Breaking Down Expedia Group, Inc. (EXPE) Financial Health: Key Insights for Investors

You've seen the headlines about travel demand, but you need to know if Expedia Group, Inc. (EXPE) is still a smart bet as consumer budgets tighten. The good news is the financial health looks defintely solid, but the growth engine has shifted; it's not just about leisure anymore. The company's trailing twelve-month (TTM) revenue through Q3 2025 clocked in at a robust $14.37 Billion, a steady 7.29% climb year-over-year. That's a lot of tickets and room nights. However, the real story is the structural pivot to business-to-business (B2B) operations, which saw bookings jump a massive 26% year-over-year in Q3 2025, proving their strategy is working. Analysts are currently projecting a full-year 2025 Earnings Per Share (EPS) of $12.28, suggesting strong operational efficiency is translating directly to the bottom line, plus the company returned value by repurchasing $957 million in shares in the first half of 2025. We need to look past the gross bookings and see where that profit is actually coming from.

Revenue Analysis

If you're looking at Expedia Group, Inc. (EXPE), the top-line story for 2025 is one of solid, strategic growth, largely fueled by a powerful but often overlooked segment. For the trailing twelve months ending September 30, 2025, Expedia Group's total revenue hit $14.37 billion, marking a respectable 7.29% increase year-over-year. The third quarter of 2025 (Q3 2025) was defintely a high point, delivering $4.41 billion in revenue, which was up 9% from the same quarter last year.

This revenue growth isn't just a tide lifting all boats; it's a clear shift in where the company is focusing its energy and capital. The key takeaway for investors is that the Business-to-Business (B2B) segment is now the primary engine, driving both volume and revenue expansion.

The Shifting Mix of Primary Revenue Sources

Expedia Group generates revenue primarily through three channels: its core Business-to-Consumer (B2C) brands like Expedia, Hotels.com, and Vrbo; its rapidly expanding B2B segment (Private Label Solutions); and its Advertising and Media businesses, including trivago. Both B2C and B2B utilize a mix of merchant (where Expedia is the seller) and agency (where Expedia earns a commission) models.

Here's the quick math on Q3 2025 performance-it shows a clear divergence in growth rates that you need to pay attention to:

B2B: The Unstoppable Growth Engine

The most significant change in the revenue profile is the consistent, outsized contribution from B2B. This segment partners with corporate travel managers, airlines, and financial institutions, providing them with Expedia's travel supply and technology platform. This isn't a new strategy, but its execution is now bearing serious fruit. The B2B segment saw its revenue jump by 18% in Q3 2025, and its gross bookings surged by an even more impressive 26%. This is the 17th consecutive quarter of double-digit growth for B2B bookings.

Why does this matter? B2B revenue is often seen as more stable and less reliant on volatile consumer marketing spend. It's a high-growth, high-margin area that is systematically diversifying Expedia Group's risk away from pure consumer direct traffic. Lodging bookings, the company's core product, grew 13% overall, with hotel bookings up 15%, largely driven by this B2B strength. The B2C side is still the largest revenue contributor, but B2B is where the momentum is.

• B2B growth provides revenue stability.
• Advertising revenue (up 16%) also shows partner confidence.
• The focus on platform technology is paying off.

If you want to dig deeper into who is capitalizing on this B2B momentum, you should read Exploring Expedia Group, Inc. (EXPE) Investor Profile: Who's Buying and Why?

Profitability Metrics

You need to know where the money actually sticks in a business like Expedia Group, Inc. (EXPE), especially as the travel sector matures. The direct takeaway is that Expedia Group, Inc. maintains a best-in-class gross margin, but its operating efficiency still lags behind its primary competitor, Booking Holdings, Inc.

The company's profitability picture for the 2025 trailing twelve months (TTM) shows a healthy top-line performance translating into solid, though not spectacular, bottom-line growth. Gross profit margin-which shows revenue left after the direct cost of sales-is exceptionally strong at approximately 89.6% (LTM June 2025). This high figure is typical for an online travel agency (OTA) because their main cost of revenue is low, reflecting the commission-based model rather than physical inventory costs. It means they are defintely capturing the vast majority of their revenue from bookings.

However, the real story is told further down the income statement. Here is the quick math on the key TTM margins ending in late 2025:

• Gross Profit Margin: 89.6%
• Operating Margin: 11.79%
• Net Profit Margin: 9.66% (Based on TTM Net Income of $1.388 billion and Revenue of $14.37 billion)

The drop from the 89.6% Gross Margin to the 11.79% Operating Margin highlights the massive spend on operating expenses (OpEx), primarily marketing, technology, and general administrative costs. For the twelve months ending September 30, 2025, Net Income was $1.388 billion, representing a significant year-over-year increase of 30.08%, which indicates that the firm's cost control efforts are starting to pay off.

Benchmarking Operational Efficiency

To be fair, Expedia Group, Inc.'s profitability ratios look great compared to asset-heavy travel companies like hotel chains, but they must be benchmarked against other OTAs. When we compare Expedia Group, Inc. to its closest peer, Booking Holdings, Inc., a clear difference in operational efficiency emerges. This is where the rubber meets the road for investors.

Booking Holdings, Inc. has a slightly lower Gross Margin at 86.8% (LTM June 2025), but their TTM Operating Margin is significantly higher at 23.70% (as of November 2025). Here's the comparison:

What this comparison hides is that Expedia Group, Inc. has been actively working to close this gap. Management has been focused on platform consolidation and disciplined expense control, which is why the TTM Operating Margin of 11.79% (Nov 2025) is an improvement from the 2024 fiscal year's 11.26%. The company is also seeing strong growth in its B2B (Business-to-Business) segment, which is inherently higher-margin and less reliant on costly performance marketing than the B2C (Business-to-Consumer) side. This strategic pivot is a key driver for future margin expansion. If you want to dive deeper into who is driving these numbers, you should check out Exploring Expedia Group, Inc. (EXPE) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You need to know how Expedia Group, Inc. (EXPE) is funding its operations, because a company's capital structure-the mix of debt and equity-tells you a lot about its risk profile and future flexibility. The direct takeaway is that Expedia Group, Inc. operates with a significantly higher reliance on debt compared to its shareholder equity, which is a common, though high-risk, strategy for mature companies in the online travel space.

As of the most recent reporting periods in late 2025, the company's total debt is substantial. For instance, the long-term debt for the quarter ending September 30, 2025, stood at approximately $4.468 billion, showing a decrease year-over-year, which is a positive sign for debt reduction efforts. Short-term debt, which is due within one year, was around $1.747 billion as of June 2025. Here's the quick math: total debt is roughly $6.2 billion against a total shareholder equity of about $2.6 billion as of September 29, 2025.

This heavy debt load translates into a high Debt-to-Equity (D/E) ratio. The D/E ratio, which measures the proportion of debt and equity used to finance assets, was reported at 7.43 as of November 14, 2025. This is a very high number. To be fair, a ratio of 1.76 is often considered about average for similar companies, which means Expedia Group, Inc. is operating with significantly more leverage than many peers. A D/E ratio this high places the company in the bottom 10% of its industry, suggesting a higher financial risk for shareholders. That's a lot of leverage to manage.

The company is defintely active in managing this debt. In February 2025, S&P Global Ratings assigned a 'BBB' issue-level rating to proposed senior unsecured notes, which aligns with their issuer credit rating and stable outlook. This investment-grade rating is crucial, as it keeps borrowing costs manageable. The proceeds from these notes were earmarked for general corporate purposes, including debt refinancing, but also for capital returns like dividends and share repurchases. This shows a clear strategy to use debt not just for growth, but also to enhance shareholder value.

Expedia Group, Inc. balances its capital structure by using debt (leverage) to amplify returns, especially since its operating cash flow is strong enough to cover the debt. They also utilize equity funding, but the debt side of the equation is clearly dominant. This aggressive use of debt is a calculated risk-it can supercharge returns during good times, but it also increases the risk of financial distress if a downturn hits the travel sector. For a deeper dive into the company's long-term strategy, you can review the Mission Statement, Vision, & Core Values of Expedia Group, Inc. (EXPE).

• Long-Term Debt (Q3 2025): $4.468 billion.
• Short-Term Debt (Q2 2025): $1.747 billion.
• Debt-to-Equity Ratio (Nov 2025): 7.43.

Liquidity and Solvency

You need to know if Expedia Group, Inc. (EXPE) can cover its near-term bills, especially given the cyclical nature of the travel industry. The direct takeaway is that while the company's traditional liquidity ratios look weak, its underlying cash flow generation is strong, which is typical for a platform business model.

Looking at the balance sheet as of November 2025, Expedia Group, Inc. operates with a negative working capital (Current Assets minus Current Liabilities). This is not a red flag by itself for an online travel agency (OTA), but it requires a closer look. The working capital is approximately ($3.8 Billion), a figure that's expected to improve slightly to about ($3.6 Billion). This negative balance exists because customers pay in advance for travel, creating a large liability called deferred revenue, which is a short-term liability that doesn't require a cash outflow.

Here's the quick math on their immediate ability to pay short-term debt (current liabilities):

• Current Ratio: The ratio of current assets to current liabilities is approximately 0.75x.
• Quick Ratio: The quick ratio, which excludes less liquid assets like inventory, is also approximately 0.75x.

A ratio below 1.0x means current liabilities, at $17.26 Billion as of September 2025, exceed current assets, which were $12.85 Billion. This is a common characteristic in asset-light, platform-based companies like Expedia Group, Inc. because of that large deferred revenue component. What this estimate hides is the high-quality nature of their current assets, which include a substantial cash and equivalents balance of around $5.83 Billion.

The real strength lies in the cash flow statement. For the trailing twelve months (TTM) ended June 30, 2025, the company generated robust $2.778 Billion in net cash from operating activities. This strong operational cash flow is the primary liquidity engine for the business. After accounting for capital expenditures of about $781 Million, the Free Cash Flow (FCF) for the TTM was a healthy $2.0 Billion.

The cash flow trends show a clear capital allocation strategy:

• Operating Cash Flow: Strong and positive, reflecting the core business's profitability and efficient working capital management.
• Investing Cash Flow: Primarily a net outflow for capital expenditures (CapEx) to maintain and enhance their technology platform, which is a necessary investment for their growth drivers.
• Financing Cash Flow: A significant net cash outflow of ($1.180 Billion) for the first six months of 2025. This is defintely driven by the company's aggressive share repurchase program, which utilized $627 million in the second quarter alone.

While the low current and quick ratios might concern a novice, the consistent, strong operating cash flow and positive Free Cash Flow mitigate any immediate liquidity concerns. The company is using its cash to return capital to shareholders via buybacks and dividends, not just to cover operational shortfalls. This is a sign of management confidence. For more on the strategic direction driving this cash generation, you can review their Mission Statement, Vision, & Core Values of Expedia Group, Inc. (EXPE).

Valuation Analysis

You want to know if Expedia Group, Inc. (EXPE) is a buy, and the quick answer is that the market views it as a 'Moderate Buy,' but its valuation multiples suggest a more nuanced picture. While the stock has seen massive gains, its forward-looking metrics point to a reasonable valuation based on expected earnings growth, suggesting it's not defintely overvalued at its current price.

As of November 2025, the stock closed at around $234.77 a share, sitting comfortably within its 52-week range of $130.01 to $279.61. Over the last twelve months, the stock has delivered a strong return, increasing by 45.94%, which reflects the post-pandemic travel rebound and solid execution. That's a serious run, so the question is how much growth is already priced in.

Here's the quick math on key valuation multiples (or, how expensive the stock is) for Expedia Group, Inc. (EXPE) based on trailing twelve months (TTM) data as of November 2025:

• Price-to-Earnings (P/E) Ratio (TTM): 21.09. This is lower than its ten-year historical average of 42.11, suggesting it's cheaper than it has been historically relative to earnings.
• Forward P/E Ratio: 13.62. This is the one to watch, as it dramatically drops based on analyst expectations for 2025 earnings, indicating significant expected growth.
• Price-to-Book (P/B) Ratio (TTM): 21.60. This is high, which is common for asset-light technology companies like Expedia Group, Inc. (EXPE), but it shows the market is paying a premium for intangible assets and brand equity.
• Enterprise Value-to-EBITDA (EV/EBITDA) (TTM): 13.46. This multiple helps compare the company against peers, as it strips out capital structure differences (like debt).

What this estimate hides is the company's capital structure. The EV/EBITDA of 13.46 is a more reliable metric for a capital-intensive industry like travel tech, and it sits near the median for the sector, making the stock look reasonably priced rather than cheap or wildly expensive.

The Street has a generally positive outlook. The analyst consensus is a 'Buy' or 'Moderate Buy'. The average price target from analysts is around $248.19, which implies a modest upside from the current price. Some firms, like DA Davidson, have even raised their price targets to $294.00, aligning with the view that the company is currently undervalued based on future growth prospects.

For income-focused investors, Expedia Group, Inc. (EXPE) offers a small but stable dividend. The annual dividend is $1.60 per share, translating to a yield of about 0.67%. The payout ratio is very low at approximately 15.31%, which is a good sign of dividend safety and suggests the company has ample room to reinvest earnings back into the business or increase the payout later.

To dig deeper into who is driving this price action, you should read Exploring Expedia Group, Inc. (EXPE) Investor Profile: Who's Buying and Why?

Next Step: Portfolio Manager: Model a discounted cash flow (DCF) valuation using the consensus FY 2025 EPS of $17.24 to confirm the implied growth rate by Friday.

Risk Factors

You're looking at Expedia Group, Inc. (EXPE) after a strong run, especially with the Q3 2025 results beating expectations. But as a seasoned analyst, I defintely see the need to map out the near-term risks. The company is executing well, but the travel sector is a dynamic, cutthroat business, so you need to understand where the real pressure points are.

The core risk for Expedia Group, Inc. (EXPE) is a strategic one: maintaining growth and margin expansion against a formidable competitor, Booking Holdings, and navigating the persistent softness in the U.S. consumer travel market, despite recent improvements.

External and Market Headwinds

The biggest threats to Expedia Group, Inc. (EXPE)'s financial health are external, starting with the competitive duopoly in the Online Travel Agency (OTA) space. Expedia Group, Inc. (EXPE) and Booking Holdings essentially control the global OTA market, but Booking Holdings has a stronger international presence, which translates to higher commission rates and better margins. Expedia Group, Inc. (EXPE) is still heavily reliant on the U.S. market.

Also, the macro environment is a constant worry. Management specifically flagged the potential impact of a U.S. government shutdown or major airline disruptions during the Q3 2025 earnings call, which could immediately affect near-term demand. Honestly, any significant global event can instantly crater the travel market. Plus, lingering price sensitivity among U.S. consumers remains a relevant risk, even as demand has improved.

• Competition: Direct booking from hotels and airlines cuts into Expedia Group, Inc. (EXPE)'s margin.
• Macro Volatility: Geopolitical or economic shocks instantly hit travel demand.

Operational and Financial Exposure

Operationally, the company's heavy reliance on its technology platform is a double-edged sword. System failures, or a major cybersecurity breach, could severely damage its brand reputation and halt bookings. The cost of maintaining and enhancing its brand awareness-investing in loyalty programs and marketing-is also expected to keep rising, which can pressure profitability if not managed effectively.

On the financial side, while the balance sheet looks healthy, the total liabilities are substantial. As of March 2025, the company had total debt of approximately $6.21 billion, though its net debt was only around $74.0 million due to a large cash reserve of $6.14 billion. Here's the quick math: while the net debt is low, the total liabilities due within one year stood at roughly $18.6 billion in March 2025, which is a big working capital number to manage. You need to monitor that current liability load.

Mitigation Strategies and Clear Actions

Expedia Group, Inc. (EXPE) is actively mitigating these risks through a clear, two-pronged strategy: diversification and efficiency.

First, they are heavily leaning into their Business-to-Business (B2B) segment, which is a major growth engine. B2B gross bookings surged 26% in Q3 2025, providing a strong counterbalance to the slower 7% growth in consumer bookings. This B2B momentum, led by Rapid API, is a crucial strategic shift that diversifies revenue away from pure consumer-facing volatility. Mission Statement, Vision, & Core Values of Expedia Group, Inc. (EXPE).

Second, they are using Artificial Intelligence (AI) to drive operational efficiency and expand margins. The Q3 2025 adjusted EBITDA margin expanded by over 2 points, which management directly attributed to operational discipline and volume leverage, including gains from AI features in search and service. They expect to continue these cost-out efforts to drive further margin expansion in 2026, albeit at a more moderated pace.

Your next step is to monitor the Q4 2025 results to see if they hit the raised full-year guidance of 6% to 8% revenue growth, paying close attention to any commentary on U.S. consumer demand and B2B momentum. That's the key signal for 2026.

Growth Opportunities

You're looking for a clear map of where Expedia Group, Inc. (EXPE) is headed, and the answer is simple: the growth story for 2025 is less about the retail traveler and much more about the B2B segment and international markets. The company's strategic pivot is paying off, so you should expect revenue growth to land in the 6.0%-8.0% range for the full fiscal year, with a corresponding 2-point expansion in Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins. That's a significant margin improvement, defintely showing operational discipline.

Here's the quick math: the B2B (Business-to-Business) segment is the clear accelerator. In the third quarter of 2025, B2B gross bookings surged 26.0% year-over-year, driving an 18.0% increase in B2B revenue. This segment, which includes Partner Solutions and corporate travel management via Egencia, provides a more stable, high-volume revenue stream that acts as a buffer against softer consumer demand in the U.S. market.

Key Growth Drivers and Strategic Focus

Expedia Group, Inc. isn't just riding the post-pandemic travel wave; they are actively shaping their market position through three core initiatives. This is a classic case of a mature company using technology and scale to build a deeper competitive moat (a sustainable competitive advantage).

• B2B Expansion: Continues to be the primary engine, growing at a double-digit rate for 17 consecutive quarters, fueled by new travel agency clients and the Rapid API adoption.
• AI-Driven Product Innovation: Integrating Artificial Intelligence across the platform to streamline the customer experience, from AI-powered itinerary builders to the Flight Deals app, which targets price-sensitive travelers.
• Global Loyalty and Supply: The unified 'One Key' loyalty program across core brands like Expedia, Hotels.com, and Vrbo enhances customer retention. Plus, they've expanded supply by adding major airlines like Southwest and Ryanair.

What this strategy hides is the geographic split. While the U.S. market has shown a more moderate pace, the international segment is on fire. In Q3 2025, room nights booked in Asia, for instance, saw growth exceeding 20%, underscoring the success of their international expansion efforts.

2025 Financial Projections and Competitive Edge

The company's raised full-year guidance reflects management's confidence in this B2B and international momentum. Analyst consensus for the full fiscal year 2025 Adjusted Earnings Per Share (EPS) is a robust $12.28. This performance against a backdrop of intense competition from Booking Holdings and Airbnb shows that their integrated merchant model and technology stack consolidation are working to improve profitability.

To give you a clearer picture of the near-term forecast, here are the key metrics that matter most for the full 2025 fiscal year, based on the most recent guidance:

The company's competitive advantage is its diversified portfolio of brands-Expedia, Hotels.com, Vrbo-all now running on a single, unified technology platform. This allows them to roll out new features, like AI tools, faster and at a lower cost than their competitors, giving them a significant edge in product velocity. For a deeper dive into the valuation, you can read our full analysis here: Breaking Down Expedia Group, Inc. (EXPE) Financial Health: Key Insights for Investors.

Your action item is to monitor the B2B gross bookings growth in the coming quarters; anything below 20% year-over-year would signal a slowdown in their most critical growth engine and require a re-evaluation of the long-term thesis.