Expedia (NASDAQ:EXPE) Surprises With Strong Q4, Stock Soars

Online travel agency Expedia (NASDAQ:EXPE) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 10.3% year on year to $3.18 billion. Its non-GAAP profit of $2.39 per share was 13.9% above analysts’ consensus estimates.

Is now the time to buy Expedia? Find out in our full research report.

Revenue: $3.18 billion vs analyst estimates of $3.08 billion (10.3% year-on-year growth, 3.5% beat)

Adjusted EPS: $2.39 vs analyst estimates of $2.10 (13.9% beat)

Adjusted EBITDA: $643 million vs analyst estimates of $571.3 million (20.2% margin, 12.5% beat)

Operating Margin: 6.8%, up from 3.6% in the same quarter last year

Free Cash Flow was $7 million, up from -$1.69 billion in the previous quarter

Room Nights Booked: 86.4 million, up 9 million year on year

Market Capitalization: $21.78 billion

“Our fourth quarter results exceeded our expectations and reflect continued strong execution and better-than-expected travel demand. All three of our core consumer brands achieved bookings growth and we further accelerated growth in our B2B business. These results contributed to a solid full year 2024 for us,» said Ariane Gorin, CEO of Expedia Group.

Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world’s leading online travel agencies.

Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Expedia grew its sales at a solid 16.8% compounded annual growth rate. Its growth beat the average consumer internet company and shows its offerings resonate with customers, a helpful starting point for our analysis.

This quarter, Expedia reported year-on-year revenue growth of 10.3%, and its $3.18 billion of revenue exceeded Wall Street’s estimates by 3.5%.

Looking ahead, sell-side analysts expect revenue to grow 6.7% over the next 12 months, a deceleration versus the last three years. This projection doesn’t excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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As an online travel company, Expedia generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.

Over the last two years, Expedia’s room nights booked, a key performance metric for the company, increased by 11% annually to 86.4 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings.

In Q4, Expedia added 9 million room nights booked, leading to 11.6% year-on-year growth. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating booking growth just yet.

Average revenue per booking (ARPB) is a critical metric to track for online travel businesses like Expedia because it not only measures how much users book on its platform but also the commission that Expedia can charge.

Expedia’s ARPB fell over the last two years, averaging 1.9% annual declines. This isn’t great, but the increase in room nights booked is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Expedia tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether bookings can continue growing at the current pace.

This quarter, Expedia’s ARPB clocked in at $36.85. It declined 1.2% year on year, worse than the change in its room nights booked.

Expedia impressed us this quarter as it blew past analysts’ estimates for many key metrics, including revenue, EPS, and EBITDA. We think this was a good quarter with some key areas of upside, and the stock traded up 7.4% to $185.56 immediately after reporting.

Expedia may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.