01—Abstract
Summary
Summary of the 10-K filed February 6, 2015. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (Expedia) filed its 10-K for the year ended December 31, 2014, on February 6, 2015.
The filing provides a comprehensive overview of the company's business operations, financial performance, and risk factors. Expedia operates as a leading online travel company, managing a diverse portfolio of brands including Expedia.com, Hotels.com, Hotwire.com, Egencia (corporate travel), and eLong (China), among others. The company emphasizes its global reach, technology-driven approach, and strategy focused on product innovation, global expansion, and new channel penetration.
Financially, Expedia reported significant revenue growth in 2014, driven primarily by its Leisure segment, with strong contributions from hotel and advertising/media revenue. The company also highlighted its continued investment in technology and expansion efforts, including strategic acquisitions like Wotif Group and the acquisition of the Travelocity brand.
However, Expedia faces intense competition, evolving industry dynamics, and significant legal and tax-related contingencies, particularly concerning hotel occupancy taxes. Investors should note the company's substantial long-term debt and its exposure to foreign exchange risk.
02—Key points
Key Highlights
- Expedia reported strong revenue growth in 2014, reaching $5.76 billion, a 21% increase over 2013, primarily driven by its Leisure segment.
- The company's global expansion strategy is evident, with international sales accounting for 47% of worldwide revenue in 2014, up from 22% in 2005.
- Expedia continues to invest heavily in technology and product innovation, launching new global platforms for its key brands and integrating acquisitions.
- Significant acquisitions in 2014 and early 2015 include Wotif Group and Travelocity, aimed at strengthening market position and supply portfolio.
- The company faces substantial legal and tax-related risks, particularly ongoing litigation and assessments regarding hotel occupancy taxes across various jurisdictions.
- Expedia reported $1.75 billion in long-term debt as of December 31, 2014, and generated $1.37 billion in cash from operating activities.
- Mobile bookings represented over one in five Expedia, Inc. transactions globally in 2014, highlighting the increasing importance of mobile channels.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Expedia Group, Inc. kept $0.07.
- Revenue$5.76B100.0%
- Cost of revenue−$1.18B20.5%
- Gross profit$4.58B79.5%
- Operating costs−$4.07B70.6%
- Operating income$517.8M9.0%
- Interest, other & tax−$119.7M2.1%
- Net income$398.1M6.9%
Where FY2014 revenue went
$5.76B- Operating costs: $4.07B, 71% of revenue
- Cost of revenue: $1.18B, 20% of revenue
- Net income: $398.1M, 6.9% of revenue
- Interest, other & tax: $119.7M, 2.1% of revenue
Kept 6.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 6, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $5.76B$4.77B | +20.8% |
| Cost of Revenue | $1.18B$1.04B | +13.6% |
| Gross Profit | $4.58B$3.73B | +22.8% |
| Operating Income | $517.76M$366.06M | +41.4% |
| Interest Expense | $98.09M$87.36M | +12.3% |
| Net Income | $398.10M$232.85M | +71.0% |
| EPS (Basic) | $3.09$1.73 | +78.6% |
| EPS (Diluted) | $2.99$1.67 | +79.0% |
| Shares Outstanding (Basic) | 128.91M134.91M | −4.4% |
| Shares Outstanding (Diluted) | 133.17M139.59M | −4.6% |
05—Questions
Frequently Asked Questions
What were Expedia's key revenue drivers in 2014?
Expedia's revenue in 2014 was primarily driven by its Leisure segment, with significant contributions from hotel bookings and a growing advertising and media segment, which includes revenue from trivago. The company reported an 18% increase in worldwide hotel revenue and a substantial increase in advertising and media revenue, up 50% year-over-year.
What are the main risks and challenges facing Expedia?
Expedia faces several significant risks and challenges, including intense competition from online and traditional travel companies, travel suppliers, and search engines. The company is also heavily involved in numerous legal proceedings and tax assessments, particularly concerning hotel occupancy taxes, which could result in substantial financial liabilities. Furthermore, Expedia must continuously adapt to the dynamic travel industry, invest in technology, manage foreign exchange fluctuations, and navigate regulatory changes.
How is Expedia's international business performing?
International operations are a critical component of Expedia's growth strategy. In 2014, international points of sale accounted for approximately 47% of worldwide revenue. The company is actively expanding its global reach through its various brands and strategic acquisitions, with a goal to generate at least 65% of its revenue from businesses and points of sale outside the United States.
What is Expedia's strategy for future growth?
Expedia's growth strategy is centered on three key pillars: product innovation through ongoing technology development and platform enhancements; global expansion into new and existing markets; and new channel penetration, with a particular focus on mobile bookings. The company also pursues growth through strategic commercial deals and acquisitions to leverage its existing infrastructure.
06—Continue