10-QPeriod: Q1 FY2010

Expedia Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 30, 2010For Securities:EXPE

Summary

Expedia Group, Inc. reported solid revenue growth in the first quarter of 2010, with a 13% increase year-over-year, reaching $717.9 million. This growth was driven by strong performance in its Leisure and TripAdvisor Media Network segments, along with increased advertising and media revenue. Profitability also saw a significant improvement, with operating income rising 21% to $112.2 million. This was supported by increased revenue and a more favorable cost structure, including the absence of restructuring charges incurred in the prior year. The company also benefited from a lower effective tax rate. Expedia initiated a quarterly dividend in Q1 2010 and continued its share repurchase program, demonstrating a commitment to returning value to shareholders while maintaining operational strength.

Financial Highlights

32 data points
Beta

Revenue

$646.42M

75.6% Gross Margin

Net Income

$59.40M

9.2% Net Margin

EPS (Diluted)

$0.40

Cash & Equivalents

$997.46M

Free Cash Flow

$589.85M

Financial Statements
Beta
Revenue$646.42M
Cost of Revenue$158.03M
Gross Profit$488.39M
Operating Income$52.16M
Interest Expense$21.20M
Net Income$59.40M
EPS (Basic)$0.41
EPS (Diluted)$0.40
Shares Outstanding (Basic)144.30M
Shares Outstanding (Diluted)147.25M

Key Highlights

  • 1Revenue increased by 13% to $717.9 million in Q1 2010 compared to Q1 2009.
  • 2Operating income grew by 21% to $112.2 million, indicating improved profitability.
  • 3The company's cash position strengthened, with cash and cash equivalents increasing by $354.9 million to $997.5 million.
  • 4Expedia initiated a quarterly dividend of $0.07 per share in Q1 2010.
  • 5Share repurchases continued, with $188 million spent in Q1 2010 to buy back 8.4 million shares.
  • 6Legal matters related to hotel occupancy taxes remain significant, with ongoing litigation and a reserve of $21 million established.
  • 7Gross bookings increased by 27% to $6.6 billion, driven by a 18% increase in transactions and a 9% increase in average airfares.

Frequently Asked Questions

Expedia reported a 13% increase in revenue for the first quarter of 2010, reaching $717.9 million, up from $635.7 million in the same period of 2009. This growth was primarily attributed to increased hotel revenue within the Leisure segment and higher advertising and media revenue from the TripAdvisor Media Network.

Profitability showed a strong improvement. Operating income increased by 21% to $112.2 million in Q1 2010 compared to $92.9 million in Q1 2009. This was driven by revenue growth and favorable cost management, including the absence of significant restructuring charges from the prior year and a lower effective tax rate.

Expedia's cash and cash equivalents significantly increased by $354.9 million to $997.5 million as of March 31, 2010. The company also initiated a quarterly cash dividend of $0.07 per share and continued its share repurchase program, spending $188 million on repurchases in Q1 2010. This indicates a focus on returning capital to shareholders while maintaining a strong liquidity position.

A significant ongoing risk is litigation related to hotel occupancy taxes, with 48 lawsuits filed by or against various municipalities and counties. The company believes these claims lack merit but has established a reserve of $21 million for potential settlements. Some legal developments have been favorable, but this remains a material area of focus.