10-KPeriod: FY2018

Expedia Group, Inc. Annual Report, Year Ended Dec 31, 2018

Filed February 8, 2019For Securities:EXPE

Summary

Expedia Group, Inc.'s 2018 Form 10-K provides a comprehensive overview of its business, financial performance, and risk factors as of February 8, 2019. The company operates as a global online travel company, offering a wide array of travel products and services through a diverse portfolio of brands such as Expedia.com, Hotels.com, trivago, HomeAway, and Egencia. The report highlights the company's strategy focused on global expansion, product innovation, and channel penetration, leveraging its extensive brand portfolio and broad supply chain to capture the ongoing migration of travel bookings to online channels. Financially, Expedia Group reported significant revenue growth in 2018, driven primarily by its Core OTA segment and strong performance from HomeAway. The company's financial health is supported by robust operating cash flow and an undrawn revolving credit facility. However, investors should be aware of the competitive landscape, potential impacts of economic downturns, ongoing legal proceedings related to occupancy taxes, and the concentration of voting power, which could influence future strategic decisions and financial outcomes.

Financial Highlights

56 data points
Beta

Revenue

$11.22B

82.5% Gross Margin

Net Income

$406.00M

3.6% Net Margin

EPS (Diluted)

$2.65

Total Assets

$18.03B

Cash & Equivalents

$2.44B

Free Cash Flow

$1.10B

Financial Statements
Beta
Revenue$11.22B
Cost of Revenue$1.97B
Gross Profit$9.26B
Operating Income$714.00M
Interest Expense$190.00M
Net Income$406.00M
EPS (Basic)$2.71
EPS (Diluted)$2.65
Shares Outstanding (Basic)149.96M
Shares Outstanding (Diluted)152.89M

Key Highlights

  • 1Expedia Group operates a diverse portfolio of travel brands, catering to various traveler segments and markets globally.
  • 2The company's growth strategy is centered on global expansion, technological innovation, and broadening its channel reach, capitalizing on the shift towards online travel bookings.
  • 3Revenue saw a significant increase in 2018, primarily from the Core OTA segment and strong contributions from HomeAway, indicating successful market penetration and brand performance.
  • 4Financially, the company maintains a strong liquidity position with substantial cash reserves and an undrawn credit facility, supporting its operational and investment needs.
  • 5Significant risks include intense competition from established players and emerging platforms, potential adverse impacts from economic downturns, and ongoing legal disputes concerning occupancy and other taxes in various jurisdictions.
  • 6The company's voting structure indicates concentrated control, with Barry Diller and Liberty Expedia Holdings holding significant voting power, which could influence corporate actions and strategic direction.
  • 7Expedia Group continues to invest in technology and cloud infrastructure to enhance its platforms and customer experience, aligning with evolving consumer trends and competitive pressures.

Frequently Asked Questions

Expedia Group operates through four reportable segments: Core OTA (Expedia.com, Hotels.com, Orbitz, etc.), trivago (hotel metasearch), HomeAway (alternative accommodations), and Egencia (corporate travel). In 2018, the Core OTA segment was the largest revenue contributor, followed by HomeAway, trivago (through third-party revenue), and then Egencia.

Key risks include intense competition from online and traditional travel companies, direct bookings by suppliers, search engines, and alternative accommodation platforms. Other significant risks involve reliance on travel supplier relationships, adverse effects from economic downturns or travel disruptions, increasing marketing costs, potential cybersecurity breaches, failure to adapt to technological changes, and the impact of ongoing legal proceedings, particularly those related to occupancy and other taxes.

As of December 31, 2018, Expedia Group had $2.5 billion in cash and cash equivalents and short-term investments. The company also had an undrawn $2 billion revolving credit facility. Its operating cash flows were strong, providing sufficient liquidity for its foreseeable needs, although it did have a working capital deficit of $2.9 billion.

Expedia Group manages foreign exchange risk by using foreign currency forward contracts to hedge certain exposures and by maintaining natural hedges. Interest rate risk is managed by issuing fixed-rate debt and maintaining a revolving credit facility, although borrowings under the facility are subject to market interest rates. The company's substantial debt obligations and currency exposures are detailed in the "Quantitative and Qualitative Disclosures About Market Risk" section.