Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to the Expedia Group Q2 2023 Financial Results Teleconference. My name is Colby, and I'll be the operator for today's call. [Operator Instructions]

For opening remarks, I will turn the call over to SVP Corporate Development Strategy and Investor Relations, Harshit Vaish. Please go ahead.

Harshit Vaish

QX Call. Group Expedia to XXXX Earnings Welcome I'm our CFO CEO be joined Julie call by on today's Peter pleased to Whalan. Kern and our

to and of stock-based As non-GAAP measures the expenses are reminder, our excludes our today compensation. stated, GAAP include a earnings any in release, to commentary most comparable measures. otherwise non-GAAP these references Reconciliation included measures unless to will certain reference

future or events. during statements statements We filings difficult materially will uncertainties our these other Except as call, with are current call, due differ do statements predictions, discussed making factors required and by that could Actual about which law, to on most during also undertake update XX-K, based the projections, assumptions, are These in which are forward-looking forms, to we any responsibility are and this other risks predict. the results recent not be expectations forward-looking to subject SEC. to and statements. XX-Q, and

Our filings, and website of on with be Peter. replay earnings the over release, can that, to our Relations and ir.expediagroup.com call at SEC me today's found turn Investor call let the

Peter Kern

Thanks, you joining today. all and morning, us Harshit, for good and thank

to remain quarter. performance Our we travel in see robust, our result are for demands execution pleased continued second and solid the

on I be As launched to one just having even gratifying the progress more and those platform results continuing transformation journey, am our on key as of are, excited our verbal with the U.S., schedule in migration.

believe growth to the one were move we it back marketing spent year. and quarter launch goals to financial of the that the where some be of pleased our second key support better we QX while from particularly able accelerated half of to can are our in meet in We spend electing QX,

with in locations to stronger Travelers trips consistent shorter versus quarter. and in stays sun Europe remained and has in destinations. remained North first urban growth favor America. worldwide stable trends have continue with and And ski America broadly APAC the Industry Latin longer

ADRs are as U.S. As far declines pricing, international while year-over-year, domestic both airfares as stable. seen capacity up cross-border holding have some airfares vacation rental and increases. hotel are

Rental prices in and as Overall to decline consumers from more year, attractive the consumers. car remains more to for inventories show compressed levels for resulting data a transactions. last travel rates continue top priority that continues normalized

value. to higher to As customer usage features, is loyalty propositions repeat app I profits us value. before, drive attract customers and their leading into help strategy build transaction and and higher travelers explained and and ultimately per BXC move our membership that These retain valuable products, lifetime higher those amplify to customers, to rates,

In higher drive addition, us to customers through marketing. future direct come this and these propensity a channels, leverage have helps sales us in to as

much and have these up time. a a these of travelers ultimately As growth all factors, more return combination investment profitable drive they and over stack faster on higher as

ROI travelers. we build As a purely we of more these room-night-focused able a value, from on which and bigger, valuable in high been have lifetime one focus transaction, we world to continue to customers base to move

drive continues acquiring members loyalty strategy good focus to to on Our app and users retaining and results. show this

this of We coming sequentially This versus up best up app with been were our the the first and know in economics, so hit have growing core continue quarter members members was why year-over-year of have percentage on segment basis points brands, new active the that customers. XXX loyalty focused XX% is to bookings and our which highs the we through quarter. apps

XXXX. increase roughly XXX% the seen Expedia I of brand our In that in am pleased this cohort to have U.S., say we versus customers

with we our of our A couple ago, step in opportunity took accelerate the to all there the our a roll brands forward markets, out program one most of common significant the strategy rentals, program One under we currency, is in vast U.S. weeks customers This and all As another industry, breadth brands of launch Key further. remains major across hotels, offering our core to use rentals, simple rewards travel flights, our activities. unified with the flexible the car cruises, our vacation Key a and and across ability One loyalty Cash, earn

have increase to competition. more addition loyal our substantially is marketplace against any first program, days, It's historically, the brands, now productive, our In this the program loyalty, vacation best-in-class seen base differentiator program early customers of much this we which into biggest the breadth and this with as our significant rental have but to of major travelers. many a more loyalty time members marks spanning we our expect and are drive will

verbal the finally nearing piece of main migration One Overall, that changes, the is Key is benefit getting piece and business our lift the greater a by capabilities platform. of and our last major agility from new end its tech our major to out BXC unified With comes stack. door, the

XXX% the verbal of web moved platform traffic already fourth during have and the to quarter. our complete to on-track our We the U.S. migration

modest as before, it is As we better increased conversion, ultimately with expect but better ultimately conversion worth we some headwinds well velocity, feature performance we've overall. to verbal payoff transition, from explained and the

of to product machine all strategy advancements the in customer of learning, enhance designed experience. and single-tech entire including personalize Our brands is latest our features, to the our suite of our and AI give benefit

On the launched Android the app. we on the AI, And topic earlier month, it powered app. conversational this last trip Expedia by iOS Expedia launched and of ChatGPT we planning, year,

learning continue our help a prompts, in a conversation which suggested response, start their to We been discovery. revenue see now by a quarter. growth to the able them conversation of we and to interactions time bring return have throughout business, trip. any closer their even can Travelers brands, to conversation will choosing be features XX% seen which of and to momentum they step soon from all we've with year-over-year a our simply on in and second suggested desired designed Along is new are grew by adding a and new one journey at choosing booking tremendous to the respond progress consumer from number consumers BXB of

and in We large only BXB all business world penetrate most areas has BXB business last the world. for B we by supply, outside addressable have engine by the has technology, BXB of service available advanced opening continued travel serve the our have is velocity benefited the differentiated the over believe of our has same that The with years, further. to exposure this to our the several a brands. fueled as added successful and Our U.S. still markets business greater business. in around segment the And own and we

we MasterCard's And to the network that so a with wins this our their continue development up for announced in marketplace white-label tech customers where loyalty travel points we've with another in point. the on Wal-Mart, for segment, new our now partnership our their great their teamed that members In can benefit first-ever issuers huge experiences. will template we travel power demonstrate powering second solution. where are spend of global MasterCard, And quarter, through Plus Wal-Mart

of fraud announce but core happy only management expand of existing Revenue After in our offering We Performance partners, also our that not through to pilot our am delivery largest the commercializing to companies. to our solutions. prevention now through expanding hotel API our products, recently tech TravelOS with our I one is capability, continue

advance, and continues with acceleration much opportunity AI to with tech As strategy, there our of our the to [lot by single-and-platform more driven our partners. to of capabilities existing partners new further industry-leading gain and is share] our scale

of now momentum have the So we very move and we 'XX improvements as in second pleased overall, half with the I'm accelerating product beyond. our towards

Over many in years, our entire few difficult the we transform taken have only last on not order strategy. our but tech, challenges to

better emerge the partners, change, clear it of building organization about are best fruition, excited marketplace massive so we period for As better much to come from overall is for see that and and offerings company. our It our to great this future. finally we is entire is into travelers, a the a begin

that, it let to with over hand Julie. me And

Julie Whalen

Thanks, everyone. Peter, hello, and

a that to another that that year-to-date, with opportunity we in largest quarter repurchases, have and profitability. of approximately $X.X share our billion strength working for Our accelerated ongoing second of this demonstrate quarter in initiatives and results it EBITDA repurchased levels long-term strategic date. and is the enabled record resulting us our buyback And deliver revenue growth significant are business to

details, by to second that to you and Before XXX growth FX headwinds basis wanted as gross financial rates, more points remind a the quarter of on I XX important basis. going to forward, impacted revenue, approximately of to points all bookings, to I comparisons It is EBITDA. year-over-year jump points XXX were basis XXXX, basis to XXXX our into that will be also note compared

basis We point also the to EBITDA saw approximate headwind XX margin. an

top-line This guide. last saw primarily The platform which with billion Growth performance demand year, trends. by which mentioned record as on shorter by XX% migration second the from year-over-year. achieved as quarter's impacted impact lodging let's our the gross gross which business, strength mid-single-digit the stays, Global versus quarter was be markets business, toward consumer up well as were as last in X% by increase call. record. well lengths continues partially hotel we by gross this of highest as tech gross of brand Expedia, bookings were Vrbo's far up to our earnings in X%, was driven offset bookings Now, as in business, Vrbo our in our and with our a was which bookings, $XX.X begin driven strength urban on line booking our and BXB quarter, and were shift from that

strong business, record size in deliver were that hotel to and of the were given we bookings total. However, able pleased growth our lodging we

been $X.X was top-line continued industry-wide growth total by the business, Moving on post-pandemic. This was year, two primarily record. our highest X% been and in softness starting P&L, partially metrics financial up second seeing which impacted that our guide, billion in Revenue line driven XX%. by by quarter offset to Revenue was with have lodging insurance mid-single-digit grew categories have strength car, revenue. the of we some and last was versus changes with across in the key the

has we And to seeing insurance consumers car, we as for rates supply are for lower For insurance, continuing increased. normalizes. attach as rates see decline appetite are

higher versus was increased revenue XX.X%, has shift Total which approximately basis support points year leverage quarter, year XXXX, a approximately revenue, due X%, the to points is which lower than million, lodging by customer XX for basis of last efficiencies $XX to increased XXX revenue of an $XXX by our margins. revenue mix other or sales primarily and million as ongoing Cost percentage operations. to versus margin last with across quarter of the second of driven

more efficiencies implemented the continue one finalize from automation systems maintenance platform of continue we customer initiatives and costs couple to such benefit will migration and various we find as in Our years, past eliminate operations to we when and support the have redundant license areas to and cloud accordingly. the over our

marketing in was in increase growth year-over-year commissions The and our which sales was of primary X% $X.X billion, XXXX. its strong to increase was versus the quarter second quarter to related of Direct business XX%. the an expense of this support in BXB second driver over up

direct commissions on BXC overall agreed generally are to in a we've the business. As to the percentage, upon our basis revenue paid and than contractually a are a guaranteed paid line, are more and and and sales expensive they percentage partners immediate. our noted returns of BXB our past, as more fall state marketing Whereas into

loyalty closely are in mostly was one app the back quarter efficiencies marketing decision our from the in support resulted as These BXC resulted increase marketing costs our a second it This in gross members, XXXX. marketing and of offset key BXC from our half. more from tie percentage planned bookings our some move to efficiencies and of business quarter to seeing as well and to the the growth launch continued to spend our by accelerated investments in second this as of to the the compared as direct in quarter leverage third marketing with we quarter, benefits BXB

leverage. marketing last will year, marketing quarter, pleased million, million this versus to were or we $XXX While expenses $XX to an were Overhead XX%. increase of quarter fluctuate see

tech to remain strategic more and readily invest as positions we the we given market. surplus on of are to pleased these cost to tier over product able talent support While we have the technology our past across teams said, our disciplined the in our fill were year we have continued initiatives, overall in and structure, top we talent

overhead We associated first into compensation salary increase with primary annual the our also quarter, the quarter. from expense which of and saw the this effect increases higher driver went was during the second year,

quarters coming efficiencies decision next spend, see with strong the realize this in second cost revenue was EBITDA expect were with expanding pleased going work million, look to to some approximately XXX to technology expense we second and basis $XXX Despite XXXX. XX.X%, our we forward. and and overall systems to finish of quarter record marketing another the deprecate including shift EBITDA we our overhead of an disciplines, we As up quarter pressure, to margin which delivered that redeploy resources XX% points of quarter versus of year,

payables, at Our cash free year-to-year emerged $X.X we increases as in like of the which has with Omicron, business year, since primarily changes this decline the remains from flow working working Last year. some meaningful timing normalized capital year-to-date. associated the strong billion in is The drivers of payments. from capital saw

on and expect cash strong robust flow the We to them remain year. an ongoing pleased remain levels, with we

access strong sheet, $X.X balance our billion, ample driven cash which operate with of first a to leverage balance our billion, come to of line our the X.X by ratio billion, ended from level to debt the with our quarter the approximately liquidity provides with undrawn and us times. cash quarter credit $X.X but EBITDA, remains has $X.X of billion, business. $X.X On expanding gross of debt our the at unrestricted perspective, revolving down we From

two make quarters continued started leverage through times, our some gross ratio the to debt potentially growth expect repayments. and have make progress to We progress EBITDA target towards in coming and

we and have cash as our that a buying our far accelerated basis allocation, of been return believe on stock undervalued, strong given an we back As remains capital levels to capital maximize price free shareholders. stock our flow

repurchases back date. million result, or a we of nearly to year-to-date, shares, bought As approximately billion $X.X largest XX our level

that liquidity continue we considering We throughout flow, strong continue not Therefore, business. cash expect of in and back stock ongoing to price XXXX. long-term of does performance the remains the our confidence undervalued our remainder reflect believe expected to and the our opportunistically buying free stock our

full-year Looking growth margin ahead, our reiterating top-line we with of double-digit outlook are expansion.

to from it offset quarter, growth expect we face its which single by As continues to accelerate the Brand relates is Hcom, and short-term to bookings Expedia acceleration migration. partially This high by headwinds to third gross Vrbo, driven year-to-year digits.

is than the While we revenue revenue acceleration. quarters driven historically to expect highest third quarter, growth, see revenue bookings lower growth for to Vrbo, our to prior by converting stays, sequential be Vrbo revenue reduced in gross bookings growth the therefore expect and which modest quarter we

expect in margins to relatively last We line with EBITDA stay year.

gives drives and starts line acceleration base which full Vrbo outlook. One as in both of to cost in, migration, to to will app us quarter While confidence top in mentioned, growth see finishes more line we year we expect impact see previously Key bottom for continued Overall, its Key marketing set of our the to kick the and growing sales reiterate leverage, investing meaningful production, half. strong expect back a launch will to we members as the a all up One fourth support and be of us more

half the a of we revenue with and quarter closing, XXXX note record on finish strong second front EBITDA. In

to the We associated the and even while are see we continue business transform continued navigate momentum, headwinds. pleased to

Our confidence profitable to path accelerating in a to returns. improvements on of the are maximize product drive we that us there that and long-term huge and give right shareholder opportunity us growth front is

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

Operator

Eric Instructions] Sheridan question from the Goldman Your first comes line [Operator from of Sachs.

Your line open. is

Eric Sheridan

question. for could. if much I so Thanks the taking Two

with to booking out the might about elements anything geography booking at industries of there as easier some for respect to behavioral a in dynamics terms normalized we to mean of the year? Vrbo comps pandemic. but And much. the in and mix way highlight? more In what exit broadly the Key or we've booking, there you'd then forward longer Are the of end of come terms trend out the quantify obviously thinking either had commentary in is in of want understood forward that seeing behavior of Vrbo, the to of tailwinds philosophy One I reacceleration forward call terms so is at consumer Thanks trends, from the elements about on summer, booking

Peter Kern

I'd I booking newly where I'll relative, yes, going Sure. going at as travelers opening with trends go there. or to they of has around Thanks, opening a opened, what seen, broadly, summer, for up, more more last seeing those. lots call and normalization mean, is I trends. summer crack open and say been what for example, There's would is and didn't Eric. a Europe, while, relative travelers what take maybe this a of a seasonal both we're obviously dynamics some of what Asia we've

of airlift Of China like out of parts full Asia have still course, don't China.

differences. huge think out, opened I and in bit, of had moving normalizing last would quarter, up effect kind quarter That's booking I COVID and things a So terms I COVID, patterns. generally and they're first after quarter Omicron. then terms there's But think around of the broadly we like booking pre-pandemic still second year by of windows, the a they're large, because trends, of but little call to what in normalized was

thing. So that's main the I think

there. will open geo, seeing LATAM We're things more. of recently. growing those APAC will more In travel faster opening terms of more again because There Asia and up be

opened, a certainly But think that's I trend. a been so. So call that year or again, once normalizes it it's

obviously, very last happening generally as vacation back started goes, then year. to more this of the quantify. the And switch, hotel or switch Vrbo earlier Vrbo consumer of rentals And the year and sort in hard far as from to half

But back the think have chance products. that's far, involved Vrbo Key a first So universe It's the be can as us is get our into yes, products One of them a journey so some year. trend as we of a far as will lapping it's big half now to of whole customers we we opportunity of other we'll into macro loyalty. as goes, sort bring the get in our that time for the that them so

Obviously Vrbo. now, hotels.com points use on their Expedia can members members,

think attractive So a to Vrbo. that very becomes use we reason

you're trying will last piece the far One we changing drive the Key innovate be migration a to app, still between product, We're moving think end. but as in of at all across with will what goes, to definitely about, One it excited to a stack then all we cross so yet, being core and very across, So is And do do. it that's quantify of the will as lot excited be product are the Hard That's belief moving it coming, what having the but as you're binary, do shopping products. tend Key. the you talked the we've which we're able about able about the on products together. one to to

able And Vrbo to as eventually to us will much for products etc. about time, we've sell long be brands, across that across our BXB more talked all a lead products, easily

So that but of we're to this the migration bu it the about we opportunities be months, don't year, have being stuff lap later we're think past a presents. then, broadly, trends vacation a number macro the shift and around for going more I hotels and to rental I for from you, think few will still excited

Eric Sheridan

you. Great, thank

Operator

from from a Your of next Lee Bank. comes Deutsche question line Horowitz

is line Your open.

Lee Horowitz

thanks. Great,

think how One quarter quarter So second Can the the in you to the this your have in your support your drive bookings impacted share quarter balance across some for about you maybe a your and year quarter that the to you you you relatedly, understand throughout help marketing second share are through pushed then us talked a Key about second better loss. third may what can move you of as the getting and to bit maybe growth number expectations, from properties? and relative spend the of nights extended of lodging the and order how pays talk the expectations

Julie Whalen

and expectations to Key for and first the At hitting of of a second return to and get obviously, action day, nicely told that our some to the and was take we our what result so spend our shift our obviously I quarter as top the had One set to the right mean, sure choice with us the mid-single line was launch we the I'll marketing. there also decision the Julie. up thought it's street digits, the the back best cap. Hi, was tie about take end I'm to it to impact Yes, of one.

maybe made thought So have Sure, it gotten the in that push nights incremental take. a decision we quarter? to bookings the second but into take this spent we better path to the But third and and could was we sure, quarter. money and some more

Peter Kern

North of then think core that. our share into in places. I gaining our plays markets. outside in And U.S. been feel holding markets We we've of outside some the been a point like We've markets, share number American

some We placed we So were again, to we're better, it's money spent when was One of extra places could is return launching many drive of course, push to Key. we sort the waiting was July Key. said, return and holding we the like have our when felt better we into We weeks, as were with it into QX, but we Julie the One bookings there weeks trying had more best drive literally on in the together, to, thought all hook felt in which like investments. of return

in a scheme movement the small So it's of things.

want customers we get there's and hook One getting out that engaged when dynamics door return getting to it QX. margins into we soon them in to where it some it as but think Of could we're in some we the the direct from And that bookings Key, around. efficiently and But this been could to it it moves we maybe things, better bit QX. around One it scheme yes, those QX as in, little as a course, launched returns them. would Key and and moves launch getting instead into Yes, and spend of though as basically can. we attached of moves it have QX nice moves maybe trying sooner, We dynamics obviously is that even money

but us revenue in scheme of we bit of of dollars why not moved extra mean in that's huge anything, little or and little things, and money sure, QX cost spend will So bit little in a a a that QX. the [GBV] and

Lee Horowitz

you. Thank Helpful.

Operator

from Your Kopelman next Cowen. comes TD question from Kevin

open. is line Your

Kevin Kopelman

Great. Thank you.

you're U.S. given think being focused you is looking the BXC is in more Key for in to quarter, and the broad-based? One launch the about As issue acceleration third that it going be the or

Peter Kern

I of think it's number a things.

I things we As push Kevin, the impact our to as so a of One in into a QX get Key number massive good saw some a to QX early big where been days, we're we designed U.S. first foreign right? for things, mentioned, seeing are combination accelerate but markets and terms also we of make that's purchase value, of so of being opportunity loyalty growth One scheme is U.S. from In back need expecting us don't of going yes, broadly, to your obviously, return, to reasonably Key. incent that's we I in program are, One well. accelerate, is in, but Key not think attractive which certainly kick starting and the

we and a built a that as keeps consumers see we we that's from acceleration as in U.S. seeing also a on really and that and QX QX The the the in continuation in just is it, growth of out of acceleration core lot the just this strong more, but insurance QX. and of base really will because acceleration more We to of, lap U.S., and we that the coming as dynamics market. opposed more demand. other but is continue to acceleration that in things alluded the building, is were outside The build like and BXC One the behaviors We're lot last Key some of not it, just the tough BXC. and strange of to, year, Julie repeating just say certainly it's good having comps normalize are I enhances

Kevin Kopelman

year Great, there? the then the Thanks. CapEx on could just for rest you thank of you. the drivers expectations touch and And

Julie Whalen

mean, even I last seen up come expected we've quarter, had Yes, the and CapEx in we this.

just hit through labor in there's so our putting launch pushing verbal i.e., literally this are that a year, be is and it much migration we We to forward, transformation go into Key to in and Obviously, function and get the projects, that, from been place. things have levels we more we as we're a these these this expect start initiatives as will, of this year. to of complete elevated labor capitalized and out lot order in and still higher capitalized these don't that we'll the like as strategic One return we putting to projects

Kevin Kopelman

Julie. thanks, Great,

Operator

Justin BOA. comes question the Post from next Your line from of

Your line is open.

Your next Evercore from comes Mark question the of ISI. line Mahaney from

line is open. Your

Mark Mahaney

there's maybe Okay, know for let's long here. Has takes so of a the One, and that questions. whether ask that conversion you to in on the a actually experience I and two do think how just the just have in or what's to want there's that. don't see, ChatGPT potential I way have have you that you it site, I too far tweaking enormous needs engagement? what How terms bot you happen get travel really you seen far so ton in of, it's increased when expectation reasonable not, led early, if feel? it right. of What to seen rates, see kind order to could of terms

engagement it's out, rolling other kind it recently expectation the thing impact Key, or one you is how take has, I the of just attracting a up that is you you tell really is of can terms maybe before newer and year full something users? successful but one it you're we'll know see when you set now Thank then for launched, think on in that that can One quarter an And deeper that's you. been

Peter Kern

thanks Yes, Mark.

with numbers you choose that of studying the don't could who customers it So moved way I It's the lots engage like interesting. with promise. a see. don't been It to. you. in early on it, to it's any It or agree customers is has days. ChatGPT, I We've it And say won't it. need ton of to with like engage

more in do we much a kind better figure and I embrace and investigate with they own bunch and you large them come out which more us. a of data. to And language future as then now though save come will can lies how think the separately things out. with live come our tool the of with Right models discovery integration,

I there that you data not with their and think, but time, better. where will our to serve personal combine where be Over data we use sharing with chatGPT, ways, can capabilities we're your

been That's stuck, customers going seem evolution experience. they we've learning, this can't to what to been where So of why get I mentioned is be an we've studying do.

don't them to conversation. know or exactly how engage of start a Some

So work, by but there's customers and around language more ways lot not it industry just the a to other prompts get us, the large on easily. models by of through

will And impact those the impact, all minimum, is wouldn't since to more I numbers. in add now of the but basically up see you it the think pieces

for. the As hopefully then their got now them And and for gradual program them having One other a attract there's make a things Key, build. more to appeal rewards choose of that's couple best-in-class I Key customers coming the do flexible, us looking Obviously, There's there's of do you're they the over back of once come think different strong, of broad, the app One of, them people. then program directly in and exhibit they back-end to you've download back? got part behaviors you've and once a

all back travel first even put and a them often, time it, see, are you have etc., takes the then to because and all that we And lot. digitally, part So as our out again, that's come into the it some as we there to out-of-home. piece, takes start there, longer into book that people performance out should seen booked just may though so the know, all the second we ads, many for launched starting don't our etc., marketing campaigns anything to literally messaging

So be it see start that it hope we to intelligent us choose will it believe and build, value their a for for to consumers brands. our gives them will will in continue And back travel. marketing you'll all our to make that's a show all continue because more up that better

back-end little begin of return have in numbers. to this driving why will and impact that sooner, out bigger those year. we to think So part a of start the direct the to But and play should part longer-range that see a we take will longer and the into things, that that's

Mark Mahaney

Okay. you Peter. very much, Thank

Peter Kern

bet. You

Operator

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

is line Your open.

Justin Post

Thank you. Great.

compete customers? about side is you're higher and on Was some then And leverage? you that site, question in street gives those? you like talk trying see the a that you Starting had doesn't It You you're base, you quality do yet. One booking? it seeing you some leverage the Key. and the that What on on said the drop-off. there? repeat there Are to rates? about improve BXC who's customer timing, lot. seems BXC Sorry real the quarter. Could better or discounts think maybe the numbers improvement allows confidence one in against marketing some to on And Thanks the seeing you the to funding see

Peter Kern

Maybe reverse those the order. in ones first. I'll take factual Take of sort

launched consumers, higher will we but have community, consumers. relevant now for to value more proposition for discounts for are silver, an partners. we them with, and that is one supply where there yes, part time. that used over way discounts, members, a are the better get we the It's and level, that give member that necessarily of to we launch, by discounts our basically, added of that One the of and part member travelers, investment is Key because value be pieces, important expanded to feature and the gold So that we've higher our Those expanding we to and as tiered better our that levels, funded blue, one this important so is have, for not of

are of more had those partners, I supply certainly, had some not a is valuable who will is think from we have discounting competitive valuable. on more that also feature our we that before, has value booking to that their that think, discounts good we and is more tiered that a are way. hotels I say So so have yes, customers worth

to how valuable question, that pool which better. into into perform because goes much know we which the customers, your have a first large we we of part cohorts are states, yes, So, valuable thoughtful follow membership, and so we perform, we more of we those reasons, more getting them for as get and app, are those get is, we in as lots cohorts into good building them them confidence

a back sees and app even and so the comes things. of So rewards, course, more discounts, forth, member member, does all good loyalty the typically and member more directly,

we So higher LTV, that build higher a et is total is as blended consumers and out cetera, are future. more consumers we total our to essentially bank peak towards in these up rates, building have play transacting the those value that of pools, of and pools left blend

now do done we as Expedia is now in well. on then countries, particularly it countries, more with we US, Vrbo are what and that doing we able we have in as have Hcom, we confidence Obviously, working doing now expanding will I before are doing talked are why in in be it to that about there. do So more it we it to well

intent, for a but why of is happening app. that more the have say where membership, to have we product, more up we can in we us. value into into where have that Every see driven moved have that, spent lot journey and we signed So here, creates we where customers runway the according step we it left

Justin Post

thank Great, you.

Operator

UBS. Your from next comes the from line Lloyd of question Walmsley

line Your open. is

Lloyd Walmsley

given that have terms that. getting One Anything interesting some customers, shopping, rates of then in love just are of can Key, help Vrbo, they eluded that, of changes you would of there, there as conversion back One at currents then, terms you Thanks. as understanding anything and now cross in from part and early feedback, share Hcom part anything going maybe on to cross loyalty, Key in

Peter Kern

Sure.

it able answer is few are using also the activate, be converted time who than customer one now members, may Key other members other members the lots existing in in a mean, a they'll I brands. the don't the a These been think XX We've count, into is, of and the weeks. today's million, of over benefit ago, in have program too we customer been join but a We've of one, One new joined to early. that $XX first have see have last in they're brands had new Vrbo. long but I where Vrbo short the and more have the million consumers program. may

the sort their had reports work in So of, places, customers accounts getting complicated. we've aligned, different done right, a getting of if core of, was lot getting their consolidated which they accounts

signal So behaving lots we've doing are, Key. in the a lot progress. launching doing a cross enough to made say lot not and different people say, One of And even currents Vrbo, acting, to differently things. of early there's It's that, huge of is well, yet too there's and time

and and lot a it people seen we've membership product a even lot minute, a issues understand, though sign-ups a customers, to benefit, great great experience usual a of millions in signing of are velocity, our there's response I they're And massively a launching that I up So engaging necessarily accustomed What the sign like, Do something it? of a is terms but incremental getting of and, with new people wouldn't of of Vrbo there's lot having just they're, the wait they're to program. to, and up. but it? say

get what of have, little I goes, heaviest far And diluted. that through we've the is the value will then We've about of from flexibility. They is the does view them. bit new mean a member that more value We of program about they say there had discounts. much sure they them. discount. a care as just value it deeper noise talked But users through HGMP did not made our yes, get we taken as And our for get

users in our more not exactly our than same, can massive be the while will they else So benefit benefit travel. get and might it heaviest constructed in opinion, get anywhere

to you went flexibility, member we for incremental of devalue our we're and et ways lot. do a not and you give discounts not all their things gold love flights, users, We're we now from, and couldn't give platinum, like far to we we're this and value and and value over all actually they huge carrying spend heaviest verbal, kinds going them cetera. high-end you before and other benefits program on it's more on your their So giving

and they find ton there's a who get the to every not won't trained out I like not to to going of this with is be was. industry What than is has they the benefits. lot program of lose say don't value time, I one users appreciate well though, think it. just as and got, And won't going slightly they're right, circumstances. thank great and a you. that, understand This loyalty they come love even single program I people they're So different value one heaviest those changes. one. make, all will the might a But have as of All it think a for think this they to to customer the last it it

Lloyd Walmsley

Thank you.

Operator

from comes of the Riley Securities. B. Naved question line next Your Khan from

Your line is open.

Naved Khan

Thank hi. Yes, you.

may follow be be I have of I will intrigued share driving international And little up. a the you what think I'm helpful. in a of and would you commentary then couple say might that. questions. gained you, there I kind markets Peter, some heard of Just Any

Peter Kern

as it I about, and to we there our it we've now and the are reacted down back were. spend we confidence of think the things good part, we back it's number value things, think forth, a mousetrap, all And talked returns have greater more I we've the nice we little that just of in where rest of we think so downloads, markets and I've and been in got really into intent of been the our build we bit app as returns. a seeing Yes, number markets as membership, we driving to little international COVID world, be in on new a rebuilding conservative a wanted started

and what for a markets but Now, opportunity way. these smarter seeing, these to back just in we're of are modest low into things. dramatic I happening, changes There's scheme fruit move nothing in us the of some hanging call

story we So, markets. again, back just about early share in good we there, signs the as feel good U.S., huge we push a into about feel what these that, international we're seeing, not

feeling this. reasonably with So, on we're more share good on ,

Naved Khan

you're hearing are ad anything about and competition, I'm to is there up curious some from had Google's some we around The or format. anything commentary say other other maybe I advertising or increased Europe markets. follow new seeing maybe if Understood. in just players about Yes.

main of introduced their think I recently understanding search. they proper

Peter Kern

Yes.

talking on vacation talking the about? last I part, about think you're what that Is rentals. you're

Naved Khan

a but this No, hotels, new into format introduced main it's I there's the search. think still,

Peter Kern

auctions. But Yes. I particularly anything them with we're in mean, I terms time. auctions say, of the in markets. I over of don't inflating think the anything not highly seen the we've we've And of different all happening I cetera, inflation in the terms seen or working around have particularly us. the of would world in look, been they're think years. the amongst pricing any what's mean, of et that's concern, competitive, I don't course, over the in biggest no, last several and working auctions those

of those environments, day of shall trying in to that auctions. to downloads every return long-term app just invest other our encourage opposed better higher as I course, it we opportunities And be find opportunities, advertising kinds are Google to or dollars, behaviors, say,

simply and tried So much transactions on focused getting getting but we've to I what our think buy get in been of in away buy, as that's and probably trying them strategy we into right we're more the so part core from consumers state a the to that, forth. not alone app,

but us, journey forever. for will an on direction journey that's So keep ongoing that's going the that

Naved Khan

Got Peter. it. Thank you,

Peter Kern

you. Thank

Operator

Colantuoni the from comes of Jeffries. question next line from Your John

is Your open. line

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

open. is line Your

Jed Kelly

Thanks Great. my taking for question.

Just two, if I may.

key you the marketing market get one, your are versus Just being on to of program you going then about that Thanks. that airlines to just your anything weaker about loyalty And all Is just softening trends. your you there out to kind brands separately? demand there's just brands under thinking earlier? efficiencies market that all the you them domestic brand the one half continue spend. able separately? pattern or shifts And mentioned recently talk is underlying Can where back each to of just plan called

Peter Kern

Sure.

little in think, pricing that mean, a bit we in is domestic far bit you've I as heard the for more never little airlines There's been seen, there's a demand air supply. yes, yes, have So I high North international. softened America. go, as And

patterns. of every dollars. I total in way. not mostly participates the industry, Obviously, not So been consumable think a it's same everybody It's shifting

been bigger Some broadly been healthy and the are good, demand, other exposure. that and consumer and in and strong. steady has terms places places there been there Others have say -- domestically that I'd overall, But acting focused. it's consumer hasn't fall rise. international more of are But

they're So I looking other consumer don't trends in think there's what anything to geographical see and there for. moving trends terms moving, of than

sense of the it money of advertising As far it as wanted Key thought to door digital buy like more needed Google TV think it's wouldn't brand drove efficient our or out the brand it spend, to and the it's we One money sense could which the this spend, of would be consumption, again Key of we get isn't, as say we through auctions could word marketing, be it of our we in or against the be brand conventionally business, as it, performance spots, it a be we about I on could hook it support focused television. be One in be spend, the kinds launch, is various things. lot not spend through with When we

So that's what we about. talking were

will they are, big program, and umbrella the in touch brands own have of proposition is sibling and one their have terms consumer. it Key loyalty make identity consumer brand One what three the together. campaign a very spend, of Key out as least our a will now, and each far As to they coming for all brand, that's have marketing then, how as to we intent that but they of part clear deliver we're will now going to they on One their keep focused how point each at is, a But they to concept them and

Jed Kelly

you. Thank

Operator

Your next Colantuoni from line Jefferies. question comes of John from the

Your is open. line

John Colantuoni

Great. Thanks for question. taking my

related to to some rate think brands the across changing changes earlier. us changes Can of and of take merchandising the the what's the and from drop a potential impact about bit the loyalty should One Sorry help perhaps collective how individual you talk to want sort little a loyalty sort perspective each rollout. other rollout. of we Key understand about about from these I

sort into you've the QX and material And to system of overall gotten bit marketing have talk see Thanks. in pull the more QX. an they've I'm bites of impact Next the business. quarter takes the started if about from forward the maybe can help or on But puts not enough an a some where, you of last there's, little smaller as in point also spend inflection quarter, and to brands acceleration in bookings the some growth? also slowdown in the curious small

Peter Kern

the I Key the you Expedia can to would Key, was it in basically spend was, closest is earn the the it Expedia lot good is offers points about what of One starting A there. I brand the historically with points, One say way money, questions program think simplest that what money. program think are you to in worth

Some things have changed. I mentioned the member discounts.

benefits now discounts. silver, get. those you the least that that so would many I currency silver platinum similar, change sense You have products member it's and for they use say, But that members that's, across gold and things. the already added could gold, in There's most

use, missing use but was really piece. you one it in the couldn't couldn't You that Vrbo,

want is that about think to to benefit the way when you've rent pot vacation a the maybe added So rental. consumers those they and Vrbo to now can

user. rich of are familiar, many program a the you very Hotel.com, for super had

of was rooms, the stayed valuable a you nights. a XX benefit they book never didn't a get user, you get vast enough very a If users that because but and free, night majority for benefit super

all why still they So I super program to as to more attractive went ago to user while that very into users to the would much points moment keeping for value there. make we're attractive trying it incremental the all find a

could on again, that use hotel product. And only you

flexible, anything. you nothing. And you with lot it a had lot more Vrbo that's use can vast, of more course, a can and more then, it. And Now a lot on do

your a be a or family And it or whatever. Now take have, on flight to have next Vrbo for you you'll or your etc. hotel able also will a resort doesn't stay, rewards, which it use to Airbnb use to go but Vrbo can

need a So it lot more and to gives ways for customers that for trying etc. of spend a more for more lot different loyal lot all and different all can of products we're us travel whatever with go base again, to customers And it they that a use occasions us, our their buy needs products. a just from us, ultimately, across build use

game. the that's So

We all all these to wanted benefit We that. these have all customers brands, the from capabilities. of

customer, is more the So shopping, for we're cross per higher LTVs, items direct, looking more patterns more etc. app-direct,

what One that's So helps think really we Key drive.

most instance but point far about And the to the that the grow, As [indiscernible] for time drag part smaller that brands We the the getting normalizing on all going with are of we yes, brands have is the bookings, and insurance BXC puts as in in to continues now and lighter half in normalizing the the back a through it, mentioned for comp. of of are That's as things smaller some effects the continues there. the and post-COVID strange grow, tough few back both time. of your year. smaller brands, emphasize getting some half takes after to lodging back lodging half stronger getting

and business we continue making like basically has you're all of part we're app-down, improving bigger, seeing good it And noisy velocity in getting right the improvements. And are journey mean now the and of improving sign-in, good improving journey. sort see noise. those pulling also I strong all we about of this more been a so weight stuff the of getting product improving overall less conversion, feel and things that product, the

they're better day and literally up stacking themselves. getting every So on

and which of magic hit with innovation One the And gets I it's So a that's no think huge why what velocity out faster things, next of is journey Tuesday, Key, migration but these other Vrbo's focused faster. we're done, on. that's long for with amount resource and door, to going a there's to the us

Unidentified Analyst

Thank helpful. you. Very

Operator

Our from Deepak final of Research. Wolf question comes line Mathivanan from a

open. is line Your

Deepak Mathivanan

for year full kind the Great. can be guide and on season said to. margin timeline a travel XQ, can to growth? should expect on taking show Is bit the deploy duplicative you somewhat of much. from with now that, almost peak all frame with start that into other can reach little anyway, questions. sort there can efforts. cost projects? We're you here of for for think headwind here. to You to Julie, full right then the of expansion? margin But us replatforming related the and about how when should cost you so you obviously Thanks we fixed flat maybe a us we Thanks them the a have margins can year And the for what help leverage this

Julie Whalen

Sure.

the back in helps On marketing the side, next help fourth half, that mentioned, that expansion the Peter margin just particularly line side, certainly on margin fourth that strength strong shift will year. guide the quarter obviously see all quarter's from more quarter did have. year. spend full the in we But alluded as the the on And for the us in with things the quarter, to, the in business of this We to leverage is, expect year. being last EBITDA the that to we you the

drive line, leverage top be including the quarter fourth which marketing So will operating will leverage entire P&L, think we're that we expansion. that going to the in

out a the transformation P&L. across phase from year to going cost as From headwind aggressive finding this we we efficiencies to move perspective, certainly the of and out of come fixed be a are

optimization licensing and the tech we've As that after reasons that optimization product of to opportunity of but on of the well, we leverage really and we and those cost should offense out P&L certainly now costs, but the probably There's dig P&L, But starting a for and with next to the that lot forward able as XXXX a cloud have migration. said, maintenance, it's that's year. going pull good got go and systems the and focus. all instead of that's pulling to migration, and of repurposing be move go through we'll more whether time as and we systems staff costs be deprecate to out some very forward, redundant innovation

super So about excited that.

Unidentified Analyst

Got it. you. Thank

Peter Kern

question. that the think Yes, was final I

all. care. Thursday. So a you Appreciate good time. your thank Take Have

Operator

That concludes call. today's

You a disconnect lines. may Have day. nice now your

Expedia (EXPE) 3 Aug 232023 Q2 Earnings call transcript