On the back of an artificial intelligence (AI)-focused technological overhaul, Expedia Group reported its highest Q1 profitability in company history on Thursday.
Within the results, the company's adjusted EBITDA rose 83% year over year to $542 million. Room nights booked totaled 113.9 million, up 6% compared to the same period last year. Gross bookings came to $35.5 billion, marking a 13% increase year over year. Revenue totaled $3.4 billion for the quarter, a 15% gain compared to Q1 2025.
“We delivered double-digit bookings and revenue growth and drove meaningful margin expansion despite a dynamic macroeconomic environment,” said Ariane Gorin, CEO of Expedia Group.
Net loss was $6 million, 97% lower than the $200 million net loss reported for the same period last year. Direct sales and marketing expenses totaled $1.9 billion, up 6% year over year in Q1.
The results come as Expedia Group has ramped up its AI efforts, long viewing the technology as an opportunity to lead. Now, it’s starting to see those AI investments drive performance.
AI’s impact by the numbers
Gorin said AI is improving personalization and conversions while also boosting operational efficiency and customer service.
The company is using data from hundreds of millions of traveler interactions across shopping, servicing, reviews and more to better its ranking and recommendation models.
AI-powered conversations have offered richer data, while more advanced models have allowed the company to uncover what Gorin called “deeper patterns.”
“In the first quarter, this translated into higher conversion at Vrbo and record attach rates on Expedia,” she said. “Our two most widely adopted features are our servicing agent and AI-powered filters, and travelers who use AI filters return more often and convert at higher rates.”
AI is also helping Expedia Group strengthen its supply advantage. Gorin pointed to the company’s network of nearly 3.7 million properties, including 800,000 exclusive listings.
The technology has helped Expedia Group onboard partners more quickly. Gorin said in the last quarter that the company’s lodging property count was up 10%, with the fastest growth coming from outside the U.S.
AI is also impacting the post-booking experience.
“We handle more than 250 million service interactions a year, with over half resolved through self-service. More than 30% of those are powered by AI, and that number keeps increasing,” she said.
The technology also helped the company manage travel disruptions and cancellations.
“As flights were cancelled across the Middle East, AI helped us handle surging volumes at speed, allowing our human agents to focus on more complex, time-sensitive issues,” she said.
The company’s marketing strategy is benefitting from AI, too. “AI-enabled tools are driving hundreds of millions of dollars in realized marketing value through greater productivity and workflow automation,” she said.
Answer engines ‘fastest-growing channel’
AI has bolstered the company’s discovery, traffic acquisition and marketing.
Right now, around two thirds of Expedia Group’s bookings come through direct channels, but AI platforms offer an opportunity to grow through indirect channels, she said.
Answer engine optimization is now the company’s “fastest-growing channel,” Gorin said, pointing to the company’s February announcement that it had gone live with ChatGPT ads.
“Traffic and bookings from AI-driven channels remain small, but we're encouraged by the mix of new users’ conversion and average purchase size,” she said, adding it’s a long-term play to access a sizable, engaged audience.
With channels like Google’s Gemini, OpenAI’s ChatGPT and Anthropic’s Claude, the priority is making sure the group’s brands show up and then directing traffic to those brands.
The company also has integrations with ChatGPT and Claude. Those integrations are informing understanding of user behavior and how to bring them into Expedia Group apps. Gorin said she anticipates more experimentation in the coming quarters.
Uber, Expedia and growing B2B
Last week, Uber and Expedia Group announced a partnership bringing Expedia Group’s hotel inventory—and eventually its short-term rental inventory through Vrbo—to Uber. Expedia Group is also integrating Uber with its platform.
Gorin said the Uber partnership will benefit Expedia Group.
“Uber is strong in some of the regions where our brands aren't as strong,” Gorin said, noting that the partnership is launching first in the U.S. and elsewhere. “So that's going to give us access to that demand.”
The CEO said she consistently pushes for partner acquisitions on the B2B side.
“It's really about how do we continue to build up our partner network, which then creates a virtuous cycle,” she said, adding that partnerships strengthen Expedia Group’s content, too.
The alignment with Uber comes as Expedia Group continues to focus financially on its B2B side.
Scott Schenkel, the outgoing CFO of Expedia Group, said on the call that the company’s B2B segment has continued to benefit from the elevated marketing activities of its largest partners.
“B2B revenue grew 25% to $1.2 billion, and EBITDA margins were 22.7%, approximately flat year over year,” Schenkel said. “As we have stated previously, we will continue to prioritize B2B investments to support future growth, which will weigh on near-term margins.”
Gorin said B2B as a value proposition creates a flywheel, helping assets across the company. She views it as another brand within the company, similar to how one might look at Vrbo or Expedia.
“We've talked in previous quarters about our ambition in building out more lines of business in B2B to become a one-stop shop,” Gorin said.
Schenkel will step down from the CFO role and will be succeeded by Derek Andersen on May 11.
Expedia Group is hosting its Explore event in Las Vegas, Nevada, May 19 to May 20. Stay tuned for coverage from PhocusWire.