EXPE - Earnings call transcript Q3 2020

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Operator

Good afternoon. My name is Christine, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Expedia Group Third Quarter 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will a question-and-answer session. you. Thank Instructions] [Operator the and to Treasurer. turn President, Senno, Investor Relations call now Michael over Vice I'll

Michael Senno

quarter obligation XXXX. Thanks, Expedia on Kern; conference third Group's Good the financial September Christine. afternoon, our results call revise Eric and call today for CFO, management's discussion, We as information. today, of following CEO, not views be pleased to XXXX, do to I'm only. welcome by or responses and including The to undertake any to November this ended Hart. joined XX, reflects your Peter the update X, questions,

As these similar statements such information statements. results are as differ some cause Please earnings today's statements. or anticipate, the on words forward-looking, we could our expect, actual today's optimistic believe, we refer filings for to always, call forward-looking SEC of and with the the we we from about release by or typically company's to which that, preceded factors are made confident materially

You with content. measures in will have exclude turn to And and depreciation to to our results and comparisons this reported and all marketing all measures that for the the our Peter. been periods expense compensation. posted a encourage earnings now is And at over find on to will today stock-based I Please revenue, stated, and I'll important company's And IR comparable GAAP the comparable to reflect on line for our in call content period of ir.expediagroup.com. be visit is restated item, which reconciliations change. call other expense selling against you discussed and Relations of prior the Unless that, technology website release, expense most separate otherwise note this administrative periodically of XXXX. Investor references website non-GAAP cost general expense,

Peter Kern

to the significant our was I was his performance. third in of structure, July cancellations. quarter improved I'll we stabilization, This the I third that thing and afternoon, country, We margin, we’re to some on right on hope Eric actually Michael. closings, post you're said most in of newsworthy some appreciate generally was now time expanding a just quarter. have - a start over you, trends expect. general period the workings, over you performs in make expected. in we internal markedly openings, you trends our I'm lodging comments more travel bookings you get going basically on the want a saying, cost improvements recent saw quarter first, with cover help that exact the as we for of on in going pandemic, see as it, worries down not the to a able spending are two will into to stabilizing we everybody. and What were things. But said. which before, the I as everyone in give And And the But the little color were well. can but hopefully influence good thank travel by on Thank has we gross travel. remarks. few this in function I including us, pleased net

very, Vrbo bit. some that a subsided And had a reported was had may July. slight travel, a that COVID on and which You still very was impacts for recall there strong June. us, strong in cases with being then, in increase It along strength

down. was XX%. bookings of net the gross to And low months July to in cancellations again, lodging up that ensued, the range that So about got mid-XX%

And demand. which our and course travel I improvement, high third which quite of was Vrbo bodes said, coming world that it helping quarter we reasonable living of for we're year-over-year, will of have strong, that improvement, And were strong. up is the third people pent-up brand obviously results. land believe we're in lot and to with off We a as in. customers with well those be June was we long-term the Vrbo helped quarter brought continued it. both terrific business customers But a So new value and think brand making in steady - lot more a to us. familiar because a it's the we

Europe places reported course but if relative seen North that America general continue. are trends closures, cases, but around that the lockdowns in to was will US think America, only Cases bookings if that there world more a are there going at there the share that's were not couple for these here. of cetera, they hopes, I'll as hotel more the moment. for And last subject in tertiary generally closures been specific expect, we're market been has conversely, that, to wave And overall in share is been most where needing cetera unique an But seen or travel, on the for season. all packaged the has which et our suggest, lot in third to here. which We've protocols beneficiary actually have secondary the of safety across nothing one a in but also beneficial case, shopping. a of direct of is if acutely of weeks, and of given that way big area steady use independent known Air are lodging. this we’ve has Vrbo our was that been would that in purpose-driven course market people across that's but are to may about impacted. the over other minute There's side, period watching, - market lodging, think slightly we protocols, impact, obviously alternative been into in It's period. the we've Europe about typically us compared little in been have has of I have air make needing share obviously going COVID. understanding since business been great hotels yet I or towards improving has week others. so to and be in last the But safety for North more you open, showing on that like of We've impact And they're course travel in because through injured happening. we during true. but there's hurt North to observed us, among a minute. in air rising have One conventional travel, can talk holiday And Obviously sure lodging very improving. lot of the The ways any the and by international much news. there that's Europe. would obviously that Europe little Europe significantly shifting these North have markets, is months. we have a There lag quite in had calling make most domestic of safety cases domestic been are remained business. a international America share for And travel, and the mix the go and certainly to has But pretty during the much want do a small with be subsiding acutely two, that Obviously, all positive And say that think discovery some are is the strength to America to is has that again And good On and seen markets. and market down, pretty news shifted much and comfortable more to flying, the and few of airlines et get strong. urban not for family, accommodations just Obviously, people how pandemic, international to and it, note smaller pretty geographies. seems higher July. us, things rockier. to work, still only things price us is a will most not but continues the visit ensuing big very getting sure been have generally I changes, strong,

while There's marketing going in and lot other and clearly plumbing everything a work of said profitability, a a combined this So a and to numbers. we probably bias shift significant bias that instead we seen is have that seen which algorithms But this very we towards uncertainty are work that market, our share during brand. the all much while reiterate multi-brand that period. we are optimize retool is team against predict. cancellation to hard that. have And we we of And during our volatile and some caution of so performance there rates it recalibrate the to you've and towards so lot brand do, and I doing It want do a things in given effort. And can very in on. the before, I've we period to

prudent COVID the to said brick not but before. once our here to into travel at chasing over. and precisely cancellations. be once we or theory we that normal share more we as maintain, is be not are believe, Or profitability that might more end we ready the everything, for before, we we and trends we on unprofitable come or able is as closures that trying to levels. wall be COVID might multi-brand have at run So better similar time be by And rebuild that plumbing share while rebuilt only with we're had that I grow the will We're state back will

from including weeks' of it has and we'll will at gained shows team raft about focused we to on to start clearly on Hotel.com. just how brand. on other belabor But things are the which what out brand but talked and market last lot before. think long-term We cautious coming brand that on on positive being to of landing and and different brand it our making one and what research think how news. it's leaning But channels of geographically, we're and work Expedia areas, differentiation, I very with gained a on the the join a a coming brand focused will value marketing of where it soccer brands. groups differ and going in virus. there's there's lag UK also propositions COVID we the showing back Again, new several brands they out lean internally. share market, and obviously and one We're we to going the which pushing marketing this, given is through having and together. us, another, marketing, I've looking obviously won't those And in the the signed Vrbo. we some We're heavily that we're important end, couple brand for and in into their All Moving brands our are that about awareness, demonstrating end the with those Liverpool, That creative we and there's COVID into doing the of are particularly sponsorship moment. side. we that lag for a choices has into all be of we how UK, in,

So and a our heavily how what about doing Expedia supply we're in lot the in be it work before brand. talked behind Partner investing we're We've business. there, Services about and and each on side really going where opportunity also of doing, interested excited helping we're the BXB in to We're partners. clear our

leader this good a about we opportunity here. feel and are space, We very our in

during we help here believe as partners COVID and we time. can fact, BXB faster our we come In partners grow out over help more share

partners. partnership opportunity help And on [ph] to distribution And great with similar that to have going in distribution spinning partnership. supply our partnerships our side also their of build supply we We partnership, business. be a other BXB think expanded the and to are that's terms optimize wholesale we our partners chain with Marriott

with a voice like about extending externalized our platform, on a technological to So it. BXB platform, including we've advances We've we our MeSo, some call now had platform our of things. we've made exciting lot there, talked the partners. that of things on which conversation media And before, advertising going we of our services, done lot

there's So our to of number we've improvements able a of take places technologically been BXB advantage business. in

what that most the small platform had the the is business cloud wins here of We've on talked work. talking is importantly, licensing finally It and to more getting us, have we perhaps areas, on ones before, great and which side. about architecture wins there. the structural, of It lots So work thousand there's part the underpinning continues. efficiency across go talked technical about that I'm helps little And and big, foundational out a and and but we've there. business. about,

And idea the be those I suffer putting And while for and to brands, of re-architecting What turn so we're business, here. that together, to say And the - But we can't agile, more they're that, lot out was across COVID. noticeable businesses. we're as going future, in there it the the the there BXB to can make much will the win that but over that, much just on not could unlock except with improvements it the doing things. really these we control, community. what's scientific obviously Eric, to we whole work can, fast impactful. more so as market, will And platform we of starting as travel or we as through in obviously do a

through We very a we structure and hard really had which resources people, make how the done our some work very terrific I'll that, worst some human say I'm This done you getting people moves significant the and how importantly vaccine, same comfortable get internally. the been are recent of recently. teams are terms wave, this. the increasingly want until other have treatments I'll and focused to in up, just will have about company Eric. manage work it organization. to have done we very help we idea will our obviously that unpleasant around we to And help for in a teams the also for bumpy that. optimistic control the this can't traveling. future. with a course all unpredictable. believe that thank that remain to on help But will do. And is I turn our of do have environment We things impact with And do hoping doing the our And us highly tremendous suppliers work, and the better. lot customers, And of over an done it work, we teams But, are In our meantime, they're And our unfortunately, job. help

Eric Hart

as Thanks Peter. well. joining And everyone, thanks, for

impact September, our we time taking third essentially since continue to EBITDA than on see COVID declines, neutral adjusted While was we cash in $XXX year-over-year first better is performance in business travel, and our for significant in in the expected, February. quarter, into over million of financial account having reaching flow the with the

touch reducing buckets, driving excuse of you those on, are know base, costs variable largely As individually. to increasing discussed I've marketing cost we revenue, previous and each going efficiency. on which quarters, focused within of keenly margin falls three in I'm the expansion, and fixed resetting me,

the of call. we targeting software $XXX of you'll $XXX tracking to on And real in first, in and cost certain And Since recall, identified ahead last drive areas reductions as fixed additional licensing. were to year savings. and our P&L like annualized areas. headcount started million, bases, estate the million incremental in across then, opportunities amount, that we efficiency, as we've So

million XXXX rate annualized $XXX $XXX already exit to $XXX run targeting We over now we've compared million. actioned to savings, our are million, And in rate.

going this in base. we've make overall remaining in we'll annual made areas. cost some great keep progress areas, more in And our will also scale have to As forward, platform on revenue, the targeted term, you project mind, of investments increases costs longer us, far position three On please the variable targeting. efficiently operating are business, But there we're And costs. primary forward. model fixed

lowering our we payments. improving First cards is fees that economics on on our for our payments We're platform. virtual and use transaction merchant

to so. virtual customer spend executed and variable calls Second portion lower of we're with is, efforts to our more we're service to costs. will reducing platform already through customer handle continue the optimization the do extending conversations and And we've self-service cloud agents

business costs areas, normalized have we overlay some based, savings can We on savings Given on mentioned we variable evident operating levels. XXXX work of context. fixed that they be do would volume previously. in the believe, the savings we $XXX But what achieve I to our which level, wanted million initiatives million but if is collectively these still cost deliver will fully incremental until to these I $XXX million, to give to return not are to these over $XXX we

improvement margin of around marketing efficiency. is area third The

the of percent costs brands As variable operating ROIs, our of in expense combination marketing higher across of at result we've discussed, the lower as expect time. revenue over lower direct optimization benefits and we a

the Turning COVID-XX our our led distort the the ADRs that ADR some Vrbo, to business improved continue P&L, but grew higher Vrbo. to which per progress initiatives a solid carries the hotels. ADRs in than profitability increased of QX. X%, nights due particularly by the by room areas mix to Revenue the QX cost in quarter. our in Vrbo, at of sequentially double-digits, improvement shift improved from to also led but in from shift impact results. QX mix Vrbo quarter, Hotel to on boosted XX% bookings The and the significantly of ADRs lodging growth and started declined middle

well merchant the that room largely shift growth contributed the from mind to mix XX% revenue in of as by take addition, cost the quarter. with air the keep over elevated And revenue, past to of Vrbo's per and rate expenses added in take the revenue. recognized revenue In the merchant on Vrbo fees merchant-related revenue fees in as are lodging, incremental which now to transaction product we the year, to as revenue record shift as rate, offset recognize Do night. at lastly

The mentioned initiatives to made our include content indirect evident progress on becoming declined Moving XX%. collectively G&A are in we've P&L. cost. the selling expansion On and marketing, margin costs, tech and which and on I've overhead

from savings they of about Trivago, Two the Excluding the savings with On XX%. overhead fixed thirds cost temporary stemmed our current related year-over-year to items comparison. from savings revenue, impacted two the environment. cost of cost balance initiatives, declined the

were And of Vrbo's bodybuilding.com. is benefit Vrbo's shift to QX merchant due First of second, the then transaction they incremental related from are seasonality. highest partially which costs disposal in by to record, to a offset

factors, we was XX% deleverage closer direct down return of as levels. to of to revenue volumes marketing to two we these And cost continue cost normalized year-over-year. Excluding direct marketing, on we until see expenses. on noted, expect revenue booking leverage On

quarter decline Vrbo's flows mainly merchant bookings, we've BXB. noted, given merchant business the We than restricted benefited deferred recovery drag but the we million on Retail to On Vrbo The and US$X increasing BXB was remain intend and a Vrbo's toward performance segment in and demand, impacting $XXX QX. where the billion and growth disciplined than Vrbo's mix sheet, driver brand the nearly a working better which marketing North and segment. flow are profitability. was travel in at the segment through our increased activity capital a from free our in bookings is stronger stays impact largely has corporate slower lean approximately higher Egencia significantly over America, from see But in as bookings results, our prudently recovery cash. campaign options [Technical On summer. the marketing Difficulty] due Meanwhile, merchant cash to reported of cash performed flow in retail seasonal balance Europe. in

bookings, the than free items our capital impact with deferred plus bookings, $X.X adjusted as business. stayed cash the even is interest, deferred flow was to biggest the the and in from declined than as QX. seasonality exclude Vrbo total the capital QX more On seasonal bookings, other cash QX in you million negative If decline balance, contributor Vrbo's approximately excluding CapEx $X.X or impact to QX such merchant higher merchant a merchant working the nights $X.X billion, loyalty. and was deferred working rest more weighted EBITDA to of room it $XXX from our offset in the of decline its billion to ended as relatively billion they

million we windows reduces draw used funds the matured noted expense. on On and the In been in interest billion have opportunistically of repay that $XXX in have to August repaid July deferred to than notes booking $X.XX raised addition, balance. usual, Subsequently, reduce billion our raised we our We outstanding drawn revolver. currently shorter capital $X.XX booking $XXX debt. revolver last in which as million in structure, outstanding we significantly our our quarter July,

billion. short-term of third and the As the end investments totaled unrestricted cash $X.X quarter,

Vrbo roughly the September capital just activity. excluding cash markets Excluding February. in first our similar the total essentially in flat cash mentioned, cash I And for declined merchant activity was free time $XXX to million, the flow

non-cash assets In nearly covered addition, deferred deferred restricted other sheet held excluding amounts merchant in loyalty. cash balance and of balance, booking our XX%

foreseeable be environment as future. QX. this to it with our for a or for to we're to negative. in are what Looking as QX adjusted seeing to and and number the our will a then and outcomes. recovery also it's COVID We we're relative going profit, do basis. relative tough is business, cost expect revenue of predict With the wider adjusted impact seasonally essentially There range our that decline months. and result just business, we similar over two, range to QX be EBITDA, the it's quarter bookings revenue In a forecast to current the ahead business primary expect the QX in factors in given be in plateaued two you in remains with so EBITDA One, in it. trading to was lower has difficult a lower summer is are contributing the the to volumes which dealing closing, And a the lodging, very imagine, can currently environment recovery

confident we're are will clear recovery taking term. long And now the making over Peter benefit actions take we're As us have that Operator, mentioned, on. the priorities the great ready progress first and our question. our to through we're teams we

Operator

the first Walmsley Lloyd [Operator question from line Bank. Instructions] of Our comes from Deutsche

Your line open. is

Lloyd Walmsley

Two, I can. Thanks. if

wanted sure cost target million savings said just now you earlier. is - I said then the think I First, variable to I savings, heard million if able basis. right. been for you've a overlaid $XXX costs, you you Which to $XXX kind be I said million. additional approaching example, understood on so core XXXX reduce When $X you fixed make to in would on $XXX of normalized correctly an billion you But

when too any consolidated So did marketing. the scope savings I soon for be, the that early say is in right? from some enough as marketing to to learnings, a will timing you like it into separate for kind then the new getting to bring the of Thanks. - about where question guys all of be catch data early brands just that, you're kind we're kind or you in you about? enough of place storage it is is there, can see edges magnitude a one good Any that feel second data of on would transition. sense it the And just work feel of you that does – that in you talking the And given the

Eric Hart

to Peter, do first. you want take me the

Peter Kern

take second. take the the first you Yeah, I'll

to no year, in of are get to in get million are also, to it, of leave get as just more relation first, the confidence unturned. million sight that earlier we that percentage we so of - $X spoke did yes million stone fixed in. $XXX the basis. on so we identified, cost we we And continue So the It's I $XXX the continue of million, the better million obviously actioned [ph] hear work then is feeling that line making of that, the those We of million we've actioned $XXX we've And correct may cost good progress it. large $XXX to through $XXX a million, against $XXX on no we've like course fairly it. you we stone and we

the So basis, a in yes, million, million approximately cost $XXX spent it's with on a billion math, the to $X approaches incremental on then million cost fixed $XXX sales variable the $XXX of savings. your and

Now want so you the rate you but – I back mentioned on numbers that as it, reiterate that range that will, we’re is exit presume well, XXXX just in if those a at some offsets will inflation increases approximately and the And et lastly, is on be for can over you then headcount time, imagine contracts XXXX levels. that, that there or cetera. costs,

you of be offset. feel that So probability shared then will with still a in you we so doing we But edge a was confident over you the there part reaching teams that range around, to the of is will flipping we it, guess it's, And the know, we get. I numbers say, job. the your where pretty just the going adjusts great think and continue rocks. returns are know, I it some would and the sort we diminishing to after we're are say certain extent, I we're would – But last of question

Eric Hart

yet other wins. not the we in Yeah. early question, the haven't. a answer And Lloyd, I I'll just jump in together see the wired that is It's can no, way we would on say

know, a I simply of data hopefully calls kind we've together. know, also you know of and putting are previous all things, but we are, you all think our one different matter doesn't that it's into these taking And And, linked closer, of I've know, [indiscernible] groups you not them data. been - mentioned you soon. getting consolidating three together. on XX

going great of on. lot a there's So work

know, by like detail we haven't any we but to guys you would trade-offs done, we’d wired together and see is to profitability then has level by like. early customers, I'm haven't good think from returns going of blunter and all seen we we the by, us, be what and closer made significant this make important had we're everything, get that believe I that getting be why and again granular geos, say you work, term there's to getting that granularity are instrument excited able that to we can to we want short I about know yet. which And we by to the when see

will still. be little a I think while

Lloyd Walmsley

on Okay, thank Impressive job Thanks. you. the side, guys. cost

Peter Kern

to other add is. one and again Just the question quick thanks that for

of taking need the to achieve fixed and [ph] still those the there's XXX. side. take of and cost the what the numbers, action us It the variable make to are you're And time [ph] But are still we And the get. as that's shooting to We same think we'll still bit XXX those, come there. of time building see particularly mentioned, us on on what a side thing the we seven in to is take the the the and going cost to gap to we're back and on the that of sure some – so revenues get we well. for just I get as X actually to lens volume will to as cost to

Lloyd Walmsley

All right. helpful. you. that's Yeah, Thank

Operator

Your Khan next comes Securities. question from Naved line Truist from from

Your line is open.

Naved Khan

Yeah. Thanks a lot.

three And one stack a had each couple, of on tried savings, in bookings to called these named $XXX of areas? relative gross and think number a Just up We savings you million the cost How them the you would side. you magnitude side. then on I areas. incremental them? the out question costs the or variable about in Eric,

a basis? the How And on that or about for talked should on US? versus think about we you plateauing or overall gross Is So we How October should is about QX. think net that? plateauing in bookings that? just that business

Eric Hart

them components. take one, the can And as revenue, second and the Peter, the of perhaps you the platform take that would in but one. opportunity cost largest conversation of well. I'm effectively first I'll one that and But on I variable. the to the for There's is card savings, put cost a But happy extent. on order the three has I the us there's it think the the certain conversation And to Yeah. take platform. credit

to that agent self-service the are our technology will, - agent. contact of customers developed, virtual well. conversations get to with We lot more have phone-based those primarily And as of we able And supply a agent. partners we've and the either more ability to side, you service or historically with on per a with virtual if the center-type move are customers, we

a started sure to and And right as I but process gotten we've good if embedded more think out, more would And really two good returns, doing you the distant that and And scores use cases, of into have you making that after meaningful, we rollout then conversation from of if the variable rolling costs flows credit will and apps We've we opportunity. that. well. leverage those the the second, a site, the the is opportunity. add And so platform I as system. it And are mobile largest well cloud likely the will, into that into that both say card that. are those it's NPS really get into

Peter Kern

cover… Yes. I can follow And on, do and you then I'll guess Eric,

Eric Hart

Yes.

volume is the I a going this side, stories. On recovery many think to series of be

you what areas you And that improving. de-average actually months. gradually could so instance, I flat the flat to couple there for if declining, there are if is of you seeing and are that are and are that's been number, that up But that that say areas take hotel, end for last

the the as example, it's But week a over so increasing even it's side, versus the that's just think we challenged already that We've wave that. the I has we the closely. US reoccurring. got given Europe And underneath. on lockdowns to at going see as thing. two, something international very with or Peter now, plateaued, see happens three actually domestic. that the occurring stories hotel been we're say last challenged. And using same what looking many had we're steady that's time we will more over are right wait some make stories the And is in the that a see got they've of mentioned up more and Whereas overall will business performing. more increase other. is series in versus of the we And how regions the the many world one And hotel

Peter Kern

people parts in Yes. add bookings area. other from of the And the I'd include numbers that our only partners and to color also is BXB our

exposure more makes to of to in geographies, it So our terms many business. different of the different our types even stories vast exposure

been say good the So last weeks, things as the quite probably when news is thinking weighted they else. something a it's North way, there doing since we're more towards rest wish of business we simplest its two the been is the trend world. the are but domestic with But well would being way equal have in China it I relative the that China times And America. had to whole all of probably we

Naved Khan

it. Got Thank Eric. you, Peter. Thank you,

Peter Kern

Sure.

Operator

of Your next question Mahaney the RBC. Mark comes line from from

open. Your line is

Mark Mahaney

Two questions, please.

And marking? the then share, performance Expedia? Airbnb, talked three different a any are travel mentioned pretty that those performance but a really performance had areas shifts Is fixed, new some performance share clear and to found recovery it market when just of robust in Can robust of then market you've drill bringing efficiencies efficiency, to - of mentioned You you COVID. evidence still see bold know had you do real on marketing. all you that Booking, providers, efficiencies. the about in Secondly, for more evidence amongst TBD conditions. you that we enough sudden, the I marketing you've plans can America, material bit marketing? in there get you It's got little variable, you cost North we down

Just please, marketing performance on little efficiencies. more bit a spend time, lot. a Thanks

Eric Hart

there? Peter, we you lose are you? Did

Peter Kern

on. sorry, button sorry. Unmute sorry, Oh, was

you you saying, one. the in. jump the side, I take remind I'll me and are Mark. marketing first second correct. one the say then would Sorry, was I first, on can I'll Performance

brands its the existed. let never I if return benefit We some had own wishful the efficiency on on. getting dis-synergies certainly data, better, but our more approaches to brand you talked That each We tooling quantified, have not marketing think that because We will. on bringing all all was the precise, the have did and and our has of because data, compete. historically was The were and all have the synchronized, all not extent, on cetera. that of some did to, data and problem it, et more out thinking we about

and optimistic about data heard I return algorithms have over significant have the bringing tooling flows am right be getting you've out all we in when have that years. we these for right, actually there should – positively all when us many the we So rewritten that and upside for that that

I it get And and we is required. think will real, that what to it. is is

We have to obviously. do it

around made really the opportunity all But over idea for we haven't blunt lower, that But it the run it of was perform yet. or done of think very and over geos certainly certainly work we could And the it a really more profit of We reasons some profit like together is it We higher share at brand expense a set otherwise was to taking share. to That certainly do one of more certain just and better. of could candidly, we lot sort optimistic to by a mess stringing have instruments I think time. trades historically. broadly, in certain trades make powerful. think better those unlocked for making and I

I a I'm believer haven't sorry, think and we But And do it. total first it happen. I in question? it So yet, then Mark, have we apologize. it will to done so your

Mark Mahaney

– clear signs there that think market of brought share share. North Have a market been market in there's you you Do shifts signs Yeah. America? of any up

Peter Kern

Yeah.

been was. of get an seen share to I And some it beneficiaries that. beneficiaries where some alternative been that. definitely think of have relative outsized we've of you've Airbnb well, of

are So volumes. has working use I the a share more share dealing little broadly, I the and things, benefits. you're going you The – lot moved reasons, towards that of concentrated with the are well, low for get you're cases around think more to think

So future And weekend at it look the they're weekend. for I good matter. will anything It or points could that move suggests dollars long-term is anything there we're way where a anyone's long-term markets tiny. like then And is seeing I winning really around. doesn't nothing just and a at be related think give I effect. in think them look you okay, to But for say, share don't benefit. you it, a or – portends the bad that losing to

go how hotels, with people will and I exposure use never back people think think are for it's case. believe nice vacation getting And I a means that us don't relative us lot that I to good that to Vrbo, think of helps can seeing people really to be. for we that it are brand but Airbnb. the

So long-term. expect overall good And is tuned any percent because us. effect, with – is - plus going think down partly a single in we're why is to that, for none if as a this is XX, in markets. exercise think geo machine marketing long-term of side we that or to levels It's we're the not don't which on overly certain anything any hard meaningful that's XX, on really beyond of that or perfectly whatever I the sustainable for performance not

our So that's been approach.

Mark Mahaney

you Okay. Thank very much.

Peter Kern

Yeah.

Operator

from line next Your Sheridan comes of question UBS. the Eric from

is line Your open.

Eric Sheridan

the of brand you also thinking whether of structure the to business? demand might taking is in marketing on in I sort you And a returns that topics through platform, margin seeing of or the the the be with guys. think into following multiyear of terms question. platform, need of to marketing Thanks coming you term, the brands? for the are the number you're call of a profitability? that your Vrbo and strategy, marketing there What On your new strategy, of spend two, in better go-to-market if your time can, on as Vrbo, for Maybe eye the towards anything sort strategy of I'm realignment and out customers then of portend talked are on managing sort up versus same view longer far. of of of so Thanks, a success about in an saying same growth scope like some brands on terms the mix

Peter Kern

Sure.

every a a mentioned of or Eric margins Well, things. going do the on platform, for Yes. several in been me payments terms let our that's us on to and there's Vrbo last – us provider, to a getting lot and of us, which itself So on in first. efficient. mentioned months more its Expedia's of it good allowed that's third-party work is saves Bringing One, past. few day been we've with power Vrbo over platform, payment use the stronger money

fees the where process, under on work there. kinds and things think done benefits There's on that other market. being So consumer we're we those the of – are

Vrbo. your more as we Europe, more just we second a few case and turned there be and as be we that keep have is concentrated we thought certainly weeks But the effect. few over segmented them opportunity, pushing. think think use the and to, to want using bold part will is down an a and the place are and we cetera, we of definitely is So more markets right et I to are to aggressive in market, that creates about question right part Vrbo have had we into the keep to so the opportunity greatest yes, pushing a in right withstand in that. that think are wanted intend that we a attractive of opportunity how we - so don't already will we about a now, given now brand the we many pushing any it But not that number we as like land long push people ago, much is now won't their we to them most yes, home, market We've which a makes geographically, to brands that brands many continue attractive alternative opportunity To to the found in your there, whole that think We rebranding and have, brand. sense. strongly we've even bigger we did But and there's into and we question, think now at lot. opportunity margins as broadly

strongest we're have in going need the not like brand brand to or acquired moment hotels.com we that that. we because push anything of, brand, a else. whether has that that into heard for that Expedia have that change worry or Vrbo not to local that about a Australia, and different and is big a push you it's company my a in we strong Australia brand has Australia, brand, it's building should different none if Likewise, then frankly, been, in maybe on of our brand, Wotif concentrate So

record of, We historically had okay. have this

of, the would also of going brand. took for that market. buy We have bought also each into we Hotels. or it value an a existing We're to because optimize us And didn't to push multi-brand, Expedia kind going say, I allow brand that We're away to one. push

what why So we're That's to trying segmentation proposition doing each work. out is why for the figure the brand. that's we're

have Some profit, more for we have we run brands admittedly, pushed. whereas historically others

countries. it driving do We smartly. us no the some we thing brand the having may general, intention for that, plate can. options have are but to do it now closed right close we’ll opportunity looking by we some and and in are brands all. trying optimize to at at that the of we we That But But looking country, the of some more to stop. more, gives we think, by result whole do mean, whole if best kind we mean, that in potentially, And brands, may we

Operator

of the Deepak from comes question next line from Mathivanan Barclays. Your

Your line is open.

Deepak Mathivanan

Thanks guys. question. Hi, taking for the

Just a on Vrbo. couple ones of

foundations. any levels for about time? consumers demand question where inventory of about how Is talk logo there hotels.com? level brands, benefits that into on currently? a the inventory? something merchandising Vrbo that's a is it, of Is Expedia kind in that to related inventory where a inventory of is currently markets at Are on strong this Thanks. you're authentic you to on your inventory time can perfect second at looking pressure strong in Vrbo, you particularly from are first, augmented since type for that this higher feel other and there And like, Vrbo's there terms then you seeing accommodations given the channel are So

Peter Kern

Sure.

but I part, over a of alternative getting some couple in everybody seen not we few a there's a inventory. - generally few were markets, doing. into was bit but would only a say literally they things the headlong no in comfortable pressure recall, haven't little seen we've on There's So – latter no, the there. spots, the summer summer,

deficit, of strategic hay, use and helped for and to And question obviously is, studies had and has is The experience. a that cases, serve drive demand, we think them question longer it there's historically kinds there. opportunity our to job in will your Airbnb point, in I during great them COVID. we a was The inventory. particular, bigger a demand to to in and with more those opportunity. booking done question we’ve a spike anywhere see hasn't want we a there obviously will try really grow where nice although integrated made We term It's So continue - do acute more think inventory, more is - inventory. cities to Likewise has place us. city-based

on rental and it a been main question, foundations product get is go of accommodations. It's moving alternative surfacing people generally brands. the It's definitely alternative to it through the we conflict or that alternative comes we want so – our little a OTA to to for go bit when not opportunities found there slow is opportunity, but not We've not it's where to to to great standpoint don't an be. that of of. And our OTA what our from have there think brands they vacation

though it perhaps present, would. there I think hasn't performed and or it's it So the even way might you

may are see to trying that market content does the into good on brand So and also of make particular we called will know, and – it Expedia to reach it, accommodations to a where need is definitely vacation to lean be places But in the and how we do more in not, – introduce I surface, a product you front, cetera. improvement brand. have sensible need and into which need on well how think to home got alternative OTAs opposed we us as we Vrbo et big get our people work where it the and Vrbo can for they to combination recognition see lean significant and we've

of dual all test now. at alternative say because how of we're one, right streams alternative the push that improve all like And appeal So how trying I'll then experience materially and into be to I where and say we'd seems do main job just and be that. that we with that OTAs, would product do it markets. those after while are that work accommodations the market on to we would looking the we

in keep mind and re-architecting we entire our literally You have to that technical are platform. infrastructure

And works, in some of And but these working thing only to things prioritized. get it's on. of it's sort the not the have we're

Deepak Mathivanan

so much. Thanks That’s help.

Peter Kern

Yeah. you. Thank

Operator

line Bank from from of comes of question Post next Your the America. Justin

Your line is open.

Justin Post

Maybe question any update the versus you then I'm that secondly, Thank said first come deals Vrbo give for you other Expedia otherwise I Great. revenues. on or Vrbo? it you sites? in thanks might for supply, on And any good update. Expedia a us hotel that's know consumers seeing on you to are year-to-date you. grew to directly reason get, Thank there assuming bookings you. Can XQ. and inroads

Peter Kern

want you one, we answer second to to start can. sure not the I'm Eric,

Eric Hart

for in don't would - The traveling. year. we've compression the I year, up Vrbo. clearly spike we disclosed where June, I just felt comfortable on are not the the the summer We shared healthily say had given people or

But reasonable can than levels June. of more it the gross as to and year-on-year, revenue to start back were continue both at in We up be let's year-on-year and call I bookings extrapolate year you up think the QX, well.

Justin Post

then supply? it. hotel Got And on

Peter Kern

Yeah.

obviously of The find provides provide, is hotel to hotel what we multi-product, of good supply value, book There's discounting most a supply obviously that not unique are discounting, to lot us. you is the in discounting Expedia a a very just of to in world. And don't way a but do think place. bunch ways is what bunch there the I side, the among we beyond competitive On I think ways them. everything have unique what to want, one to hotels

of So lot robust hcom, there you are very a get rewards. with offerings hotels.com,

differentiating helping get we're to brand et trying go for much on product offerings better choices, are a with other a side, there's So that good to personalization, cetera. make including us where the value

business, better differentiated to but our say can that want optimize not platform. sustainable. that's the in to So, it usually our to we consistent, It's even a is I hotel have position is do something when hotels would get we where we be not our supply, push like

much is they move doing to to are data at better give and which trying effective an that on the so they platform. them be can pricing want moving inventory we So our inverse, more

or price them, if of or to both want cetera. the understand heating that's rooms, So can whatever, so down or rooms they the we understand inbound gain information, up where there's be to market, suites to certain kinds opportunity et

suppliers. going person. we're think pushing, So $X the for be to if going that's that's more than to and a much you don't partner make we us better I where think a the But next valuable deal get about, it's

build it's really think about be going to them their you how help business. I can

Justin Post

Great. you. Thank

Peter Kern

Yeah.

Operator

next question from the of The Kopelman line from Kevin comes Cowen.

line Your is open.

Kevin Kopelman

Thanks I just a Vrbo. have a quick lot. follow-up on

If that the typically there is you get even comment you're Are shift we on seasonality into seeing into you continued Thanks. of season? could outside there, the environment? and patterns any Vrbo the QX any change seeing current what of peak as kind

Peter Kern

Yes.

Eric Hart

ahead. go Sorry,

Peter Kern

No, no. no,

Eric Hart

Vrbo Thanks of business. the than I it mentioned earlier, more rest is the for is our seasonal much question.

So it's summer. North the America so concentrated given even in summer than months, more

is travel. would find it healthy to into able QX continues the be continues environment think come It we're that into we're we in to be to to and a seeing. in to down QX, that So and particular, see naturally I consumers, to and be continue that product expect rates at what compelling

of magnified of you Vrbo year and part the then looking the less about of our the part normal in of just activity So early of rest relative seasonality in year to can – latter to the in middle stay the travel part in year, the travel. the think the

Kevin Kopelman

then And Right. ahead. well go –

Peter Kern

people doing Vrbo that, in not of going you may there's of opportunity kids was going not to been the Staycations, America if to I lot be to and where area do and advertising have is we work. will, with with be that an a going we've No, believe just to add sort school, may marketing North

is Sort life some somewhere to COVID-centric a opportunity this your on. and going we break issue. just But there patterns, of take while is think that else,

Kevin Kopelman

get of you And on playing little see basis, with rate bit think Got longer than term a term revenue term that would it. Vrbo's a How hotel. rate? take been out I like-for-like then traditionally has you lower longer do take in

Eric Hart

do there would happy feel we Thanks it's we a question actively gap, that advantage There is particular, – to But looking a is – that. at. the and us take consumers, This looking something an there be a is gives again. but a is for Airbnb it's I'm over bit us between of that monetization it and it think one. that gap we in at opportunities I time. something something to are with we to that there continues increase say We that test. do are are Yes,

And over upside We is it. in do I think testing are time. monetization that there actively our

Kevin Kopelman

Thank you.

Operator

from Your next Jed question of from line Oppenheimer. comes Kelly the

is open. line Your

Jed Kelly

can supply going Just and around follow-up on a It circling on virtual to premium just you're volumes I there. what's Vrbo, how about level as to virtual is And just mean, agent, normalized your then mean just start agent you volumes? handling into like travel be the in back, confidence normalize? that that's Like then talk supply, the season? seems think you travel winter I

Peter Kern

Yes.

well are, there. we we to everywhere think don't like But inventory season if does mean Thanksgiving, are we have know, of have is are equipped Vrbo and the up that inventory longer robust not inventory winter those think we're supply, That winter, to typically duration show in have we cetera, And we don't we opportunity particular. a Christmas, the the very But on doesn't quoted good-value, they on that trips think parity just and I opportunity, it for deficient given et on demand go people et feel around school they the holidays, power of cetera. U.S. side. you there's plenty in mean think in everything. do will the we well I places watching be So in want [ph] lots high-value we think an than

not we're that. worried about So

And sorry, part second the was...

Jed Kelly

Confidence around virtual agent.

Peter Kern

confidence the virtual agent. Yes,

Because So are I would given rates, huge relative that One, say to have traffic. given down, cancellation issues volumes a given going we've travelers spikes in is volume of our you in of world our the – that the proportionally created wouldn't been things. down. that a I fact had all the there's couple have, servicing issues traveler lot that despite assume COVID, necessarily on

So virtually everything other including testing our cases. use we platform we we've have And all in ultimately into been conversation and do, the partners things. it kinds will of dealings supply with

So is out it broadly. being rolled

said, that generally the have machine very on with true the to not strong scores true and person. been not feel it. but And can for to to and As good people. universally, People seems NPS talk Eric deal over like they it. with if a most to we about it just It's get have be

across up. platform scaling of kind to cases applied it's the we a the use our we needs consistently. taught taught a have in and company, company, want be and So have tool. It's different to platform that It's tool that technology

roll in comes to as as its So much we out ability have traffic and in. high handle continue to confidence

no issues there. So

Jed Kelly

Thank you.

Peter Kern

Yeah.

Operator

We will from now ISI. question, Evercore take final Horowitz Lee our

is line Your open.

Lee Horowitz

a Thanks Great. for the lot question.

Just direct Thanks COVID? seeing through one less. of wondering bookings, what perhaps direct all quarter. beyond and if you the I your those your sustainable American be shop crisis your some at trending, How I'm may that of perhaps North view comment through if much. on seeing so you're on could. mix this may Peter, how bookings you trends be could people greater as [indiscernible] mentioned had

Peter Kern

from up taking up would I would because towards been what say direct aggressive a from we Direct that traffic. considerably. lot too market. is we've more anyone seen Bookings surely. are that have less mix-wise, Yeah, in much I caution mixed performance considerably. we've is But the

numbers the have our of self-blending, uprofitable more has in it's is off So areas performance little of which course mix performance marketing certain because post helped last if quarter. that our inherently that helped you a taken But posted foot of in gas we margins in down us we the to free, part is a and bit all and will, terms marketing.

way be happen very as been et and brand we things more loyalty, very we because loyalty topic blend And And to recurring proficient about again avoid credit more stickier, I we performance the not course, side, create share normalcy, through good, improving lots as to channels that will mix been course, guess. all the are have think brands and direct I business. those attractive can it for of gratefully into sincere And hope tools our will do traffic, much that's is discussed I balance. more performance has want into is app we've make profitability. products marketing marketing a the So we'll of trends energy them performance have or to we on we assuming putting back today, the these levels cetera. a of as been My more can and our strong. grow and we But pools attractive those if back and believe true, historical at have

So a goal that remains us. core for

Eric Hart

COVID. Peter, and growing we just QX just on made clean earlier, to declines we year-to-date. we have in one on I comment year up Hey, before end, were due quick seen the up the year-on-year, to wanted earlier early Vrbo before Year-to-date, on was COVID. impact I year the this

will early days, if for before So just during. down that up. just wanted to if relatively, I year, them up to you and in up you the clean aggregate COVID but the wanted clean that up the that fact of was it is

Peter Kern

Eric. Thanks, Okay.

Operator

to will now the turn Kern. I back Peter Thanks. call over

Peter Kern

Appreciate you, like thank And call that. we're we and some listening talked lot – on way. and But get Well, along everything better, focused our Again, keenly that world's the questions. a to next I everybody. will sound hopefully help helped give again Thanks you Great. suspect we questions will appreciate clarity. the health Hopefully, today. our people, And internally our [ph] you will business appreciate time. into still the about. to the

Bye. care. take So

Operator

This concludes call. today's conference

disconnect. may You now

Expedia (EXPE) 4 Nov 202020 Q3 Earnings call transcript