Good day everyone and welcome to the Expedia Group Q4 2024 Financial Results Teleconference. My name is Alex and I'll be the operator for today's call. If you wish to ask a question at the end of the presentation please press star followed by one on your telephone keypad. If you change your mind please press star followed by two to cancel your request. For opening remarks I will turn the call over to SVP Corporate Development Strategy and Investor Relations. Arshit Bash, please go ahead.

Good afternoon, and welcome to Expedia Group's fourth quarter 2024 earnings call. I'm pleased to be joined on today's call by our CEO, Aryan Gorin, and our incoming CFO, Scott Schenkel. As a reminder, our commentary today will include references to certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in our earnings release. Unless otherwise stated, all growth rates are on a year-over-year basis and any reference to expenses exclude stock-based compensation. We will also be making forward-looking statements during the call, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict. Actual results could materially differ due to factors discussed during this call and in our most recent forms, 10K, 10Q, and other filings with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. Our earnings release, SEC filings, and a replay of today's call can be found on our Investor Relations website at ir.expediagroup.com. And with that, let me turn the call over to Arianne.

Thanks, Harshit, and thank you all for joining us today. I want to start by welcoming Scott Schenkel as our new CFO. It's great to have him on board, and you'll hear from him shortly. Our fourth quarter results exceeded our expectations, with room nights, gross bookings, and revenue all growing double digits. This top-line strength reflects our continued strong execution, along with better-than-expected travel demand. Our disciplined cost management and top-line outperformance resulted in strong EBITDA growth with margin expansion. Bookings for the consumer business accelerated for the third consecutive quarter to 9%, up five points sequentially. Each of our core brands, Brand Expedia, Hotels.com, and Vrbo saw bookings growth. Our B2B business had a stellar quarter, with bookings growth increasing five points sequentially to 24%, and our advertising business posted yet another strong quarter with 25% revenue growth. Travel demand remained healthy in Q4, despite price increases in hotels, vacation rentals, and air. Like last quarter, international demand was stronger than the US, with booked room nights growing high single digits in the US, low double digits in Europe, and high teams in the rest of the world. Our B2B business continues to benefit from this strong international demand, especially in APAC. And in our consumer business, our global expansion efforts continue to show solid progress, with bookings growth outside the U.S. accelerating four points sequentially. Within our consumer business, brand Expedia remains strong, with room nights growing mid-teens. Air on Expedia notably improved, driven by higher ticket prices, continued package product improvements, and new merchandising capabilities. For Hotels.com, bookings returned to slight growth driven by momentum in international markets. And for Vervo, bookings growth accelerated sequentially as well, with improved traffic and conversion. Global active membership in our loyalty program grew 7% in Q4, and our 12-month member repeat rate was also up over 300 basis points year over year. Across our three core brands, nearly 50% of room nights came from silver, gold, or platinum members. These higher tier members receive additional benefits such as member discounts, which are funded by our supply partners and help to drive loyalty to our brands. Our strong fourth quarter results contributed to a solid full year 2024. When I stepped in as CEO last year, we set an ambition to bring Vrbo and Hotels.com back to growth while extending our strengths in brand Expedia, B2B, and advertising and being disciplined in our costs. While we have more work ahead, I'm proud of how our teams delivered against this call to action and built momentum over the course of the year. Booking's growth in our consumer business accelerated every quarter in 2024, from negative three percent in Q1 to nine percent in Q4. B2B bookings grew 21 percent for the full year. We've grown bookings from existing partners through strong account management, great inventory, and new product features, and had our best year ever in production from new partners. Overall, B2B accounted for 27% of our bookings last year, and we've cemented our leadership year. Our advertising revenue grew 32% in 2024 and drove 5% of our overall revenue. We onboarded more advertisers to our platform, launched new ad types like video, and introduced new tools for partners to manage their campaigns, all of which are resonating strongly with our advertisers. As a reminder, advertising is a high-margin, high-growth business, and we see a lot more opportunity to innovate. Supply is at the heart of our business, and we made great strides last year in improving our supply through technology investments, stronger partner relationships, and everyday efforts from our commercial teams. We're sourcing more traveler benefits, whether through member deals or package discounts. We've released new functionality around merchandising and have improved the quality of our vacation rental supply. All of these are great for travelers while delivering valuable and targeted demand to our supply partners. As we move into 2025, we have three overarching priorities, building on our progress from 2024. First, deliver more value for travelers. Second, invest where we see the greatest opportunity to drive growth in each part of our business. And third, continue driving operating efficiencies and expanding our margin. I'll share more color on each and then talk about how AI will help us across all three let's start with our first priority of delivering more value for travelers already today we create effortless personalized and rewarding experiences for customers we do this through our supply with deals travelers can only get through us and bundles and savings that we can uniquely create we also do it through our industry leading customer service and innovative products and features that travelers want And in 2025, we're going to do even more. In supply, more member rates beyond hotels and more targeted offers. In servicing, more self-service options both in the product flows and in the virtual agent experience. And of course, in product, all powered by deep insights and data that enable personalized experiences that travelers trust. Moving next to our second priority, we'll invest where we see the greatest opportunity to drive growth in each part of our business. In our consumer business, this means focusing on our three biggest brands, having clear, sharp value propositions for each of them. For Expedia, for example, that's building on our strength as a one-stop shop and focusing on differentiators like packages while scaling newer products like vacation rentals. Our consumer business is still heavily weighted to the U.S., and while we made progress in 2024, looking ahead, we'll continue to push internationally in a targeted way. In our loyalty program and marketing, we'll be even more targeted in our spending. For example, looking deeply at where we see the biggest impact from our loyalty earn. And in B2B, it's about sourcing unique supply for our B2B partners, testing new products, and signing new deals, and deepening our commercial partnerships. And finally, our third priority is to continue driving operational efficiencies and expanding our margins. We were disciplined in our cost management in 2024, and that allowed us to expand profit margins while reinvesting in strategic areas. We believe we still have room to deliver further efficiencies across our variable costs and fixed cost base to expand our margins even farther. AI is an accelerator for all three of these priorities, and we've only scratched the surface. As we look ahead, we're exploring the many ways AI will unlock even more value in our products. We're already seeing evidence of how AI is driving better experiences across the discovery, shopping, and post-booking journey, which in turn are driving loyalty and growth. Going forward, we'll continue to test and release AI-generated features to further personalize our traveler experience. AI also opens new possibilities to drive traffic to our brands as consumers increasingly search in new Gen.AI native experiences. experiences, and we're ensuring that we meet them where they are. And for our B2B business, the AI-native travel startups that will inevitably emerge present new partnership opportunities for us. Finally, we see tremendous opportunity to use AI to allow our teams to move faster and be more productive. It's not just about cost reduction. what's even more exciting is how it will enable our teams to spend more time where they can have the biggest impact. We're excited about the potential and are seeing early results across customer support, technology, marketing, and our commercial teams, really across all parts of how we operate our business. So in closing, we're pleased with our fourth quarter performance and momentum we've built over 2024 and we believe that in 2025 and beyond we have a substantial opportunity to drive even greater value for our travelers partners and shareholders with that over to you scott thank you ryan and good afternoon everyone i'm excited to join expedia group and i look forward to partnering with you and the team to help deliver our priorities let's get started We wrapped 2024 with a strong fourth quarter, both financially and across many of the operating metrics.

Room nights, gross bookings, and revenue all grew double digits, with EBITDA margins expanding nicely. Total gross bookings of $24.4 billion grew 13%, with a five-point sequential acceleration in both B2C and B2B, with a better-than-expected demand environment and strong operational execution. We had a particularly strong post-Thanksgiving promotional window where bookings during this period were our highest ever. Lodging gross bookings grew 12%, which includes our hotel business growing 14%, and continued acceleration at Vrbo. Outside of our lodging business, we also saw notable strength in our air business, driven by higher air prices, growth in multi-item packages, and our new merchandising capabilities. Revenue of $3.2 billion grew 10%, led by our B2B business, which grew 21%. Revenue growth accelerated seven points from the third quarter, primarily driven by Vrbo's bookings momentum throughout the year, translating into stays and further improvement in Hotels.com. Gross margin was nearly 90% for the quarter, up 125 basis points. We are pleased to see our ongoing initiatives continue to deliver transactional efficiencies, particularly in customer service. Direct sales and marketing expense in the fourth quarter was $1.5 billion, up 13%, leading to flat leverage as a percent of gross bookings. This was over 20 basis points of sequential improvement, driven by continued efficiencies at Brand Expedia. As I noted earlier, brand Expedia did benefit from the merchandising actions for our air business as they resulted in bookings without any incremental marketing expenses. Our overhead expenses were $643 million, a decrease of 1%, resulting in nearly 250 basis points of leverage. This was primarily driven by lower people costs in products and technology from our actions in 2024, as well as overall strong expense control. We remain committed to driving efficiencies across our P&O, and we're pleased to see another quarter of strong overhead leverage. We delivered fourth quarter EBITDA of $643 million, up 21%, with an EBITDA margin of 20.2%, an expansion of 175 basis points. This was better than expected due to both the higher revenue growth and effective expense management. We delivered $338 million of EBIT with a margin of 10.6 percent, up 280 basis points. This was 105 basis points greater than EBITDA margin expansion, driven by lower stock-based comp and ongoing depreciation leverage. Turning to the full-year results, we posted gross bookings of $111 billion, up 7 percent, and revenue of nearly $14 billion, also up 7 percent. underpinned by a notable recovery throughout the year in our B2C business and continued strength in B2B and our advertising business. While we decided to invest in marketing to accelerate our B2C business, we feel that was net beneficial to the business, and we paid for this by being financially disciplined and driving gross margin improvement of 170 basis points and overhead of approximately 140 basis points. As a result, EBITDA margin for the year was 21.4%, an expansion of approximately 60 basis points. This strong earnings growth enabled us to generate another year of robust free cash flow at $2.3 billion, up 26%, driven primarily by higher EBITDA growth in deferred merchant bookings and lower capital expenditures. Moving to our balance sheet, with With a strong cash flow, we ended the quarter with $4.5 billion of unrestricted cash and short-term investments. In late January, we notified the holders of our May 25 debt trunch that we will repay those notes in February. We continue to actively manage our balance sheet with the goal of maintaining debt levels consistent with our current investment grade rating. As a result, and subject to market conditions, we intend to refinance and maintain our target leverage ratio of two times. As part of our Disciplined Capital Allocation Strategy, we repurchased 1.6 billion or 12.1 million shares in 2024. This combined with the shares we have repurchased since we reinstated the program a little over two years ago has resulted in over 4 billion or 36 million shares repurchased. So, in summary, a solid year with a strong Q4 finish. Moving to our first quarter guidance. We expect our first quarter gross bookings growth to be in the 4% to 6% range and revenue growth to be 3% to 5%. This reflects approximately two points of foreign exchange headwind at current rates and the impact from lapping leap year, and in revenue, the Easter shift to April. In Q1, we expect EBITDA margins to be flat to slightly better year over year. As a reminder, the first quarter is our lowest EBITDA quarter, causing margins to be highly sensitive. Moving to the full-year guide, we expect our 2025 gross bookings and revenue growth in the 4% to 6% range, which is roughly in line with 2024, factoring in the two points of negative FX impact. On the bottom line, we will continue to optimize our cost structure to deliver efficiencies. And as a result, we expect to deliver another record year of EBITDA with margin expansion of 50 basis points year-over-year. With strong performance on EBITDA and cash flow, we will continue to buy back our stock opportunistically with approximately $3.2 billion remaining on our share repurchase authorization. Additionally, today we announced that we are reinstating our quarterly dividend starting in March of 2025 with a dividend of 40 cents per share, which is approximately a 1% annual dividend yield. So in closing, we remain focused on delivering long-term profitable growth while being disciplined capital allocators. I'm confident that with our strategies for growth and strong ongoing execution, we will continue to deliver shareholder returns in 2025 and beyond. Let me now open the call for questions.

Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on the telephone keypad. If you'd like to remove your question, you may press star followed by two. Our first question for today comes from Mark Mahaney of Evercore ISI. Your line's now open. Please go ahead.

Thanks. I just wanted to ask about Vrbo and Hotels.com, the recovery that you've seen, the improvement, recovery for HCOM and the ongoing improvement for Vrbo. Just talk about the sustainability of those into next year. What were the initiatives that you think really started turning those businesses around? So help us to have confidence that that's going to continue into 2025. Thank you very much.

Okay, thanks, Mark. Let me start with Vrbo. You know, we did a lot of work in 2024 on product, supply, and marketing. And that, all three of those drove the acceleration through the year. And I do want to take a minute to thank the teams for that because it was, you know, it was a big task to do it. We are cognizant of the fact, though, that Vrbo, you know, Vrbo with Hotels.com was meaningfully disrupted during the replatforming and we lost travelers that were still winning back on product you know we put back some features that we had lost you know verbo also benefited from some of the platform capabilities like dateless search or property comparison uh but we recognize that we still have more work to do whether it's on product or supply in particular and we've got some exciting plans coming in in 2025 around both of those so i would just say especially on product and supply we know there's more work ahead we're going to continue leaning in where we see the best returns and pulling back where the returns aren't as strong when it comes to hotels.com you know that one was also that brand was also pretty meaningfully impacted with not only the tech migration but also the change in the loyalty program and pulling back in international. As I said, we have come back to modest growth at the end of the year, and the team has some big plans around really reinvigorating that brand that we'll see come to life in 2025. So I would say all up, we've got conviction in these two brands. We know there's still a bunch more work to do, but we feel good about where we are right now.

Okay. Thank you very much.

Thanks.

Thank you. Our next question comes from a Justin post of Bank of America. The lines are open. Please go ahead.

Looks like Q1 guidance has some detail in bookings. Could you talk about, I know there's been some weather issues maybe and other issues. Any headwinds early Q1 that you're thinking about? And then just longer term on margins, you know, 50 bps, you know, nice improvement year over year, but where you are versus peers, it looks like there's a lot of room there. How are you thinking about, you know, longer term and what you can do with margins versus your peers?

Let me start with Q1 Guide. First off, you know, as I said in my script, the bookings growth is 4 to 6 percent, factoring in two points of FX headwind, and about a point lapping leap year. So, you know, if you look at that, that's roughly 7% to 9% excluding those two realities. You know, when nothing appears to be structurally different in the travel environment, to your question, we have seen some softening relative to Q4, which was strong, as we pointed out, and our latest guide reflects that. And in light of some strong holiday promotions in December, we also believe there might have been some pull-ins of some of the January bookings. So we think all of that kind of brings us to the 4% to 6%, and we feel pretty good about that. If I pivot to revenue growth, just to kind of close out the point, I'm sure, our guide at 3% to 5% reflects some added pressure from lapping last year, in particular the Easter timing shift. So you take 3% to 5% plus two points of foreign exchange plus a point from leaf year and roughly a point from Easter. or we're at a kind of rate very equivalent to last year, is the way we think about it. Maybe I'll take a shot at margins. Look, I think a half a point of margin in 2024 and a half a point of margin in 2025, a nice one point, is a good start. And I think we're doing it in a way that balances growth, makes sure that we handle what we need to with marketing and make sure that we keep the traffic and the demand up and we balance the forward-looking needs for overhead and make sure we reduce that. And I think you've seen both in 2024 and 2025 overhead come down and realize some nice leverage in the cost structure. I don't know if you have anything else. So thanks, Justin.

Great. Thank you.

Thank you. Our next question comes from Deepak Mathavanan of Canter Fitzgerald. The line is now open.

Please go ahead. great thanks for taking the questions arian just wanted to dig a little bit deeper into the b2b side what's driving the strength in apac um can you also talk about kind of like the roadmap of new partnerships and what would be the primary growth drivers as we think about 2025 for the b2b business and then scott great to hear from you again um maybe i'll just ask you to expand a little bit on the margin comment you know last year you guys had cost saving efforts that helped with margin expansion this year, you should still see fixed cost leverage, but what is the high level strategy beyond achieving fixed cost leverage, maybe also in terms of how you're thinking about marketing investments and so on? Any caller you can add about different line items that should help with the leverage would be super helpful. Thanks again.

Yeah, thanks, Deepak. So on B2B, the couple of things that are dragging the strength in APAC is one, you know, the partnerships that we have there, we're adding new partnerships, we have some deep long-standing partnerships, and the fact that the markets there are growing well. So the partners that we're working with are growing in line or faster than the market, and we're able to win share with them. So typically what we do is you'll sign a partner, you'll get some of their business, and then over time, as you deepen the relationship, as we put in place sort of new strategies with them, we're able to win share. So that's really what's going on in APAC. And then in terms of B2B for this year, as I said, it's really a formula of what can we do with our existing partners as they are growing? What new inventory can we put in with them? Where can we have our inventory surface more? It's also signing new partners and testing. We're going to be testing some new products in market. I also want to make sure everyone understands the importance of supply. You know, the quality of our supply is so critical in growing that B2B business, and we've, over the last couple of years, done a lot of work in being able to get some supply that is particularly relevant to some of our B2B partners. Just on the margins, maybe I can pick it up for Scott as well, is we're not going to break out the different pieces, but clearly we see opportunities in a number of places. We just want to make sure that we maintain the ability to invest in the areas that we see good long-term growth. During 2024, we talked a number of times about how we were leaning into international markets. We were leaning into Vrbo, maybe in ways where it wasn't as good a short-term return as we might get elsewhere. But we believe we need to have that ability to balance sort of investment for the long-term. and also remain committed and disciplined in our margin expansion.

Great. Thank you very much.

Thanks, Deepak.

Thank you. Our next question comes from Navad Khan of B Riley Securities. Your line's now open. Please go ahead.

Great. Thank you very much. So I remember you guys added some inventory to Verbo. I think it was apartment type of inventory, uh roughly a million properties uh wondering if you have any any color to provide in terms of how that uh that inventory performing relative to expectations and as you think about 2025 is that the type of inventory you will try to kind of add to verbal or or it would be more of whole homes and uh the second question i have is really just around the uh uh the advertising revenue so this This 25% growth is really strong and wondering how sustainable that is into 25. Thank you.

Thanks for the question. On the Vrbo inventory, as you said, we added a million properties. These were a lot in urban areas. They're always properties that aren't shared spaces that have no host. There were a number of apartments, and I'm not going to say specifically how they're doing other than to say that, you know, did contribute to, you know, Vrbo's recovery. As we look to supply in 25, it's not only about adding new supply, but also how do we make sure that the supply that we have, you know, has flexibility, has great cancel policies, has maybe longer, you know, different promotions and the like. So, you know, when we think quality of supply, it's not only in the number of properties, but it's also in, you know, rate types and flexibility. In terms of ad revenue, you're right that the last multiple quarters, we've been growing that very quickly. You know, we still see a lot of road ahead, whether it's getting more advertisers into our products, into our auctions, because, you know, we work with tens of thousands of hotels and other partners around the world, whether it's innovation in the products themselves so that the advertisers are getting better returns and we're able to monetize or new ad types in our brands. So the team has quite a roadmap ahead and they're very focused on driving more value to our partners and also doing it in a way that's positive for our travelers.

Thank you, Arjun.

Thanks.

Thank you. Our next question comes from Trevor Young of Barclays. Your line's now open. Please go ahead.

Great.

Thanks.

Ariane, in the prepared remarks, I think you mentioned potentially partnering in AI. Can you expand on that? And, you know, do you view using some of those applications as a potential customer acquisition channel for Expedia, whether you'd be a supply partner for them? And then relatedly, you know, does that shape how you think about some of the investments in Romi AI and other AI capabilities in-house? And then second question, with Despegar getting or potentially getting acquired, any thoughts on how that changes your outlook for Lab-Am and your partnership there?

Yeah. Thank you for the question. You know, I would say in AI, I would really think about it sort of in three buckets. You know, the first bucket is how are we using AI to make our products better, whether it's for travelers or for partners, you know, and we've been doing it for a couple of years. There's obviously a lot more to go, but we need to make sure that, you know, when travelers come into our brands, well, A, they want to start there with their search and they're getting a delightful experience that makes them want to come back. Same thing with our partners, whether it's through onboarding or things we're doing in advertising. How do we use all of the great developments in AI in our products? The second is looking at changing traveler behaviors. As I remarked, travelers are going to start to search in different ways. And so we need to make sure that our brands are showing up in those new places where people are using Gen.AI native search. And fortunately, we've got a very tech, sophisticated marketing team that's making sure that we do show up there. And then there's the question of if there are these native AI travel startups, can we go partner with them and can we go power them? And that's why, to me, if I think about all three of those, we see opportunities across the board and we want to make sure that we're really on the front foot. And, of course, in all of that, I'm not even talking about how are we using AI for our internal uses. In terms of Latin America and DESPAGAR, I would say it doesn't change our perspective on LATAM. DESPAGAR is a great partner for us. We have our own brands in LATAM, and we have a number of partnerships there as well.

Great.

Thanks, Trevor.

Our next question comes from Connor Cunningham of Mellius Research. The line is now open. Please go ahead.

Thank you. I think you saw some nice leverage on the marketing side. could you just talk about the the tactical changes that you're making there and just you know if that's aiding in in just like underlying growth within the international markets and whatnot and then i think you mentioned in in the prepared remarks uh just merchandising and better cross-selling of product can you talk about that a little bit more how's bundling you know ben and you know what's your expectation for that in the 25 in general thank you yep thanks for the question uh just on on marketing we've talked over the last i think year and a half about how we've been looking at marketing, loyalty, and our sort of promotional spend.

We look at all three of those together to say where are we getting the best returns and which of those works the best in which place. And the teams are getting more sophisticated on understanding that, understanding those returns, both by brand and by geo. So I would say it's not a tactical change. I mean, it's just, it's continuing down that path of better understanding returns and being able to act decisively when we see things. And you can expect more of that in the year to come. You know, some of the international growth also came from work we've done in packages. I've talked about sort of, you know, work on the package product, also on promotions. And some countries tend to be more package-heavy countries than others. So that's helped us in the growth. We do see that when travelers buy multiple items from us, they're more likely to repeat. And so we know that we give travelers a great deal when they buy a package from us or when they buy one thing and then add something else on. So they're getting a good deal and we know that it drives repeat for us.

So that, I would say, has been in the Expedia brand's DNA since the beginning and is something we continue to lean into appreciate thank you thanks thanks thank you our next question comes from jed kelly of oppenheimer your line is now open please go ahead hey um great great thanks for taking my questions uh two if i may just just looking at your four year guidance for 25 one would assume it implies some type of deceleration in your b2b segment So can you just give us an update, you know, how we should think about B2B in 25? And then I was a little surprised. You're saying your margins are going to be flat in 1Q. I figured you were comping last year where you pulled back on some verbal advertising in 1Q. So can you just give us an update on how you're viewing your advertising around Vrbo?

Why don't I take that and then you weigh in. First off, like we talked about, FX is a headwind for the year as well. So if you index off the revenue growth at start there of 3% to 5%, you got two points ahead from the foreign exchange, got a little for Q1, and you have a little bit of an Easter shift as well from the comping of Easter in really getting pushed out to the second quarter. So that pressures revenue as well. So you're really looking at a range, factoring in those three items of 7% to 9%, roughly to spell it out. So, yes, the deceleration, but some of that we're factoring in is really driven by some of the dynamics that we talked about with regards to seeing what we've seen in the first few weeks of January. So, without rehashing that, we factored that into the guide you were going to say something like that.

And then I was just going to add, on the Vrbo question, it was really in Q4 23 that we pulled back significantly in the advertising on Vrbo because that was the time that we were going through the migration.

And margin-wise, you're roughly flat. I think it's leaving enough room for us to make sure that we can redeploy marketing, as we talked about very much in line with what Arian just said a minute ago, as well as continue to get the leverage out of overhead and some of the other cost buckets, but leaving room for the investment as we see fit to drive growth.

Thank you. Our next question comes from Lee Horowitz of Deutsche Bank. Your line's now open. Please go ahead.

Thanks so much for taking the time. Me one on margin. Appreciating you guys won't break out the pieces of the margin guide. I know in the past we've obviously talked a lot about marketing leverage. Can you maybe help us understand if you expect to get marketing leverage in 25? Is that an input to that 50 bps of margin? Or are there other sort of areas of fixed and variable cost efficiency that can drive this kind of margin?

I think to reflect roughly half a point, we're not going to have margin expansion for the year. We're not going to get into the different line items. We'll explain them as we go through the year. But I appreciate the question and understand why you're looking for that.

Okay, no worries. And then maybe just on Vrbo, any comments, you know, obviously pointing towards a little bit of a slowdown in the 1Q relative to a strong 4Q. any comments on Vrbo, quarter-to-date trends, and maybe just like your outlook for where Vrbo can grow sort of longer term, particularly relative to a market that, you know, is maybe growing low to mid-single digits. Do you think you guys can, you know, outpace the market for quite some time, and what do you see as the key differentiators to do that?

Yeah, so we're not going to give sort of directional guidance on one of the brands, but what I can say is, you know, we believe that Vrbo has a differentiated value proposition of being a vacation rental pure play where there's no host and it's whole homes. Again, we recognize that it hasn't had some of the investments or some of the investments, whether it's in product supply and the like, until last year. And we believe that there's a lot of growth that we can get from it. At the same time, I would argue we're still testing what are the things that work the best, whether it's around marketing spend, the loyalty program. We've learned a lot in the last year, in particular regarding the loyalty program, of what are the returns from various things. So I think you will find in the year to come that, A, we'll continue to be investing in the brand, as I said, across marketing supply and product, and that we'll make decisions based on what we need to do in order to grow it. But we completely have conviction.

Thank you. Our next question comes from Kevin Copelman of TD Securities. The line is now open. Please go ahead.

Thanks a lot. And Scott, congrats on the start. Yeah, I just wanted to ask you about capital returns philosophy. If you can give us any more color on first, I guess, how you're thinking about share repurchases and your philosophy there. And then with the reinstitution of the dividend, how you're thinking about the size of that dividend over time and where it falls with your capital returns.

Yeah, absolutely. Let me just start with the basics around capital allocation. So we talked about in the script about repaying some of the debt, and we plan to refinance that if market conditions are favorable. So we'll remain committed to the target leverage ratio of two times. buybacks specific to those we remain a capital it remains a capital allocation priority for us in 24 alone as I covered we we bought back 12 million shares for a billion six and while the pace of these buybacks can vary quarter to quarter with over three billion remaining in our current repurchase authorization will continue to be opportunistic how we buy those shares back you can expect us to be in the market doing that Yeah. Specific to dividends, what I'd say is let's start with $0.40 and let's see how things progress from there. Obviously, part of this is making sure that we have a dividend for income investors that want to be invested in our stock and have thresholds. So it's really important that we do that. And it was important for us as a company as we think about having to have turned off the dividend during COVID, that to bring it back is important for our shareholders and our overall capital allocation methodology and thought process. And then I think it's also important, you know, we have room in our capital structure to invest in the business, including M&A, if the opportunities present themselves. So it's important to keep that flexibility. But I think with a really strong stock buyback, with the allocation that we have, a strong dividend coming out of the gate of 1%. We feel pretty good about where we're going to go and what we're doing.

Thanks. That's really helpful. And just maybe a follow-up on your comment there with kind of the core consumer brands doing better. Does that change the way that Expedia is thinking about larger acquisitions and whether it would be a time to add another brand into the fold.

Look, I think, look, I'm coming in new here, but I think any time a company is at our scale and our technology base, we should be in the market and looking at M&A. And I think they've been and will continue to be. I don't know if, Ariane, you have any others.

Yeah, I mean, as you said, obviously we have a team that's looking at deals. You know, right now we're continuing to be focused on running the brands that we have. growing the B2B business, the advertising business, and continuing to have strong returns.

Thank you. Thank you. Our next question comes from Doug Anmuth from JPMorgan. The line's now open. Please go ahead.

This is Dayan for Doug. Thanks for taking the questions. First one, could you share your views on the overall travel demand in 4Q as in to 2025 travel season, and if there were any particular regions in 4Q where you might have been taking share? and any impact from the appreciation of the U.S. dollars. And then secondly, we're curious if you have any updated thoughts on your loyalty strategy in 2025, particularly in markets outside of the U.S. and the U.K.

Sorry, can you repeat that last? I didn't hear the last bit.

So we're curious about your, if you have any updated thoughts on your loyalty strategy in 2025, particularly in the markets outside of the U.S. and the U.K.

Okay. Yep, thank you. So just in terms of the travel environment, as we said, the travel environment was very healthy in the fourth quarter. And while we've seen some softening in January relative to Q4, as I said, you know, some of it we think is pull forwards from the strong Thanksgiving promotions, there was FX pressure, there's some moderation in prices, but we don't think anything has structurally changed and that the environment is healthy. In terms of regions where we're taking share. You know, I shared in my prepared remarks that our room night growth was higher in international markets than in the U.S., and we believe that in a number of those markets, we are taking share. In terms of the impact from the stronger dollar, obviously, as Scott, you know, Scott shared the impact of that on our guidance, but what it also means is that over time, a stronger dollar makes it more attractive for Americans traveling abroad, and whenever there are opportunities around that, our teams are always looking at how can we help travelers understand when there are good deals for them. In terms of our loyalty strategy in 25 outside of the U.S. and U.K., as you all may know, we paused the rollout of OneKey after the U.K. And so what our teams are now working on is taking the learnings that we've had from OneKey, where we know that it's been a net positive for Expedia. It's been a drag on bookings for hotels.com. And for Vrbo, it's driven new travelers from cross-sell, from people who have earned on Expedia and hotels.com, then redeeming on Vrbo. But we're still assessing the impact of the always-on earn on Vrbo. So we're going to take all of those learnings and then look by brand and by geography what we need to do in loyalties, and we'll share more in the year to come.

All right. Thank you.

Thank you. At this time, we'll take no further questions, so I'll hand back to CEO Ariane Gurren for any further remarks.

So thank you all for joining us today, and we appreciate the questions. We closed the year with a strong fourth quarter and solid full-year results. Looking ahead, we're focused on our three priorities of delivering more value for travelers, investing where we see the greatest opportunities right growth and expanding our margins. And I'd like to close by thanking our team for their work and dedication on behalf of travelers and partners all around the world. Thank you.

Thank you all for joining today's call. You may now disconnect your lines.