01—Abstract
Summary
Summary of the 10-K filed February 11, 2010. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc.'s 2010 Form 10-K filing for the fiscal year ending December 31, 2009, reveals a company navigating a challenging economic landscape marked by the lingering effects of the 2008 financial crisis.
Despite a slight increase in revenue to $2.96 billiona, the company faced headwinds from declining Average Daily Rates (ADRs) in the hotel sector and pressure on airfare pricing and commissions. The report highlights Expedia's diversified brand portfolio and its strategic focus on technology and global reach. The company reorganized its reporting segments into Leisure, TripAdvisor Media Network, and Egencia, signaling a shift towards brand-centric operations.
Key financial performance indicators show growth in hotel room nights and air ticket volumes, partly driven by reduced fees and increased international presence, though overall revenue per transaction was impacted. Significant legal proceedings, particularly concerning hotel occupancy taxes across various U.S. jurisdictions, represent a material ongoing risk. The company also declared its first-ever quarterly cash dividend, signaling a degree of financial confidence despite the economic uncertainties.
02—Key points
Key Highlights
- Revenue increased slightly to $2.96 billion in 2009, driven by growth in hotel room nights and air ticket volumes, though revenue per transaction declined.
- The company reorganized into three reportable segments: Leisure, TripAdvisor Media Network, and Egencia.
- Significant legal proceedings related to hotel occupancy taxes across numerous U.S. jurisdictions continue to pose a material risk and have resulted in substantial legal reserves and settlements.
- Average Daily Rates (ADRs) in the hotel sector declined by 15% in 2009 due to weak travel demand, impacting revenue per room night.
- Expedia declared its first-ever quarterly cash dividend of $0.07 per share, signaling management's confidence despite economic headwinds.
- The company continues to invest in technology and global expansion, with international operations accounting for 37% of worldwide revenue in 2009.
- A substantial $3 billion impairment charge for goodwill and intangible assets was recorded in 2008, significantly impacting operating income for that year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Expedia Group, Inc. kept $0.11.
- Revenue$2.74B100.0%
- Cost of revenue−$602.7M22.0%
- Gross profit$2.14B78.0%
- Operating costs−$1.74B63.5%
- Operating income$397.7M14.5%
- Interest, other & tax−$98.2M3.6%
- Net income$299.5M10.9%
Where FY2009 revenue went
$2.74B- Operating costs: $1.74B, 64% of revenue
- Cost of revenue: $602.7M, 22% of revenue
- Net income: $299.5M, 11% of revenue
- Interest, other & tax: $98.2M, 3.6% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 11, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $2.74B$2.94B | −6.6% |
| Cost of Revenue | $602.68M$638.71M | −5.6% |
| Gross Profit | $2.14B$2.30B | −6.9% |
| Operating Income | $397.74M-$2.43B | +116.4% |
| Interest Expense | $49.45M$71.98M | −31.3% |
| Net Income | $299.53M-$2.52B | +111.9% |
| EPS (Basic) | $2.08$-17.60 | +111.8% |
| EPS (Diluted) | $2.05$-17.60 | +111.6% |
| Shares Outstanding (Basic) | 144.11M143.08M | +0.7% |
| Shares Outstanding (Diluted) | 146.07M143.08M | +2.1% |
05—Questions
Frequently Asked Questions
What were the main financial trends for Expedia in 2009?
In 2009, Expedia experienced a slight revenue increase to $2.96 billion, primarily driven by higher transaction volumes in hotel room nights and air tickets. However, revenue per transaction declined due to factors like lower Average Daily Rates (ADRs) in the hotel sector, reduced airfare pricing, and the elimination of consumer booking fees on platforms like Expedia.com. The company also incurred significant charges related to legal settlements, particularly for hotel occupancy tax disputes.
What are the major risks and legal challenges facing Expedia as of this filing?
Expedia faces significant risks from intense competition in the online travel market, global economic conditions affecting travel spending, and disruptions in the travel industry. A major ongoing challenge is the extensive litigation across numerous U.S. jurisdictions concerning the collection and remittance of hotel occupancy taxes. The company has accrued substantial reserves for potential settlements and judgments related to these matters, and unfavorable outcomes could materially impact its financial condition.
How is Expedia's business structured and what is its strategic focus?
Expedia operates through a diverse portfolio of brands and has reorganized its reporting into three key segments: Leisure (including Expedia.com, hotels.com, Hotwire, etc.), the TripAdvisor Media Network, and Egencia (corporate travel). Its strategy focuses on leveraging its brand portfolio, investing in technology and content innovation, expanding its global reach, and offering a broad range of travel products. The company aims to be a central player in the travel value chain for leisure and business travelers.
What is the significance of Expedia declaring its first dividend?
The declaration of its first-ever quarterly cash dividend in February 2010 signals a level of financial stability and confidence from Expedia's management, despite the challenging economic environment. While modest at $0.07 per share, it indicates a potential shift towards returning capital to shareholders, subject to ongoing business performance and board discretion.
06—Continue