Expedia Group (EXPE) Q3 2026 earnings review
Expedia Group beats summer profit targets, but partner margins shrink
Expedia Group, the owner of travel websites Expedia, Hotels.com and Vrbo, beat its third-quarter targets across the board while projecting a quiet end to the year. Revenue rose 12% from a year ago and operating profit before depreciation and one-offs (Adjusted EBITDA) climbed 17% as the consumer division kept its direct ad spending flat. Chief executive Ariane Gorin raised the full-year outlook, but the fourth-quarter plan calls for revenue growth of only 4% to 6%.
| Total gross bookings | $34.0B +11% from a year ago (planned $32.2–32.8B) |
|---|---|
| Revenue | $4.94B +12% from a year ago (planned $4.65–4.75B) |
| Adjusted EBITDA margin | 34.2% +1.35 percentage points from a year ago |
| Full-year revenue outlook | Raised $265M middle of the range: +11.3% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because the consumer business expanded its profit margin by 2.7 percentage points in a quarter when the company's own prior plan pointed to no overall margin gain at all. That ad discipline, paired with $576 million in share buybacks, lifted profit per share excluding one-offs by 24%. Two cautions remain: the partner division's margin shrank for a second straight quarter on acquisition and commission costs, and the full-year raise mostly passes through the third-quarter beat rather than lifting the fourth-quarter view.
The question now is whether the fourth-quarter slowdown to ~5% revenue growth is real travel weakness or a sixth straight conservative target. One view is that tougher comparisons and partner commission pressure are catching up with the business; the other is that management is leaving the same 4% cushion it just beat. Fourth-quarter bookings and partner margins will tell.
🐂 Bull Case
Consumer Ad Discipline Lifted Profit Margins
Expedia Group's consumer division (B2C), which runs travel sites Expedia, Hotels.com and vacation-rental site Vrbo, drove this quarter's profit beat. Three months ago, the prior plan pointed to a flat third-quarter profit margin because the business was comparing against last year's cost cuts. Instead, the online travel agency held consumer ad spending flat while bookings grew, lifting its overall margin.
- Consumer direct selling and marketing: $1,028 million, down from $1,032 million a year ago, dropping 2.3 percentage points of consumer revenue by our math
- Adjusted overhead (indirect marketing, technology and general administration, excluding stock pay): 12.7% of total revenue, down 1.4 percentage points
- Consumer Adjusted EBITDA margin (operating profit before depreciation, taxes and one-offs): 43.5%, up 2.7 percentage points
- Total Adjusted EBITDA: $1,689 million, or 34.2% of revenue, up 1.35 percentage points
The Seattle-based group credited "marketing efficiency and improved returns across channels" plus lower cloud and customer-service costs. Because the consumer business generates nearly four-fifths of segment profit, keeping its ad bill flat more than paid for heavier spending in the partner division.
What to watch: fourth-quarter Adjusted EBITDA against the $830–880 million plan. Another beat above the top end would show that consumer ad savings can carry into the winter travel season.
Consumer Bookings Held Up Across the US
"We exceeded the high end of our guidance in the quarter, reflecting resilient travel demand and strong execution," chief executive Ariane Gorin said. Total gross bookings, the full retail value of trips booked across all brands, rose 11% from a year ago to $34.0 billion, clearing the top of the company's plan by $1.2 billion.
Travelers booked 115.7 million room nights, up 7% from a year ago, matching the second quarter's pace even against a tougher comparison from last summer. Consumer gross bookings rose 7% to $22.9 billion and consumer revenue grew 6% to $3.07 billion on "continued strength in the US", where room nights grew in the mid-single digits while regions outside the US and Europe grew in the mid-teens.
What to watch: fourth-quarter booked room nights. Holding near 7% growth would show US travelers are still booking trips despite the cautious fourth-quarter dollar outlook.
Buybacks Lift Per-Share Profit Above Operating Growth
Expedia Group turns steady operating gains into faster per-share growth by buying back its own stock. In the third quarter, the travel group spent $576 million to retire about 2 million shares, up from $200 million in the second quarter, bringing nine-month buybacks to $1.73 billion alongside $173 million in cash dividends.
Those repurchases cut the diluted share count used for profit excluding one-offs by 3.8% from a year ago, to 122.3 million shares. As a result, profit excluding one-offs rose 19% to $1,148 million, while profit per share excluding one-offs grew 24% to $9.39. Standard net income grew 7% to $1,030 million only because last year's third quarter included a $133 million pre-tax gain on minority investments versus $9 million this quarter.
What to watch: fourth-quarter share repurchases on the cash flow statement. Spending near $500 million again would keep the annual share-count reduction near 4%.
Positives this quarter didn't test
Two standing growth drivers from earlier quarters are not broken out in the earnings release or slides and await the conference call or quarterly filing.
- Supplier-funded promotions: hotel and property owners funded over 40% of Vrbo bookings last quarter; the third-quarter share is not in the release and will be tested in call commentary.
- Vrbo and Hotels.com brand growth: consumer bookings rose 7% overall, but individual brand rates are not in the release; confirmation that both brands grew during the peak summer quarter would support the consumer recovery.
🐻 Bear Case
Fourth-Quarter Plan Points to a Sharp Slowdown
While the third quarter beat the plan and management raised its full-year targets, the new fourth-quarter forecast still points to a steep slowdown at year-end. Management raised the full-year revenue range by $265 million at the middle, which is little more than the $238 million third-quarter beat.
- Fourth-quarter gross bookings plan: $27.9–28.4 billion, or 3.3–5.2% growth from a year ago, down from 11% in the third quarter
- Fourth-quarter revenue plan: $3.69–3.75 billion, or 4.0–5.7% growth, down from 12% in the third quarter
- Fourth-quarter Adjusted EBITDA plan: $830–880 million, which by our math puts the middle of the range at a 23.0% margin, down 0.9 percentage points from 23.9% a year ago
Expedia Group has beaten the top of its quarterly revenue and bookings ranges for six straight quarters, by an average of 3.8% against the middle of the revenue range over the past three. Even so, a plan that has fourth-quarter profit barely growing at the middle ($855 million versus $848 million a year ago) leaves the second-half slowdown risk alive until the fourth quarter is reported.
What to watch: fourth-quarter gross bookings against the $28.4 billion top of the range. A print inside the range rather than above it would confirm that underlying travel demand has cooled.
Partner Division Slows and Its Margin Keeps Shrinking
Gorin said the group continues to "advance our strategy to build the one-stop travel platform for B2B partners". The business-to-business division (B2B), which supplies hotel inventory and booking software to airlines, banks and corporate travel firms, remains the faster-growing half of the company, and Expedia Group has spent $727 million on acquisitions over the past nine months to expand it. Yet growth is slowing and that expansion is weighing on profitability.
Partner gross bookings rose 19% from a year ago to $11.15 billion, slowing for a fourth straight quarter from 26% a year ago, even with "elevated marketing activity from some of our largest partners". Partner revenue rose 23% to $1.71 billion, but the division's Adjusted EBITDA margin fell 1.34 percentage points to 27.5%, after dropping 2.7 percentage points in the second quarter. Direct selling and marketing (mostly commissions paid to partners at the time of stay) rose 23% to $1,048 million, and the division's overhead and currency-hedge costs jumped 41% to $165 million, adding 1.26 percentage points of revenue, which the slides blamed on "partner mix and acquisition consolidation".
What to watch: fourth-quarter B2B Adjusted EBITDA margin against last year's 23.9%. A third straight drop would show that new acquisitions and partner commission rates are permanently lowering the division's margin.
AI Tools Have Yet to Lift Consumer Growth
"AI is opening further opportunities across our business, enhancing internal productivity and creating new sources of growth," Gorin said. The ongoing debate around online travel agencies is whether artificial-intelligence answer engines will send travelers to Expedia Group or intercept the high-margin customers who used to visit its apps and websites directly.
This quarter's numbers show the productivity savings, as technology and content spending excluding stock pay rose only 6% to $293 million while revenue grew 12%. They do not show new consumer growth: consumer revenue slowed to 6% growth from 8% in the first half, and revenue at Expedia Group Advertising, which sells ads across its travel sites, slowed for a third straight quarter to 7% growth ($206 million), down from 19% in the first quarter and 13% in the second.
What to watch: Expedia Group Advertising revenue growth in the fourth quarter. A second single-digit quarter while room nights grow 7% would suggest traffic on the company's own consumer apps is growing more slowly than partner bookings.
Risks this quarter didn't answer
Three standing financial and legal concerns were not updated in the earnings release or presentation.
- IRS tax dispute: last quarter's filing disclosed $988 million to $1,224 million in disputed federal transfer-pricing tax adjustments for 2011–2018; any update on reserves or cash payments will appear in the third-quarter Form 10-Q.
- Currency-hedge losses by division: realized revenue-hedge losses were $23 million across the company versus a $6 million gain a year ago, and $91 million over nine months; the split between the consumer and partner divisions awaits the Form 10-Q segment footnote.
- Multi-item attach rate: the share of travelers booking more than one product per trip remains undisclosed in the release.
👓 Other Themes
Europe Demand Lags While Air Ticket Bookings Fall
Travel demand remains uneven across regions and trip types. Room nights booked in Europe, the Middle East and Africa (EMEA) grew only in the low single digits over the past twelve months, trailing mid-single-digit growth in the US and mid-teens growth in the rest of the world. Meanwhile, booked air tickets fell 6% from a year ago to 13.6 million and air revenue dropped 7% to $93 million as higher ticket prices weighed on volume.
💲 Other KPIs
Cash collected from travelers for trips not yet taken rose 12.9% from a year ago by our math ($12,579 million versus $11,140 million in the third quarter of 2025), outpacing total gross bookings growth of 11%. Merchant bookings, where Expedia Group collects payment upfront rather than acting only as an agent, grew 15% to $21.65 billion.
The average nightly price paid per booked room rose 2.5% from a year ago (reported as 2%) to $215.00. Price growth slowed from 7% in the first quarter and 5% in the second quarter, so the 10% increase in lodging gross bookings ($24.88 billion) came mostly from the 7% rise in booked room nights.
Nine-month free cash flow (operating cash flow minus capital spending) rose 21.3% from a year ago by our math, to $3,627 million. In the third quarter alone, free cash flow was an outflow of $1,399 million versus an outflow of $686 million a year ago, a regular seasonal swing as summer travelers complete stays and the group pays hotel partners.
🔮 Guidance
Unchanged against what the prior full-year plan implied. The fourth-quarter target calls for 4.3% growth at the middle of the range, down from 11% in the third quarter. The range sits right inside the $27.84–28.54 billion implied three months ago by our math, as the quarter compares against an 11% jump a year earlier.
Raised slightly against what the prior full-year plan implied. The target calls for 4.9% growth at the middle ($3.72 billion), nudged up by about $26 million from the $3.66–3.73 billion implied three months ago by our math. If the pattern holds from the 3.8% average beat of the past three quarters, fourth-quarter revenue would grow 8.9% by our math.
New. At the $855 million middle of the range, fourth-quarter Adjusted EBITDA would rise 0.8% from last year's $848 million by our math, and the margin would dip 0.9 percentage points to 23.0% from 23.9% as the business compares against last year's second-half cost cuts.
Raised. The travel group lifted the middle of the full-year bookings range by $1.50 billion to $131.65 billion, or 10% growth. Across four updates this year, the middle of the range held flat in May, rose $2.15 billion in August, and rose $1.50 billion today.
Raised. Management increased the middle of the full-year revenue target by $265 million to $16.40 billion, or 11.3% growth by our math. That follows a $335 million raise in August after holding the range steady in May, and passes through the $238 million third-quarter beat plus $27 million for the fourth quarter.
Raised. The online travel company now plans for its full-year Adjusted EBITDA margin to rise 1.8 to 2.0 percentage points above last year's 23.8%, up from the prior plan of 1.5 to 1.75 percentage points, after nine-month margin expansion reached 2.7 percentage points (26.4% versus 23.7%).
❓ Key Questions
Why does the fourth-quarter plan call for lower profit margins?
Third-quarter Adjusted EBITDA margin rose 1.35 percentage points against a flat forecast, yet the fourth-quarter plan implies a 0.9-point drop at the middle of the range. How much of that step-down is planned marketing spend versus routine caution?
What caused partner overhead and hedge costs to jump 41%?
In the partner division (B2B), overhead and realized currency-hedge costs rose from $117 million to $165 million, cutting the division's margin by 1.34 percentage points. How much came from merging acquired companies versus currency-hedge losses?
What did the $727 million in nine-month acquisitions buy?
Cash spent on acquisitions reached $727 million over the first nine months of 2026, and goodwill and intangibles rose $763 million since December. How much bookings and revenue did acquired businesses contribute to the partner division this quarter?
Why did Expedia Group Advertising growth slow to 7%?
Advertising revenue on Expedia Group's own brands slowed from 19% growth in the first quarter and 13% in the second to 7% in the third ($206 million), flat with the second quarter in dollars. Is ad pricing or direct consumer traffic slowing?
Has the IRS tax dispute required any cash deposits?
Last quarter's filing noted $988 million to $1,224 million in disputed federal tax adjustments for 2011–2018, and nine-month prepaid expenses rose by $817 million on the balance sheet. Did the company make any advance tax payments this quarter?