Expedia Group (EXPE) Financials

Expedia Group’s latest quarter shows a sharp earnings setback after a very strong finish to 2025, but the business is still generating solid operating cash flow and continues to carry a large liquidity cushion. In Q1 2026, revenue rose to $3.43 billion from $2.99 billion in Q1 2025, but the company swung to a net loss of $12 million versus net income of $-197 million? Actually, Q1 2025 was a net loss of $197 million on a reported basis, so the latest quarter was still loss-making but modestly improved on that comparison. The bigger issue is that operating income fell to just $251 million from $1.04 billion in Q3 2025 and $420 million in Q4 2025, reflecting a much weaker profitability profile in the seasonally slower quarter.

On a year-over-year basis, Expedia’s revenue trend remains positive, but margins are under pressure. Q1 2026 revenue increased about 14.7% from Q1 2025, and gross profit matched revenue because cost of revenue was not separately reported. However, operating expenses were heavy, led by $2.06 billion in marketing expense and $520 million in SG&A. That left operating margin at only about 7.3% in Q1 2026, well below the much stronger levels seen in the prior holiday-quarter performance.

Cash generation remains a notable strength. Expedia produced $3.93 billion of operating cash flow in Q1 2026, which is substantially higher than reported net income and suggests earnings were supported by working capital movements and non-cash charges. Even more importantly, the balance sheet shows $5.54 billion in cash and equivalents plus $2.25 billion in restricted cash and $254 million in short-term investments. That gives the company meaningful near-term financial flexibility despite the earnings volatility.

Liquidity looks strong, but leverage and working-capital dynamics deserve attention. Total current liabilities were $19.36 billion, driven heavily by $15.17 billion in current deferred revenue. Total debt was $4.47 billion in long-term debt and no short-term debt at quarter-end, which is manageable relative to cash, but the company’s large deferred-revenue balance means cash flows can swing significantly from quarter to quarter. That was evident in prior periods, when operating cash flow ranged from strong positives to a negative $497 million in Q3 2025.

Shareholders should also note that capital returns remain active. In Q1 2026, Expedia repurchased $788 million of common equity and paid $58 million in dividends. In the prior year, buybacks were consistently large as well, including $688 million in Q2 2025 and $531 million in Q3 2025. That supports EPS over time, but it also consumes cash during periods when operating performance is uneven.

• Revenue growth continues: Q1 2026 revenue of $3.43 billion was up from $2.99 billion a year earlier.
• Strong operating cash flow: Q1 2026 operating cash flow was $3.93 billion.
• Large liquidity buffer: The company ended Q1 2026 with $5.54 billion in cash and equivalents and $2.25 billion in restricted cash.
• Debt is not short-term heavy: Short-term debt was $0 at Q1 2026, while long-term debt was $4.47 billion.
• Capital returns continue: Expedia bought back $788 million of stock in Q1 2026.
• Seasonality is significant: Expedia’s profitability has shown large quarterly swings across 2024-2026.
• Deferred revenue is large: Current deferred revenue of $15.17 billion is a major balance-sheet item and a key driver of cash-flow variability.
• Noncontrolling interest is material: Total equity and noncontrolling interests were $1.84 billion, versus common equity of only $576 million in Q1 2026.
• Latest quarter was still unprofitable: Q1 2026 net income attributable to common shareholders was a loss of $6 million.
• Marketing spend remains very high: $2.06 billion in marketing expense kept margins tight in Q1 2026.

Bottom line: Expedia’s latest quarter was mixed: revenue and cash flow were healthy, but earnings weakened sharply and margins compressed. For retail investors, the key question is whether the company can sustain growth while keeping marketing and operating costs from swallowing the incremental revenue. The balance sheet and cash generation are supportive, but profitability remains inconsistent.