Expedia Group, Inc.EXPENASDAQ
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Operator: Hello, everyone. Thank you for joining us and welcome to the Expedia Group, Inc. Q4 2025 financial results webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. For opening remarks, I will now hand the call over to Rob Bevegni, VP of Investor Relations. Please go ahead.
Rob Bevegni: Good afternoon, and welcome to Expedia Group, Inc. fourth quarter 2025 earnings call.
Rob Bevegni: I'm pleased to be joined on today's call by our CEO, Ariane Gorin, and our CFO, Scott Schenkel. As a reminder, our commentary today will include references to certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in our earnings release. Unless otherwise stated, all growth rates are on a year-over-year basis, and any references to expenses exclude stock-based compensation. We will also be making forward-looking statements during the call, which are predictions, projections, and other statements about future events. These statements are based on current expectations and assumptions which are subject to risks and uncertainties that are difficult to predict. Actual results could materially differ due to factors discussed during this call and in our most recent Forms 10-K, 10-Q, and other filings with the SEC. Except as required by law, we do not undertake any responsibilities to update these forward-looking statements. This call is being webcast on the Investor Relations section of our website at ir.expediagroup.com. A replay will be archived on our site. A slide deck containing financial highlights has also been posted on our IR website. For today's call, Ariane will begin with a review of our fourth quarter results and update on our progress against our strategic priorities. Then Scott will provide additional details on our fourth quarter financial performance and guidance. After our prepared remarks, we will turn the call over to our operator to begin the Q&A portion of the call. And with that, let me turn the call over to Ariane.
Ariane Gorin: Thank you, Rob.
Ariane Gorin: Thank you all for joining us today.
Ariane Gorin: We accelerated both bookings and revenue growth and expanded margins by over two points. We returned Vrbo and Hotels.com to growth, while sustaining the performance of Brand Expedia, B2B, and advertising. Looking ahead, we are well positioned to build on our momentum as we execute our strategy and capitalize on the opportunities created by AI. In the fourth quarter, we exceeded our expectations, growing bookings and revenue by 11%, and expanding our margins by four points. Booked room nights were up 9%, including high single digits in the U.S., and low double digits in EMEA and the rest of the world. Consumer spending remained healthy, with longer booking windows and lengths of stay relative to 2024. Our B2B and advertising businesses had stellar quarters. We grew B2B bookings by 24%, and advertising revenue by 19%. Our consumer brands bookings were up 5% overall, and double digits outside the U.S. We grew loyalty members by mid single digits, with faster member growth in our Silver tiers and above. And for the second consecutive quarter, all three core brands delivered year-over-year bookings growth, reflecting sharper brand positioning, product improvements, and ever better execution. Turning to our three strategic priorities, I'll begin with our first: delivering more value to travelers. On product, our sites and apps are 30% faster than they were a year ago. We have upgraded our checkout path and added new payment options, giving travelers more flexibility and making booking even easier. We are using AI to deliver more personalized experiences across all our On brand Expedia, for example, our refined recommendation models drove our best fourth quarter attach rates ever. This is a strong signal, as travelers who buy multiple products spend more and return more often. We also know how important it is to give travelers confidence throughout their journey, including when plans change. Our ability to meet this need is an important competitive advantage. Last quarter, we expanded VrboCare, strengthening Vrbo's differentiation and giving travelers peace of mind when booking their trips. Across our brands, we enhanced our help center and servicing capabilities so travelers can effortlessly modify their bookings or get support if things go wrong. This resulted in record traveler self-service levels. And for more complex issues that require a live agent, our advanced agent tools are contributing to materially reduced wait times, even during peak call periods. All of that translates into more satisfied travelers. On supply, we continue to broaden our inventory to give travelers more choice and better value. In the fourth quarter, we grew our lodging property count by more than 10% compared to 2024. We are sourcing more promotional rates, up more than 10 points from the third quarter, and partner-funded promotions were over 30% of bookings in Q4. Nearly 70% more properties participated in our Black Friday sale than ever before. These trends demonstrate the strength of our flywheel, as deeper partner participation increases traveler value and drives incremental demand back to our partners. Turning to our second priority, investing where we see the greatest opportunities for growth. B2B had another fantastic quarter, with double-digit growth across all regions. We gained share with existing partners and benefited from increased marketing activity from some of our largest partners. We added new partners and had more active travel agents than any prior fourth quarter. We continue to invest in new lines of business, extending capabilities from our consumer business into B2B. Last quarter, we launched a cancel for any reason assurance product. And in December, we announced our intent to acquire Tickets to broaden the activities we offer to our partners and their travelers. B2B is a great business, and we will continue to invest to drive future growth. On advertising, we reaccelerated revenue growth and finished the year with a record number of active partners. We continue to expand placements of new ad formats, and after launching video ads in our search results in early 2025, last quarter, we introduced video ads on Expedia's homepage. We are a high return channel for our partners. And as we inject AI into both our ads and our ad targeting tools, our ads are becoming more relevant, in performance. Finally, as Gen AI changes how travelers do trip discovery, it opens up new growth opportunities for us. We are working with all the major platforms to capture traveler demand, ensuring our brands show up prominently in GenAI searches, and function effectively with the agentic browser. We are experimenting aggressively and while volume is still small, every additional integration gives us data and learnings about how to better surface our brands and how consumer behaviors are evolving. These learnings coupled with insights from our own brands, in turn informing the development of AI experiences in our own products. And that is important because while third-party AI experiences are a new way to attract travelers and turn them into loyal members, our biggest long-term opportunity remains direct engagement. Today, two thirds of our bookings come from travelers who begin their planning journey directly with our brands. And those direct bookings are growing faster than bookings from indirect channel. We are confident that our work to make our products even more personalized and intuitive along with our work on supply, customer service, and loyalty, will deepen our competitive advantage. Moving to the third pillar of our strategy, driving operating efficiencies and margin expansion. We expanded margins by nearly four points in the quarter, thanks to our continued operational discipline, and volume leverage. I am particularly pleased with the work we have done to get marketing leverage in our consumer brands. We have improved our targeting and measurement capabilities, reduced our least efficient spend, and reallocated dollars to where we see the highest incremental return. We also continue to optimize our organizational structure for speed and effectiveness, ensuring we have the right skills and velocity to execute on our strategy. At the same time, we are deploying AI internally to give our team superpowers and make our offerings to travelers and partners even more competitive. This is already delivering tangible benefits. Our product and tech teams are using AI to design and build products, improving quality while shortening cycle time. Our supply teams are leveraging AI to speed up inventory onboarding team. And our service team is using AI to resolve traveler issues faster and more effectively. As we grow our business, and increase our use of AI, we are keeping a close eye on cost, and we have been able to optimize our cloud spend through technology improvements, and a more disciplined cloud operating model. In closing, I want to thank our teams for their hard work and our partners for their continued trust in us. We enter 2026, our thirtieth year as a company, well positioned to extend our momentum. Looking ahead, we are confident in our strategy and our ability to execute to drive long-term value for all stakeholders. With that, I will turn it over to Scott.
Scott Schenkel: Thank you, Ariane, and good afternoon, everyone. I'm pleased to share our fourth quarter 2025 performance
Scott Schenkel: which exceeded the high end of our guidance range with bookings and revenue up 11% and EBITDA margin expansion of nearly four points. As Ariane mentioned, our outperformance was driven by sustained market strength through year end and disciplined execution across the company. We grew share in the U.S. for both hotel and Vrbo, and held lodging share globally. We also saw continued strength from B2B, which was a meaningful driver to our overall performance in the quarter. Our booked room nights were up 9%, driven by continued strength in the U.S., and sequential acceleration in EMEA, where B2C once again saw its fastest growth in nearly three years. Growth in rest of world slowed as issues in Asia weighed on growth in multiple quarters. Gross bookings and revenue grew 11% to $27,000,000,000 and $3,500,000,000 respectively. The impact from foreign exchange was roughly in line with expectations, adding slightly over one point to bookings growth and about two points to revenue. Moving to our segment performance. B2C gross bookings of $18,300,000,000 grew 5% driven by sustained momentum both domestically and internationally. B2C revenue of $2,200,000,000 grew 4%,
Scott Schenkel: consistent with last
Scott Schenkel: quarter, bookings growth exceeded revenue growth primarily due to book-to-stay timing, as the majority of our revenues are recorded at the time of stay. B2C EBITDA margins were 31.5%, up approximately six points from last year, driven by significant marketing leverage. Margins were further supported by disciplined overhead management as well as continued growth in our high-margin advertising revenues. B2B gross bookings grew 24% to $8,700,000,000 with continued double-digit growth across all regions. Rapid API was again the largest contributor to growth, and benefited from increased marketing activities with some of our largest partners. B2B revenue grew 24% to $1,300,000,000, while B2B EBITDA margins were 24%, down approximately a point. As we have stated previously, we will continue to prioritize investments to future growth, which may modestly weigh on near-term margins. Moving to our cost structure where we again leveraged meaningfully across all our categories. Cost of revenue is $342,000,000, up 3% but leveraging one point as a percentage of revenue driven by continued efficiencies in payments and customer service. Total direct sales and marketing expenses were $1,700,000,000, up 10%. We saw significant leverage in our B2C business with direct sales and marketing down 5%, leveraging half a point as a percentage of B2C gross bookings. This was offset by growth in B2B expense, which reflects partner commissions and is recognized at the time of stay. Overhead expenses were $640,000,000, roughly flat versus last year, while leveraging over two points on revenue. As a reminder, last year, we implemented a series of cost reductions which had a meaningful impact on the margin in the back half of the year, and expect those actions to favorably impact 2026. Additionally, we have already taken action in January with our product and technology organizations to simplify and become more efficient. While we will be using much of the savings to strategically rehire in key areas like AI and machine learning, these type of actions will favor margins as well. Turning to profitability. We delivered fourth quarter adjusted of $848,000,000 with a margin of 24%. The nearly four points of adjusted EBITDA margin expansion was driven by revenue growth, expense leverage and cost out, particularly within B2C direct sales and marketing. Adjusted EPS of $3.78 grew 58%, outpacing EBITDA growth due to share repurchases and a lower tax rate. Moving to our cash position. We ended the quarter with $5,700,000,000 of unrestricted cash and short-term investments, and we remain committed to maintaining debt levels consistent with our investment grade rating. Free cash flow for the year was $3,100,000,000 and reflects the strength of our operating model and disciplined execution of our strategic priorities. In Q4, we utilized $255,000,000 to repurchase 1,100,000 shares of our common stock, and since 2022, we have repurchased over 45,000,000 shares, reducing our share count by 22% net of dilution. We remain committed to returning capital to shareholders. We intend to continue opportunistic share repurchases at a pace similar to recent years and today are raising our quarterly dividend by 20% to $0.48 a share. Turning to our outlook. Our guidance reflects strong bookings momentum as we enter Q1, while remaining appropriately cautious given ongoing macro uncertainty. For the first quarter, we expect gross bookings growth to be between 10% to 12% with revenue of 11% to 13%. At current exchange rates, this assumes foreign exchange tailwinds approximately three points to bookings, four points to revenue, and implies stability in growth at the upper end of the range. For EBITDA, we expect EBITDA margins to be up three to four points. As a reminder, the first quarter is our lowest EBITDA quarter, so the benefits of our prior cost actions will have an outsized impact in Q1 relative to other quarters. For the full year, we expect gross bookings growth to be between 6% and 8% and revenue of 6% to 9%, including one and two points of FX tailwind, respectively. Similar to our Q1 guidance, the upper end of our range implies stability and growth on an FX-neutral basis, while the lower end of the range reflects a more cautious view given the dynamic macro environment. We experienced variability in bookings during 2025 and our 2026 outlook assumes a more seasonal cadence similar to what we saw in 2024. Regarding EBITDA margins, we noted last quarter we expect a more moderate pace of expansion in 2025, as we lap the benefits from our 2025 headcount reductions and marketing optimization. With this in mind, we do expect full-year margins to expand by 100 to 125 basis points as we maintain cost discipline while selectively reinvesting in growth initiatives. In closing, I am proud of the progress the team delivered in 2025, driving faster site performance, a leaner cost structure, and more efficient marketing, all of which strengthen our confidence in the outlook shared today. With clear momentum across our strategic priorities, we are well positioned for long-term profitable growth and remain confident in our ability to and create shareholder value in 2026 and beyond. With that, we will now open the call for questions.
Operator: We will now open for questions. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Mark Mahaney with Evercore ISI. Please go ahead.
Mark Stephen Mahaney: Thanks. I wanted to ask two questions, please. One, Ariane, could you just talk about the product or the features that you would want to try to roll out or are rolling out in order to really enhance the travel planning process on Expedia. It is always known as a booking site, but what can you do to kind of capture more people up the funnel and to just kind of keep them there? And then secondly, Scott, you know, a lot of leverage being shown in B2C marketing. Just talk about how much more leverage there is there going forwards, or are there other sources of leverage that are just as big as what you have been able to get out of that so far? Thank you.
Ariane Gorin: So I would start my answer saying it is not just what we are doing in the product. It starts with marketing, and we are doing a lot of work to make sure we know travelers. We are targeting them. We are personalizing our marketing to them so that when they are doing discovery, whether it is in social channels or anywhere else, and when they are seeing our brands, they see messages that resonate with them. And then when they land on our brands, we are giving them relevant relevant context so that they then convert. Again, it starts with the marketing, knowing our travelers, having messages that resonate with them, so we are top of mind. Then in the product, obviously, we do a very good job when people land in converting them, but there are things that we can do, whether it is agents of you know, that can help look at if you have a certain budget then, you know, how do we give you ideas? If you want to search by destination, you know, if you want to work search by themes, I think there is a lot of exciting things can come both in the existing flows, but also in natural language flows. You know, right now, we have got an agent, sort of the AI agent in Hotels.com. What works the best is actually the point solutions like AI filters or property Q&A. And what the team is working on, and we will have more to share later this year, is how we can use natural language and sort of AI to allow people to go from the trip planning all the way into the booking. Again, I just reemphasize it is not just when they land with us. It is also how are our brands known and what is the work we are doing in marketing.
Scott Schenkel: Mark, to your question on the marketing, maybe a few thoughts and then some context. We have leveraged about 50 basis points as a percentage of GBD in B2C. And we have done that through strong marketing discipline, improving efficiency, by holding the teams accountable, and having a strong point of view about return levels, incrementality, detailed analytical insights, and then reallocation. And I think we have done some really nice work
Scott Schenkel: to
Scott Schenkel: cut costs sharply accurately. And then as think, redeploy where we see upside between channels. And the improved targeting and measurement capabilities I think have allowed us to be more dynamic in terms of how we manage our direct B2C sales and marketing. And I think the reduced spend on lower performing channels and reallocating has really helped kind of cut costs, take some leverage, and then also reinvest for growth in other channels. So it feels very good. And as we look forward to the rest of 2026, think you can expect more of the same.
Ariane Gorin: And just to add to that, I would say at the highest level, we are taking a more disciplined and data-driven approach to our marketing. And it is even more grounded in customer insights. Scott and I challenged the team to improve the returns and they have done a great job. We have significantly stepped up the measurement capabilities we have, our testing velocity, and our understanding of incrementality, and that sits behind a lot of what Scott described. Also, the work that we have done to sharpen our brand value propositions with stronger creative makes our spend more effective. So last year was a big year for relaunching Hotels.com with the Bellboy, and we were able to move awareness and consideration numbers. For Brand Expedia, just last week with the Super Bowl, we launched a new campaign, which is the one place you go to go places. It was actually the most watched ad on YouTube with over 200,000,000 viewers. So that, you know, as the creative is good, that also helps our efficiency. And finally, the product and tech improvements that I talked about in my prepared remarks, the fact that our sites are faster, that they are converting better, that also makes our marketing dollars go further because when we bring traffic into our brands, they are converting better.
Mark Stephen Mahaney: Thank you, Ariane. Thank you, Scott.
Operator: Your next question comes from Eric James Sheridan with Goldman Sachs. Please go ahead.
Scott Schenkel: Part of the answer to Mark's
Eric James Sheridan: question. How would you characterize the current competitive positioning of your consumer facing brands? And how much of them have been realigned for where you want them to be in the marketplace today or to the degree level of work still needs to be done to sort of have them operating on a more normalized level from a growth standpoint as we go deeper into 2026. Thanks so much. Yep.
Ariane Gorin: I feel very good about we are where we are in the positioning of each of the three brands, and that has been a lot of work over the last twelve to eighteen months. So positioning Expedia as the one stop shop where you go to find everything. Positioning Hotels.com as the hotel pure play with a great loyalty value proposition. And, you know, Savior Way, which we launched at the end of last year, was a key part of that. For Vrbo, positioning it as the trusted pure play vacation rental marketplace, know, last year when we finally launched our promotion suite, that allowed us to, you know, basically expand our supply. In November, when we expanded VrboCare, it gave travelers more trust. So I would say sort of the positioning, I feel good about. We have done a lot of work that are just the basics of the marketplace around supply, around, you know, faster speed, all of those things are great. And now there is really just a lot of growth potential growth as our marketing becomes more effective. There is international growth. As I shared in my prepared remarks, room nights were growing faster outside of the U.S. than in the U.S. So there is always work to be done. But I feel like especially relative to a year ago, we are in a good place for those brands and a healthy place to be able to grow.
Scott Schenkel: Great. Thank you.
Operator: Your next question is from Jed Kelly with Oppenheimer and Co. Please go ahead.
Eric James Sheridan: Hey. Great. Thanks for taking my
Jed Kelly: question, and good job. I guess, Ariane, since you have been here or taken over, you have really done a nice job making the business a pretty consistent EBITDA compounder, and you considered generate consistent margin growth. And I do not want to get you too take you too far out, but can you just give us a vision on where you potentially see the margin trajectory of this business could go over the medium term? Thank you.
Ariane Gorin: Thank you, Jed. Look. All I what I will tell you is there is more to come. Obviously, you can see in our full-year guide that we see more margin expansion. And it is not only us executing more effectively. It is our marketing executing more effectively. It is us being able to deliver more from the teams that we have. And, of course, the beauty of this business is as we grow, as we get more scale, I think the margins will come. So, you know, I would just say my confidence in the growth comes from the fact that we have got a lot of potential on B2C like I just talked about. Know, B2B there is always more opportunity to get more partners. We are making investments in new lines of business, which know, again, gives us positions us even better to be the one stop shop for our partners. There is more supply. We grew the number of lodging properties in the fourth quarter by 10%, and there is still a lot to go. There are some where we do not have the coverage that we would like. We can get more promotions. Obviously, last year, we added Southwest. We added Ryanair. So that gives me a lot of confidence in growth. And then the ads business, you know, I see a lot of potential especially in using AI to make those ads even more effective. So, yeah, I again, I see growth on the horizon. I am excited about the opportunities, and AI just gives me even more confidence.
Scott Schenkel: Yeah. I think just a couple of quick points. I think the dynamic that we are looking at is a really strong quarter for outlook for Q1 as well. So an extra three to four points on margin rate expansion for Q1. But for the rest of the year, as I pointed out in my prepared remarks, to be somewhat muted in the context of versus a 3% to 4% number. Just as we have taken a number of actions I want to come back to that, but a number of actions last year had not only on headcount but also on marketing costs, on cloud costs, those have kind of had a compounding effect over the course of the year and are hitting Q1 strongly. But I think the way Ariane operates is she challenges everyone on the team to get more for less. And so there is a constant drumbeat in the business of do we think about operating smarter, do we do it with less money, and how do we do it in a way that then favors growth as we think about reinvesting some of those funds as well as dropping some of that through to the bottom line. So as we look out over the course of 2026 for certain, and I do not anticipate that culture to change as well. Yeah. Just to ask that, you know, I talk a lot about being brilliant at the basics.
Ariane Gorin: And also about making every dollar count. And it is important that we all look whether it is in our cloud spend, whether it is in our marketing spend, whether it is just where we are allocating our time, are we doing it where we can have the highest returns and make the most impact?
Jed Kelly: Thank you.
Operator: Your next question comes from Conor T. Cunningham with Melius Research. Please go ahead.
Scott Schenkel: Hi, everyone. Thank you. Just a helpful comment on the 10% supply growth that you gave for the fourth quarter. Curious on how that is actually trended into 1Q. Mean, obviously, there is a lot of debate around
Conor T. Cunningham: hotels going more direct with large language models and so on. And then maybe if you could just parse out branded hotel growth versus ones that are not, I think that would be a helpful outline. Thank you.
Ariane Gorin: Sorry. Can you repeat? I missed the first part of the question. You said 10% hotel growth, and I missed the end of it. Can you repeat, please?
Scott Schenkel: Just yeah. Sorry. So just on you talked about 10% supply growth.
Conor T. Cunningham: I am curious on how that has progressed into 2026. Obviously, there is this debate around hotels going more direct with large language models and so on. So just curious on that. Versus you know? And if you could parse it out a little bit between branded hotels versus ones that are not would be that would be helpful. Thank you.
Ariane Gorin: Sure. Okay. Thank you. Look. We continue to add more properties. We, you know, we have added airlines last year. There is even if we have a very good assortment, especially as we are growing internationally, there will be opportunity to do more. And in fact, some of the work we did on AI has sped up the time it takes to onboard properties. It is 70% faster than it was before. So you know, I expect we will continue adding supply. We will continue adding rate plans. And as for the talk about, you know, large language models and what that can do, what we are seeing is our business continues to grow. We are doing work with the large language models and with this, with whether it is ChatGPT or Google and the like to make sure our brands are showing up well there. We are doing work in answer engine optimization, in native integrations, work with agentic browsers, and all of the work that we do there benefits our suppliers because we are doing the complicated work to help them drive demand to them through our business. Obviously, you know, in the same way that they could always get business direct through Google and the like, that will continue to be the case. But as long as we do the job of making sure that our brands have very strong value propositions, that travelers know them, they trust the value they are going to get coming to us, the same thing in our B2B business that we are adding value to the B2B partners, I think the pie will expand. Thank you.
Operator: Your next question is from Kevin Campbell Kopelman with TD Cowen. Please go ahead.
Scott Schenkel: Hi. This is Jacob in for Kevin. Thanks for taking question. I have two questions. Is Expedia seeing any changes on traffic from Google as they continue to roll out more advanced AI features within travel?
Jacob Seed: And then on B2B direct sales and marketing costs of 27% year over year, can you talk about key drivers
Scott Schenkel: and how you see that playing out this year?
Ariane Gorin: Sure. I will take the first one and then hand it to Scott. Look. We were not seeing material changes right now. We are experimenting aggressively. We are working closely with Google and others as they are adapting their interfaces, making sure that our brands show up well, as I said, through many ways, whether it is answer engine optimization, native integrations, and browsers. I actually think that AI search opens up even more possibilities to reach more travelers, and as there is more context in those searches, there is an opportunity for us to better target and then as we bring those travelers into our ecosystem to better convert. So I think it is an exciting time right now. Again, it is a fast moving time. We are clear eyed about where we all are, but, you know, our strategy is to be in early, to partner deeply, to get learnings from these early integrations, and to find opportunities. Because one thing we have always been good at is figuring out how to surface our brands in third-party experiences and then convert travelers that come to us and we will continue doing that.
Scott Schenkel: And for B2B marketing, it really was more aligned with the revenue number, so 24%, versus anything else. Because the dynamic is we book that with the time of stay. And it is more a commission model than it is a rev share model than it is a marketing spend. So it is pretty straightforward.
Jacob Seed: Got it. Thank you.
Conor T. Cunningham: Yep.
Operator: Your next question comes from Kenneth Gawrelski with Wells Fargo. Please go ahead.
Scott Schenkel: Thank you so much. Could I want to stick on the B2B side. You talk about any kind of concentration or any specific drivers that is driven that continues to drive the robust growth you see there? And as you look throughout 2026, any factors we should be thinking about on the top line? And then maybe, say, on B2B, you touched upon the margins and perhaps some temporary investment pressure on margins. Could you talk a little bit about the kind of the key factors driving that potential pressure early this year? And then maybe the longer-term outlook is should we think about these the 25% B2B margins as kind of the right place to think about the long-term outlook for the B2B business on the margin side? Thank you.
Scott Schenkel: Yes. Ken, I know you work from the bottom up there. First off, on margins, and we talked about this last quarter as well. As we are redeploying a portion of the savings that we are delivering in other parts of the company, we are investing in B2B initiatives that will weigh in the short term on our near term, will be weighing on those on our margins there. But we will continue to do those investments because that is one of the that we see as strong growth opportunity for the company, and I will let Ariane jump in on that in a second. That is factored into our Q1 and our 2026 guide. And so without getting into guiding by business unit or talking about specific numbers, we have had, what, 18 quarters now of strong double digit growth in B2B. So I think it has been relatively consistent and strong double growth. And as we invest in the new products, new lines of business, we feel like we can make that continue going forward.
Ariane Gorin: And I would just add, we took actions to win wallet share with existing partners. The B2B business benefited from the supply work that I was referring to earlier. You know, the fact that we had more partners participating in Black Friday. We had an increase in the number of properties. All of that flows through into B2B. Plus, you know, some of our large partners made investments in marketing in the fourth quarter, which we then benefited from. Our travel agency platform, which we call TAP, performed very well. We expanded the loyalty program. We grew the number agents that were active in the fourth quarter. On our template, which a number of partners use, we have improved the configurability. I mentioned we launched our first assurance offering. So it is really the team is innovating across the product and technology, adding supply. We are deepening our partner relationships. And that has been a formula that has worked for us. As I always tell the team, it is a competitive industry. We are going to win some deals. We are going to lose some deals. The important thing is that we keep on adding partners. We keep on innovating. I think the work that we are doing in the new lines of business is going to be very exciting for the years to come. And, you know, we really believe in this business.
Operator: Your next question is from Deepak Mathivanan with Cantor Fitzgerald. Please go ahead.
Scott Schenkel: Hey. Thanks for taking the questions.
Eric James Sheridan: Ariane, can you talk a little bit more about the development efforts on the AI experiences side? Are you approaching it know, generally using the current LLM architecture and your cloud partners, or do you think you need to
Scott Schenkel: fundamentally
Harshit Vaish: build new AI capabilities specific to travel, maybe with Expedia data in a unique way. And then if I can ask one for Scott, how should we think about the tech and infrastructure investments that required to build and support some of the AI experiences? The platform currently already well positioned to a trade on AI capabilities? Or do you anticipate potentially making some investments on this front? Thank you so much.
Ariane Gorin: Sure. So in the product, I think of AI in a couple ways. One is just in the existing flows, how do we use AI to make a better travel experience? So that is, you know, personalization. It is better recommendations. Better ranking models. It is more personalized content. So you know, if someone has always goes to properties that have spas, how do I make sure that that is what they are, you know, that we are highlighting on properties? So that is one sort of real area of, I think, potential product improvement and performance. The other is everything related to natural language engagement with the product, which I talked about earlier. How do you introduce natural language? How do you make it both sort of typing and also spoken? I would say it is earlier days on that, but that is also sort of a vector that we are going down. You I will just give you an example, though, of why I believe both things need to live side by side. Think about something like servicing, you can go into our app and you can go through the native flow and, you know, make changes, cancel, change your room type, in a few clicks. You can also do that in the servicing agent, and we want to make sure that we give people the choice of which of those makes most sense to them. In terms of the question about sort of the architecture and the technology, I would start by saying it is grounded in our data. So a lot of the work we have done the last couple of years has been about making sure that, you know, we have clean data. We have got, you know, customer data, destination data, and the like. And our tech teams are looking at the architecture. They are learning. They are obviously staying on the front foot on how things are evolving. And in fact, some of the partnerships that we are doing, whether it is around agentic browsers and the like, really does keep us on the forefront. And that is true both for our consumer business and for our B2B business.
Scott Schenkel: You want to talk briefly about the platform and kind of how you see that, and then I will pick up on the numbers?
Ariane Gorin: Sure. I mean, look. The platform, I mean, anybody who tells you their platform is done is not truthful. At the same time, I do not foresee some kind of big platform transformation like we had in the company a few years ago. At all. I think it is about understanding where the technology is evolving, understanding where are the pieces that we need to shift, where are the new architectures that we need to look at. But, you know, I would say it is not on one end of the spectrum or the very other end of the spectrum.
Scott Schenkel: Yeah. I think that is well said. I think the dynamic is not a majority of our spend, but it is a continual spend to make sure that our platform contemporary and continues to evolve. I think the other thing I would point to how we are thinking about it, and I think in the spirit of your
Conor T. Cunningham: question,
Scott Schenkel: we think about reshaping the product and technology teams, what we are trying to do is, you know, look at do we operate smarter, how do we operate in a way that is more efficient and effective, simplify the organization and our decision making and speed? And at the same time, bring new talent in around AI and machine learning that can develop our help develop our product in ways that Ariane just talked about.
Ariane Gorin: So
Scott Schenkel: while there will be some net benefits to that, I think in the margin rate, overall, I think that is cut cost to invest and grow strategically.
Ariane Gorin: And I said in my prepared remarks that even though we are using AI more, we are growing the business, you know, we have optimized our cloud spend and from our technology spend. And going back to the whole theme of discipline and making every dollar you can just count on the fact that the way we are looking at the technology work, it is how do we make sure we have the platform that we need and we are doing it with sort of the cost also in our mind.
Harshit Vaish: Very helpful. Thanks, Ariane. Thanks, Scott.
Operator: Your next question is from Naved Ahmad Khan with B. Riley Securities. Please go ahead. Great.
Harshit Vaish: You very much. Adrian, I have one question on alternative lodging. So you have had alternative lodging on Brand Expedia for some time, and I am curious if you can provide any color on what the uptake is for what the mix looks like for alternate lodging versus hotel today versus maybe a couple of years ago or just last year. Is that growing or are you still trying to get more adoption there? And then for Scott, maybe, you know, can you just maybe talk a little bit about CapEx for 2026 and how should we be thinking about that? Thank you.
Ariane Gorin: Sure. It is definitely growing. It is to me, it is not where it is, it is not at its maximum potential, and that is why I believe that there is a real opportunity there. But we made great progress in 2025 on selling vacation rentals on Brand Expedia. We changed the UX. So if you go onto lodging, you now see sort of there is all lodging and then hotels and vacation rental. We brought on inventory. We made sure the servicing experience was great. So there was a lot of work that we did to drive more vacation rentals on Brand Expedia to support our one stop shop value proposition, and there is still upside there.
Scott Schenkel: Yeah. On CapEx, it will be roughly in line with 25. I would not anticipate a material change one way or the other.
Harshit Vaish: Thank you.
Operator: Question is from Deutsche Bank. Your line is open. Please go ahead.
Conor T. Cunningham: Great. Thanks for taking the questions. I guess, one, as you think about your 2026 outlook, can you comment at all if it assumes your B2C business accelerates relative to 5% you delivered this year? And how you are thinking about the challenges you may face in terms of delivering acceleration while simultaneously bringing down the intensity of your ad spend. And then maybe just on AI topic of the day, topic of the week, if are you thinking about the potential urgency to invest more aggressively into loyalty in your B2C business as some of these general purpose chatbots take on more of the customer relationship in travel funds. Thank you both.
Ariane Gorin: I will take the first. I will take the last of the question, and Scott can take the first. Look. We always feel a sense of urgency to make sure that we are delivering more value and more trust to our travelers. And travel is a high stakes purchase. Know, it or it can be. It is complex. It is high stakes. It is not like a T-shirt, where, you know, if you choose the wrong one, you can send it back. Is it there is something that happens in your trip, you never get your time back. And that is why we are investing a lot in making sure that not only we have a great selection and price and assortment, and the ability to, you know, add trip elements after you bought one, but also building trust. You know, we have got proprietary verified reviews, and we know that 70% of travelers check reviews before they make a booking. So the fact that, you know, when they if they make their booking with us and they do their shopping, they are going to have that trusted information is really important. Or the fact that if something goes wrong in the trip, they are going to be able to, you know, either deal with it in our app or call us is important. You know, I will just add that during the winter storms and government shutdown, we were able to answer our calls on average between one to three minutes. Was the best in the industry, we believe. And, you know, travelers want to know that we have got their back. So, of course, continuing to enhance the loyalty program is one piece of our offer. But there is a lot of different parts that we believe, you know, make travelers want to continue a deep relationship with us.
Harshit Vaish: Yeah. Maybe to try and be helpful, I am not going to get into
Scott Schenkel: by BU guide for 2026, but maybe just some thoughts around guidance overall. First off, for Q1, we exited Q4 with strong, clear momentum. Think we are all encouraged by our strong start to the year. And we expect our first quarter bookings growth of 10% to 12%. That, of course, includes three points from an FX tailwind, but we expect to be able to deliver that. I would not expect a material difference in growth rates amongst the BUs, but obviously, it does oscillate up and down a bit even in 2025. For 2026, at the high end, our full-year guide of 8% reflects stable healthy growth on a constant currency basis at the high end again. As we will update each quarter as we go along. But again, I would not expect a material shift
Scott Schenkel: in
Scott Schenkel: an overall growth rate between business units if you look at the last couple of years average. Last year's average, I should say.
Scott Schenkel: Understood. Thank you both.
Scott Schenkel: Yeah.
Operator: Our last question will be from Trevor Young with Barclays. Please go ahead.
Conor T. Cunningham: Great. Thanks for fitting me in. You spoke to supply growth earlier in your comments. Was that largely a B2B dynamic outside of the U.S.? Or are you seeing some of that in B2C domestically? We have got a few major hotel supply partners speaking to pushing more inventory to the OTAs in Q3 and Q4 and being sharper on pricing and so forth. And so we were just wondering if that was the tailwind for your U.S. room night growth, contributing to that coming in at high single digits again. And then my second question is on the Tickets acquisition, it appears to be more positioned on the B2B side.
Scott Schenkel: Is there an opportunity to leverage that on the B2C side as well to push
Conor T. Cunningham: into experiences more broadly across your customer base? Thank you.
Ariane Gorin: Sure. So on the first question, the supply, it works on both parts of the business, B2C and B2B. When I talked about 10% growth in number of properties, and then also the promotions, that flows through to both. And that is just the way the platform works, and that is the way our business model works. And it is a value that we deliver to our supply partners is they have one connection, and they can get access to all of the demand. In terms of Tickets, yes, I did talk about as part of our B2B business because it is going to be run by the person who is leading B2B. And we think it is a great value proposition to be able to extend what we are offering in B2B. But, obviously, it is going to, you know, that their expertise is going to have an impact in B2C. So while we are, you know, we will keep our B2C product, when you bring in some expertise like that, it can only help us do even better.
Scott Schenkel: Great. Thank you, Ariane.
Operator: The Q&A is now over. I will now turn the call back to CEO, Ariane Gorin, for closing remarks.
Ariane Gorin: So I just want to thank you all for joining our call today. We closed 2025 strong, and as we enter 2026, we remain focused on executing our strategy to deliver value for all of our stakeholders. So thank you all.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.