10-KPeriod: FY2014

Expedia Group, Inc. Annual Report, Year Ended Dec 31, 2014

Filed February 6, 2015For Securities:EXPE

Summary

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.

Financial Highlights

52 data points
Beta

Revenue

$5.76B

79.5% Gross Margin

Net Income

$398.10M

6.9% Net Margin

EPS (Diluted)

$2.99

Total Assets

$9.02B

Cash & Equivalents

$1.40B

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$5.76B
Cost of Revenue$1.18B
Gross Profit$4.58B
Operating Income$517.76M
Interest Expense$98.09M
Net Income$398.10M
EPS (Basic)$3.09
EPS (Diluted)$2.99
Shares Outstanding (Basic)128.91M
Shares Outstanding (Diluted)133.17M

Key Highlights

  • 1Expedia reported strong revenue growth in 2014, reaching $5.76 billion, a 21% increase over 2013, primarily driven by its Leisure segment.
  • 2The company's global expansion strategy is evident, with international sales accounting for 47% of worldwide revenue in 2014, up from 22% in 2005.
  • 3Expedia continues to invest heavily in technology and product innovation, launching new global platforms for its key brands and integrating acquisitions.
  • 4Significant acquisitions in 2014 and early 2015 include Wotif Group and Travelocity, aimed at strengthening market position and supply portfolio.
  • 5The company faces substantial legal and tax-related risks, particularly ongoing litigation and assessments regarding hotel occupancy taxes across various jurisdictions.
  • 6Expedia reported $1.75 billion in long-term debt as of December 31, 2014, and generated $1.37 billion in cash from operating activities.
  • 7Mobile bookings represented over one in five Expedia, Inc. transactions globally in 2014, highlighting the increasing importance of mobile channels.

Frequently Asked Questions

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.

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.

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.

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.