10-QPeriod: Q1 FY2012

Expedia Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 27, 2012For Securities:EXPE

Summary

Expedia Group, Inc. reported a net loss of $3.3 million for the first quarter of 2012, a significant decrease from a net income of $52.0 million in the same period of the prior year. This decline was heavily influenced by discontinued operations, primarily related to the spin-off of TripAdvisor and the extinguishment of debt associated with it, which resulted in a loss of $23.9 million. Despite the net loss, the company's core operations (income from continuing operations) showed improvement, with income increasing to $20.6 million from $5.8 million in Q1 2011. Revenue for the quarter grew by 12% to $816.5 million, driven by strong performance in the Leisure segment, particularly in hotel bookings. The company also saw a notable increase in cash and cash equivalents, which rose to $1.27 billion from $689.1 million at the end of 2011, largely due to strong operating cash flows and working capital management.

Financial Highlights

53 data points
Beta

Revenue

$816.49M

75.5% Gross Margin

Net Income

-$3.28M

-0.4% Net Margin

EPS (Diluted)

$-0.02

Total Assets

$6.82B

Cash & Equivalents

$1.27B

Free Cash Flow

$797.00M

Financial Statements
Beta
Revenue$816.49M
Cost of Revenue$200.10M
Gross Profit$616.39M
Operating Income$48.68M
Interest Expense$21.39M
Net Income-$3.28M
EPS (Basic)$-0.02
EPS (Diluted)$-0.02
Shares Outstanding (Basic)133.20M
Shares Outstanding (Diluted)139.31M

Key Highlights

  • 1Reported a net loss of $3.3 million, largely due to a $23.9 million loss from discontinued operations related to the TripAdvisor spin-off and debt extinguishment.
  • 2Income from continuing operations significantly improved, reaching $20.6 million compared to $5.8 million in the prior year's quarter.
  • 3Total revenue increased by 12% to $816.5 million, with the Leisure segment showing a 11% increase.
  • 4Hotel room nights booked increased by 24%, driving revenue growth, though revenue per room night saw a slight decrease.
  • 5Selling and marketing expenses increased by 7% to $377.1 million, reflecting investments in affiliate marketing and personnel.
  • 6Cash and cash equivalents significantly increased to $1.27 billion as of March 31, 2012, up from $689.1 million at the end of 2011.
  • 7The company repurchased approximately 5.8 million shares of common stock for $192 million during the quarter.

Frequently Asked Questions

The significant drop in net income to a loss of $3.3 million was primarily due to a substantial loss of $23.9 million reported from discontinued operations. This loss is attributed to the spin-off of TripAdvisor and related costs, including the early extinguishment of $400 million in senior notes.

Expedia's core business, represented by income from continuing operations, showed strong improvement. Income from continuing operations rose to $20.6 million for the first quarter of 2012, a significant increase from $5.8 million in the same period of 2011. This indicates a positive underlying operational performance.

Expedia is involved in numerous lawsuits regarding hotel occupancy taxes. While many are still active, the company has seen favorable rulings in several jurisdictions, with courts deciding that online travel companies are not subject to these taxes on their facilitation services. However, the company has maintained a reserve of $31 million for potential settlements as of March 31, 2012, acknowledging the ongoing uncertainty and potential for adverse outcomes.

Expedia's liquidity position is strong, with cash and cash equivalents increasing significantly to $1.27 billion. The company also has access to a $750 million revolving credit facility. Management believes these resources, combined with operating cash flows, are sufficient to meet foreseeable liquidity needs.