Expedia grew Q2 2026 revenue 14% to $4.3B on 12% higher gross bookings, led by B2B (+23% revenue); flat B2C marketing lifted adjusted EBITDA 23%, while a $280M investment gain inflated GAAP net income to $878M.
Revenue
$4.3B
+14.0% YoY
Net income
$878M
+166.1% YoY
Diluted EPS
$7.16
+188.7% YoY
Operating margin
18.6%
Overview
Expedia Group's second quarter of 2026 (three months ended June 30, 2026) was a clean beat on the parts of the business it controls, set against a patchier travel backdrop. Revenue rose 14% to $4,315 million, gross bookings (the total value of trips customers booked, including taxes and fees, before Expedia's cut) rose 12% to $33.9 billion, and operating income jumped 65% to $800 million. The company said it exceeded the high end of its own guidance and raised its full-year outlook (per the August 5, 2026 earnings release, Exhibit 99.1 to Form 8-K).
Two things to separate before reading the headline profit numbers:
Net income nearly tripled to $878 million, but a large part of that is not from selling travel. "Other, net" swung to a $215 million gain from a $78 million loss a year earlier, mainly because of a $280 million mark-to-market gain on minority equity investments. The 10-Q identifies that equity stake as Global Business Travel Group (GBTG), which agreed in May 2026 to be taken private at $9.50 per share. Those gains are also largely non-taxable, which is why the effective tax rate fell to 14.8% from 23.9%.
The underlying improvement is still real. Adjusted EBITDA, the company's main internal profit measure (earnings before interest, tax, depreciation and amortization, excluding stock-based pay, restructuring and other items), rose 23% to $1,119 million. Adjusted EPS rose 36% to $5.76, against 188% growth in GAAP diluted EPS (both from the earnings release). The gap between those two growth rates is roughly the size of the investment gain.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$4,315M
$3,786M
+14.0%
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¹ From the Q2 2026 earnings release (8-K Exhibit 99.1, August 5, 2026); all other figures from the Form 10-Q. The 10-Q's MD&A states room night growth (6%) and ADR growth (5%) but not the absolute figures.
Year to date (six months): revenue $7,741 million (+14%), gross bookings $69,458 million (+12%), operating income $1,051 million vs. $415 million, net income attributable to Expedia $872 million vs. $130 million, diluted EPS $7.05 vs. $0.96, and adjusted EBITDA $1,661 million (+38%). The year-to-date operating figure includes a one-off credit: Canada repealed its Digital Services Tax in March 2026, and Expedia reversed $71 million of previously accrued liabilities, which is why the "legal reserves, occupancy tax and other" line was a $58 million credit for the half.
Segments: B2B is the growth engine, B2C is the margin story
Expedia reports three segments. B2C is its consumer brands (Expedia.com, Hotels.com, Vrbo). B2B sells Expedia's hotel inventory and booking technology to other businesses such as airlines, banks, travel agents and online retailers. trivago is a hotel price-comparison site in which Expedia holds a majority stake.
Segment
Revenue Q2 2026
Revenue Q2 2025
Growth
Gross bookings growth
Adj. EBITDA Q2 2026
Adj. EBITDA Q2 2025
Adj. EBITDA margin (Q2 26 vs Q2 25)
B2C
$2,677M
$2,479M
+8%
+8% ($23,186M)
$889M
$728M
33.2% vs 29.4%
B2B
$1,493M
$1,209M
+23%
+21% ($10,742M)
$369M
$331M
24.7% vs 27.4%
trivago (third-party revenue)
$145M
$98M
+48%
n/a
$1M
-$6M
n/a
Segment margins are calculated here from the 10-Q's segment revenue and segment adjusted EBITDA; the "unallocated corporate" cost of $140 million (vs. $145 million) sits outside the segments.
B2C grew revenue 8%, in line with its bookings, but lifted its adjusted EBITDA 22%. The 10-Q attributes this to "revenue growth and disciplined cost management, particularly in direct selling and marketing." MD&A says B2C bookings growth "was driven by sustained momentum in the U.S."
B2B delivered the growth: bookings +21% and revenue +23%. Management names Rapid API, the product that lets partners plug Expedia's hotel supply into their own sites, as the largest contributor. B2B's margin fell even though its direct selling costs (mostly partner commissions) grew slightly slower than revenue: the pressure came from its other operating costs, which rose to $170 million from $98 million, and cost of revenue, which rose to $39 million from $28 million. The 10-Q describes this as "a prioritization of investments to support future growth." B2B still added $38 million of adjusted EBITDA year over year, but at a lower rate on each dollar of revenue.
Room nights grew only 6% while bookings grew 12%. The difference is mostly price: the average daily rate booked rose 5% (the 10-Q says room night growth "was led by continued strength at B2B"). Lodging revenue rose 13%, "primarily driven by higher ADRs stayed and an increase in room nights stayed in our hotel business." Expedia does not disclose revenue per room night. The nearest disclosed take-rate measure, revenue margin, edged up to 12.7% from 12.4%: flat at 11.5% in B2C, 13.9% vs. 13.7% in B2B.
Marketing efficiency: the biggest source of margin expansion
For an online travel agency, marketing is the largest cost. Expedia pays search engines, metasearch sites and TV advertisers to win customers, and in B2B it pays commissions to partners.
Consolidated direct selling and marketing rose 10% to $2,119 million, but fell to 49.1% of revenue from 50.7%. The 10-Q says the increase was "primarily driven by an increase in B2B partner commissions to support revenue growth."
Within the segment tables, B2C direct marketing was essentially flat: $1,101 million vs. $1,092 million (+0.8%), while B2C revenue grew 8%. B2C marketing spend fell to about 41% of B2C revenue from about 44%. For the half year, B2C direct marketing actually fell to $2,136 million from $2,207 million, while B2C revenue rose 8%. That is the "significant marketing leverage" management refers to, and it is the main reason B2C's adjusted EBITDA margin widened by nearly 4 points.
B2B direct selling costs rose 22% to $915 million from $752 million, slightly below B2B revenue growth of 23%.
Other costs were flat or fell as a share of revenue. Technology and content was flat at $325 million, as lower personnel costs from earlier cost-cutting offset higher cloud and licensing costs. Cost of revenue fell to 9.3% of revenue from 9.9%, which the 10-Q attributes to "continued efficiencies in payments." Restructuring charges dropped to $13 million from $44 million. Management expects about $35 million more.
U.S. vs. international demand
According to the earnings release, revenue from U.S. points of sale (bookings made through U.S. sites) was $2,570 million, up 12%. Revenue from non-U.S. points of sale was $1,745 million, up 18%. The release classifies all trivago revenue (+48%) as non-U.S., which lifts the international growth rate, so it is not a clean measure of consumer demand abroad. The 10-Q is cautious about Europe: events in the Middle East and Mexico late in Q1 "negatively affected the travel industry, and that pressure continued into the second quarter, particularly in Europe, where macro headwinds and reduced air capacity weighed on demand."
Air is where that shows most. Booked air tickets fell 5% and air revenue fell 13% to $91 million, reflecting "lower revenue per ticket" as reduced airline capacity pushed fares up. Air is only about 2% of revenue. Smaller lines grew faster: EG Advertising (sponsored listings on Expedia's own sites) rose 13% to $206 million, and "other" revenue (insurance, car rental, cruise, activities) rose 23% to $444 million.
Stock-based pay, buybacks and the balance sheet
Stock-based compensation was $114 million, up from $105 million. Adjusted EBITDA excludes it, but it is a real cost to shareholders. It equalled about 10% of the quarter's adjusted EBITDA.
Buybacks: Expedia repurchased about 883,000 shares for roughly $200 million in Q2 (average of about $219 in May and $230 in June). Over the half year it bought back 4.2 million shares for $900 million. In May the board authorized a new $5 billion program, leaving $5.7 billion of authorization at June 30. Diluted shares fell to 122.6 million from 132.8 million a year earlier. That 7.7% decline explains why EPS growth ran well ahead of net income growth. The quarterly dividend stays at $0.48.
Debt and cash: In February Expedia repaid $750 million of 5.0% notes and paid about $1.1 billion to settle its 0% convertible notes, including a $78 million conversion premium. In April it issued $1 billion of 5.5% notes due 2036. Cash and short-term investments were $7.1 billion, up from $5.7 billion at year-end. Operating cash flow for the half was $5.4 billion, helped by customers paying for trips before Expedia pays hotels, a seasonal inflow that the 10-Q notes typically reverses in the second half of the year.
Tax dispute to watch: after quarter-end, the IRS issued new transfer-pricing adjustments for 2011–2018. As proposed, they would mean roughly $988 million to $1.22 billion of federal tax (sum of the three ranges given in the 10-Q), plus interest. Expedia says it disagrees and "will continue to vigorously defend our position."
Takeaway: Ignore the 166% jump in GAAP net income, which is inflated by a $280 million non-operating investment gain and a lower tax rate on it. The quality signal is in B2C: consumer-brand revenue grew 8% while direct marketing spend was flat, lifting B2C's adjusted EBITDA margin to 33.2% from 29.4%. B2B is now the growth engine (+23% revenue), but it earns thinner margins because partner commissions scale with revenue.
Outlook
The earnings release raised full-year 2026 guidance:
Full year 2026
Previous guidance
Current guidance
Gross bookings
$127–129B (+6–8%)
$129.5–130.8B (+8–9%)
Revenue
$15.6–16.0B (+6–9%)
$16.05–16.22B (+9–10%)
Adjusted EBITDA margin expansion
+1.0–1.25 pts
+1.5–1.75 pts
For Q3 2026, management guides to gross bookings of $32.2–32.8 billion (+5–7%), revenue of $4.65–4.75 billion (+5–8%) and adjusted EBITDA of $1.51–1.56 billion.
Our read: the Q3 guide implies a sharp slowdown, from 12% bookings growth in Q2 to 5–7%, even with the full-year range raised. Much of the full-year increase comes from the first-half beat, and the second half is guided far more conservatively. That fits the 10-Q's caution about Europe and air capacity. The margin story looks more durable than the growth story. B2C marketing discipline and lower restructuring charges don't depend on travel demand accelerating. B2B's mix shift will keep capping consolidated margin gains, because each B2B revenue dollar carries partner commissions. Three things to watch in Q3: whether B2C bookings hold near the U.S.-driven 8% pace, whether B2B margins stabilize, and how the IRS transfer-pricing dispute develops.