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Expedia Group (EXPE +5%) opened to a 3-year high today following its Q2 results last night. This online travel company reported EPS and revenue above expectations, similar to peers Airbnb (ABNB) and Booking Holdings (BKNG). What's different is that EXPE is seeing a nice move higher today while ABNB and BKNG traded lower. We think this is because the company raised its FY25 revenue and gross bookings guidance, while ABNB and BKNG struck a more cautious tone. Although EXPE saw muted US travel demand during the quarter, signs of improvement in the US and the outperformance of its other brands supported the move.

• EXPE posted sequential improvement across several key metrics in Q2, with gross bookings up 5% yr/yr (vs. 4% in Q1), booked room nights up 7% (vs. 6%), and revenue up 6% (vs. 3%). By region, booked room nights increased low-single digits in the US, mid-single digits in EMEA, and mid-teens in the rest of the world. Management pointed out that Asia was particularly strong with a 20% yr/yr increase in booked room nights.
• B2B and Advertising continue to be bright spots. B2B bookings increased 17% yr/yr, marking 16 consecutive quarters of double-digit growth. Advertising revenue was up 19%, driven by a record number of active partners.
• Its core brand, Expedia, continues to be its largest and fastest growing consumer brand, with multi-term attach rates at the highest level since the pandemic. Alternative brands include Hotels.com and VRBO. Hotel.com bookings declined slightly yr/yr while VRBO room nights were roughly in line with the US market. Management did point out that Hotels.com room nights accelerated from Q1.
• Taking a step back to EXPE's commentary on US travel demand and its consumer. EXPE noted that the US travel market was muted in Q2, with consumers at the higher end of the market remaining resilient, while those at the lower end have taken a more cautious approach to travel spend. What stood out to us is that since the beginning of July, management noted an uptick in overall travel demand, particularly in the US. As a result, the company raised both its FY25 revenue and gross bookings guidance growth to 3-5% from 2-4%, despite lapping a tough comparison in Q4.

Overall, this was a good quarter for EXPE. We were a bit cautious heading into this report given the commentary from peers ABNB and BKNG. While it was encouraging to see many metrics accelerate through the quarter, what really stood out was management's commentary on the uptick in US travel demand. We think investors are pleased to hear this since US travel demand has been particularly soft since the announcement of reciprocal tariffs.