10-K: Expedia Group's 2024 Annual Report: Revenue Climbs Amid Strategic Shifts

Expedia Group reports a 7% increase in revenue for 2024, driven by growth in the B2B segment and lodging bookings, while navigating strategic initiatives and a complex global environment.

Summary

• Expedia Group's 2024 annual report reveals a 7% increase in total revenue, reaching $13.7 billion.
• Gross bookings increased by 7% to $110.9 billion, primarily driven by lodging gross bookings.
• Lodging revenue increased by 7%, with room nights booked growing by 9%.
• Air revenue increased by 4% due to an increase in air tickets sold.
• Advertising and media revenue increased by 16%, driven by Expedia Group Media Solutions.
• The B2B segment experienced a 21% revenue increase, while trivago's third-party revenue decreased by 7%.
• Operating income increased by 28% to $1.3 billion.
• Adjusted EBITDA increased by 9% to $2.9 billion.
• The company is reinstating quarterly common stock dividends at $0.40 per share, payable on March 27, 2025.
• Expedia Group is executing a $5 billion share repurchase program, with $3.2 billion remaining authorized as of December 31, 2024.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with revenue growth and strategic initiatives, but also acknowledges risks and challenges in the competitive landscape and global environment.

Positives

• Revenue increased by 7% to $13.7 billion.
• Gross bookings increased by 7% to $110.9 billion.
• Lodging revenue increased by 7%, driven by a 9% increase in room nights booked.
• Advertising and media revenue increased by 16%, with Expedia Group Media Solutions growing by 32%.
• The B2B segment experienced a 21% revenue increase.
• Operating income increased by 28% to $1.3 billion.
• Adjusted EBITDA increased by 9% to $2.9 billion.
• The company is reinstating quarterly common stock dividends at $0.40 per share, payable on March 27, 2025.

Negatives

• trivago's third-party revenue decreased by 7%.
• The company recognized intangible impairment charges of $147 million related to indefinite-lived trade names within its B2C and trivago segments.
• Legal reserves, occupancy tax and other charges increased to $118 million, including a $107 million charge related to an Italian VAT settlement reserve and a $30 million charge related to digital service taxes retroactively enacted by Canada.

Risks

• The company operates in a highly competitive global environment.
• Declines or disruptions in the travel industry could adversely affect the business.
• The company's business depends on relationships with travel suppliers and other B2B partners.
• Constraints in liquidity due to factors out of the company's control may occur.
• Indebtedness could adversely affect the business and financial condition.
• Changes in search engine algorithms and dynamics or other traffic-generating arrangements could negatively affect the business.
• The company is subject to payments-related risks, including fraud.
• International operations involve additional risks.
• Acquisitions, investments, divestitures or significant commercial arrangements could result in operating and financial difficulties.
• The company relies on the performance of its employees, and if it is unable to retain, motivate or hire qualified personnel, its business would be harmed.
• The company may not achieve some or all of the expected benefits of its strategic initiatives or its efforts to increase its operational efficiencies, which may adversely affect its business.
• The company is exposed to various counterparty risks.
• The company has foreign exchange risk.
• The alternative accommodations business is subject to regulatory and legal risks.
• A failure to comply with current laws, rules, and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely affect the business.
• Application of existing tax laws, rules, or regulations are subject to interpretation by taxing authorities.
• The company could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities.
• The company is involved in various legal proceedings and may experience unfavorable outcomes, which could adversely affect the business and financial condition.
• The company cannot be sure that its intellectual property and proprietary information is protected from all forms of copying or use by others, including potential competitors.
• The company relies on information technology to operate its businesses and maintain its competitiveness, and if it fails to adequately maintain or improve its information technology systems, or to adapt them to technological developments and industry trends, its business and operations could be adversely affected.
• System interruption, security breaches and unplanned outages in the company's information systems may harm its businesses.
• The company processes, stores and uses customer, supplier and employee personal, financial and other data, which subjects it to risks stemming from possible failure to comply with governmental regulation and other legal obligations, as well as litigation and reputational risks associated with the failure to protect such data from unauthorized use, theft or destruction.
• Increased focus on the company's environmental, social, and governance ('ESG') responsibilities have and will likely continue to result in additional costs and risks, and may adversely impact its reputation, employee retention, and willingness of customers and partners to do business with it.
• Climate change may have an adverse impact on the company's business.
• Mr. Diller may be deemed to beneficially own shares representing approximately 31% of the outstanding voting power of Expedia Group.
• Actual or potential conflicts of interest may develop between Expedia Group management and directors, on the one hand, and the management and directors of IAC, on the other.
• The company's stock price is highly volatile.

Future Outlook

The company expects a healthy but more normalized travel demand environment in 2024, as consumers continue to prioritize spend on travel and experiences over other discretionary spending. Future operational results may be subject to volatility, particularly in the short-term, due to the impact of macroeconomic pressures and evolving geopolitical conflicts.

Management Comments

• Expedia Group's mission is to power global travel for everyone, everywhere.
• We believe travel is a force for good.
• Travel is an essential human experience that strengthens connections, broadens horizons and bridges divides.
• We help reduce the barriers to travel, making it easier, more enjoyable, more attainable and more accessible.
• We bring the world within reach for customers and partners around the globe.

Industry Context

The online travel industry is experiencing increased competition from various sources, including online travel agencies, search engine companies, metasearch companies, and travel supplier direct websites. The increasing popularity of the sharing economy has also had a direct impact on the travel and lodging industry.

Comparison to Industry Standards

• The report mentions Booking Holdings, Airbnb, and Trip.com as key competitors in the online travel agency and alternative accommodations space.
• The report notes that travel suppliers, such as hotels, airlines and rental car companies, may offer products and services on more favorable terms to consumers who transact directly with them.
• The report acknowledges competition from search engines like Google, which are increasingly adding their own travel search functionality and content.
• The report also mentions travel metasearch websites, including Kayak.com (a subsidiary of Booking Holdings), trivago (a majority-owned subsidiary of Expedia Group), TripAdvisor, Skyscanner and Qunar (both are subsidiaries of Trip.com).

Management Changes

Legal Proceedings

• The company is involved in various legal proceedings and disputes involving taxes, personal injury, contract, alleged infringement of third-party intellectual property rights, antitrust, consumer protection, labor and employment matters, securities laws, and other claims.
• The company is currently, or has been in the past, involved in various legal proceedings and disputes involving taxes, personal injury, contract, alleged infringement of third-party intellectual property rights, antitrust, consumer protection, labor and employment matters, securities laws, and other claims, including, but not limited to, the legal proceedings described in Part I, Item 3, Legal Proceedings.
• These matters may involve claims for substantial amounts of money or for other relief that might necessitate changes to our business or operations.
• While the Company maintains insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise and the defense of these actions has been, and will likely continue to be, both time consuming and expensive and the outcomes of these actions cannot be predicted with certainty.
• Determining reserves for pending litigation is a complex, fact-intensive process that requires significant legal judgment.
• It is possible that unfavorable outcomes in one or more such proceedings could result in substantial payments that could adversely affect our business, consolidated financial position, results of operations, or cash flows in a particular period.

Related Party Transactions

• The Company and IAC are related parties because Mr. Diller serves as Chairman and Senior Executive of both Expedia Group and IAC.
• At December 31, 2024, each of Expedia Group and IAC has a 50% ownership interest in two aircraft that may be used by both companies.
• The Company and IAC have agreed to share costs relating to flight crew compensation and benefits pro-rata according to each companys respective usage of the aircraft, for which they are separately billed by the entity described above.
• We share equally in fixed and nonrecurring costs for the aircraft; direct operating costs are pro-rated based on actual usage.
• In addition, we have agreements pursuant to which we may use additional aircraft owned by a subsidiary of IAC on a cost basis.

Stakeholder Impact

• The company's performance is largely dependent on the talents and efforts of its employees.
• Institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers, employees and other stakeholders are increasingly focused on ESG practices of companies, including climate change, diversity, equity and inclusion, human capital management, data privacy and security, supply chains (including human rights issues), among other topics.
• These evolving stakeholder expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks and impacts, any of which may be outside of our control or could have a material adverse impact on our business, including on our reputation and stock price.

Next Steps

• The company will continue to execute its $5 billion share repurchase program.
• The company will pay a quarterly cash dividend of $0.40 per share on March 27, 2025.
• The company will continue to evaluate the potential effect of Pillar Two on future reporting periods.
• The company will continue to monitor the issue of hotel occupancy and other taxes closely and provide additional disclosure, as well as adjust the level of reserves, as developments warrant.

Key Dates

Keywords

Expedia Group, revenue, gross bookings, lodging, air travel, advertising, EBITDA, share repurchase, travel industry, financial results