3Q23: Exceeding expectations on the back of resilient travel demand
- 3Q23 exceeded expectations with record revenue and EBITDA
- Affirms full year guidance of double-digit topline growth and margin improvement
- New $5b share repurchase authorisation, accounting for c.35% of its market capitalisation
3Q23 exceeded expectations with record revenue and EBITDA. In 3Q23, Expedia posted revenue of $3.93b (+9% yoy), above consensus estimates of $3.86b. Adjusted EBITDA was up 13% as EBITDA margins expanded by 110 bps to 31%, due in part to higher revenues and cost control. Adjusted EPS of $5.41 (+33% yoy) also surpassed consensus estimates of $4.93. Total gross bookings of $25.7b grew 7% yoy, driven by an 8% growth in lodging gross bookings which represents a record third quarter.
Expedia maintains full year guidance of double-digit topline growth and margin improvement. Consensus currently sees top line growth at 9.8%, slightly below guidance, and EBITDA margins of 20% in FY23 (vs 20% in FY22). Negatives from tech migration largely in the rear-view mirror post completion of the VRBO (an online marketplace for vacation rentals) migration to Expedia’s front-end stack but we believe it will take time for the positive effects to accrue. Meanwhile, Expedia continues in its effort to acquire high lifetime value customers which could see its One Key loyalty program rolling into other regions beyond the US, driving marketing spend. Another notable development this quarter is share repurchases worth $1.8b YTD and a new $5b share repurchase authorisation, accounting for c.35% of its market capitalisation.