Q2 2025 Expedia Group Inc Earnings Call
Good day everyone. And welcome to the Expedia group Q2 2025 Financial results. Teleconference my name is Alex. Albert E. The operator today is cool.
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For opening remarks. I'll now turn the call over to SVP Corporate Finance Dan SEMO. Please go ahead.
Good afternoon, and welcome to Expedia group. Second quarter, 2025 earnings call. I'm pleased to be joined on today's call by our CEO, Aryan Goran. And our CFO Scott shenkle is 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 all growth rates are on a year-over-year basis, and any reference to expenses excludes. Stock-based compensation,
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 Q, 10K, and other filings with the SEC except is required by law. We do not undertake any responsibility to update these forward-looking statements.
We are also webcasting our earnings call and earnings deck. While going through the prepared remarks, a copy of this deck will be posted to our website. After the call, our earnings release, earnings deck, SEC filings, and a replay of today's call can be found on our Investor Relations website at irxgroup.com.
For today's call, Aryan will begin with a review of our second quarter results and an update on our progress against our strategic priorities and Scott will provide additional details on our second quarter financial performance and guidance.
After our prepared remarks, we will turn the call over to the operator, to begin the Q&A portion of the call. And with that, let me turn the call over to Aryan.
Thank you, Dan, and thank you all for joining us today.
Our second quarter results, exceeded both our top and bottom line expectations.
We grew gross bookings by 5%, grew Revenue by 6%, and expanded adjusted IBA margins by nearly 2 points.
We delivered these results in the context of a soft U.S. travel market, reflecting our focused execution and continued progress on our strategic priorities.
The US Travel Market was muted in the second quarter.
Consumers at the higher end of the market remained resilient, while those at the lower end took a more cautious approach to discretionary spending.
That said, since the beginning of July, we've seen an uptick in overall travel demand, particularly in the US.
Based on our solid first half performance. And these current trends were raising our annual guidance and Scott will cover this in a moment.
In the second quarter, our booked room nights grew 7% overall and we maintained our leadership in the US with low single digits growth.
We grew room nights. Mid single digits in the Mia and mid teens. In the rest of the world including nearly 20% in Asia.
B2B and advertising continued, their strong performance.
B2B bookings, grew, 17% outpacing, the market and delivering, our 16th consecutive quarter of double digit growth.
Advertising Revenue grew 19% with a record. Number of active partners and momentum across both sponsored listings and display ads.
brand Expedia was once again our largest and fastest growing consumer brand with multi-item attach rates at their highest level since the pandemic
Hotels.com booking was declined slightly, but room nights accelerated from the first quarter, helped by our brand. We launched in April.
VRBO grew room nights. Roughly in line with the market in the US though, bookings declined in a softer environment with lower daily rates shorter length of stay and higher cancellation.
Our second quarter performance was underpinned by progress on our 3, strategic priorities.
1 delivery for travelers.
2 investor. We see the greatest opportunity for growth and 3 Drive operating efficiencies and expand margins.
AI accelerates, all of these priorities and I'll share how we're leveraging it in each.
Let me start with delivering more value to Travelers through our supply loyalty program and products.
On Supply our recent partnership with Southwest Airlines has delivered fantastic results. Bringing new customers to both Expedia and to Southwest and delivering approximately 5% of Southwest total passenger volume in the second quarter.
This contributed to us outpacing, total US air ticket sales in the quarter.
in Amia, we've added Premiere in,
A leading European Hotel chain and combined with adding Ryan are earlier this year. Strengthened our value proposition to Travelers in Europe.
In May, we launched new vacation rental promotions and capabilities, and in just a few months, nearly 10% of verbal bookings are on our new promotional rates.
When we bring on more relevant Supply, we drive more value for travelers and in turn more growth for our supply partners.
Our loyalty program showed continued momentum even as we calibrate the program.
As a reminder, higher tier members, receive better member rates from our supply partners and earn accelerated rewards which together create another powerful flywheel for retention and repeat.
Turning to our products. We're continually improving the foundations of our user experience like performance scalability and configurability
Basics that we know drive conversion and repeat.
At the same time, we're using AI everywhere, leveraging our vast first-party data to create better, more personalized experiences.
Our AI filter has helped Travelers, find what they're looking for faster, resulting in higher conversion rates, and our insurance products now, personalize coverage resulting in our highest insurance attached rates ever.
In customer service. AI is contributing to record high. Net promoter scores while helping us to reduce costs.
This leads me to our second priority investing where we see the greatest opportunities for growth.
B2B is growing fast or excited about it and we're investing behind it.
We're onboarding new B2B Supply and making it easier for partners to identify and surface the right deals for their Travelers.
We're also expanding our product portfolio.
Last quarter, we launched our first partner on our car API and later this year, we'll roll out additional lines of business.
B2B is large outside the US. And as we grow, it creates another powerful flywheel for our supply Partners, as well as benefiting our consumer business.
On Advertising. We're making it simple and cost-effective for advertisers to reach their goals.
Our new ad formats like video are driving higher engagement and conversion rates.
We're rolling out more Automation and about half of our partners. Now, use our automated campaign optimization tools.
We're a high-return channel for our advertisers, and while the space is getting more crowded by continuing to innovate both on the ads themselves, as well as advertiser tools, we believe there's a lot of growth potential ahead.
In our consumer business, we're making progress growing outside the US and capitalizing on new traveler behaviors.
We grew bookings outside the US by high single digits. With brand Expedia, growing 13%.
The UK and Northern Europe, grew particularly well in part fueled by the new Supply I mentioned earlier.
We continue to see opportunity to grow as we bring together marketing product Supply and servicing in a way that's relevant to Travelers in each of our Focus markets.
We're also capitalizing on new traveler search behaviors in particular with social Genai searches and agentic AI.
Traffic from Genai searches is small, but growing fast and it's in converting into bookings at higher rates than other traffic.
We're working with all the large Tech layers, Google open, AI meta, and Microsoft to name a few to make sure that Our Brands appear prominently and their value propositions are clear.
It's a fast changing space and having the right Integrations and Partnerships enables us to stay ahead all the while optimizing our own sites, apps Tech and marketing for the future.
Moving to the third pillar of our strategy: operating efficiencies and margin expansion.
For the past 3 quarters, we've been flat or leveraged against direct marketing spend in our consumer business.
There's still work to do in this area, and we're taking a rigorous approach, refining our measurement and leaning in where we see the greatest return.
As our product gets better, as we drive more direct and better retention, we will see improved marketing leverage.
AI is a key enabler of productivity and effectiveness.
It touches every function across our company and all our employees have ai goals.
Our engineering teams, for example, have broadly, adopted AI, powered, developer assistance and we're seeing reduced cycle Times by more than 20% in some teams and faster feature delivery.
We expect the impact to compound as we integrate AI deeper into our workflows.
And that this work alongside our cost discipline will underpin. Our continued margin expansion.
To conclude even as the US Travel Market was tough. In the first half of the year. We made tangible progress on our strategic priorities.
We have much work and opportunity ahead as we continue to execute on our strategy and deliver value. For all of our stakeholders with that over to you.
I'm pleased to share our second quarter performance, which beat the high end of our bookings and revenue, guidance by point, and our adjusted ebit on margin expansion guidance by a point.
In summary for Q2, our book room nights are up 7%.
Gross bookings were up, 5% and revenue is up to 6%.
Our B2B and advertising businesses. Delivered, strong, double digit growth up, 17% and 19% respectively.
On the bottom line, we delivered IBA margin expansion of approximately 2 points.
Our book room nights were 105 million up 7%.
As Aryan mentioned, the growth was primarily driven by B2B with strong International performance.
We saw notable strength in Asia, which grew almost 30%, with particular strengths in our rapid API product.
As a reminder, Rapid connects Expedia Group's powerful lodging supply with our travel partners.
In b2c brand, Expedia grew booked through nights. 5% also, betting benefiting from the international growth, partially offset by a softer us, consumer spending and travel environment.
Adrs of 209 dollars were essentially flat with prior year.
The US Travel Market experienced continued pressure on inbound travel with shorter booking windows and higher cancellations.
Even with that backdrop, we believe our company grew faster than Market in both are and hotel lines of business while vacation rental room, nights grew roughly in line with the market.
Gross bookings were 30.4 billion up 5%, which includes a 1-point benefit from foreign exchange.
Revenue of $3.8 billion grew 6%.
Which was 8% on an fx neutral basis. International Revenue growth was up 13%.
We outperformed our bookings in Revenue, guidance, due to the strength outside the US in particular, in B2B.
Our International bookings growth. Also benefited from foreign exchange while brand Expedia, also saw strength, led by growth in are advertising and attached.
Lodging bookings and lodging Revenue, broke both grew 6%.
Turning to page 10 and our segments of performance starting with b Toc.
B2c gross. Bookings is 21.6 billion, increased 1% year-over-year.
We delivered high single-digit growth outside the US partially offset by softness in the US market.
B, Toc revenue of 2.5 billion grew 2%.
Driven by an increase in hotel demand particularly from Brand Expedia reflecting growth in advertising and additional stays from past period. Bookings?
B to C Ebon. Margins were 29.4%.
Up. Nearly 3 points from last year, driven by volume growth most notably in our higher margin products like advertising
and you discipline cost management more specifically in our direct sales and marketing.
Moving to B2B.
We are excited about the momentum in the business and continued growth prospects as as we unlock, even more of our supply and watch new apis for our partners.
This business builds upon the same Supply and technology for our b2c business, allowing us to expand our reach and power more Global Travel.
B2B. Growth bookings are 8.8 billion up to 17%.
Our B2B segment continues to benefit from increased volume due to solid execution and a higher mix of business outside of the US.
B2B Revenue group, 15% driven by strong growth in Asia and Europe, as well as a shift in the timing from Easter.
B2B ebitda margins were 27.3% up, more than 2 points, year-over-year driven by volume leveraging on, the cost of sales and overheads.
We delivered second quarter adjusted, EBA of 908 million.
A margin of 24%.
The 2 points of adjusted margin, Evita margin expansion, was driven by Revenue growth in both segments, particularly driven by our advertising business and about a quarter point of benefit from a foreign exchange.
Adjusted ebit, uh, adjusted EPS of $4.24 grew 21% versus prior year, driven by higher revenues and leverage of costs, along with the share repurchase activity.
Moving to page 13 cost of Revenue of 373 million was 9.8% of Revenue representing a quarter, point improvement from the prior year this reflected on growing efficiencies particularly in customer service.
Direct sales and marketing expenses were 1.9 billion up 7% and essentially flat as a percentage of gross bookings.
we did see leverage in our b2c business, which was offset by B2B
Payments to our partners are included in the direct sales and marketing expenses for B2B.
Overhead expenses were $637 million, or 16.8% of revenue.
A nearly quarter, point improvement, keep in mind the actions, we took to reduce our cost structure, did not fully impact Q2, and our expected to reduce to, and our expected to further benefit our expense base in the second half of the year.
The strength in our balance sheet continued with 9.2 billion in total liquidity and quarter end. This includes 6.7 billion of unrestricted cash and short-term Investments and 2.5 billion from our undrawn revolving credit facility.
Our leverage ratio of 2 times is in line with our Target.
And we remain committed to maintaining debt levels consistent with our investment grade rating.
Free cash flow on a trailing 12-month basis with 2 billion, and our Flex of our asset light and operating model and discipline execution of our strategic priorities.
At quarter end, we had 2.3 billion remaining in our share repurchase program. After utilizing 627 million in the quarter to repurchase 3.8 million shares of our common stock.
This brings our total shares repurchased in the last 3 years to 42 million and reduces our share count by 21%.
Turning to the outlook for the third quarter.
We expect gross, bookings growth of 5 to 7% in Revenue growth of 4 to 6.
This includes an estimated 1-point benefit from foreign exchange to bookings and revenue growth like current exchange rates.
Adjusted Eva margin is expected to expand by 50 to 100 basis points. With no material impact from currency at current exchange rates.
For the 4 year. We expect gross, bookings and revenue. Growth is 3 to 5% which you represent a 1 Point increase versus our previous guidance.
for booking, this includes roughly half a point of benefit from foreign exchange and for Revenue it includes approximately, a 1 point headwind at current rates,
For the year, we expect adjusted ebita margin expansion of the full point.
This is at the high end of our pre previous guidance of 75 to 100 basis points. Provided in May,
we are off to a good start in the first half of the year with adjusted ebit time, margin up over 1 and a half points in the second half, we will benefit from the cost actions. We announced with the first quarter results.
In addition, we expect to deliver additional margin expansion from our B Toc marketing Leverage.
We're focused on optimizing. Our current spend across the Enterprise while continuing to invest in our growth drivers.
Regarding Capital allocation for the balance of 2025. We expect to continue repurchasing shares, roughly in line with levels over the last couple of years.
Finally, our 25 guidelines implies, a moderation. Q4 growth as compared to Q3, which is driven by 2 factors first. We're laughing last year's significant strength for bookings and revenue. Growth were up 13 and 10% respectively.
Secondly, the continuing uncertainty around the U.S. consumer.
And travel into the US.
I'm encouraged by the momentum, we're seeing across our strategic priorities and I want to Echo our Echo. Rian's. Enthusiasm around the progress we've made here to date.
Especially during a challenging us consumer spending environment.
Now, let me open the call for questions.
Thank you.
Council mind if you'd like to ask a question. Please press star by 1 on your telephone keypad.
If you would like to remove your question, please press star followed by 2.
Our first question for today comes from Eric Sheridan of Goldman Sachs.
The lines. Don't open. Please go ahead.
Thanks so much for taking the question, and thanks for all the detail and the prepared remarks. I, I think honing in on some of the bigger themes. And what you said, when you guys think, broadly in where this company is going over the next couple years, how do you think about aligning? Some of your key, strategic priorities and growth Investments against traffic Dynamics conversion? And thinking about scaling, various forms of inventory and go to market strategy, over the medium long term. Thanks so much.
yeah, first I would start by saying
we're happy with the the portfolio. Mix. We have between our consumer Brands, our B2B Brands, and we think that it you while of course our consumer business is quite uh I would say concentrated in the US. If you look at the company as a whole we're we're quite Diversified. When you look at the B2B business.
Behavior shifts. You know, we are working with all of the different partners uh, who have, for example, AI traffic. Whether it's open AI Microsoft and the like and so I think we're well, positioned to make sure we're capturing that traffic, of course, with our work on Supply, with our work, on our product, with our work and our loyalty program. You know, our goal would be to have as much direct traffic as possible into Our Brands. But again, we're working with all of these Partners uh to get traffic from outside as well. And then B2B is a highly Diversified business, not only geographically, but also in terms of the type of Partners we work with, we know that it's a big travel industry, some people buy traffic, Sorry by um by travel through their corporate programs, some from offline, retails come from their loyalty programs and we're really there to power it all. So if I just step back and think about our 3 big strategic priorities, which are deliver more value for travelers and partners through our
products Supply and loyalty program invest, where we see growth, which is in B2B in advertising. And then in consumer, there's a big opportunity, still internationally and with these new traffic Trends and then expand margins. Uh, I think we feel good about where we are.
yeah, I'd add to that area, a couple of things first off, maybe the double click on the direct traffic point that Aryan brought up
Um we continue to see strength in the traffic, we get from direct and we are very closely working with AI providers as well as monitoring our own traffic and conversion to make sure that we are seeing the uplift. We think we should and holding our strengths in direct which we feel good about. The second is
Um, for uh, for app traffic, our app traffic, continues to grow and conversion continues to get better.
Um, so as we think about the mix of where our traffic's coming from, we feel very strongly about those 2, the other. Um the other traffic channels brought these speaking, we're seeing more strength in Social, which we feel good about and continue to invest behind. And as we make trade-offs between the other channels, to balance our returns and our growth. Um, that's where I think you'll see particularly how to BNB some, some productivity going forward.
Thank you.
Yep.
Thank you. Our next question comes from Anthony Post. I'll thank you of America.
Your line is now open. Please go ahead.
Great. Thank you. I think I'll, um, ask you again about Hotels.com. You've mentioned some improvement. Um, maybe give us some things that are working there and how your outlook is for that brand for the next 12 months. And then Scott, um, maybe you could talk about how you thought about Q4 comps in your full year guidance. Uh, thank you.
I'll take the
Look, I talked about it. A year ago, hotel.com was our most disrupted of all of our brands from the platform migrations and the change in the Loyalty program. And the fact that we pulled back on International for a period of time, while we were going through Big 3 platforms. Um, and as I said, I feel good about where we are right now, I'll start with the brand relaunch in April. Uh, we're seeing brand awareness and direct traffic move in the right direction from that. And so that gives us a lot of confidence.
Next in the product. You know, we introduced new capabilities like price alerts and insights that really reinforced the value proposition of this brand as a hotel specialist. So there are things that are specific to Hotels.com, and it also benefits from some of our underlying platform improvements, for example, like our checkout path.
And finally, as we've been leaning back into International markets with the hotels.com, loyalty program of 10 for 1. We're seeing some really nice results and hotels.com is actually a brand that's quite uh exposed to International markets. So I just say look it's it's been a road to get here. Uh and we have a full roadmap of uh for the second half and we feel good about the progress that we've made.
yeah, specific to your second question, you know, as I said, in my prepared remarks,
There's a fair amount of Market uncertainty combined with tougher. Lapping, you know, we're up 6 to 7 points in Q3 to Q4 of last year, and that Dynamic is going to make, we think the comps a little tougher in Q4, but effectively, we're not updating Q4. So when you guys do the force out for Q4, it's going to show roughly flat, flat for gmv and revenue. And I think we, we feel strongly that we'll be on the upside of the higher end of that range and we'll get to Q4 when we get to it.
Great. Thank you.
Thank you. Um, next question comes from Lee Horowitz of dower Bank.
Hey, thanks so much. Um, I think I heard you talk to marketing leverage in your B2C business in the second half of the year. I guess, what is involved in your business over the last year or so to sort of reach that elusive goal? It's been something we can talk about for a while. Just curious what you're seeing to have confidence in that outlook, and how you think about that, perhaps going forward into '26.
so I'll start and then Scott if you'd like to add um,
First of all, marketing leverage comes from obviously, uh, the product itself getting better. So are we able to as we bring traffic in 1? Is it coming more direct?
To when we bring it in, is the paid traffic? Are we getting it in an efficient level and then are we converting that traffic that comes in into bookings and then people repeating and coming back Direct
All of the work that we are doing around travel or value. What I talked about the work in the product, the work in the supply, and the Loyalty program.
You know, with the goal of getting more, repeat, more direct and more loyalty, which automatically will improve our marketing leverage. In addition, I've talked about the work we're doing in sharpening the value proposition for each of the brands. Because the sharper it is, the more people understand that Expedia is the one-stop shop where they can come in and get great package deals and bundle and save, the more effective our marketing will be.
and then, of course, it's just a simple work in marketing of making sure that, you know, we have the right Integrations with the right partners that we've got the right measurement and that's so great about the progress that our team is making around that
There you go.
Thank you. Um, next question comes from navad Khan of B, Riley securities.
The lines are open. Please go ahead.
Great. Um, thank you very much.
Um, maybe just, uh, just a question on the promotional environment, given, you know, the, the the sort of sluggish us are you kind of leaning more on promotions, uh, to drive, bookings and conversions versus prior periods. Uh, just any thoughts on that and how the how does it affect maybe uh less marketing, maybe more promotions? Uh that's 1 and the second question I have is just on the all-in pricing that you're you're doing now on on the on the across the platform, what kind of impact are you seeing from that on on conversion rates? Thank you.
Okay, on the promotions, I sort of split. The answer into the first part is supplier driven promotions and, uh, in the second quarter, we saw more of our uh more of our bookings. Come On, promotional rates that were provided by Supply partners. And I think that's both a reflection of Supply Partners, participating more in the promotions and the US consumer being more price sensitive. Um, and look, we partner with our our supply Partners to, to help them get more reach. So, that's what we're seeing on promotions and then regarding our own promotional activity. Whether it's around, packaging in the like, you know, we look at it in a very, I would say, methodical way, both marketing loyalty and promotions and pricing together. And wherever we see the best returns, we'll sort of optimize around that.
So that's the answer on the promotions question in terms of all-in pricing, you know, anytime you change the the ux of of an e-commerce app or site, there's obviously some adjustments. But you know, there's there was not any more impact than what we had expected. Uh and you know we think it's it's a good thing for The Travelers.
Just to call out that I think we talked about this before, but just for clarity um the loyalty and pricing goes into contract.
But it doesn't show up in marketing.
Just so we're clear on that.
Understood, thank you.
Thank you, Operator. The next question comes from Jed Kelly of Oppenheimer.
Now open, please go ahead.
Hey, great. That thanks for taking my question. Um, just in Ai and how it, you know, benefits B2B and how you're using your agent. Is that something you can use with your agent to, to, you know, generate new business by, you know, potentially letting them use AI agents to get more inventory. And then, just on, um, VRBO I, I see that bookings were were down year-over-year, you called out slower, adrs. Uh, can you just talk about the mix shift? And are you still seeing the mix shift to the higher value homes? Thank you.
On VRBO is we are still filling some of the foundational gaps that we had in particular around Supply, uh, that during the period that we were going through those big migrations. We hadn't been able to get to an important part of those gaps in Supply came from, uh, promotions. Like I described, we actually just unlocked the last minute deal, which we didn't have before. And as we look to get more trip types to be able to serve more than, you know, the 1 once a year large vacation, uh, we need to unlock the supply and product to do that. So, last minute was a big part of that for weekend trips. You know, uh, 6 months ago, I talked about the multi-unit, vacation, inventory and urban. So we are on the path to be able to cater to more trip types. Uh, whether it's as I said, short booking window longer booking Windows whole homes or apartments. Um, I'd also just call out on VRBO last quarter. We launched categorical recommendations on the app. Uh,
On the app home screen which helps people more easily find their match. So there are some good things happening there in VRBO.
In terms of your B2B agent question. Uh, you know, I would say it's early days between us and Supply Partners in figuring out, you know, how will agents help? Whether it's onboarding inventory, whether it's helping with, you know, customer support issues, but, you know, the travel industry, despite all of the technology we have in it, there are still for servicing. Uh,
Needs for the supply partners and a distributor like us to do a lot of back and forth with the customer. So, I think it's exciting to see what Agentic will allow in that area.
Our next question comes from Connor Cunningham of meleis research the lines. Now open, please go ahead.
Hi everyone. Thank you. You had a a pretty big acceleration in the point of sale outside the US. And I'm just trying to understand the opportunity set there, maybe a little bit longer term. I realize that you're you're going to start investing a lot more internally, but it historically, I think this what has been like, 555, 455 and, and I realized the business has changed a lot. But is that a potential goal that we could get back to at some point? And then if I could just ask another 1 within that is the booking curve. Now starting to to to elongate a little bit, uh, with all the the uncertainty kind of passing out in the market in general, thank you.
Yeah, I'd say that the the booking Windows, particularly for Q2 starting to shorten and then we've seen kind of a, a pivot, a little bit. As we've seen, rebooking tap in from the cancellations that happen in Q2 as we entered Q3. But we're now going to get into Q3 too and too much detail here today, but that's the dynamic I'd call out there. I don't, I don't know if you had anything to add on that. No, and then, I would just, you know, and then on the international question or the, the growth outside of the US. So I'm going to answer it with regard to the consumer business because the B2B business is already.
You know, majority outside of the US.
You know, compared to the Past we're taking a very focused approach. So each brand has a set of focus markets where they are working to make sure that they have great brand awareness product marketing Supply servicing and the like and rather than looking at okay, what is the how do we spread ourselves thin? We're really looking in a focused way and I do believe we can drive outside growth in those focused markets. You know, for example, in Japan and Brazil we were growing over 20% uh in northern Europe. We're growing in strong double digits. So it's really a focused approach, understanding what The Travelers in those countries are looking for and then executing against it.
Great. Thank you.
Thank you. Our next question. Comes from Kevin, copelan of TD. CD Securities. Your line is now open. Please go ahead.
Great. Uh, thanks a lot. Could you touch on the uh key growth drivers in B2B and the latest trends you're seeing there um and and also if you could help us uh just strip out the FX uh impact from q1 to Q2 and and then secondly on B2B. Could you touch on the revshare rate and Trends there and what we should expect going forward. Thanks.
Uh, we reported 5 and FX, crucial was 4. So um, that was roughly about a point quarter to quarter.
And then I'll say, you know, the drivers of growth, Scott talked about the fact that in Asia, uh, we're growing 30%. Uh and you know, this is a business 1 as I said, that's geographically diverse but in particular is quite exposed to Asia, uh, which is the fast growing Market 2 from a segment perspective. Uh, Powers offline, retailers, corporate travel and the like, and we believe that in most of our partners, we're actually winning share with them. So their businesses are growing. And then, as we create more value for them, we're able to capture more of their travel spend. Um, and as we look forward on revshare rate, I mean, certainly, uh, to the extent that there are more entrance in the space that can put some pressure on re re Revenue rates, but this is why we're constantly looking to iterate our product to bring more value and more stickiness to our partners. I talked about the work we were doing in, merchandising to make it easier for our partners to understand when they're a good.
Deals and good rates will constantly be working with them to optimize the tech integrations that we have with them, so that all of the conversations are not just about what the revenue share is.
Thank you.
Thank you. Our next question comes from Doug anmo of JP Morgan the lines now open, please go ahead.
Hi. This is Deon for thanks for taking the questions. I have to, um, first 1, I'm brand Expedia, could you just contact that a little bit more and talk about how that performing within the broader?
B2c segment and um, it's growing faster and the overall like is it 6? So for us to think that brand Expedia is taking, share from other players in the space and then secondly on the guide
Um, I think in your 4 year guide um when you exclude the impact of f, you have a bigger race for the revenue that bookings. I'm just wanting to understand some of the drivers behind that. Thank you sure. Let me start with uh brand Expedia. Uh so yes with Lee brand Expedia is taking share in a number of markets that it's in. It's got a great value proposition. As I said, earlier, is a 1-stop shop bundle and save. Uh, you know, to be able to do packages where you have your selection of flights with hotels and to do it. Dynamically is very powerful and we believe we have the leading solution there. Um, as a result, we have record attached rates and great growth in packages. You know, we're, we're bringing on new Supply. I talked about Southwest and Ryan are but there are a lot of
Airlines that as we work for better connectivity with NDC with them, we're able to unlock additional rates that Travelers want.
So we're excited about it, it's taking share. And at the same time, there are underpenetrated opportunities. With this brand, we aren't as big in vacation rentals as we would like to be, we're not as big an activities. These are areas that, you know, despite the fact that we're growing well we see as our future growth drivers, in addition to International
Yeah, specific for total year.
Foreign exchange, there's not a material difference between the Delta Zone on on our ranges for foreign exchange and revenue versus gbv.
But we can tie that out offline if you'd like.
All right. Thank you.
Yep.
Thank you. Our next question comes from a Deepak, my Tiff of Cantor Fitzgerald,
your Line's not open. Please go ahead.
Great. Thanks for taking the questions are on. On the AI assistant you noted that the traffic is converting at a higher rate. Um, can you expand on, uh, what the drivers of Prior conversion at? Is it because, you know, the traffic is having a higher intent than other channels, or is it because they are, you know, going further deeper into the booking path. Any kind of hypothesis that you have, there would be great. And then now 1 Prescott,
um, Scott, you
Yeah, sorry. Go ahead.
No, go ahead. Sorry.
No, I was just gonna ask a quick 1 for Scott. Um, Scott, can you talk about the B2B business in Asia specifically, in the context of Rapid API product? Uh how should we think about the opportunity to grow this further maybe in the next few years? You know what what specifically is the value prop that consumers are finding that this product and the weather penetration is in terms of that any color would be great.
My hypothesis is exactly what you're saying which is its traffic, that is sort of further down the discovery funnel. And so when it comes to Our Brands, uh, it's more qualified now, we're doing a lot of work with these, uh, AI companies, whether it's open AI, Google or the like 1 to make sure that, you know, when Travelers are in their worlds that our brands are showing up. Well, there's Tech work, there's marketing work, there's integration work that that needs to happen to make that happen. Also to make sure that then when a traveler comes to us, we're able to have the context that that traveler has so that we can give them more personalized experience when they come to us.
But I would just say it is early days whether it's the agentic search, sorry, whether it's the AI search. Whether it's the a, uh, the agents themselves coming and taking actions, uh, on our sites in our apps. Uh, we are working closely with all these Partners, we're experimenting, uh, we're testing and it's an exciting area. I believe, in all of it, what remains important is that Our Brands have strong Supply, a great loyalty program, that we have a great, simple user experience with really good servicing. So that whether Travelers start with us, or start in these AI experiences, and then come to us, that they are loyal with our brands.
Right. I think that's a great summary and I think for with regard to B2B I think the way we think about it is with a significant amount of their gbv and revenue coming from International. Asia included. Obviously, we feel very good about the mix.
Of those markets and the growth dynamics that come with them as it relates to API.
Um, it's just a way for us to bring our total Supply in our technology, to those those customers, in those, in those regions. And so we feel very strongly we've had great, um, history of continuing strong, double digit growth. And I think, as we look forward, we expect to continue that
Great, thank you so much.
Thank you. Our next question, comes from Mark mahaney of evercore. Isi, your line is now open. Please go ahead.
Uh, okay, um, actually, I'd just like to ask 2, really high-level questions and I'm sorry I missed some of the details, uh, from earlier in the call. So Aryan. I, I would ask the question to you this way you've been CEO. Now, for a little, I know you've been with the company for a long time, but you've been the CEO for a little over, you know, 12 14, 15 months, something like that. When you think about the, the sort of the, the areas that needed fixing, um, what I really want to ask you, is, which areas do you think that you've been able to that have been most improved over the last year? And where, where do you feel?
Feel like the real lagard still are that there's real places to lean into that, that could use the most Improvement in Scott. I know you've been there for, you know, 6 months or a little over that I think. And, um, you know, you come into this cost structure and you think about the learnings that you've had so far, uh, where are you in terms of, you know, thinking through strategizing, through real cost opportunities, to take these margins, you know, maybe materially higher to where or somewhat higher to where, you know, the, uh, the other players are in the space. Sorry for the high level questions. But I think there are kind of important. Thank you.
Yeah, thank you Mark. Uh
So, so I would say I it was important.
To maintain. And in fact, accelerate the momentum where we were doing well in B2B and in advertising and also in brand Expedia, but, you know, a year ago, when I took this role, you know, I was really clear that we'd done a bunch of platform work but it wasn't necessarily translating into growth in our consumer business and integrate traveler experiences. The way we wanted it. So I, you know, we're on the journey, we're on the path, especially with VRBO and hotel.com of being really clear on what are the value, propositions? How are they positioned in Market? How are we feeling any key gaps that they have, and then executing against those? If and some of it is taking the platform capabilities, we built and finishing some of them off
And I talked to the team a lot about being brilliant at the basics. You know I say look our business is about how are we getting traffic in?
What sort of where we'd like on the journey in terms of sort of, I think you said, where are the areas we lean into? Um again, I'm waiting to see the results come through in the consumer business.
And then there's something about in our culture being fast moving faster. And again, when you go through big, migrations and platform migrations I think sometimes that can slow us down. Uh, and what's the probably the most exciting thing to me right now is, how are you using AI internally in order to get more effective and to move faster? So, that's sort of probably the area, I would say lean into and opportunity.
yeah, Mark, I would, um
Specific to the question around cost and implicitly, then margins.
When we look at the margins, I start with—and maybe you missed it earlier—but the...
Dynamics around the first half. I think are indicative as we talk about first half second half,
The team took, I think quick action in early Q2 around restructuring. Our some of our cost base.
and I think between that,
And we looked and and some of the work that we're doing on marketing.
Without really having a full half year or even quarter of cost for structuring benefit and without making that many changes to marketing which we're planning. Our margin rates up 150. Um basis points over the course of Q2 and and for the and for the first half
so, as we look at,
The first half, good strength with opportunities to continue to take cost out and rebalance our cost portfolio while thinking about how we invest for growth longer term.
So, as we look at the second half, and I kind of talked a little bit about this earlier, but, um, how do we think about balancing the marketing investments, redeploying between channels, between brands?
And different spin types to maximize growth as well. As take costs out of the business responsibly while investing back into the business and delivering ex, uh, good solid margin expansion for this company. That's how I kind of put it in context as we look forward.
Okay. Thanks Scott. Thanks Iran.
Yep.
Thank you. Our final question for today. Comes from chop, Tom champion of Piper Sandler.
Your line is now open. Please go ahead.
Hi, good afternoon. Uh, Aryan, it sounded like your comments around. The Loyalty program were were were positive and maybe um, there there was a an inflection there. Just curious if you could elaborate on that and um, and and and discuss what what underpins that and then and then Scott for you. Um just as as you think about sales and marketing discipline um in the second half, what what what does that entail? I'm I'm just curious if you can elaborate on that. And you know what what what do you do more of than what less of thank you.
Sure. So on 1 key, uh, as I said in my prepared remarks, we grew our members High single digits.
The silver members and above are growing faster than base and non-members.
Uh and importantly we haven't seen any negative impact as we pulled back the VRBO earn for blue members. So you know, look it's working. It's you know, we're growing nicely, we have more growth in the the the Top members.
That being said, you know, about a year ago, we stopped. There were a lot of key opportunities beyond the U.S. and the U.K. because it had such an impact on HCOM. And while it was driving some cross-sell across the brands,
You know, 1 of the things I did when I came in, is I wanted to make sure that it was also a program that was working for each of the brands individually. So, how did we take the tech platform and the common currency that worked across the board? But then tailor them to each of the brands. And I think that's what you will see us do in the quarters to come
Specific to to um marketing class Tom, I would call out. First off just
In the end, it's going to be, how do we get productivity out of the sales? The direct sales and marketing line in B to C
um, as we look at Country deployment of costs,
Brand deployment of costs Channel deployment of costs. I think you can expect us to see. You can expect to see some um changes to each of those.
Um, and redeployment to drive to balance growth and drive productivity.
Thank you, both.
Yep, thank you very much.
I'm outside the court over to CEO Aryan gurin for any further remarks.
Joining the call today and thank you for your question. We delivered solid results ahead of our guidance.
Despite soccer travel demand in the US, the recent Trends, we're seeing reinforce our fundamental conviction that people want to travel and will continue to prioritize it.
I want to thank our team for their work on behalf of our Travelers and our partners.
Thank you.
Thank you, that concludes today's call. You may now disconnect your lines.