Expedia Group (EXPE, Financial) is experiencing a significant surge, with shares up 17%, following impressive earnings, accelerated revenue growth, and a reinstated dividend after a five-year break. Since Ariane Gorin took over as CEO in May last year, EXPE's stock has risen over 80%, reflecting strong operational execution and increasing travel demand.
Key Highlights:
- Travel demand exceeded EXPE's expectations in Q4, with booked room nights up 12% year-over-year, a 3-point increase from the previous quarter. Total gross bookings rose by 13% in Q4, compared to a 7% rise last quarter.
- EXPE's consumer business bookings grew by 9% in Q4, up 5 points from Q3, driven by growth across all banners. Vrbo, EXPE's competitor to Airbnb (ABNB, Financial), gained momentum in 2024. EXPE plans further improvements for Vrbo in 2025.
- Hotels.com returned to bookings growth, with international markets outpacing the U.S.
- EXPE's B2B and advertising businesses were standout performers in Q4, with 24% and 25% year-over-year growth, respectively. Despite a slight slowdown from the previous quarter, advertising remains a high-margin, high-growth area with potential for further innovation.
- EXPE achieved a 39% increase in adjusted EPS to $2.39, with gross margins improving by 125 basis points year-over-year in Q4, nearing 90%.
- Looking forward, EXPE anticipates a slowdown in bookings and revenue growth in Q1, projecting 4-6% and 3-5% growth, respectively, due to FX headwinds and challenging year-over-year comparisons. These figures align with EXPE's FY25 outlook.
EXPE concluded FY24 on a positive note, setting a bullish tone ahead of competitors' Q4 reports, including Airbnb (ABNB) on February 13 and Booking Holdings (BKNG, Financial) on February 20. While ABNB's shares have remained flat over the past five months, similar gains from improved travel demand could trigger a rally.
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