01—Abstract
Summary
Summary of the 10-Q filed July 29, 2011. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc.'s second-quarter 2011 financial report shows robust revenue growth, driven primarily by the Leisure and TripAdvisor Media Group segments.
Total revenue increased by 23% year-over-year to $1.02 billiona for the quarter and 19% to $1.85 billion for the six-month period, signaling a continued recovery and expansion in the travel industry. Net income attributable to Expedia, Inc. also saw significant growth, rising to $140.4 million for the quarter ($0.50 diluted EPS) from $114.3 million in the prior year. For the six-month period, net income increased to $192.4 million ($0.69 diluted EPS) from $173.7 million.
The company highlighted increased room nights stayed and higher average daily rates in its hotel business, alongside strong advertising revenue growth from TripAdvisor. Notably, the company is preparing for a spin-off of its TripAdvisor Media Group into a separate publicly traded company, expected in the fourth quarter of 2011. Financially, Expedia maintained a strong liquidity position with over $2.3 billionb in cash and short-term investments.
The company also generated substantial cash flow from operations, a significant portion of which was attributed to working capital benefits from its merchant model. Management expressed confidence in its ability to meet foreseeable liquidity needs.
02—Key points
Key Highlights
- Revenue grew by 23% year-over-year to $1.02 billion for Q2 2011 and by 19% to $1.85 billion for the first six months of 2011.
- Net income attributable to Expedia, Inc. increased to $140.4 million for Q2 2011 ($0.50 diluted EPS), up from $114.3 million in Q2 2010 ($0.40 diluted EPS).
- The company announced plans to spin off its TripAdvisor Media Group into a separate publicly traded entity, expected to be completed in Q4 2011.
- Hotel revenue saw strong growth driven by an 18% increase in room nights stayed and a 5% increase in revenue per room night for the six-month period.
- TripAdvisor Media Group's advertising revenue grew significantly, up 34% year-over-year for the quarter, contributing to overall revenue growth.
- Expedia maintained a robust liquidity position with $2.3 billion in cash and cash equivalents and short-term investments as of June 30, 2011.
- Operating income increased by 17% to $227 million for Q2 2011, driven by revenue growth, though partially offset by increased selling and marketing expenses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Expedia Group, Inc. kept $0.15.
- Revenue$913.6M100.0%
- Cost of revenue−$195.8M21.4%
- Gross profit$717.8M78.6%
- Operating costs−$574.1M62.8%
- Operating income$143.7M15.7%
- Interest, other & tax−$3.3M0.4%
- Net income$140.4M15.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed July 29, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $913.59M$751.54M | +21.6% |
| Cost of Revenue | $195.81M$168.57M | +16.2% |
| Gross Profit | $717.78M$582.97M | +23.1% |
| Operating Income | $143.71M$126.54M | +13.6% |
| Interest Expense | $22.49M$20.21M | +11.3% |
| Net Income | $140.39M$114.26M | +22.9% |
| EPS (Basic) | $1.03$0.80 | +28.7% |
| EPS (Diluted) | $1.01$0.79 | +27.8% |
| Shares Outstanding (Basic) | 136.80M142.04M | −3.7% |
| Shares Outstanding (Diluted) | 139.05M144.49M | −3.8% |
05—Questions
Frequently Asked Questions
What is the company's outlook for the upcoming quarters, particularly regarding the TripAdvisor spin-off?
Expedia expects to complete the spin-off of TripAdvisor Media Group in the fourth quarter of 2011. The company's overall outlook indicates a continued improvement in the travel industry, though it remains cautious due to global economic uncertainties. Management expressed confidence in liquidity and operational cash flow generation.
How did the company's different segments perform in Q2 2011?
The Leisure segment saw revenue increase by 21% year-over-year, driven by strong hotel performance. TripAdvisor Media Group's third-party revenue grew by 34% due to increased advertising. The Egencia segment also showed substantial growth with a 34% increase in revenue. Overall revenue growth was broad-based across segments.
What are the key factors driving the increase in revenue and net income?
Revenue growth was primarily fueled by increased hotel bookings (higher room nights and ADRs) and robust advertising revenue from TripAdvisor. Net income growth was supported by these revenue increases, improved effective tax rates compared to the prior year, and efficient cost management, although selling and marketing expenses also increased.
What is the company's financial health and liquidity situation?
Expedia is in a strong financial position, with $2.3 billion in cash and cash equivalents and short-term investments as of June 30, 2011. Operating activities generated substantial cash flow, benefiting from working capital improvements in the merchant model. The company has sufficient resources to meet its foreseeable liquidity needs and maintains a $750 million revolving credit facility.
06—Continue