01—Abstract
Summary
Summary of the 10-Q filed October 29, 2009. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported its third-quarter and nine-month results for the period ending September 30, 2009.
For the third quarter, revenue increased by 2% to $852.4 milliona, driven by a 26% increase in transactions in the Leisure segment, primarily in hotels and car rentals. However, revenue per room night declined significantly due to lower average daily rates (ADRs) and reduced traveler fees. For the nine months, revenue saw a 3% decrease to $2.26 billion, impacted by lower air and hotel revenue, though offset by increases in car rental and advertising/media revenue.
The company noted a significant increase in operating income for the quarter, largely due to expense management and revenue growth, but the nine-month operating income declined, primarily due to substantial charges related to occupancy tax assessments and a class-action lawsuit settlement. Financially, Expedia ended the period with a stronger cash position, a substantial increase in cash and cash equivalents year-over-year.
The company also reported a working capital deficit, which widened due to significant repayment of its credit facility. Despite the challenges posed by the ongoing economic downturn and specific industry pressures, Expedia is strategically focusing on brand portfolio, technology innovation, global reach, and product offering diversification.
02—Key points
Key Highlights
- Third-quarter revenue increased 2% year-over-year to $852.4 million, driven by a 26% increase in Leisure segment transactions, though offset by lower pricing.
- Nine-month revenue decreased 3% to $2.26 billion, impacted by lower air and hotel revenue but bolstered by car rental and advertising/media growth.
- Operating income for the third quarter increased 12% to $223 million, benefiting from revenue growth and reduced operating expenses.
- Nine-month operating income decreased 6% to $431 million, primarily due to significant charges for occupancy tax assessments and a class-action lawsuit settlement.
- Cash and cash equivalents significantly increased to $838.6 million as of September 30, 2009, from $665.4 million at the end of 2008.
- The company is actively managing its debt, with $650 million repaid under its credit facility during the first nine months of 2009, leaving no outstanding balance at quarter-end.
- Expedia has recognized substantial legal reserves and accruals for occupancy tax issues and a class-action lawsuit, totaling significant amounts impacting the nine-month results.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, Expedia Group, Inc. kept $0.14.
- Revenue$852.4M100.0%
- Cost of revenue−$169.4M19.9%
- Gross profit$683.0M80.1%
- Operating costs−$460.0M54.0%
- Operating income$223.0M26.2%
- Interest, other & tax−$106.0M12.4%
- Net income$117.0M13.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed October 29, 2009Financial Statements
| Revenue | $852.43M |
| Cost of Revenue | $169.44M |
| Gross Profit | $682.99M |
| Operating Income | $222.97M |
| Interest Expense | $21.18M |
| Net Income | $117.01M |
| EPS (Basic) | $0.82 |
| EPS (Diluted) | $0.80 |
| Shares Outstanding (Basic) | 144.21M |
| Shares Outstanding (Diluted) | 146.86M |
05—Questions
Frequently Asked Questions
What is the overall revenue trend for Expedia Group for the first nine months of 2009?
For the first nine months of 2009, Expedia Group's revenue decreased by 3% to $2.26 billion compared to the same period in 2008. This decline was primarily attributed to decreases in air and hotel revenue, though it was partially offset by increases in car rental revenue and advertising and media revenue.
How has Expedia's profitability been impacted by legal matters and restructuring?
Profitability for the nine months ended September 30, 2009, was significantly impacted by specific charges. The company recognized $74.2 million for occupancy tax assessments and legal reserves, along with an accrual of $19 million for a consumer class-action lawsuit settlement. Additionally, $29 million in restructuring charges were incurred due to business reorganization around global brands. These items collectively reduced operating income for the nine-month period.
What is the company's liquidity position as of September 30, 2009?
Expedia's liquidity position strengthened, with cash and cash equivalents and short-term investments totaling $887 million as of September 30, 2009, up from $758 million at the end of 2008. Furthermore, the company had $958 million available under its $1 billion revolving credit facility, with no outstanding borrowings at quarter-end. The company repaid $650 million under its credit facility during the first nine months of 2009.
How is Expedia's hotel business performing, given the economic climate?
The hotel business experienced a 19% decline in revenue per room night for the third quarter of 2009, largely due to a 14% decrease in average daily rates (ADRs) and reduced traveler fees. Despite this, room nights stayed increased by 27% (including acquisitions and packages), indicating strong demand for rooms at lower prices. For the nine-month period, hotel revenue decreased 2% due to lower ADRs, partially offset by a 23% increase in room nights stayed.
06—Continue