Summary
Expedia Group, Inc. (EXPE) reported its financial results for the quarter and six months ended June 30, 2009. Total revenue declined by 3% for the quarter and 5% for the six months compared to the prior year, reflecting weakness in the travel industry exacerbated by macroeconomic conditions and the swine flu outbreak. Operating income saw a significant decrease of 33% for the quarter and 20% for the six months, largely due to substantial charges related to occupancy tax assessments (particularly in San Francisco) and a legal reserve for a class-action lawsuit. Despite these headwinds, the company's revenue margin improved slightly, driven by a favorable shift in business mix away from lower-margin air products towards advertising and media revenue. The balance sheet shows an increase in cash and cash equivalents, while long-term debt remained relatively stable. However, working capital saw a notable deficit increase, primarily due to significant debt repayments. The company generated solid cash flow from operations, though it was slightly lower than the prior year, impacted by increased tax and interest payments. The company is actively managing legal proceedings, especially concerning hotel occupancy taxes and class-action lawsuits, which have resulted in significant accruals that impacted profitability.
Financial Highlights
30 data points| Revenue | $769.77M |
| Cost of Revenue | $148.76M |
| Gross Profit | $621.01M |
| Operating Income | $114.64M |
| Interest Expense | $20.80M |
| Net Income | $40.90M |
| EPS (Basic) | $0.28 |
| EPS (Diluted) | $0.28 |
| Shares Outstanding (Basic) | 144.09M |
| Shares Outstanding (Diluted) | 145.44M |
Key Highlights
- 1Revenue declined 3% year-over-year for the quarter and 5% for the six months, indicating a challenging market environment.
- 2Operating income decreased significantly (33% quarterly, 20% year-to-date) due to substantial charges for occupancy tax assessments and class-action lawsuit reserves.
- 3A positive shift in revenue mix towards higher-margin advertising and media revenue, and away from lower-margin air travel, contributed to an improved overall revenue margin.
- 4Cash and cash equivalents increased, providing a solid liquidity position, though working capital deficit widened due to debt repayments.
- 5Significant legal proceedings, particularly concerning hotel occupancy taxes and class-action lawsuits, are ongoing and have resulted in material financial provisions.
- 6The company continues to invest in technology and content innovation, and global reach expansion, despite the current economic climate.
- 7Gross bookings decreased by 5% for the quarter and 8% for the six months, influenced by declining airfares and hotel Average Daily Rates (ADR), although transaction volumes saw some increase.