01—Abstract
Summary
Summary of the 10-Q filed November 7, 2011. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported solid financial results for the nine months ended September 30, 2011, with revenue growing 18% year-over-year to $2.99 billiona and net income increasing 14% to $402 million.
This growth was primarily driven by a strong performance in the Leisure segment, particularly in hotel bookings, and a significant increase in advertising and media revenue from the TripAdvisor Media Group. The company also demonstrated effective cost management, with operating income rising 7% to $625 millionb, reflecting a healthy operating margin. The balance sheet shows a strong cash position of $1.45 billion and total assets of $7.68 billion.
Long-term debt remains stable at approximately $1.65 billionc. A significant development highlighted is the ongoing plan to separate Expedia into two publicly traded companies: TripAdvisor and the remaining Expedia, Inc. This spin-off, expected to be completed in Q4 2011, is a key strategic initiative that will allow each entity to focus on its respective business and unlock shareholder value. The company also continued its share repurchase program and maintained its dividend payments.
02—Key points
Key Highlights
- Revenue increased by 18% to $2.99 billion for the nine months ended September 30, 2011, compared to the same period in 2010.
- Net income attributable to Expedia, Inc. grew by 14% to $401.97 million for the nine months ended September 30, 2011.
- Operating income increased by 7% to $624.56 million for the nine months ended September 30, 2011.
- The company reported strong cash flow from operations of $1.23 billion for the nine months ended September 30, 2011.
- Expedia announced plans to spin off TripAdvisor into a separate publicly traded company, expected to be completed in Q4 2011.
- The company continued its share repurchase program, buying back shares for $199 million in the first nine months of 2011.
- Hotel revenue was a key driver of growth, increasing by 20% for the nine months ended September 30, 2011, due to higher room nights stayed and ADRs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Expedia Group, Inc. kept $0.21.
- Revenue$1.02B100.0%
- Cost of revenue−$206.5M20.2%
- Gross profit$814.0M79.8%
- Operating costs−$604.9M59.3%
- Operating income$209.1M20.5%
- Interest, other & tax$435,0000.0%
- Net income$209.5M20.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed November 7, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $1.02B$898.10M | +13.6% |
| Cost of Revenue | $206.45M$190.03M | +8.6% |
| Gross Profit | $814.00M$708.07M | +15.0% |
| Operating Income | $209.10M$209.15M | 0.0% |
| Interest Expense | $23.23M$26.99M | −13.9% |
| Net Income | $209.53M$176.55M | +18.7% |
| EPS (Basic) | $1.54$1.26 | +22.2% |
| EPS (Diluted) | $1.50$1.23 | +22.0% |
| Shares Outstanding (Basic) | 136.18M140.61M | −3.2% |
| Shares Outstanding (Diluted) | 139.68M143.14M | −2.4% |
05—Questions
Frequently Asked Questions
What is the overall financial health of Expedia based on this filing?
Expedia demonstrated strong financial health during the nine months ended September 30, 2011. Revenue and net income showed solid year-over-year growth, driven by the Leisure segment and TripAdvisor. The company maintained a robust cash position and healthy operating income, indicating effective management of operations and expenses.
What is the strategic significance of the planned TripAdvisor spin-off?
The planned spin-off of TripAdvisor is a significant strategic move designed to separate Expedia's travel transaction brands from its media and reviews business. This separation is expected to allow each entity to pursue its own strategic objectives more effectively, potentially leading to enhanced focus, operational efficiency, and ultimately, increased shareholder value.
How did the company's key segments perform?
The Leisure segment remains the largest contributor to revenue and showed strong growth, primarily from hotel bookings. The TripAdvisor Media Group also performed well, with significant increases in advertising and media revenue. Egencia, the corporate travel segment, also reported solid growth in revenue and gross bookings.
Are there any significant legal or regulatory risks disclosed?
Yes, Expedia is involved in numerous lawsuits related to hotel occupancy taxes. While the company believes many of these claims lack merit and has seen some favorable rulings, it has established reserves for potential settlements. The outcome of these ongoing legal proceedings could have a material impact on the company's financial condition.
06—Continue