EXPE earnings call transcript, November 4, 2026

Thank you very much.

Thank you very much.

Derek, why don't you take the first one, just a second.

Hey, Mark.

On the Q4 guidance for growth, you know, I would say, yes, we had a stronger than expected Q3. So we are expecting some moderation in Q4 on the growth. There's a few factors driving that. The first is we're seeing a bit of a softer operating environment. Start the quarter. And that's really driven by a couple of factors. One of them is the U.S. election cycle, where we're seeing an impact that is roughly similar to what we've seen in prior election cycles in terms of softer demand there. The other is the ongoing. geopolitical events that we're seeing in the Middle East and Europe and the impact that they're having both on disrupting demand within those regions, but also on the long haul corridors that run through those regions. The second impact I call out is within our B2B segment. We're now beginning to lap the robust promotional activity that we saw from some of our largest partners that really ramped in Q4 of the prior year. And so while the fundamentals of the B2B business are still really strong. We're going to see a bit and are seeing a bit of a moderation in the growth rate in that business in Q4. And then finally, the last factor I'd note is we did pull forward some of the timing of our fall sale so that more of it occurred in Q3 this year. And that was helpful in terms of capturing seasonal demand in Q4. And we saw that benefit in the efficiency of our marketing, or sorry, of capturing demand in Q3. But we're going to now lap the timing of the sale in the prior year in Q4. So that's another factor. The only thing I'd sort of close.

on there, though, is that we're on pace for a really strong 2026 in total. And we're now on track to beat the top end of the full year guidance range that we set at the beginning of the year for each of bookings and revenues. We're pleased with the growth it's shaping up for the year in total. And then Mark, on your question on agenda partnerships, not surprising that I'll start out by saying it's early days. I'm excited about the possibilities here. And we're working with all the big players to make sure that our brands are showing up well, that they're showing up well, whether it's organically or through direct integrations. We're using the integrations to learn about how our customer behavior is changing, understand how are the agents making decisions, what tech integrations are required. And what kind of customers are using these. You know, right now, again, it's a small amount of traffic. It's high intent traffic. So we're pleased with that. From the third party data we're seeing, we're leading in citation share in the US. So I would just caution us all that it's important to remember that these models are changing frequently, which can lead to big swings on small volumes. But that's why we've got a team focused on it. I also say that the integrations are helping us to learn not only about consumer behavior on those agents, but also to bring those learnings back into the natural language experiences in our products. So it's early days, you know, the economics of the partnerships are being worked out. You know, we have a track record of being able to

work with big advertising platforms or tech platforms to use them as channels to acquire customers at attractive economics. And that's what I think we'll see. And I'll close by saying, you know, so far, what we're seeing is that agentic AI real strength is in discovery, but that when it comes to bookings, people still want to book with a trusted brand, where they know that they'll be taken care of. If something goes wrong, they know they can trust the content and the prices and the like, but it isn't fighting time.

Thank you, Arianne.

Thank you, Derek.

I'll ask a two-parter on B2B. When you think about the growth sustainability of B2B over the next 12 to 18 months, can you break down to us a little bit how you're thinking about the components of growth across wallet share with existing partners, new partners, and verticals, and continued... apply expansion. And the second part of the question would be on the margin for B2B. Is there a way we should be thinking about investment cycles in B2B and different outcomes for margin over shorter duration period of times that we should... we should be aware of that B2B could operate in as a segment.

Thanks so much.

Let me start and then Derek can pick up. Yeah, as you said, B2B had another solid quarter. It's important to note that the growth was broad-based. It was double-digit growth across... all of the regions. And, you know, when we look at the performance drivers that we expect to help us continue to grow, you know, it starts with growing with existing partners. How are we growing wallet share through adding supply... ...by improving the integrations, supporting them on their promotions, and, you know, supporting them as we are sourcing promotional deals that they can surface. Next, it's about enhancements to our existing... ...I talked about the agentic template that we just announced with Qantas. So, you know, our three main products in B2B are the Rapid API, our travel agency platform, and our template. And as we enhance the template with agentic capabilities... As we add activities to the travel agency platform, we think that those will be growth levers in order to grow with existing partners. Of course, also with new partners. And then the last piece is our investments to really be a one-stop. Travel shop. Because we've got a lot of partner relationships. These partners are building travel programs. And if we can be the provider of everything that they need for the travel program, well, that creates growth opportunities. It's why this year we closed the acquisition. of car trawler. It's why we acquired tickets. And so we will continue to invest to make sure that we really can be that one-stop shop for our partners.

And then, Eric, just on the margin question, I think, you know, in the very near term, we are seeing a little pressure on the B2B margins. The primary drives of that in the very near term are, you know, one partner mix. You know, as we help our partners grow and succeed and grow their business, they get into higher tiers and all else being equal. That's going to put a little pressure on margins as we help our partners succeed. Grow the overall scale of our business. The second but smaller factor is just the recent investments that we've been making is already on set in the one stop travel shop. And we do see a little bit of pressure on the margins there in Q3 and into Q4 on the business as a result of that. But if I zoom out longer term, you know, this is a really attractive segment with a huge TAM. And that's why it's very important for us to make these long term investments in the business so we can better serve our partner, grow our overall number of partners. which hit 75,000 more recently, but also drive differentiation and be able to grow the relationship by servicing more of it, which is why the one stop travel shop is so important. So we're really excited about the longer term opportunity for the B2B business to contribute as it's scales to our EPS growth as a business. And then across EG at an EG level, we remain committed to driving efficiency through the business so we can continue to make incremental progress on the overall margins. And you can see that reflected in the updates we made today.

to our full year guidance where we now expect full year emerging expansion of 180 to 200 BIPs, which is again above the high end of the ranges we communicated at the beginning of the year.

the AI in the product.

Hey Justin, it's Derek.

Hey, Jay, this is Derek speaking. Yeah, we've had a lot of progress on the margin. expansion, as you noted. If you actually look over the three years from 2024 through the full year guide here for 26, it's more than four points of margin expansion. We've really done that across a number of different dimensions. Number one is the investments we've made. in our own products and in operational execution that have helped to drive steady, solid top line growth in a healthy demand environment. And that gives us the opportunity to drive leverage over the fixed elements of our cost structure. You know, the second. is we've had much improved consumer marketing returns. We've also driven out efficiency across cost of sales. And I think one recent example I'd cite there is just the work that we've done to leverage AI and traveler support and how we've seen that improve. Cost efficiency there, but also deliver higher satisfaction scores, which is great. And finally, just we've maintained discipline over the overall overhead cost structure. You know, in the most recent quarter is just one example. We were up 1% year over year, even as we drove book. listings and revenue growth double digits. So we've had a pretty good run here of really good margin expansion. As I look forward, I see a lot of opportunity for us to continue to make incremental progress across the cost structure. One is the investment.

That we've made to continue to drive longer term growth and pointing to things like the one stop travel shop on B2B is just one example of that. The things that we're doing to improve services and experiences for the consumer business that Arielle touched on. We also see, you know, many of the changes that we've made on the consumer marketing side to drive leverage there. Well, some of that was big gains that we got from removing inefficient spend. There's things that we've done around how we measure and calibrate those results. How we can move spend effectively and measure accurately to drive it to the most efficient channel. And that's more durable. And we see room for incremental margin improvement on that as well. So we do believe that we can continue to make incremental progress. on margins by staying disciplined on the costs and continuing to drive efficiency out. And hopefully you can see that reflected in the updates we made to our full year margin for this year, where we now expect to see about 180 to 200 bps and hope to make some incremental progress. As we go forward and execute on our strategy. Thank you.

and the infrastructure and supply and all of that that we have in B2B, that global reach, that ability to do servicing allows us to both help our existing partners and potential new partners as they look at Agenda Commerce.

Hey, it's Derek.

Thank you both.

Thank you so much.

So, traffic is changing. As you say, like Google search, things are changing very quickly. The good news for us is that we've got really good metrics and measurement on incrementality and returns. Various channels. So we're keeping an eye on obviously where all of the traffic is coming from over the last 12 to 18 months as we've improved our understanding of returns and incrementality. We've moved our investments across channel from search. to social and the like. And we have teams who do this day in, day out, who are very technical in making sure that we're getting the best returns possible. As you alluded to, OpenAI has launched some advertising products. Yes, we are participating. I think it's important as there are new products that come out on the market to take a posture of testing, being willing to maybe accept some returns that aren't as high as more established. products that are more optimized, and that's our approach across the board as some of these new AI services come out with new products. We'll be testing, learning, and then over time, I believe many of these will become big channels for us. And, you know, to the extent that there's more fragmentation at the top of the funnel, that's a good thing for us.

business for us, and we see a long runway ahead in it. We reach travelers as they're deciding where to stay and what to book, which is incredibly important. We're also in the midst of broadening the business. We expanded our sponsored listings. We've been offering to Vrbo this year, and we're growing display advertising as well as off-platform. And we're using AI in our products to make it much simpler for partners of any size to set up and run campaigns. So while there's a lot of changes happening in our ads business, at the moment, we continue to have high conviction in the long-term opportunity ahead here. And we're excited to see our team land some of these changes for our partners in the months ahead. Thank you.

Thank you so much.

At the highest level, the way I think about the size of the B2B travel market is you take the overall travel market, which is over $3 trillion, you remove from that sort of all of supplier direct, you remove from that a couple of the biggest OTAs in the world, and you say, all of the rest is the addressable market for B2B. Now, there's a lot in there. There are corporate travel agencies, there are offline retail travel agents, there are companies that use travel for their loyalty programs, there are smaller online travel agents in emerging markets. So it's a large market, you do need to look at each of them individually. So, you know, where are we on offline travel agents, you know, we work with 10s and 10s and 10s of 1000s of them. But it's not only can you work with more travel agents, but it's also with ones you work in, can you gain share of wallet, because in a lot of our partnerships, you know, they are not necessarily exclusive partnerships. And so it's that day in day out gaining share of wallet. So that's sort of how I think about it. high level, there are some partners in which we are, you know, high in the share of wallet. And so if you think about the potential there, it's about how much will that partner itself grows so that we can grow with them. And then there are a number of partners we work with where we're still sort of a lower level of share of wallet. So it's really multi dimensional. It's, you know, where can we grow share of wallet with the existing partners and what's that opportunity where there are new partners where we can just place someone else. And then also what new businesses are being created.

That want to use travel as a way of driving customer loyalty. Thank you. I guess the natural follow up would be in the past you split out the growth organically within each. Your partners and then the number of partners that you had into the components of your B2B growth. Is that something you can share again? Are you referring to something we did a couple of years ago when we went to. I'm trying to think of what you're referring to. That we've never disclosed it in our financial statements. I believe a couple of years ago we did a presentation in which we provided a click down within B2B. Is that what you're talking about? You used to give commentary on the quarterly calls. About the split of your growth sort of organically within each partner and then the number of partners that you have.

Okay, we'll look at what we'll disclose in future quarters. I think, again, what we've said in the past, and Derek just said, we've got 75,000 partners that we work with. We've talked about double-digit growth across all of our regions. And we've talked about there isn't a concentration, an inordinate concentration, in any particular partner. So I'll go back and look at what is it that we've said in the past that you may be looking for.

Thank you so much.

All right.