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Following sizeable earnings upside, accelerated revenue growth, uplifting guidance, and a reinstated dividend after a five-year hiatus, Expedia Group (EXPE +17%) is soaring today, flirting with all-time highs reached in early 2022. Since the travel giant appointed Ariane Gorin as CEO in May of last year, its shares have surged by over +80%, a testament to solid operational execution, successful growth initiatives, and an improving travel demand backdrop.

• Travel demand was more robust than EXPE anticipated in Q4, illuminating a steady preference from consumers across the globe to allocate their tighter budgets toward experiences. Booked room nights grew by 12% yr/yr in the quarter, up 3 pts from last quarter. Total gross bookings also accelerated, climbing by 13% in Q4 versus a 7% jump last quarter, which already represented a 150 bp increase from Q2.
• Bookings for EXPE's consumer business accelerated by 5 pts from Q3 to expand by 9% in Q4, supported by growth across each of its banners. Vrbo, EXPE's answer to Airbnb (ABNB), registered mounting momentum throughout 2024. This trend is encouraging, particularly following such a volatile past year or so when EXPE was working through a conversion, which weighed heavily on performance. EXPE's CEO acknowledged that there is still plenty of work to do to continue improving Vrbo, noting that the company has exciting plans coming in 2025.
  • Meanwhile, Hotels.com posted a return to bookings growth, supported by international markets, which continued to outpace the U.S.
• The clear standouts in Q4 were EXPE's B2B and advertising businesses, delivering growth of 24% and 25% yr/yr, respectively. While ads cooled off from the 32% leap last quarter, growth was still impressive, underscoring success with EXPE's several initiatives, such as launching new ad types and introducing new tools for partners, both of which have resonated with advertisers. Advertising is a high-margin, high-growth business. EXPE sees considerably more opportunity to innovate in this business, potentially boosting margins over the next several quarters.
• With the help of sustained advertising demand coupled with a favorable travel environment, EXPE posted healthy adjusted EPS growth of 39% yr/yr to $2.39. Gross margins climbed by 125 bps yr/yr in Q4, nearly reaching 90%.
• Looking ahead, EXPE predicts bookings to cool off in Q1, highlighting FX headwinds and an unfavorable yr/yr comparison, targeting growth of +4-6%. Similarly, EXPE expects revenue growth of +3-5% next quarter, a deceleration from the 10.3% posted in Q4. These numbers mostly represent EXPE's FY25 outlook, projecting gross bookings and revenue growth in the +4-6% range.

EXPE capped off FY24 on a high note, posting an excellent Q4 report. The company has made the right moves during a mixed demand landscape from the past several quarters to prepare for liftoff once demand rebounds more meaningfully. EXPE's performance sets a bullish tone ahead of its closest peers' upcoming Q4 reports, including ABNB on February 13 and Booking Holdings (BKNG) on February 20. On a side note, shares of ABNB have flatlined over the past five months. If it can extract similar gains from an improving travel demand landscape as EXPE, it could ignite a powerful rally in the stock.