10-KPeriod: FY2017

Expedia Group, Inc. Annual Report, Year Ended Dec 31, 2017

Filed February 9, 2018For Securities:EXPE

Summary

Expedia Group, Inc.'s 2017 Form 10-K provides a comprehensive overview of its business as a leading online travel company, highlighting its diverse portfolio of brands like Expedia.com, Hotels.com, trivago, and HomeAway. The company emphasizes its global reach and strategy focused on expanding its supply portfolio, driving technology and product innovation, and increasing channel penetration. In 2017, Expedia continued to grow its revenue and gross bookings, benefiting from strategic acquisitions and strong performance across its segments, particularly in lodging and advertising/media. Investors can gain insights into Expedia's competitive landscape, which includes other online travel agencies, travel suppliers, and search engines. The company's risk factors discussion points to ongoing challenges such as intense competition, dependency on travel supplier relationships, and potential impacts from economic downturns and technological shifts. Management also discusses its proactive approach to managing market risks, including interest rate and foreign exchange exposures, and highlights its commitment to shareholder returns through dividends and share repurchases.

Financial Highlights

55 data points
Beta

Revenue

$10.06B

82.5% Gross Margin

Net Income

$378.00M

3.8% Net Margin

EPS (Diluted)

$2.42

Total Assets

$18.52B

Cash & Equivalents

$2.85B

Free Cash Flow

$1.14B

Financial Statements
Beta
Revenue$10.06B
Cost of Revenue$1.76B
Gross Profit$8.30B
Operating Income$625.00M
Interest Expense$182.00M
Net Income$378.00M
EPS (Basic)$2.49
EPS (Diluted)$2.42
Shares Outstanding (Basic)151.62M
Shares Outstanding (Diluted)156.38M

Key Highlights

  • 1Expedia operates a diversified portfolio of travel brands targeting various customer segments, including Expedia.com, Hotels.com, trivago, and HomeAway.
  • 2The company's growth strategy centers on global expansion, product innovation, and expanding channel penetration, with international revenue representing a significant and growing portion of total revenue.
  • 3In 2017, Expedia saw continued revenue growth, driven by its Core OTA segment, HomeAway, and advertising/media businesses, demonstrating resilience in a competitive market.
  • 4Significant litigation concerning occupancy and other taxes continues to be a material factor, with ongoing legal battles and established reserves reflecting the potential financial impact.
  • 5The company's financial position is supported by strong operating cash flow and a substantial revolving credit facility, though it also carries significant long-term indebtedness.
  • 6Expedia acknowledges the highly competitive nature of the online travel industry, facing pressure from direct supplier channels, search engines, and emerging players in the alternative accommodations market.
  • 7The company continues to invest heavily in technology and content to enhance user experience and maintain a competitive edge in an evolving digital landscape.

Frequently Asked Questions

Expedia operates through a combination of business models, including the merchant model (where Expedia is the merchant of record), the agency model (where Expedia acts as an agent facilitating bookings), and the advertising model (primarily through trivago and Expedia Media Solutions). They also generate revenue from subscription-based vacation rental listings and traveler service fees via HomeAway.

Expedia's primary growth drivers are global expansion, product innovation (including technology and platform improvements), and expanding its channel penetration across various travel segments. Strategic acquisitions and partnerships also play a key role in their growth strategy.

Key risks include intense competition from online travel agencies, travel suppliers' direct channels, search engines, and alternative accommodation providers. Other risks involve reliance on travel supplier relationships, potential disruptions to the travel industry, increasing marketing costs, IT system vulnerabilities, data security breaches, and ongoing legal proceedings related to occupancy and other taxes.

Expedia acquired HomeAway to expand into the vacation rental market, directly competing with players like Airbnb. Their strategy also involves leveraging their broad portfolio of brands to cater to different traveler needs and investing in technology to enhance their offerings and user experience across all travel verticals.