Expedia Group's stock plummeted 7.31% in after-hours trading on Thursday, despite the company reporting better-than-expected first-quarter financial results.

The sharp decline followed the company's issuance of second-quarter gross bookings guidance that fell short of analyst expectations. Expedia expects Q2 gross bookings in the range of $32.5 billion to $33.1 billion, the midpoint of which is below the average analyst estimate of $33 billion. CEO Ariane Gorin attributed the cautious outlook to the impact of the Middle East conflict, which led to cancellations in March across Europe and Asia, despite the region representing only about 2% of the company's total business.

Gorin noted there was a two-point impact on the company's gross bookings and room nights arising from the Middle East conflict and travel advisories in Mexico. While the cancellations subsided in April, the uncertainty has prompted a more conservative forecast for the current quarter, overshadowing the strong Q1 performance where adjusted earnings and revenue significantly exceeded Wall Street estimates.