Online travel agency Expedia (NASDAQ:EXPE) reported Q1 CY2024 results topping analysts' expectations, with revenue up 8.4% year on year to $2.89 billion. It made a non-GAAP profit of $0.21 per share, improving from its loss of $0.20 per share in the same quarter last year.

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“Our first quarter results met our guidance with a revenue and earnings beat but with less robust gross bookings. We saw continued momentum in B2B, Brand Expedia and Advertising. However, Vrbo’s recovery following the recent re-platforming has been slower than anticipated, which has put pressure on gross bookings,” said Peter Kern, Vice Chairman and CEO, Expedia Group.

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

Online Travel

Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.

Sales Growth

Expedia's revenue growth over the last three years has been incredible, averaging 61.4% annually. This quarter, Expedia beat analysts' estimates but reported mediocre 8.4% year-on-year revenue growth.

Ahead of the earnings results, analysts were projecting sales to grow 9.1% over the next 12 months.

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Usage 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 nights booked, a key performance metric for the company, grew 15.2% annually to 101.2 million. This is solid growth for a consumer internet company.

In Q1, Expedia added 6.7 million nights booked, translating into 7.1% year-on-year growth.

Revenue Per Booking

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

Expedia's ARPB growth has been subpar over the last two years, averaging 1.8%. The company's ability to increase prices while maintaining its nights booked, however, shows the value of its platform. This quarter, ARPB grew 1.2% year on year to $28.55 per booking.

Key Takeaways from Expedia's Q1 Results

It was great to see Expedia top analysts' revenue and EPS expectations this quarter. Despite the beat, its growth regrettably slowed and its gross bookings fell short of management's expectations, indicating weaker demand going forward. A reason for the lower bookings was Vrbo, whose recent re-platforming is progressing slower than anticipated. Zooming out, we think this was still a decent but mixed quarter due to the lower bookings and demand trends. The market was likely expecting more, and the stock is down 8.5% after reporting, trading at $124.5 per share.

So should you invest in Expedia right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.