Updated Aug 17 at 11:16am ET.
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Expedia is shifting its focus toward two areas to drive future profits: its business-to-business (B2B) arm and artificial intelligence. The B2B segment involves Expedia providing the technology and travel inventory for other companies, like banks or airlines, to run their own travel sites. This part of the business often grows faster and more reliably than the main consumer websites.
At the same time, the company is using AI to help travelers plan trips and find better prices. This matters because it helps keep people inside Expedia's own apps rather than starting their search on Google. If more people go directly to Expedia, the company spends less on expensive search ads, which leaves more profit on every booking.
The company reported earnings of $5.76 per share, well ahead of the $5.22 analysts expected. Total revenue rose 14 percent to $4.32 billion, fueled by a surge in its business-to-business arm. This segment, which provides travel booking technology to other companies, is becoming a critical engine for growth as the main consumer brands like Hotels.com and Vrbo face a more mature market.
Management also raised its full-year revenue forecast to a range of $16.05 billion to $16.22 billion. This suggests that the massive project to move all its brands onto a single technology platform is paying off through better efficiency. With the technical heavy lifting finished, the company is now converting more of its revenue into profit, with adjusted EBITDA margins expanding by nearly two percentage points compared to last year.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Expedia signed a 12-month exclusive deal to become the only online travel site authorized to sell Allegiant Air flights. The agreement covers Allegiant's entire network of 566 routes across 124 cities in the U.S.
This is a win for Expedia because Allegiant has historically avoided selling through third-party sites to keep its costs low. By securing this exclusive access, Expedia can offer unique flight options that its rivals cannot, which helps attract more travelers to its apps without relying as heavily on expensive search engine advertising.
Source: PRNewsWire
Analysts updated their price targets for Expedia following the company's strong second-quarter earnings report. Most analysts are split between buy and neutral ratings, and the average target of $332 suggests the stock is fairly priced near its current level.
Management has a habit of setting beatable targets, clearing its own bar in seven of the last eight quarters while growing revenue at a double-digit pace.
| Expectation | |
|---|---|
| EPS | $8.72 |
| Revenue | $4.72B |
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