this many times, but when you have to willingly take steps backward to go forward you create a lot of inherent unpredictability and yet despite that we delivered and landed the year.

Speaker Change: In the fourth quarter, we saw strong revenue and EBITDA performance, but we did see some softness in gross bookings driven primarily by air which in turn was largely driven by a reduction in average ticket prices.

Speaker Change: As you all know error does not impact revenue or profitability very much but it does have an outsized impact on our overall gross bookings while air has been showing some signs of macro softening. We continue to improve our air product with new AI, driven features and pricing capabilities and like many areas of our business, we see significant opportunity to grow.

Peter Kern: Thank you for watching. While AIR has been showing some signs of macro softening, we continue to improve our AIR product with new AI-driven features and pricing capabilities, and like many areas of our business, we see significant opportunity to grow, regardless of any macro. Our lodging business held up very well and had yet another record quarter, with our hotel gross bookings growing 13% year over year. Verbo finished its planned front-end migration in Q4 and suffered expected conversion degradation.

Speaker Change: A list of any macro headwinds.

Speaker Change: Our lodging business held up very well and had yet another record quarter with.

Speaker Change: And with our hotel gross bookings growing 13% year over year verb.

Speaker Change: <unk> finished this plan front end migration in Q4 and suffered expected conversion degradation.

Peter Kern: But it now has more tests running than ever in its history, and we are clawing back conversion at a breakneck speed. We also cut back last year on verbal marketing in concert with the expected conversion to, but we are now really excited about our new brand work that is designed to punch our main competitors squarely in the nose, and we are leaning back into spin. There will be a bit of a lag effect as we ramp back up, but we are excited to get Vrbo back on offense. Product is Improving Every Day. The Impact from Improved and Increased Marketing, and of course, our secret weapon and one key, whose effect will only continue. We did an awful lot in 23, from the launch of OneKey to the completion of the Vrbo migration, from the integration of machine learning and AI into more and more of our customer experience to the launch of Chat GPT-Assisted DRIP. But more important than any win in 23 is the sheer magnitude of change we have driven since we embarked on our transformation journey at the beginning of this year. Over this period, we rationalized investments in over 20 brands to three or fewer in every country. We eliminated dependency on 76 different agencies around the globe.

But it now has more tests running than ever in its history, and we are calling back conversion at a breakneck pace. We also cut back last year on verbal marketing in concert with the expected conversion degradation, but are now really excited about our new brand work.

Speaker Change: It is designed to punch our main competitor squarely in the nose and we are leaning back into spend.

Speaker Change: There's a bit of a lag effect as we ramp back up but we are excited to get <unk> back on offense with the product improving every day with.

Speaker Change: The impact from improved and increased marketing and of course, our secret weapon and one key whose effect will only continue to build.

Speaker Change: We did an awful lot in 23 from the launch of <unk> to the completion of the verbal migration from the plumbing of machine learning and AI into more and more of our customer experience to the launch of chat GPT assisted trip planning.

Speaker Change: But more important than any win in 'twenty three is the sheer magnitude of change we have driven since we embarked on our transformation journey at the beginning of 2020.

Speaker Change: Over this period, we rationalized investments and over 20 brands to three or fewer in every region. We eliminated dependency on 76 different agencies around the globe and instill instead built an entire full service marketing creative and media buying team internally.

Peter Kern: We have built an entire full-service marketing, creative, and media buying team and turned all performance marketing into one group. Unified Data and Tools, allowing us to optimize across brands and bring programmatic approaches to everything we do in meta-search, social, SEO, and everywhere else. And we fundamentally shifted the business from transactional web arbitrage to app-first focused on acquiring and retaining the customers with the highest LTE and return on investment. On the tech side, we decommissioned 17 CRM systems and built one universal messaging platform linking all brands. We went from seven different loyalty stacks to one, consolidated from 13 machine learning platforms and 4 experimentation platforms to 1, and have converged 300 million customer data profiles into one common identity. We have meaningfully reduced the number of developer tools and optimized our IT footprint.

Speaker Change: We consolidated all performance marketing into one group with unified data and tools, allowing us to optimize across brands and bring programmatic approaches to everything we do in meta search social SCO and everywhere else and.

And we fundamentally shifted the business from transactional web arbitrage to App first focused on acquiring and retaining the customers with the highest LTV and return on investment.

Speaker Change: On the Tech side, we decommissioned 17, CRM systems and build one universal messaging platform linking all brands.

Speaker Change: We went from seven different royalty stacks to wonky, we consolidated from 13 machine learning platforms and for experimentation platforms to one.

Speaker Change: We converted $300 million customer data profiles into one common identity platform.

Speaker Change: We have meaningfully reduced the number of developer tools and optimized our it footprint and most importantly, all of our brands are now on a single front end stack with a unified test and learn platform that gives us the ability to rapidly launch test and features across brands platforms in GFS.

Peter Kern: For more information, visit www.expertise.com, and most importantly, all our brands are now on a single front-end stack with a unified test-to-learn platform. It gives us the ability to rapidly launch tests and features across brands and platforms. It is hard to fully conceptualize how much we have changed, but perhaps one simple way is to double-click on how all these elements allow us to massively accelerate our test and learn capabilities. Thank you

Speaker Change: It is hard to fully conceptualize, how much we have changed but perhaps one simple way is to double click on how all of these elements allow us to massively accelerated our test and learn capability.

Speaker Change: Ive faster feature deployment and better performance in the product.

Peter Kern: Our unified front end now allows us to deploy features around the globe and on any brand at a pace we could not contemplate just a couple years ago. What used to take months, even years, now takes weeks and sometimes just days. Our recent launch of cars on Hotels.com in the U.S. is a perfect example of something that never made the cut list because of the massive engineering lift, but post-unifying the front-end stack, literally weeks to deploy. That same unified front end allows us to massively increase the breadth and impact of our test and learns, while our single test environment, along with ML and AI woven throughout the customer experience, now allows us to run many multiples of the tests we used to and call them much faster.

Speaker Change: Our unified front end now allows us to deploy features around the globe and on any brand at a pace, we could not contemplate just a couple of years ago, what used to take months even years now it takes weeks and sometimes just days our recent launch of cars on hotels Dot com in the U S is a perfect example of something that never made the cut list because of the massive engineering.

Speaker Change: List, but post unifying the front end stacks it took literally weeks to deploy.

Speaker Change: That same unified front end allows us to massively increase the breadth and impact of our test and learns via a single test environment, along with ml and AI woven throughout the customer experience now allow us to run many multiples of the tests, we used to call them much faster the combination of which will allow us to effectively <unk>, our test and learn impact in 2024.

Peter Kern: Combining which will allow us to effectively 8x our test and learn impact in 20, Thank you very much, and the effects we've seen so far are only just scratching the surface of what is possible. And while there are endless achievements to be proud of in our transformation, it is equally remarkable that even while swapping out our engine mid-flight, we were able to deliver a consistently solid financial performance. Thank you all for joining us. Our continued operating discipline has driven EBITDA margins to the highest levels in over a decade. We have used our strong free cash flow to aggressively buy back our stock at attractive prices. And as a result, our share count today is down to 2015 levels. We have closed over a hundred office locations, and we have 30% fewer heads than in 2019. Meaningfully, we have gone from approximately 30% of people working in product and tech in 2019....

Speaker Change: It cannot be straight stated strongly enough. We are just at a completely different place technologically and the effects. We have seen so far are only just scratching the surface of what is possible.

Speaker Change: And while there are analysts achievements to be proud of and our transformation is equally remarkable that even while swapping out our engine mid flight, we were able to deliver consistently solid financial performance. We grew our business throughout our transformation, notably reaching record levels of lodging gross bookings and revenue despite having sold off and shuttered a number of businesses along the way.

Speaker Change: Our continued operating discipline has driven EBITDA margins to the highest levels in over a decade.

Speaker Change: We have used our strong free cash flow to aggressively buyback our stock at attractive prices and as a result, our share count today is down to 2015 levels.

Speaker Change: We have closed over 100 office locations and we have 30% fewer head than our 2019 peak and meaningfully we have gone from approximately 30% of people working on product and tech in 2019% to 50% today.

Peter Kern: Again, we are in a truly different place as a company as we launch into 2020, but that doesn't mean that it's all just linear improvement. That learning and test and learning is a big part of our journey, and we will still get things wrong in our tireless effort to improve the customer experience. We can afford to get a lot more wrong as we, in fact, get a lot more right, ultimately more at-bats, the sheer power of going fast and simplifying our ability to innovate.

Speaker Change: Again, we are at a truly different places the company as we launch into 'twenty, four which does not mean that it's all just linear improvement from here that learn and test and learn as a big part of our journey and we will still get things wrong, and our tireless efforts to improve the customer experience.

Speaker Change: But we can afford to get a lot more wrong as we in fact get a lot more rate ultimately more at bats, the sheer power of going fast and simplifying our ability to innovate is what puts us in a position to once again lead our industry technologically for the next decade.

Peter Kern: This puts us in a position to once again lead our industry technologically for the next decade. So what does all that mean for 2024? On a macro level, we expect travel demand to remain relatively healthy, but we expect growth rates across the world to decelerate, especially early in the year as we lap the post-Omicron tailwinds we saw last year. We are still expecting much faster growth internationally outside North America and Western Europe, though we expect the gap to continue closing. We may also see some softness in prices across categories. This past quarter, both hotel and vacation rental ADRs grew very slightly, but the mixed effects led to overall lodging ADRs declining year-over-year, as I mentioned earlier. Air ticket prices have declined, particularly in the U.S., and we are seeing some continued pressure on car rental prices.

Speaker Change: So what does all that mean for 2024 on a macro level, we expect travel demand to remain relatively healthy, but we expect growth rates across the world to decelerate, especially early in the year as we lap the postponement gone tailwind as we saw last year.

Speaker Change: We are still expecting much faster growth internationally outside North America, and Western Europe that we expect the gap to continue closing.

Speaker Change: We may also see some softness in prices across categories. This past quarter, both hotel and vacation rental adr's grew very slightly but the mix effects led to overall lodging ADR is declining year over year and.

Speaker Change: And as I mentioned earlier.

Speaker Change: Air ticket prices have declined, particularly in the U S and we're seeing some continued pressure on car rental rates.

Peter Kern: Against this backdrop, though, we are well positioned to go back on offense, gain share against competition, and ultimately grow our top and bottom lines. Our strategy will remain largely unchanged, but we can finally stop doing surgery on ourselves and instead execute without the numerous distractions. We will be laser focused on five strategic priorities which broadly translate to all parts of our First. We will continue our focus on acquiring and retaining high ROI travel. The Greatly Improved product, driven by the latest ML and AI capabilities and OneKey, which now has over a hundred million members, we will continue to drive greater retention, repeat, and direct visits. All of which underpins our shift towards more loyalty and app members. In fact, we ended the year with our highest ever percentage of business coming from the app, up nearly 600 basis points year over year. We will be scaling OneKey internationally this year and expect to see our number of app members continue to increase in those markets.

Speaker Change: Against this backdrop, though we are well positioned to go back on offense gained share against competition and ultimately grow our top and bottom line meaningfully this year, our strategy will remain largely unchanged, but we can finally stopped doing surgery on ourselves and instead execute without the numerous distractions. We have faced in recent years, we will be laser focused on five strategic.

Speaker Change: <unk> priorities, which broadly translate to all parts of our business.

First we will continue our focus on acquiring and retaining high ROIC travelers.

Speaker Change: Much sharper about measuring customer lifetime value and targeting who to go after and which channels with a greatly improved product driven by the latest ml and AI capabilities and <unk>, which now has over 100 million members. We will continue to drive greater retention repeat and direct business.

Speaker Change: All of which underpins our shift towards more loyalty and App members.

Speaker Change: In fact, we ended the year with our highest ever percentage of business coming from the App up nearly 600 basis points year over year.

Speaker Change: We will be scaling one key internationally this year and expect to see our mix of App members continue to increase in those markets with better customer targeting constantly improving a stickier AI driven products and <unk>, we feel really good about continuing to build momentum in value in our member roles.

Peter Kern: Better Customer Targeting, Constantly Improving It's Stickier AI-Driven Products, and One. We feel really good about continuing to build momentum and value in our members. Our second priority will be to increase our share of wallet with our travelers and partners, again, with a product that uses AI and ML2. Find out more!

Speaker Change: Our second priority will be to increase our share of wallet with our travelers and partners again with a product that uses AI and ml to predict a consumer's best next action in order to sell Concord complementary items.

Peter Kern: mcinefix.com, CRM Communications, Our core experience will continue to drive more items and more dollars. Expedia, We also drive more cross-brand and cross-product engagement through OneKey, which enables cross-earn and redemption across all our key brands. And we encourage those consumers to stay in our ecosystem for all their travel. We are already seeing early signs of this with an increasing number of customers who have cross-shopped our brands in the U.S. since the launch of one. Thank you very much.

Speaker Change: Booking flow post booking and in CRM communications, our core experience will continue to drive more items and more dollars into the consumer's basket.

Speaker Change: We will also drive more cross brand and cross product engagement through <unk>, which enables cross earn in redemption across all our key brands and encourages consumers to stay in our ecosystem for all of their travel needs.

Speaker Change: We are already seeing early signs of this with an increasing number of customers, who cross shop, our brands in the U S. Since the launch of <unk> and.

Speaker Change: And as we continue to rollout <unk> outside the U S and now have the ability to roll out new lines of business on different brands. We expect all of these moves to allow us to capture more wallet share from our consumers.

Peter Kern: We expect all of these moves to allow us to capture more wallet share from our community. Our third priority will be to accelerate our global market expansion. We've talked before about how we retreated back to the U.S. during the pandemic while we were overhauling our tech platform and marketing model. We pulled back in certain countries where we did not have the right product market fit and had been spending more but losing shares.

Speaker Change: Our third priority will be to accelerate our global market expansion, we've talked before about how we retrenched back to the U S. During the pandemic, while we are overhauling our tech platform and marketing model we.

Speaker Change: Pulled back in certain countries, where we did not have the right product market fit and had been spending more but losing share.

Peter Kern: Now, after changing virtually everything from how we market to how we retain customers to our entire product experience, we have what it takes to go back on offer. In the back half of 23, we were able to hold or build share in most of our core market, and now we have the opportunity to be more aggressive. In 24, you will see us spend up in a number of markets. We claim real share where we believe we have the right to do so.

Speaker Change: Now after changing virtually everything from how we market to how we retain customers to our entire product experience. We have what it takes to go back on offense in the back half of 'twenty, three we were able to hold or build share in most of our core markets and now we have the opportunity to be more aggressive in 24, you will see us spend up in a number of markets.

Speaker Change: Our reclaim real share where we believe we have the right to win.

Peter Kern: Our fourth priority will be to continue cementing our leadership in B2B. Revenue in this segment grew a stellar 33% in 2023 versus 2020, while it benefited from the AIPAC reopening. And we expect those geo tailwinds to moderate somewhat this year.

Our fourth priority will be to continue cements our leadership in the <unk> segment.

Speaker Change: Revenue in this segment grew a stellar 33% in 2023 versus 2022, while it benefited from the APAC reopening.

Speaker Change: And we expect those <unk> to moderate somewhat this year, we are still expecting very strong growth given our differentiated capabilities and a huge tam just still penetrate.

Peter Kern: We are still expecting very strong growth given our differentiated capability. As I have explained before, our B2B business benefits from all the work we have done in product and technology, along with all the B2B-specific innovations we have rolled out over the last few years. We are seeing a strong pipeline of new customers globally, and we continue to find ways to gain wallet share in our economy. Beyond just offering supply, we have achieved good early results in externalizing components of our technology to our partners as well. Overall, I'm very enthusiastic about reinforcing our, Powering the Trout. Our fifth strategic priority will be to drive efficiency and effectiveness across our businesses. As I mentioned, we have grown our EBITDA margins to their highest levels in a decade, growing over 300 basis points. But we are capable of much more.

Speaker Change: As I have explained before our <unk> business benefits from all the work we've done in product and technology to win in BTC, along with all the <unk> specific innovations we have rolled out over the last few years.

Speaker Change: We are seeing a strong pipeline of new customers globally, and we continue to find ways to gain wallet share and our accounts and beyond just offering supply. We have achieved good early results and externalizing components of our technology to our partners as well.

Speaker Change: Overall, I am very enthusiastic about reinforcing our leadership in powering the travel industry.

Speaker Change: Our fifth strategic strategic priority will be to drive efficiency and effectiveness across our business as I mentioned, we've grown our EBITDA margins to their highest levels in a decade growing over 300 basis points since 2019.

Speaker Change: But we are capable of much more all of our transformation work was not only to enhance our consumer experience, but also to allow us to do more with less we have significant opportunity to run more efficiently across the company to eliminate redundant systems to keep optimizing in the cloud and utilize the latest productivity productivity.

Peter Kern: All of our transformation work was not only to enhance our consumer experience but also to allow us to do more with less. We have a significant opportunity to run more efficiently across the company to eliminate redundant systems. We will keep optimizing in the cloud and utilize the latest productivity capabilities from AI. In addition, we will keep leveraging our technology leadership to find opportunities. Thank you. We have both improved our NPS and created massive, all while maintaining our best-in-class. Generative AI for Only Accelerator. So in closing...

Speaker Change: Abilities from AI. In addition, we will keep leveraging our technology leadership to find opportunities for decreasing costs, while increasing customer experience work, we have done in improving our customer service operations is a great case study by building better technology and self service tools, we have both improved our NPS and creative massive efficient.

Speaker Change: <unk>, all while maintaining our best in class service and generative AI will only accelerate this trend.

Speaker Change: So in closing I'm.

Peter Kern: I'm incredibly pleased and proud of everything we have accomplished over the last few years, and I'm really excited about our path. Thanks to our massive transformation, we are now a very different company than we were before. We are set up to out-innovate our competition for the next decade and efficiently deliver the best experiences for our customers and partners. And if we do that, the business and shareholder returns will take care of themselves. While you have to kick me around for one more earnings cycle, let me just say that, in addition to the gratitude I feel for, and all that we have done to foster our collective interests, I'm also grateful to our chairman, our board, and our shareholders. Thank you for supporting the ambitions we have and helping us get there. Now, with that, I will hand it over to you.

Speaker Change: I'm incredibly pleased and proud of everything we've accomplished over the last few years and I'm really excited about our path forward. Thanks to our massive transformation. We are now a very different company than we were four years ago. We are setup to out innovate our competition for the next decade and efficiently deliver the best experiences for our customers and partners and if we do there.

The business and shareholder returns, we will take care of themselves.

Speaker Change: While you have to kick me around for one more earnings cycle. Let me just say that in addition to the gratitude I feel for the team and all of that we have done to foster our collective interest I'm also grateful to our chairman our board and our shareholders for supporting the ambition, we had and helping us get to this point.

Speaker Change: And with that I will hand, it over to Julie.

Julie P. Whalen: Thanks, Peter, and hello, everyone. Before I get into our financials, I do want to take a moment to thank Peter and to express my confidence in Ariane as our new CEO come May. I've had the pleasure of knowing Peter since I joined Expedia Group's board in 2019 and, of course, in a more detailed manner since assuming my role as CFO in 2020. Throughout this journey, Peter has done an amazing job navigating us through the pandemic, driving our massive business transformation, and setting us up for a very successful future. I am so thankful to have had the opportunity to work for Peter. He will be missed, but I am glad he'll continue to support Expedia Group through his ongoing role on our board as vice chairman.

Julie P. Whalen: Thanks, Peter and Hello, everyone before I get into our financials I do want to take a moment to thank Peter and to express my confidence in <unk> as our new CEO come may.

Julie P. Whalen: I've had the pleasure of knowing Peter since I joined Expedia group's board in 2019 and of course in a more detailed manner since assuming my role as CFO in 2022.

Julie P. Whalen: Throughout this journey Peter has done an amazing job navigating us through the pandemic driving a massive business transformation and setting us up for a very successful future.

Julie P. Whalen: So thankful to have had the opportunity to work for Peter He will be missed but I am glad you'll continue to support Expedia group to its ongoing role on our board as Vice Chairman.

Julie P. Whalen: At the same time I look forward to working alongside our Rihanna She assumes her new role as CEO dismay.

Julie P. Whalen: At the same time, I look forward to working alongside Arianne as she assumes her new role as CEO this May. Arianne and I have partnered closely together since I first came to Expedia Group. She's an accomplished operator who has been on our leadership team for many years, and it will be great to have someone so familiar with our business and our ecosystem lead us into this next exciting phase for our company. Now, let's turn to the financials. Our fourth quarter results once again reflect another quarter of accelerating performance on the top and bottom lines, with revenue and EBITDA growing double digits to record levels. This continued strong quarterly performance resulted in full year results at the highest levels we have ever seen across lodging bookings and overall revenue in EBITDA. For full year 2023, we delivered over $104 billion in total gross bookings, growing 10% versus last year, including almost $74 billion in lodging bookings, growing 11%, with the hotel business growing even faster at 18%.

Julie P. Whalen: And I have partnered closely together since I first came to Expedia group. She is an accomplished operator, who has been in our leadership team for many years and it will be great to have someone sell familiar with our business and our ecosystem lead us into this next exciting phase for our company.

Julie P. Whalen: And now, let's turn to the financials.

Julie P. Whalen: Our fourth quarter results once again reflect another quarter of accelerating performance on the top and bottom line with revenue and EBITDA growing double digits to record levels. This continued strong quarterly performance resulted in full year results at the highest levels, we have ever seen across lodging bookings and overall revenue and EBITDA.

Julie P. Whalen: For full year 2023, we delivered over 104 billion and total gross bookings growing 10% versus last year.

Julie P. Whalen: Alluding almost 74 billion in lodging bookings growing 11% with the hotel business is growing even faster at 18%.

Julie P. Whalen: We drove $12.8 billion of revenue, growing 10%, and we also generated $2.7 billion of EBITDA, with an EBITDA margin of 21%, which grew faster than revenue at 14% and resulted in a year-over-year margin expansion of almost 75 basis points. In addition, our B2C business saw meaningful sequential acceleration in year-over-year revenue growth in the back half of the year and generated marketing leverage for the full year, and our B2B business went from strength to strength, having its most successful year in our history, with both top and bottom line growth of over 33%. And this overall strong financial performance resulted in us meeting our full year guidance of double-digit top line growth with margin expansion. Now, I will discuss more of the details regarding our fourth quarter results.

Julie P. Whalen: We drove $12 8 billion of revenue growing 10% and we also generated $2 7 billion of EBITDA with EBITDA margin of 21%, which grew faster than revenue at 14% and resulted in year over year margin expansion of almost 75 basis points.

Julie P. Whalen: In addition, our BDC business saw a meaningful sequential acceleration in year over year revenue growth in the back half of the year and generated marketing leverage for the full year.

Julie P. Whalen: In our <unk> business went from strength to strength, having its most successful year in our history with both top and bottom line growth above a 33%.

Julie P. Whalen: And its overall strong financial performance resulted in US meeting our full year guidance of double digit top line growth with margin expansion.

Julie P. Whalen: Now I will discuss more of the details regarding our fourth quarter results.

Julie P. Whalen: Total gross bookings of $21.7 billion were up 6% versus last year. Gross bookings were impacted by some pressure on our air bookings in the quarter, primarily driven by lower average ticket prices as more capacity came online, as well as overall pressure on gross bookings at the beginning of the quarter from the crisis in the Middle East, as we called out on our last quarter's earnings call.

Julie P. Whalen: Total gross bookings of $21 7 billion were up 6% versus last year.

Julie P. Whalen: Gross bookings were impacted by some pressure in our air bookings in the quarter, primarily driven by lower average ticket prices as more capacity came online as well as overall gross bookings pressure at the beginning of the quarter from the crisis in the Middle East as we called out on our last quarter's earnings call.

Julie P. Whalen: Gross bookings for lodging, our largest business, had another record quarter, growing 8%, relatively in line with our third quarter growth rate. And we saw even faster growth in our hotel business at 13%. We also continue to gain or maintain share in our hotel business across our key markets around the world, consistent with last quarter. Moving to the key financial metrics in the P&L, starting with total revenue. Revenue of $2.9 billion was the highest on record and grew 10% versus last year.

Julie P. Whalen: Gross bookings for lodging, our largest business had another record quarter growing 8% relatively in line with our third quarter growth rate and we saw even faster growth in our hotel business at 13%.

Julie P. Whalen: We also continued to gain or maintain share in our hotel business across our key markets around the world consistent with last quarter.

Julie P. Whalen: Moving to the key financial metrics in the P&L, starting with total revenue.

Julie P. Whalen: Revenue of $2 9 billion was the highest on record and grew 10% versus last year. This wasn't approximate 160 basis point acceleration from the third quarter driven by both our <unk> and <unk> segments.

Julie P. Whalen: This was an approximate 160 basis point acceleration from the third quarter, driven by both our B2C and B2B segments. Revenue growth was primarily driven by the continued performance of lodging, which grew 14%. Total revenue margin also increased by approximately 55 basis points versus last year, primarily driven by the continued mix to lodging, which has higher margins. Cost of sales was $336 million for the quarter and $72 million, or 17% lower than last year, which combined with our strong top-line growth, drove approximately 390 basis points of leverage as a percentage of revenue versus last year. We were pleased to see that our ongoing initiatives to deliver an improved customer experience and increased automation are resulting in continued operating efficiencies, resulting in lower costs year-over-year despite higher top-line growth.

Julie P. Whalen: Revenue growth was primarily driven by the continued performance of lodging, which grew 14%.

Julie P. Whalen: Total revenue margin also increased by approximately 55 basis points versus last year, primarily driven by the continued mix to lodging, which has higher margins.

Julie P. Whalen: Cost of sales was $336 million for the quarter and $72 million or 17% lower than last year, which combined with our strong top line growth drove approximately 390 basis points of leverage as a percentage of revenue versus last year.

Julie P. Whalen: We were pleased to see that our ongoing initiatives to deliver an improved customer experience and increased automation are resulting in continued operating efficiencies, resulting in lower costs year over year, despite higher topline growth.

Julie P. Whalen: Direct sales and marketing expense in the fourth quarter was $1.4 billion, which was up 14% versus last year, largely due to an increase in commissions in our B2B business to support its ongoing strong revenue growth of 28% year-over-year. As we have stated previously, commissions paid to our B2B partners are in our direct sales and marketing line and are more expensive as a percentage of revenue than our B2C business. However, because they are generally paid on a state basis at contractually agreed upon percentages, the returns are more guaranteed and immediate. In our B2C business, our marketing spend as a percentage of gross bookings was flat.

Julie P. Whalen: Direct sales and marketing expense in the fourth quarter was $1 4 billion, which was up 14% versus last year largely due to an increase in commissions in our <unk> business to support its ongoing strong revenue growth of 28% year over year.

Julie P. Whalen: As we have stated previously commissions paid to our <unk> partners are in our direct sales and marketing line and are more expensive as a percentage of revenue within our <unk> business. However, because they are generally paid on a state basis to contractually agreed upon percentages. The returns are more guaranteed and immediate.

Julie P. Whalen: And our B to C business, our marketing spend as a percentage of gross bookings was flat.

Julie P. Whalen: Overhead expenses were $654 million, an increase of $64 million versus last year, or 11%. As we have stated previously, this increase is a result of our investment and talent across our product and technology teams to support our strategic initiatives. With our strong revenue performance and expense discipline, with expenses growing slower than revenue, we delivered record EBITDA of $532 million, which was up 19% year-over-year, with an EBITDA margin of 18.5%, expanding over 130 basis points year-over-year. Both EBITDA growth and margin expansion accelerated sequentially from the third quarter. This strong earnings growth enabled us to generate another year of robust free cash flow at $1.8 billion. Free cash flow year-over-year would have been even higher, but it was impacted by timing changes within working capital.

Julie P. Whalen: Overhead expenses were $654 million, an increase of $64 million versus last year or 11%.

Julie P. Whalen: As we have stated previously this increase as a result of our investment in talent across our product and technology teams to support our strategic initiatives.

Julie P. Whalen: With our strong revenue performance and expense discipline with expenses overall growing slower than revenue, we delivered record EBITDA of $532 million, which was up 19% year over year with an EBITDA margin of 18, 5% expanding over 130 basis points year over year.

Julie P. Whalen: Both EBITDA growth and margin expansion accelerated sequentially from the third quarter.

Julie P. Whalen: This strong earnings growth enabled us to generate another year of robust free cash flow at $1 8 billion.

Free cash flow year over year would have been even higher but was impacted by timing changes within working capital last year as the business emerge from the pandemic, we saw meaningful year over year increases in our deferred merchant bookings balance which has since normalized this year.

Julie P. Whalen: Last year, as the business emerged from the pandemic, we saw meaningful year-over-year increases in our deferred merchant bookings balance, which has since normalized this year. These strong free cash flow levels enabled us to complete our largest ever level of share repurchases at $2 billion, or over 19 million shares. Moving on to our balance sheet, we ended the quarter with strong liquidity of $6.8 billion, driven by our unrestricted cash balance of $4.2 billion and our undrawn revolving line of credit of $2.5 billion, which provides us with plenty of cash to operate the business. Our debt level remains at approximately $6.3 billion with an average cost of only 3.7%.

Julie P. Whalen: These strong free cash flow levels enabled us to complete our largest ever level of share repurchases of 2 billion or over 19 million shares.

Julie P. Whalen: Moving onto our balance sheet, we ended the quarter with strong liquidity of $6 8 billion driven by our unrestricted cash balance of $4 2 billion and our Undrawn revolving line of credit of $2 5 billion, which provides us with plenty of cash to operate the business.

Julie P. Whalen: Our debt level remains at approximately $6 3 billion with an average cost at only three 7%.

Julie P. Whalen: Our gross leverage ratio, at a further reduced 2.3 times, continues to make progress towards our target gross leverage ratio of 2 times, driven by our ongoing strong EBITDA growth. As we look ahead to 2024, we anticipate that market growth rates will moderate in 2024, given the absence of COVID-driven tailwinds that were prominent last year. But despite this backdrop, given the operational changes we have made to our business over the last couple of years, we expect to have another strong year with top line year over year growth relatively in line with what we saw in 2023. On the bottom line, we believe we have further room to optimize our cost structure and, therefore, improve margins. We expect to continue to drive operating efficiencies and cost of sales across our customer support and other operations.

Our gross leverage ratio at a further reduced to three times continues to make progress towards our target gross leverage ratio of two times driven by our ongoing strong EBITDA growth.

Julie P. Whalen: As we look ahead towards 2024, we anticipate that market growth rates will moderate in 'twenty four given the absence of Covid driven tailwind that were prominent last year.

Julie P. Whalen: But despite this backdrop given the operational changes we have made to our business over the last couple of years, we expect to have another strong year with top line year over year growth relatively in line with what we saw in 2023.

Julie P. Whalen: On the bottom line, we believe we have further room to optimize our cost structure and therefore improve margins. We expect to continue to drive operating efficiencies and cost of sales across our customer support and other operations.

Julie P. Whalen: And with overhead expenses, as we have said, we expect to drive savings this year as we deprecate systems and redeploy resources now that the bulk of our replatforming is in the rearview mirror. These efficiencies and overhead will also translate over to reduced CapEx levels. Overall, we are taking a very close look at streamlining our cost structure to align with the next phase of our journey. And based on our initial estimates, these actions are expected to result in approximately $80 to $100 million in one-time GAAP expenses for the year, heavily weighted towards the first quarter.

And with overhead expenses as we have said, we expect to drive savings. This year as we deprecate systems and redeploy resources now, but the bulk of our re platforming is in the rearview mirror.

Julie P. Whalen: These efficiencies and overhead will also translate over to reduced capex levels.

Julie P. Whalen: Overall, we are taking a very close look at streamlining our cost structure to align with the next phase of our journey and based on our initial estimates. These actions are expected to result in approximately $80 million to $100 million in one time GAAP expenses on the year heavily weighted towards the first quarter.

Julie P. Whalen: We are still finalizing the details, but we expect to have more to share this quarter. As far as marketing is concerned, we are investing in our global expansion efforts to reignite our international growth and drive further market share gains. This will naturally drive some shorter-term pressure on marketing efficiency for our B2C business.

Julie P. Whalen: We are still finalizing the details, but we expect to have more to share this quarter.

Julie P. Whalen: As far as marketing, we are investing behind our global expansion efforts to reignite, our international growth and drive further market share gains. This will naturally drive some shorter term pressure on marketing efficiency for our BDC business, but despite this incremental investment we expect to still drive overall BTC marketing leverage on the year as a percentage of gross bookings.

Julie P. Whalen: But despite this incremental investment, we expect to still drive overall B2C marketing leverage for the year as a percentage of gross bookings, as we continue to improve direct transactions, retention, and conversion with more scale. Putting this all together, we expect to deliver another record year of EBITDA with EBITDA margin expansion at levels relatively similar to what we saw in 2023. This EBITDA growth and some possible early repayment of debt should enable us to hit our target leverage ratio of approximately two times this year. We also expect this EBITDA growth, combined with the benefit we expect to see from the CapEx efficiencies I mentioned earlier, to drive strong free cash flow growth. And we aim to leverage the strong free cash flow to further maximize shareholder returns.

Julie P. Whalen: As we continue to improve direct transactions retention and conversion with more scale.

Julie P. Whalen: Putting this all together, we expect to deliver another record year of EBITDA with EBITDA margin expansion at levels relatively similar to what we saw in 2023.

Julie P. Whalen: This EBITDA growth and some possible early repayment of debt should enable us to hit our target leverage ratio of approximately two times this year.

Julie P. Whalen: We also expect this EBITDA growth combined with the benefit we expect to see from a capex efficiencies I mentioned earlier to drive strong free cash flow growth.

Julie P. Whalen: And we aim to leverage the strong free cash flow to further maximize shareholder returns while our stock prices increased in recent months. We continue to believe that it remains undervalued and does not reflect our expected long term performance of the business.

Julie P. Whalen: As such we will utilize the strong cash generating power of our business and our new $5 billion share repurchase authorization announced last quarter to continue buying back our stock Opportunistically.

Julie P. Whalen: While our stock prices have increased in recent months, we continue to believe that it remains undervalued and does not reflect our expected long-term performance of the business. As such, we will utilize the strong cash-generating power of our business and our new $5 billion share repurchase authorization announced last quarter to continue buying back our stock opportunistically. As it pertains to our first quarter outlook, last year our first quarter was very strong, and we are therefore facing some tough comps in the first quarter of 2024. Additionally, to start the year, we have seen continued pressure in air due to reduced pricing levels from increased capacity and the grounding of the Boeing fleet, as well as some pressure in our Vrbo brand, as Peter alluded to earlier. As a result, we expect our gross bookings growth in the first quarter to be in the low to mid-single digits and our revenue growth to be in the mid-single digits. In addition, we expect some EBITDA margin compression consistent with the levels we saw in Q1 last year.

Julie P. Whalen: As it pertains to our first quarter outlook last year, our first quarter was very strong and we therefore are facing some tough comps in the first quarter of 2024 and.

Julie P. Whalen: Additionally to start the year, we have seen continued pressure in air due to reduced pricing levels from increased capacity and the grounding of the Boeing fleet as well as some pressure in our <unk> brand as Peter alluded to earlier.

Julie P. Whalen: As a result, we expect our gross bookings growth in the first quarter to be in the low to mid single digits and our revenue growth to be in the mid single digits.

Julie P. Whalen: In addition, we expect some EBITDA margin compression consistent with the levels. We saw in Q1 last year.

Julie P. Whalen: As we move throughout the year, we expect our growth rates will increase due to conversion gains from product improvements. The continued stacking of high ROI customers accelerated further by momentum building in our <unk> loyalty program and higher traction in our faster growing global markets.

Speaker Change: So in closing I am really proud of what our team has been able to accomplish to the successful execution of our multiyear initiatives, which enabled us to deliver one of the strongest financial years on record here at Expedia group.

Julie P. Whalen: As we move throughout the year, we expect our growth rates will increase due to conversion gains from product improvements, the continued stacking of high ROI customers accelerated further by momentum building in our One Key Loyalty Program, and higher traction in our faster-growing global market. So in closing, I am really proud of what our team has been able to accomplish in the successful execution of our multi-year initiatives, which enabled us to deliver one of the strongest financial years on record here at Expedia Group. Yet, it feels like we're just getting started.

Speaker Change: Yet it feels that we're just getting started with most of the heavy lifting behind US we are now better positioned than ever to go on the offense and this combined with our strong financial position should enable us to continue to deliver long term profitable growth and shareholder returns.

And with that I would now like to open the call for questions. Thank you.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you would like to ask a question. Please press star.

This was one that kind of thing.

Speaker Change: Pat.

Operator: With most of the heavy lifting behind us, we are now better positioned than ever to go on the offense. This, combined with our strong financial position, should enable us to continue to deliver long-term profitable growth and shareholder returns. And with that, I would now like to open the call for questions. Thank you. Thank you. As a reminder, if you would like to ask a question, please press start mode by 1 on your telephone keypad. If you would like to retract your question, please press star followed by 2. Our first question comes from Naved Khan from V. Riley. Naved, please go ahead.

Speaker Change: Two question please.

Speaker Change: Let's see.

Speaker Change: Our first question comes from Robert called BYD with please go ahead.

Robert: Yeah, Hi, thanks, Thanks, a lot.

Robert: And Peter I will Miss you on these calls after the Q1 call, but I had a few questions one on verbal.

Robert: The migration complete I think.

Robert: Talking about sort of.

Robert: The App, David kind of taking some time.

Speaker Change: Let me summarize.

Speaker Change: Sure.

Speaker Change: <unk> seen some weakness in January just give us some color on.

Speaker Change: What exactly is the reason for that.

Peter Kern: Thanks a lot. And Peter, we'll miss you on these calls after the Q1 call, but I have a few questions, one on VIRBO, you know, with the migration complete, I think you talked about sort of, you know, the app update kind of taking some time, and a little surprised that it's still been seeing some weakness in January, just give us some color on what exactly is the reason for that, and you talked about some sort of green shoots, so give us some commentary there, and then maybe on one key, can you talk about maybe where, maybe the learnings are, are you satisfied with the retention and the convergence so far, and how much room do you see for improvement from here on, and also in terms of international rollout, I think previously you talked about the first half for that, is that still on the cards? Yeah, so three, three good questions. Lots of material there. Thanks, Naved. And you can call me anytime if you miss my voice.

Speaker Change: And you talked about some.

Speaker Change: Some green shoots so give us some some commentary there and then maybe on the on one key can you just talk about maybe the.

Speaker Change: Maybe the learnings are you satisfied with the retention and the conversion so far.

Speaker Change: And how much room do you see for improvement from here on and also in terms of international rollout I think previously you talked about first half for that is that still on the cards.

Speaker Change: Yeah. So.

Speaker Change: Three three good questions lots of material there. Thanks.

Speaker Change: Thanks to all of them and you can call me anytime if you could Miss my voice.

Speaker Change: The.

Speaker Change: First on <unk> I would say if you think about what we were doing at the tail end of last year, we were pushing to 100% migration Yep everything moved over and I think as we told everybody.

Speaker Change: Steps.

Peter Kern: The first on Verbo, I would say, you know, if you think about what we were doing at the tail end of last year, we were pushing for 100% migration, the app, everything moved over. And I think, as we told you, everybody, these steps come with expected conversion degradation because you can't get everything to par. It takes forever.

Speaker Change: With expected.

Speaker Change: Conversion degradation, because you can't get everything to par takes forever and you have to move everything to start working on the new product. So we did that I'd say that degradation was broadly in line with or slightly better than what we hoped but it was still there and when you're doing that you obviously are not investing as heavily.

Speaker Change: In terms of marketing because your marketing people went to a worst converting product. So you kind of tend to back off on that spend because the spend becomes less efficient as you know get to a place where the product is ramping back up very quickly and we've clawed back much of the conversion, which is I think the green shoots you're referring to so where we're actually gaining.

Peter Kern: You have to move everything and start working on a new product. So we did that. I'd say that degradation was broadly in line or slightly better than what we hoped, but it was still there.

Peter Kern: And when you're doing that, you obviously are not investing as heavily in terms of marketing because you're marketing people into a less profitable product. So you kind of tend to back off on that spend because the spend becomes less. As you now get to a place where the product is ramping back up very quickly, and we've clawed back much of the conversion, which is, I think, the green shoots you're referring to, so we're actually gaining much faster than, at least in my tenure, I've ever seen us gain back in terms of one of these transitions, and the product is basically virtually back to the same levels of conversion, now we can There is a little bit of a lag there because you've been underspending, if you will, for a bit, waiting for the product to get to where it's converting us wrongly. Now we are spending back up, so it will take a little time to get there. Fully operational, if you will, but it's more or less a sequence we expected to happen. It's just you're seeing it on and off.

Speaker Change: Much faster than at least in my tenure I've ever seen us gain back in terms of one of these transfer transitions and.

Speaker Change: And the product is basically virtually back to the same levels of conversion now we can push back in and spend again, there is a little bit of a lag there because you've been under spending if you will for a bit.

Speaker Change: Waiting for the product to get to where it is converting a strongly now we're spending back up. So you know it will take a little time to get the engines fully operational if you will but.

Speaker Change: It's more or less a sequence we expect it to happen its just youre seeing it in our numbers now.

Speaker Change: As far as <unk> goes.

Speaker Change: I think you said or am I satisfied with what we're seeing I would say im satisfied it's still early days I mean, we're seeing a lot of the indicators we wanted to see as I alluded to cross shopping is good we're seeing.

Speaker Change: One of the things, we hope to achieve was getting <unk> hotels dot com customers, who had fewer than 10 stamps people, who hadn't gotten to earn anything yet to be more engaged with the product and we're seeing their repeat rates improve and their business improve.

Speaker Change: We're starting to see verbal customers earn and they'll burn.

Peter Kern: As far as one key goes, I think you asked me if I was satisfied with what we're seeing. I'd say I was satisfied. It's still early days. I mean, we're seeing a lot of the indicators we want to see, as I alluded to, cross-shopping is good. We're seeing one of the things we hope to achieve was getting Hotels.com customers who had fewer than 10 stamps.

Speaker Change: Their <unk> rewards not only on <unk>, but other places, but again those cycles are a bit long. So it will take longer for the millions of people who have now ordered one can cash on herb over didn't used to to come back and spend it.

Speaker Change: Because they may not rent the house for six months or a year, but that is where we are weighing in that opportunity with our customer base and then we're crossing that opportunity across the brands and.

Peter Kern: So, we're seeing now that people who haven't gotten to earn anything yet are becoming more engaged with the product, and we're seeing their repeat rates improve, and their business improve. You know, we're starting to see Vrbo customers earn and now burn their 1Key rewards not only on Vrbo but other places. But again, those cycles are a bit long.

Speaker Change: And we're seeing good signs of cross shopping and people starting to use more brands. So that's all consistent with what we hoped but this isn't it's not a switch you flip.

Speaker Change: When you talk about travel timing many people only travel once or twice a year. So it takes a little time and we're building that and so all good so far.

Peter Kern: So it will take longer for, you know, the millions of people who have now earned 1Key cash on Vrbo who didn't used to, to come back and spend it because they may not rent a house for six months or a year. But that is, you know, we're laying that opportunity with our customer base and then we're crossing that opportunity across the brands, and we're seeing good signs across shopping and people starting to use more brands. So that's all consistent with what we hoped. But this isn't, you know; it's not a switch you flip.

Speaker Change: But looking forward to it being even much more impactful over time.

Speaker Change: And then international expansion, we are not detailing which countries we're doing exactly when for competitive reasons, but <unk> will rollout, we will push back into a number of markets that were historically pretty strong for us and it stayed reasonably strong but we just think we have a lot of opportunity and then we will have some tests into some markets that we haven't been as <unk>.

Speaker Change: <unk>, historically, where we think theres opportunity with the new product, new marketing approaches et cetera, So a lot of exciting opportunity on the international front.

Peter Kern: When you talk about travel timing, many people only travel once or twice a year, so it takes a little time, and we're building that in. So, all good so far, but looking forward to it being even, you know, much more impactful over time. And then international expansion. We're not detailing which countries we're doing exactly when for competitive reasons, but one key we'll roll out is that we will push back into a number of markets that were historically pretty strong for us and have stayed reasonably strong. But we just think we have a lot of opportunity. And then we will have some tests in some markets that we haven't been as invested in historically, where we think there's opportunity with the new product, new marketing approaches, etc. So a lot of exciting opportunities on the international front. It doesn't, it's not all dependent on one key.

Speaker Change: It doesn't it's not all dependent on one key we think theres opportunity, regardless, but in the markets, where it's relevant where we have multiple brands that have.

Speaker Change: That have high brand awareness, we will be moving we will be launching one thing there and we think it will only enhance that.

Speaker Change: Great. Thank you Peter.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Kevin Kopelman from Cowen Kevin. Please go ahead.

Kevin Kopelman: Alright, Thank you very much.

Kevin Kopelman: First of all Peter Congrats on your tenure.

Kevin Kopelman: We'll definitely Miss you on working with you on the calls.

Kevin Kopelman: I did want to ask a question on that could you let us into your thought process a little bit any color on your decision to step away and the timing.

Peter Kern: We think there's an opportunity regardless, but in the markets where it's relevant, where we have multiple brands that have, that have high brand awareness, we will be moving, you know, we will be launching one key there, and we think it will only do so. Great. Thank you, Peter. Thank you. Our next question comes from Kevin Kopelman from Cowan. Kevin, please go ahead.

Speaker Change: Yeah sure I mean, I think I tried to capture it in my comments, but.

Speaker Change: When this started the idea was for me to come in for a period of time and.

Sort of right the ship put us where we want it to be in.

And then.

Speaker Change: Build the team and make sure we have the people to take it forward for the next generation as it were.

Peter Kern: Oh, thank you very much. First of all, Peter, congrats on your tenure. We'll definitely miss working with you on the calls. I did want to ask a question about that. Could you let us into your thought process a little bit or give us any color on your decision to step away at this time? Yeah, sure. I mean, I think I tried to capture it in my comments.

Speaker Change: <unk>.

Speaker Change: The transformation and turn it into a bigger bid off more than I thought I was going to and it was a bigger job than I thought it was.

Speaker Change: I have my doubts you know a year ago, but.

Speaker Change: But.

Speaker Change: We've made so much progress and as I stare at the board and I stare that should it should should I go further et cetera.

Peter Kern: But, you know, when this started, the idea was for me to come in for a period of time and sort of right the ship, put us where we wanted to be. And, and, and then, build the team and make sure we had the people to take it forward for the next generation, as it were. And the transformation turned into a bigger job than I thought it was going to be, and it was a bigger job than I thought it was, and I had my doubts a year ago. But we've made so much progress, and as I stared at it, The board and I stared at it, should I go further, et cetera.

Speaker Change: Loved this company I love the category.

Speaker Change: My team, we built an amazing group here.

Speaker Change: But I built it so that they can take it forward and you know there's never a right time, but hopefully.

Speaker Change: This is a good time to transition.

Speaker Change: <unk> fortunate to have our young we're fortunate to have all the people around her that we brought in or have been here many years and I just think the company is ready.

Speaker Change: I'll be here till may all be busting my butt till then.

Speaker Change: I'm not I don't know how to do it a different way, but and.

Speaker Change: Look we still transformations are never done the work is never done there isn't like in data and it's like good. We did you know number 100 on our list of 100 things to do but we've just made so much progress that I think the company is in a good place for it and and it felt like the right time for everybody.

Peter Kern: I love this company. I love the category. I love my team.

Peter Kern: We've built an amazing group here, but I built it so that they could take it forward. There's never a right time, but hopefully, this is a good time to transition. We're fortunate to have Ari on board.

Speaker Change: Understood. Thanks for that and if I could just ask a quick follow up on <unk> question about <unk>.

Peter Kern: We're fortunate to have all the people around her that we've brought in or have been here many years. And I just think the company is ready. I'll be here till May. I'll be busting my butt till then. I don't know how to do it a different way, but, and look, we still do, transformations are never done.

Speaker Change: Could you could you just walk us through.

Speaker Change: What that looks like is as you pass through Q2 is it fair to think about that is as an easier comp once you anniversary the initial.

Peter Kern: The work is never done. There isn't like an end date, and it's like, good, we did number 100 on our list of 100 things to do, but we've just made so much progress that I think the company's in a good place for it, and it felt like the right time for everything. understood. And thanks for that. And if I could just ask a quick follow-up on Naved's question about Verbo. Could you walk us through what that looks like as you pass through Q2?

Speaker Change: Platform upgrade in and what the timeframe could be to get that back to flat and then growth.

Speaker Change: Yes, I think.

Speaker Change: Basically you can assume.

Speaker Change: We anticipate growing out of this consistently across the year.

Speaker Change: Fourth quarter will be higher than third quarter higher than second quarter higher than the first quarter. So we expect to continue growing I think as I alluded to you know conversion is now basically back to.

Peter Kern: Is it fair to think about that as an easier comp once you anniversary the initial platform upgrade and what the timeframe could be to get that back to flat and then growth? Yeah, I think, I think basically you can assume we're growing out of this consistently across 4th quarter will be higher than 3rd quarter, higher than 2nd quarter, higher than 1st quarter. So, you know, we expect to continue growing. I think, as I alluded to, conversion is now basically back to where it was before, before we did all this, but we didn't do it to get to even; we did it to get to materially better. And now Vrbo can benefit, and the reason it's going as quickly as it is, is that we have lots of winning tests, if you will, that we used on the broader OTA platform that are also winners for Vrbo.

Speaker Change: Where it was before we before we did all of this but we but we didn't do it to get to even we did it to get to a materially better and now Bravo can benefit and the reason its going as quickly as it is is we have lots of winning.

Speaker Change: Test if you will that we used on our on the broader OTT platform that are also winners for verbose. So we're able to take a lot of our winning experiments move them over to <unk>.

Speaker Change: And get that humming again, and but we can we continue to go further and as I alluded to.

Speaker Change: Our ability to multiply our test and learn capacity in a material way both in speed and breadth is really changing how we do things. So now when we have tests many of our tests, we watch across all of our brands across all our platforms all devices and we just couldnt do that before so the speed of improvement we expect to continue.

Speaker Change: To accelerate that will enhance all the brands, but variable is the one that has a hole to dig out of.

Peter Kern: So we're able to take a lot of our winning experiments, move them over to Vrbo, and get that humming again, but we continue to go further. You know, our ability to multiply our test and learn capacity in a material way, both in speed and in breadth, is really changing how we do things. So now when we have tests, many of our tests, we launch across all our brands across all our platforms, all our devices So the speed of improvement we expect. Accelerate, we shot our own foot off on purpose late last year.

Speaker Change: There were the most recent hole to dig out of and so we expect that to continue to grow we expect the investment back into the brand to continue to have impact we expect the cross shopping effect of having the <unk> come in and Expedia customers being able to use their <unk> to have an effect. So all of that we expect to continue to build throughout the year.

Speaker Change: But we shot our own foot off on purpose.

Speaker Change: Late last year, we pulled back on spend because we thought that was the rational thing to do given the conversion situation and now we're leaning back and it's really as simple as that accept we expect to improve faster than product and I still think we have the best in class marketing full stop in our category and when we go back on offense at will.

Peter Kern: We pulled back on spend because we thought that was the rational thing to do given the conversion situation, but now we're leaning back in. It's really as simple as that, except we expect to improve faster on product, and, you know, I still think we have the best in class marketing full stop in our category, and when we go back on offense, it will take hold, and both of those things will work. Great. Thanks, Peter.

Speaker Change: I'll take hold in both of those things will work together.

Speaker Change: Great. Thanks, Peter.

Peter C. Stabler: You bet.

Speaker Change: Thank you.

Peter Kern: Thank you. Our next question comes from Eric Sheridan from Golden Fax. Eric, please go ahead.

Speaker Change: Our next question comes from Eric Sheridan from Goldman Sachs. Please go ahead.

Eric Sheridan: Thanks, So much for taking the question look to ask more of a big picture one now with <unk> in the market and elements of the re platforming behind you how should we think about some of the things you've talked about in the prepared remarks about unified product offerings and being more innovative in the way you go to market and retain customers and drive direct traffic.

Peter Kern: Thanks so much for taking the time to answer the question. I'd love to ask more of a big picture question. Now with one key in the market and elements of the replatforming behind you, how should we think about some of the things you talked about in the prepared remarks about unified product offerings and being more innovative in the way you go to market and retain customers and drive direct traffic, and how should we think about some of the product roadmaps that you're most excited about and the mixture of both growth that could come from those initiatives versus investments that still need to be made? Thanks.

Eric Sheridan: And how we should be thinking about some of the product roadmap that you are most excited about in the mixture of both growth that could come from those initiatives versus investments that still need to be made.

Peter Kern: Yeah, I mean, broadly working backwards, I don't think there are, you know, there are investments of time and calories to be made, but in terms of investments of money and capital, I think we're on the other side of that hill. I expect to be able to do things more efficiently going forward. But if you talk about one key and the product itself, you know, as I say, like one key is a great way to create stickiness within our environment.

Speaker Change: Yeah, I mean, I'd say broadly working backwards I don't think they are there.

<unk> of time calories to be made but in terms of investments of money in capital I think we're on the other side of that Hill, and we expect to be able to do things more efficiently going forward.

Speaker Change: But if you talk about <unk> and the product itself as I say, one key is a great way to create stickiness within our environment, but.

Peter Kern: But you might have heard me mention that we've finally migrated all our CRM, virtually 100% of our CRM and the brands to our new unified messaging platform. That platform allows us to do things much faster. This is a presentation on how you can communicate with customers. So whether we have one-key benefits, whether we have new offerings in one key, whether there are one-key bonuses, all the things we can use to merchandise in the most modern ways.

Speaker Change: Might've heard me mentioned that we've finally migrated all our CRM virtually 100% of our CRM and the brands.

Speaker Change: Two our new unified messaging platform that platform allows us to do things much faster to communicate with customers. So whether we have one key benefits, whether we have new cases, new offerings in <unk>, whether they're one can't bonuses all the things we can use to merchandise and keep people and use <unk> to be the glue that keeps members stick.

Speaker Change: And you'll remember remember members get more than just one can you they get member discounts in the product.

Speaker Change: And many of the products, we're expanding that every day, we now have deeper discounts for silver and gold.

Peter Kern: And that's what our new single messaging platform allows us to do. And then you add on to that. This kind of goes to the broader point, as we've improved the products, we've added new features, but I say, as you said, what am I most excited about? It's really machine learning and AI plumbed into, essentially, the entire product experience. Because what that gets you is, effectively, a personalized experience for every customer. And that's from the front end, basic shopping flows, as I mentioned, to post-booking, to CRM, and everything else. And the more we can connect, and now that we have a single identity for our customers, and now that we... We've seen some of our best wins now, just as algorithms improve and learn and new versions come out. Whether it's to optimize pictures or content or what you see in what order or what filters are applied.

Speaker Change: So theres just a lot of things to keep them in but it's important to be able obviously to communicate with them in the most modern ways and that's what our new single messaging platform allows us to do and then you add onto that just kind of goes to the broader point as we've woven we've improved the products. We've added new features but I'd say you said what am I most excited about it's really.

Speaker Change: Machine learning and AI plumbed into essentially the entire product experience because what that gets you is effectively a personalized experience for every customer and thats from the front end basic shopping flows as I mentioned to post post booking to CRM and everything else and the more we can connect and.

Speaker Change: Now that we have a single identity for our customers and now that we can use that data to give them. The best experience. We're seeing some of our best wins now just as algorithms improve and learn and new versions come out whether it's to optimize pictures or content or what you see in what order or what filters are at.

Speaker Change: <unk> like those kinds of things that we can now do at scale that is what I'm. Most excited about I mean, we have lots of cool features we have all kinds of things going on to improve the <unk>.

Peter Kern: Like those kinds of things that we can now do at scale. That is what I'm most excited about. I mean, we have lots of cool features; we have all kinds of things going on, the Air Shopping Experience, the Package Shopping Experience, you name it. But really, at its core, I think having AI and ML plugged in, we can now do so much more so much more quickly, and it will feel to the consumer like a much more personalized experience that's relevant to them. And I think that's inherently sticky in a way that, you know, frankly, travel products have not historically been in our history.

Speaker Change: Her shopping experience the packet shopping experience.

You name it but but.

Speaker Change: Really at its core I think having plumbed in the.

Speaker Change: The AI and ml, we can now do so much more so much more quickly and it will feel to the consumer like a much more customized experience that's relevant to them and I think thats inherently sticky in a way that frankly travel products have not historically been in our space. So that's what I'm most excited about.

Peter Kern: So, that's what I'm... Thank you, Peter.,,,, Thank you. Our next question comes from Lee Horowitz from Deutsche Bank. Lee, please go ahead.

Speaker Change: Okay. Thank you Peter.

Speaker Change: But.

Speaker Change: Yes.

Speaker Change: Thank you.

Our next question comes from Lee Horowitz from Deutsche.

Lee Horowitz: Bank. Please go ahead.

Peter Kern: Great, thanks for the question. First, Peter, congrats on your tenure. Thanks again.

Lee Horowitz: Great. Thanks for the question first Peter Congrats on your tenure. Thanks again, it's been a crazy couple of years and congratulations on all that you've accomplished over that time period maybe.

Peter Kern: It's been a crazy couple of years, and congratulations on all that you've accomplished over that time period. Maybe just sticking with Vrbo, as we think about it in 2024. I guess, one. How do you feel about the overall health of the alternative accommodations industry? Do you think there may be some continued pricing headwinds in, say, core vacation rental destinations as travel patterns continue to normalize and perhaps a macro weakness plays through? And then, secondly, can you provide any thoughts on how the competitive set for Vrbo has evolved over the past couple of years, maybe as you've taken your foot off the gas, and how maybe this shifting competitive landscape, if it is happening, is informing your strategies to get this Thanks. Yes, sure, Ethan. Thanks for your thoughts. It has been a couple of crazy years. I would say a few things. Sort of working backwards, I think, you know, obviously, we're, We are continuing to be healthy, even post-pandemic, as habits. However, there's like VR within VR. So Urban has done better.

Lee Horowitz: Maybe just sticking with variable as we think about it in 2020 for I guess, one how do you feel about the overall health of the alternative accommodations industry. Do you think there may be some continued pricing headwinds and say core vacation rental destinations as travel patterns continue to normalize and perhaps some macro weakness plays through and then secondly can you provide any thoughts on how the competitive.

Lee Horowitz: I've said for a very.

Lee Horowitz: Yeah.

Lee Horowitz: Over the past couple of years, maybe as you're taking your foot off the gas and how maybe this shifting competitive landscape it is happening.

Lee Horowitz: Forming your strategies to get this business back to humming again thanks.

Lee Horowitz: Yeah.

Speaker Change: Yes. Shortly then thanks. Thanks for your thoughts it has been a couple of crazy years of.

Speaker Change:

Speaker Change: I would say a few things.

Speaker Change: Sort of working backwards I think obviously, we've seen we are continue to be healthy even as even post pandemic as habits have shifted.

Speaker Change: However, theres like VR within VR. So urban has done better we are not heavily weighted to urban as you know some of our competitors are.

Peter Kern: We are not heavily weighted to Urban, as you know. Some of our competitors are. I think that's what you mean by the evolving landscape. You know, obviously, Airbnb has always been there.

Speaker Change: That's what you mean by the evolving landscape, obviously airbnb has always been there.

Peter Kern: Booking has been doing more with that product, again, largely, as best we can tell, focused on and benefiting from the Urban side of VR or alternative accommodations. You know, we're still squarely situated in our core markets. We haven't made a big decision to pivot to Urban.

Speaker Change: Booking has been doing more with that product again largely.

Speaker Change: We can tell focused and benefiting from the urban side of VR.

Speaker Change: Our alternative accommodations.

Speaker Change: We're still squarely situated in our core markets, we haven't made a big decision to pivot to <unk>.

Peter Kern: But one of the things that's enabled by all the migrations we're doing that will come this year, we have a bunch of multi-unit VR inventory on our OTA brands that is not on VRBO, and we still have some VRBO content that is not on our OTA brands. So there's still opportunity, more in sharing the inventory we already possess. We've had no shortage of finding inventory, and I think, you know, housing market issues and other things probably make that, you know, macro easier now. It's really just changing habits.

Speaker Change: Urban but one of the things that's enabled by all migrations. We're doing it will come this year, we have a bunch of multi unit VR inventory on our OTA brands that is not on verbal and we still have some verbal content that is not on our OTA brands. So there's still opportunity to do more in sharing the inventory we already possess.

Speaker Change: Yes, we have.

Speaker Change: Had no shortage of finding inventory and I think you know housing market issues and other things probably make that.

Speaker Change: Macro easier now.

Speaker Change: It's really just changing habits now our hedge against rent.

Peter Kern: Now, our hedge against, you know, renting a mountain house or a beach house is, of course, renting a hotel room or resort room. As an alternative, and we've participated very well in that, and we feel good about our... But I think, you know, we feel very good about Verbal, you know, we needed to get the product to a new place, and we are now, you know, firmly on that journey. I don't think we gave space to anybody. I think, you know, we have a good brand, we have an improving product that I have no doubt will be best in class, and, you know, we just have to get back into the office. Again Over time, we should have the stickiest product because our product comes with loyalty, and our loyalty is usable across any travel product. So I think that's a winning combination.

Speaker Change: Renting a mountain house or a beach house's of course renting a hotel.

Speaker Change: Our resort room.

Speaker Change: As the alternative and we've participated very well on that and we feel good about our position there.

Speaker Change: But I think we feel very good about forever, we needed to get the product to a new place. We are now firmly on that journey I don't think we gave space to anybody I think.

Speaker Change: We have a good brand we have an improving product that I have no doubt, we'll be best in class and.

Speaker Change: And we just have to get back on offense and again. This is one of those places where you had to take a pause go slow to go fast and.

Speaker Change: And the slow BARDA always hurts, a little but if you don't do it you can never go fast so.

Speaker Change: So we're in a good spot now and I think we just have to accelerate out of it and I don't worry about the supply.

Speaker Change: Situation.

Speaker Change: And I don't really think.

Speaker Change: We're losing ground to other competitors, who have some super sticky product and over time, we should have the stickiest product because our product comes with a royalty and royalty is usable across any travel products. So I think thats a winning combination we just got to keep pounding at home now and now that we have the product to get behind we will do that.

Julie P. Whalen: We just got to keep going now that we have the product to get behind. Helpful. Thank you. Yes. Thank you. Our next question comes from Anthony Post from Bank of America. Anthony, please go ahead. Great. Thank you. I guess a couple for Julie.

Speaker Change: Yeah.

Speaker Change: Helpful. Thank you.

Speaker Change: Yep.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Anthony <unk> from Bank of America. Anthony. Please go ahead.

Anthony: Great. Thank you I guess a couple for Julie.

Julie P. Whalen: You gave us the 11% growth for lodging and 18 for hotels. So we can kind of solve for Vervo, but can you give us any range of what percent your alternative accommodation nights are or bookings are, just so we can't have too big of a range there? And then second, last year you were very clear, double-digit top and bottom line. I think you said similar growth on the top line and then margin improvement. I mean, is that kind of saying double digits for both, or do you want to clarify the growth rates at all?

Anthony: Give us the 11% growth for lodging and 18 four hotel. So we can kind of solve for vivo, but can you give us any range of what percent. Your alternative accommodation nights are or bookings. Just so we can not have too big of a of a range. There and then second last year, you were very clear double digit top and.

Anthony: Bottom line I think you said similar growth on the topline and then margin improvement.

Speaker Change: Is that kind of saying double digit for both or do you want to clarify kind of the growth rates at all thank you.

Julie P. Whalen: Thank you. Sure. On the first one, we haven't, and I think recently we haven't given out what percent is our, you know, verbal piece of the business, but I think, you know, once when we bought the company, there was some, you know, and obviously numbers that were provided at that time; you can do some extrapolation on the growth rate and get pretty close, probably. So I don't think there's anything else that we would, you know, give out today from a disclosure perspective on that front.

Speaker Change: Sure.

Speaker Change: Now the first one we haven't I think recently, we havent given out what percent is our barbell piece of the business, but I think <unk>.

Speaker Change: Bought the company there was some.

Speaker Change: Obviously numbers that were provided at that time, you can do some extrapolation on the growth rate and get get pretty close probably so I don't think theres anything else that we would give out today from a disclosure perspective on that front.

Julie P. Whalen: On the guidance perspective, you know, we basically have said, as you alluded to, that we are planning to grow relatively in line with our growth rates for this year, which is about, you know, called nine and a half, 10% in GBV, and 10% on revenue. And then we said with margin expansion relatively in line, which we're calling about 75 basis points for expansion this year. So that's how I would take it. I mean, relatively in line with us, you know, plus or minus 100 or so basis points.

Speaker Change: On the guidance perspective.

Speaker Change: We basically upside as you alluded to that we are planning to grow relatively in line with our growth rates from this year, which is about nine 510% in GBP and 10% on revenue and then we said with margin expansion relatively in line, which we're calling about 75 basis points for expansion this year. So.

That's how I would take it I mean relatively aligned to us plus or minus 100, or so basis points, but that's how I would think I would think about it that it's pellets for GBP and revenue.

Julie P. Whalen: But that's how I think I'd think about it, that it's both for GBV and revenue. Great, thank you...

Speaker Change: Great. Thank you.

Peter Kern: Thank you. Our next question comes from Jed Kelly from Oppenheimer. Jed, please go ahead.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jed Kelly from Oppenheimer. Please go ahead.

Jed Kelly: Yeah, Hi, thanks, Thanks for taking my question just going onto your overall marketing strategy.

Peter Kern: Yeah, hey, thanks. Thanks for taking my question. Just going on to your overall marketing strategy. You know, just by watching TV, I still see you're still marketing to a lot of the brands, hotels.com, Expedia. And do you start to pivot those brands more into one key? Can you talk about that? And then can you just talk about your comments on streamlining expenses? Sort of what's the strategy behind that move?

Jed Kelly: Just just by watching television I still see Youre still marketing to allow the brand hotels Dot com Expedia and do you start to pivot those brands more into <unk> can you talk about and then can you just talk about you.

Jed Kelly: Your comments on streamlining expenses sort of what's the strategy behind that move thank you.

Peter Kern: Thank you. Yes, sure. Thanks, Jed.

Speaker Change: Yes, sure. Thanks, Jed so on the marketing front, yes in the U S and we will see.

Peter Kern: So on the marketing front, yes, in the US, you will see all the brands advertised. There used to be far more brands, but you know, we're down to those core three.

Speaker Change: All the brands advertised.

Speaker Change: It used to be far more brands.

We're down to those core three and we believe in those three I think we're still trying to find the balance between.

Peter Kern: And we believe in those three. I think, you know, we're still trying to find the balance between, you know, can they be advertised as one, or do they need to be advertised as three? And what is the best way to penetrate the market?

Speaker Change: Can they be advertised as one or do they need to be advertised as three and what is the best way to penetrate so I would think of that as sort of a we're on our own learning journey about what we can do how we can help.

Peter Kern: So I would think of that as sort of a learning journey about what we can do, how we, Thank you all so much for joining us today, and we hope that we've been able to help people see them as a family of products that work together, and we continue to try to optimize, be it on television, which is what you're seeing, or in programmatic, or, frankly, in Metasearch, and so forth. So we're constantly working to see what the optimum way to drive those is, but I will say in the rest of the world, we have made very... I think we need to look at brands both of, where we will maintain one brand or if we think it's worth it, two or three brands and what we will do there. We will lean heavily into, you know, it's a high bar for there to be more than one. There has to be real brand affinity and other things that are driving that key, especially now that conceivably any of our brands could have all or any lines of business, and So the opportunity to take, for example, a market that is a predominant hotel.com market and potentially add car and air and other packages and other things is within our reach now. And so we can make quite different decisions about whether we need to be on with Expedia just to have air or something else.

Speaker Change: Help people see them as a family of products.

Speaker Change: That worked together and and.

Speaker Change: And we continue to try to optimize be it on TV, which is what youre seeing or programmatic.

Speaker Change: Or frankly, even in.

Speaker Change: Meta search and so forth. So we're constantly working to see what the optimum way to drive those are but I will say in the rest of the world. We have made very conscious decisions of.

Speaker Change: Where we will maintain one brand or.

Speaker Change: If we think it's worth it two or three brands and and what we will do there and we will lean heavily into.

Speaker Change: It's a high bar for there to be more than one.

Speaker Change: There has to be real brand affinity and other things that are driving that continuation of the second branch, so, especially now that conceivably any of our brands could have or any lines of business and that's not that hard for us to do so the opportunity to take for example, a market that is a predominant hotels dot com market and.

Speaker Change: Attention, we add car in the air and other packages and other things is within our gift now and so we can make quite different decisions about do we need to be in with Expedia just to have air or something else. So so.

Peter Kern: So that's really a big opportunity for us and allows us to simplify how we think about them and, in some ways, not replicate some of the complexity we've made for ourselves. So, that's a work in progress, but, you know, all those things are effective, and we're working to optimize all the time on the best way to communicate that. So on the streamlining of expenses, I think we've been saying, you know, all last year that, obviously, during the transformation phase, we've ramped up our expenses. We've had duplicate systems, legacy systems where we're still building out the new system and all the costs that are associated with that across the board from the cloud and licensing and maintenance and things like that.

Speaker Change: So that's really a big opportunity for us and allows us to simplify how we think about those decisions.

Speaker Change: And in some ways not replicate some of the complexity, we've made for ourselves over the years.

Speaker Change: So that's a work in progress, but all those things are effective and we're working to optimize all the time on the best way to communicate that.

Maybe Julie can say something about the.

Julie P. Whalen: On the streamlining of expenses I think we've been saying all last year that obviously during the transformation phase ramped.

Julie P. Whalen: Ramped up and expenses, we've had duplicate systems legacy systems, why we're still building out the new system.

Julie P. Whalen: And and all the costs that are associated with that across the board from cloud and licensing and maintenance and things like that and so we have said as we come out of this transformation phase that we think theres opportunity to deprecate systems, and redeploy resources and find cost savings throughout the P&L and so this is our first step.

Peter Kern: And so we have said as we come out of this transformation phase that we think there's an opportunity to deprecate systems and redeploy resources and find cost savings throughout the P&L. So this is our first sort of stab, if you will, at that. And so you'll see things across the board coming out as we move throughout the year, in cost of sales, in overhead, and to the extent that obviously crosses over into capital expenditures. You'll see some of the pressure coming off at least the growth rates there, and if not, and also in absolute dollars. But that's simply what it represents.

Speaker Change: Stab if you will at that.

And so youll see things across the board coming out as we move throughout the year in cost of sales and overhead and to the extent that obviously crosses over into capital expenditures, you'll see some of the pressure coming off at least the growth rates there and if not I can also in absolute dollars.

Speaker Change: But that's simply what that represents for I'm not going to go into a lot of details today, but we did purposely say that we will give you more information later this quarter and as we move throughout the year on that as we give you more of the details associated with it.

Julie P. Whalen: We're obviously not going to go into a lot of details today, but we did purposely say that we would give you more information sort of later this quarter and throughout the year on that as we give you more of the details, and I would just add... Thank you. That's always been the plot that we wanted.

Speaker Change: And I would just add.

Speaker Change: That's always been the plot that we wanted this wasn't just to build the cool new things. This was also to build them the right way and be efficient in how we did it in and that's the opportunity that.

Peter Kern: This wasn't just to build cool new things. This was also to build them the right way and be efficient in how we did it, and that's the opportunity that information has also provided for us, and we're excited to be on that side, not just http://www.expedia.com. Thank you. Our final question comes from Mark Mahaney from Evercore ISI. Mark, please go ahead. Okay, thanks. I'm sure these questions have been

Speaker Change: The transformation has also provided for us and we're excited to be on that side of it too not just from us.

Speaker Change: Experience standpoint, but from an efficiency.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Thank you.

Thanks.

Speaker Change: Thank you.

Speaker Change: Our final question comes from Mark Mahaney from Evercore ISI Mark. Please go ahead.

Mark Mahaney: Okay. Thanks I'm sure. These questions have been covered but if I could ask again please.

Peter Kern: But if I could ask again, please, of these two initiatives, the replatforming of the brands, particularly the Vrbo brand, and then the one key strategy, is it, I assume these are more like snowball events. Have you already seen an impact on the business or on demand, cross selling, retention, or acquisition from these so far? Or would you, if not, do you have expectations of when we will?

Mark Mahaney: These two initiatives the re platform the re platforming of the brands, particularly the Turbo brand and then the one key strategy is it.

Mark Mahaney: I assume these are more like snowball events have you already seen an impact on the business or on demand cross selling retention acquisition from these so far or would you say if not could you lay out expectations of when we would thank you very much.

Peter Kern: Thank you very much. Yeah, Mark, I'll give you a quick answer. I think we've sort of addressed some of it already, but basically, the Virbo transition to the unified stack is more of just a, An execution thing, I think what it gives us is the opportunity now to accelerate Verbo Future, and Test and Learn, and Grow Faster as I, the rest of the group we dug a hole we knew we would when we moved it to the new stack the conversion would go down we have been digging out of that hole we're about back to par but we didn't do it to get the bar we did it to accelerate far past that and now we have the opportunity in Vrbo riding on the same rail that the other brands gets the benefit of all the testing, Shared Test...

Speaker Change: Yeah, Mark I'll give you a quick answer I think we sort of address some of it already but basically the.

Speaker Change: <unk> trends.

Speaker Change: Transition to the <unk>.

Speaker Change: Unified stack is more of just the.

Speaker Change: An execution thing I think what it gives us is the opportunity now to accelerate for BOE in terms of feature and test and learn and grow faster as I mentioned.

Speaker Change: To the rest of the group.

Speaker Change: We dug a hole we knew we would when we moved it to the new stack that conversion would go down we have been digging out of that hole, we're about back to par.

Speaker Change: But we didn't do it to get the bar, we did it to accelerate far past that and now we have the opportunity in vivo riding on the same rail as the other brands gets the benefit of all the testing.

Peter Kern: We're excited about the progression of that product, but it had to go through the bad to get to, As far as OneKey goes, I also... We feel very good about the early indicators. Yes, there is more cross-shopping. Yes, we're seeing more repeat business from certain pools of customers that we thought would benefit from this, like hotels.com customers who had less than 10. Stamps in our old system, and people, if you will, who hadn't earned any benefit now, they have benefits, and they're coming back more, and that's what we. But, as I also mentioned, while millions of people have earned benefits, you know, one, a small percentage of them have re-spent it, and that just has to do with the cycles of the booking windows for Vrbo.

Speaker Change: Sure testing opportunities that winners that we found other places and so forth. So we're excited about the progression of that product, but it had to go through the bad to get to the good.

Speaker Change: As far as one can goes I also mentioned we are we feel very good about the early indicators, yes. There is more cross shopping yes, we're seeing.

Speaker Change: More repeat from certain pools of customers that we thought would benefit from this like hotels dot com customers, who had less than 10.

Stamps in our old system and people if you will who hadn't earned any benefit now they have benefit and they're coming back more and that's what we want to see.

Speaker Change: But as I also mentioned while millions of people have earned one key.

Speaker Change: Cash on bareboat.

Speaker Change: A small percentage of them have respected and that's just has to do with the cycles of the booking windows for verbal and if people rarely book more than once or twice a year. So we've got to get those.

Peter Kern: Rarely booked more than once or twice a year. So we've got to get those, you know; we expect to see those people back in. That's why I've said we've built up this value. And now that value needs to be realized as they come back direct later, as they use that one key cash across other brands with more cross shopping, like that's the dream. And, of course, getting Expedia and Hotels.com.

Speaker Change: We would expect to see those people back in and that's why I've said, we've built up this value and now that value needs to be realized as they come back direct later as they use that one key cash across other brands with more cross shopping like that's the dream and of course, getting Expedia and hotels com members to use their wonky cash on herbal, which we've also seen but.

Speaker Change: Again, those cycles aren't every month people do that once or twice a year. So we're seeing good early signals, but its all building and Thats why I am excited like it is going to be a slow build but it's going to be a great sticky thing for us over time and again, we'll keep more and more as we get more of the right people in as we keep more of them.

Peter Kern: Thanksrankethings.com, you know all of our products, and again, we capture more wallets here from them. That's you know that's what we are. Thank you, Peter, and thank you everybody. I think that was the last question, operator, is that right? That's correct. Okay, thank you everybody, I appreciate your questions, and we'll see you in May. That concludes today's call; you may now disconnect your lines and have a nice day.

Speaker Change: And as they get to use.

Speaker Change: All of our products and again, we capture more wallet share from them.

Speaker Change: That's what we're pushing for.

Speaker Change: Thank you Peter.

Peter C. Stabler: Thanks, and thank you everybody I think that was the last question operator is that right.

Speaker Change: That's correct.

Speaker Change: Okay. Thank you everybody I appreciate your questions and we'll see you in May.

Speaker Change: Take care.

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

Speaker Change: [music].

Speaker Change: No.

Speaker Change: [music].