Expedia Group, Inc. (EXPE) Balance Sheet

The balance sheet is expanding, but the growth is funded by liabilities, not retained earnings. Equity swung from $1.6B in 2024Q4 to $1.2B in 2026Q2, despite positive net income, suggesting aggressive buybacks or dividend payments are consuming capital. This trend implies a structurally weaker equity base, which may limit financial flexibility.

The D/E ratio, while elevated, has improved from 3.11 in 2025Q2, but this is partly due to a shrinking equity base rather than debt reduction. Debt levels have remained relatively stable around $6.5B, but the increase in cash to $6.7B provides a near-term cushion. However, the reliance on debt to fund operations and buybacks may indicate a strategic choice to lever up, which could strain cash flows if interest rates rise.

The asset base is dominated by goodwill, which has remained stable at $7.0B, suggesting no major impairments yet. PPE is modest at $2.7B, indicating an asset-light model. The stability of goodwill suggests that past acquisitions have not been written down, but this also implies potential impairment risk if the B2B segment underperforms. The low PPE intensity supports the high gross margin but also means the company has little collateral for additional borrowing.

The improvement in retained earnings is a positive sign, but the equity base is still small relative to total assets, indicating that the company is returning most of its earnings to shareholders via buybacks and dividends. This strategy may boost EPS in the short term but leaves the balance sheet vulnerable to shocks. The negative equity in 2024Q1 was a red flag, and while it has recovered, the current level is still precarious.

The current ratio below 1 suggests that current liabilities exceed current assets, which is typical for OTAs due to deferred revenue and payables. However, the ratio has not improved despite a large cash balance, implying that the company is relying on short-term borrowings or has significant upcoming obligations. The cash position provides a buffer, but the negative working capital could become a concern if travel demand weakens.

The sharp increase in deferred revenue is a positive indicator, as it represents cash collected for future travel. This suggests strong demand and provides visibility into near-term revenue. However, the seasonal pattern is evident, with peaks in Q2 and troughs in Q4, which should be considered when modeling. The growth in deferred revenue also implies that the company is collecting cash upfront, which supports liquidity but also creates an obligation to deliver services.