Shares of Expedia $EXPE Group tumbled as much as 9% after Thursday's closing bell, erasing gains from a first-quarter revenue beat as investors focused on cautious guidance tied to unrest in the Middle East and declining travel activity in Mexico.
First-quarter revenue at the Seattle-based company came in at $3.43 billion, a 15% year-over-year gain, according to the company's earnings release. Gross bookings reached $35.53 billion, a 13% year-over-year increase. Adjusted earnings per share came in at $1.96, compared with $0.40 in the same period last year. The company posted a GAAP net loss of $6 million, or $0.05 per diluted share.
Wall Street had forecast revenue of $3.35 billion for the period, according to Bloomberg, meaning Expedia came in roughly $80 million ahead of that bar.
Expedia CEO Ariane Gorin said on Thursday that geopolitical disruptions in the Middle East and a U.S. shelter-in-place advisory tied to violence in Mexico had created "a wave of cancellations" during the quarter. Together, those two disruptions trimmed approximately 200 basis points from the company's bookings and room-night growth figures for the quarter, according to Reuters. Even though the Middle East accounts for a small slice of overall volume, Gorin noted that the anxiety it generated drove heightened cancellations among travelers in Europe and Asia as well.
"Cancellations have abated and bookings have picked up again," Gorin told Bloomberg.
For the second quarter, Expedia guided gross bookings of $32.5 billion to $33.1 billion and revenue of $4.11 billion to $4.19 billion. On the earnings call, CFO Scott Schenkel warned that despite an encouraging start to the period, the guidance was built around the expectation that instability would persist. Expedia left its full-year guidance unchanged, projecting gross bookings of $127 billion to $129 billion and revenue of $15.6 billion to $16.0 billion.
Despite the cautious tone, Gorin pointed to the FIFA World Cup, set to begin in North America next month, as a demand driver. "It's going to be a big summer in the U.S. with the World Cup," she told Bloomberg.
Adjusted EBITDA for the quarter reached $542 million, up 83% year-over-year, with a margin of 15.8% — an expansion of 591 basis points, the company said. Expedia's B2B segment outpaced its consumer business, with gross bookings rising 22% to $10.75 billion versus 10% growth in B2C.
Expedia announced a new $5 billion share buyback program along with its earnings report. This adds to the $700 million in repurchases completed in the first quarter. Gorin described the buyback approach as patient and selective, saying management believes the current share price does not show the company’s true value.
"Our first quarter results marked a strong start to the year, as we delivered double-digit bookings and revenue growth and drove meaningful margin expansion despite a dynamic macroeconomic environment," Gorin said in a statement.