Expedia Q3 2025 10-Q Analysis: Profitability Soars on B2B Strength

Expedia Group, a giant in the online travel industry, has released its financial results for the third quarter of 2025. This report provides a valuable window into the health of the travel sector and the performance of a major digital platform. Let's dive into the key figures from the company's latest 10-Q filing with the SEC to understand its performance.

A Profitable Peak Season

Expedia's top-line numbers reflect a robust travel market. The company generated $4.41 billion in total revenue for the quarter, a solid increase from the same period last year. This revenue translated into a strong net income of $964 million, highlighting significant profitability during what is typically the industry's peak season.

The flow from revenue to profit is illustrated in the diagram below, which breaks down the company's income and expenses for the three-month period.

In the chart, you'll notice a negative revenue figure labeled "Unallocated." This represents intersegment revenue eliminations, which is an accounting adjustment to avoid double-counting revenue when one division of Expedia provides services to another.

Strength in Diversification

A key part of Expedia's success lies in the performance of its distinct business segments. The company operates through three main divisions:

• B2C (Business-to-Consumer): This is the segment most consumers know, including brands like Expedia.com, Hotels.com, and Vrbo. It remains the largest part of the business, bringing in $2.88 billion in revenue and an impressive $1.05 billion in operating income.
• B2B (Business-to-Business): This rapidly expanding segment provides travel technology and supply to other businesses, such as airlines and corporate travel agencies. It generated $1.39 billion in revenue and contributed $341 million in operating income, underscoring its growing importance to Expedia's overall strategy.
• trivago: The well-known hotel metasearch engine contributed $194 million in revenue and delivered a modest but positive $15 million in operating income.

The strong performance in the B2B segment, in particular, demonstrates Expedia's successful strategy of diversifying its revenue streams beyond direct consumer bookings.

The High Cost of Customer Acquisition

Analyzing an online travel company's cost structure is revealing. For Expedia, the direct cost of the services it sells—its Cost of Revenue—was only $376 million. This leads to a substantial Gross Profit of over $4.0 billion and an impressive Gross Margin of 91.5%. Such high margins are characteristic of platform-based businesses that connect buyers and sellers without owning the physical inventory (like hotel rooms or flights).

However, attracting travelers to the platform is a costly endeavor. Expedia spent nearly $2.2 billion on Selling and Marketing in this quarter alone. This figure, which represents almost half of the company's total revenue, highlights the fierce competition in the online travel market against rivals like Booking Holdings and Airbnb.

In summary, Expedia's third-quarter results depict a highly profitable company capitalizing on strong travel demand. While the cost of acquiring customers remains a major expense in a competitive field, the company's efficient, high-margin business model and the strength of its growing B2B segment have positioned it for a successful year.