Expedia's (NASDAQ:EXPE) Q3: Beats On Revenue

Online travel agency Expedia (NASDAQ:EXPE) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 8.7% year on year to $4.41 billion. On top of that, next quarter’s revenue guidance ($3.41 billion at the midpoint) was surprisingly good and 4.2% above what analysts were expecting. Its non-GAAP profit of $7.57 per share was 9% above analysts’ consensus estimates.

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Company Overview

Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world’s leading online travel agencies.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Expedia’s sales grew at a mediocre 8.3% compounded annual growth rate over the last three years. This fell short of our benchmark for the consumer internet sector and is a rough starting point for our analysis.

This quarter, Expedia reported year-on-year revenue growth of 8.7%, and its $4.41 billion of revenue exceeded Wall Street’s estimates by 2.9%. Company management is currently guiding for a 7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

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Room Nights Booked

Booking Growth

As an online travel company, Expedia generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.

Over the last two years, Expedia’s room nights booked, a key performance metric for the company, increased by 8.9% annually to 108.2 million in the latest quarter. This growth rate is decent for a consumer internet business and indicates people enjoy using its offerings.

In Q3, Expedia added 10.8 million room nights booked, leading to 11.1% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating booking growth.

Revenue Per Booking

Average revenue per booking (ARPB) is a critical metric to track because it not only measures how much users book on its platform but also the commission that Expedia can charge.

Expedia’s ARPB fell over the last two years, averaging 1.7% annual declines. This isn’t great, but the increase in room nights booked is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Expedia tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether bookings can continue growing at the current pace.

This quarter, Expedia’s ARPB clocked in at $40.78. It declined 2.2% year on year, worse than the change in its room nights booked.

Key Takeaways from Expedia’s Q3 Results

We were impressed by how significantly Expedia blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $219.70 immediately after reporting.

Is Expedia an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.