10-QPeriod: Q3 FY2011

Expedia Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 7, 2011For Securities:EXPE

Summary

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 billion 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 million, 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 billion. 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.

Financial Highlights

54 data points
Beta

Revenue

$1.02B

79.8% Gross Margin

Net Income

$209.53M

20.5% Net Margin

EPS (Diluted)

$1.50

Total Assets

$7.68B

Cash & Equivalents

$1.27B

Free Cash Flow

-$127.09M

Financial Statements
Beta
Revenue$1.02B
Cost of Revenue$206.45M
Gross Profit$814.00M
Operating Income$209.10M
Interest Expense$23.23M
Net Income$209.53M
EPS (Basic)$1.54
EPS (Diluted)$1.50
Shares Outstanding (Basic)136.18M
Shares Outstanding (Diluted)139.68M

Key Highlights

  • 1Revenue increased by 18% to $2.99 billion for the nine months ended September 30, 2011, compared to the same period in 2010.
  • 2Net income attributable to Expedia, Inc. grew by 14% to $401.97 million for the nine months ended September 30, 2011.
  • 3Operating income increased by 7% to $624.56 million for the nine months ended September 30, 2011.
  • 4The company reported strong cash flow from operations of $1.23 billion for the nine months ended September 30, 2011.
  • 5Expedia announced plans to spin off TripAdvisor into a separate publicly traded company, expected to be completed in Q4 2011.
  • 6The company continued its share repurchase program, buying back shares for $199 million in the first nine months of 2011.
  • 7Hotel 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.

Frequently Asked Questions

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.

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.

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.

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.