01—Abstract
Summary
Summary of the 10-K filed February 8, 2019. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Expedia Group operates a diverse portfolio of travel brands, catering to various traveler segments and markets globally.
- The company's growth strategy is centered on global expansion, technological innovation, and broadening its channel reach, capitalizing on the shift towards online travel bookings.
- Revenue saw a significant increase in 2018, primarily from the Core OTA segment and strong contributions from HomeAway, indicating successful market penetration and brand performance.
- Financially, the company maintains a strong liquidity position with substantial cash reserves and an undrawn credit facility, supporting its operational and investment needs.
- Significant 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.
- The 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.
- Expedia Group continues to invest in technology and cloud infrastructure to enhance its platforms and customer experience, aligning with evolving consumer trends and competitive pressures.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Expedia Group, Inc. kept $0.04.
- Revenue$11.22B100.0%
- Cost of revenue−$1.97B17.5%
- Gross profit$9.26B82.5%
- Operating costs−$8.54B76.1%
- Operating income$714.0M6.4%
- Interest, other & tax−$308.0M2.7%
- Net income$406.0M3.6%
Where FY2018 revenue went
$11.22B- Operating costs: $8.54B, 76% of revenue
- Cost of revenue: $1.97B, 18% of revenue
- Net income: $406.0M, 3.6% of revenue
- Interest, other & tax: $308.0M, 2.7% of revenue
Kept 3.6% as net incomeNet income $406.0M · 3.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 8, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $11.22B$10.06B | +11.6% |
| Cost of Revenue | $1.97B$1.76B | +11.8% |
| Gross Profit | $9.26B$8.30B | +11.5% |
| Operating Income | $714.00M$625.00M | +14.2% |
| Interest Expense | $190.00M$182.00M | +4.4% |
| Net Income | $406.00M$378.00M | +7.4% |
| EPS (Basic) | $2.71$2.49 | +8.8% |
| EPS (Diluted) | $2.65$2.42 | +9.5% |
| Shares Outstanding (Basic) | 149.96M151.62M | −1.1% |
| Shares Outstanding (Diluted) | 152.89M156.38M | −2.2% |
05—Questions
Frequently Asked Questions
What are Expedia Group's primary business segments and how do they contribute to revenue?
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.
What are the key risks identified by Expedia Group in its 2018 10-K filing?
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.
What is the company's financial health and liquidity position as of December 31, 2018?
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.
How does Expedia Group manage its exposure to market risks like foreign exchange and interest rates?
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.
06—Continue