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Expedia Group (EXPE) is traveling lower after its Q1 results last night. The OTA platform beat handily on EPS, continuing its recent stretch of large double-digit upside, while revenue increased 14.7% yr/yr to $3.43 bln, also above expectations. Q2 revenue guidance of $4.11-4.19 bln was in line with expectations, while EXPE reaffirmed its FY26 guidance, including revenue of $15.60-16.00 bln, acknowledging that while there could be potential upside, it is taking a prudent approach given the volatility it has seen and ongoing macro/geopolitical uncertainty.

• Booked room nights increased 6% yr/yr, including mid-single digits in the U.S., low-single digits in EMEA, and low double digits in the rest of the world.
• Gross bookings increased 13% yr/yr, above its guidance for 10-12% growth. Its consumer brands, including Expedia, Vrbo, and Hotels.com, grew bookings 10%, the fastest pace in 12 quarters.
• EXPE said momentum from late 2025 carried through February, delivering its best start to the year in three years, with booking windows and lengths of stay modestly higher yr/yr. However, the environment became more challenging in March as the Middle East conflict and travel advisories in Mexico weighed on demand.
• While the Middle East represents less than 2% of EXPE's bookings, the broader disruption drove elevated cancellations across Europe and Asia, reducing bookings and room-night growth by about 2 pts.
• Encouragingly, cancellation rates stabilized in early April, and booking activity reaccelerated throughout the month. EXPE also noted that U.S. domestic room-night growth remained stable in Q1.
• B2B remained a bright spot, with bookings increasing 22%, driven by an acceleration in North America and double-digit growth across all core regions, while revenue increased 25% to $1.2 bln.
• Adjusted EBITDA increased 83% yr/yr to $542 mln, with nearly 6 pts of EBITDA margin expansion to 15.8%, its highest Q1 margin in 15 years. The upside was supported by strong marketing leverage, revenue flow-through and cost efficiencies.
• EXPE expects Q2 gross bookings growth of 7-9% and adjusted EBITDA margin expansion of 50-100 bps. It reaffirmed FY26 gross bookings growth of 6-8% and EBITDA margin expansion of 100-125 bps.

Briefing.com Analyst Insight

EXPE continues to execute well, but the negative reaction appears to reflect a softer travel demand backdrop and a more prudent stance on guidance. That said, the quarter still had encouraging developments, with U.S. demand remaining relatively resilient, B2B continuing to grow at a healthy pace, margins expanding sharply, bookings above guidance despite headwinds, and delivering yet another large EPS beat. AI also appears to be a lingering concern and a longer-term debate for online travel agencies. EXPE spent a lot of time on the call arguing that AI is already improving personalization, servicing, partner onboarding, and marketing productivity, while also creating new traffic opportunities. Also, EXPE acknowledged there could be upside to its FY26 outlook, but wants more visibility before updating guidance, leaving some uncertainty around how much April's improving trends can build heading into larger travel events like the World Cup and the summer travel period. Overall, EXPE is executing well, but investors appear focused on whether demand can reaccelerate and how the OTA model evolves as AI becomes a larger part of travel search.