01—Abstract
Summary
Summary of the 10-Q filed October 26, 2012. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. reported solid revenue growth for the nine months ended September 30, 2012, with total revenue increasing by 15% to $3.06 billiona compared to the prior year.
This growth was driven primarily by a significant increase in hotel room nights stayed and a strong performance in the Egencia corporate travel segment, which saw a 54% revenue increase. The company's balance sheet also strengthened, with cash and cash equivalents and short-term investments totaling $2.4 billionb at the end of the third quarter. Despite the positive top-line performance, the company faced challenges, including a decline in revenue per hotel room night and revenue per air ticket, and a decrease in its overall revenue margin for the quarter.
Additionally, Expedia is actively managing various legal proceedings, most notably those related to hotel occupancy taxes, and is subject to ongoing antitrust investigations in the UK and US. Financially, Expedia demonstrated healthy operating cash flow generation. The company continued to return capital to shareholders through share repurchases and dividend payments.
Significant items impacting the period include the spin-off of TripAdvisor in late 2011, which resulted in the presentation of TripAdvisor's results as discontinued operations, and a loss incurred from the early extinguishment of debt related to this spin-off. Looking ahead, Expedia is focused on product innovation, global expansion, and exploring new channel penetration, particularly in mobile and social media. Investors should monitor the company's ability to navigate competitive pressures, manage litigation risks, and successfully execute its growth strategies in the evolving online travel landscape.
02—Key points
Key Highlights
- Total revenue increased by 15% to $3.06 billion for the nine months ended September 30, 2012, compared to the prior year.
- Gross bookings for the nine months increased by 16% to $26.4 billion, with a notable 32% increase in the Egencia segment.
- Cash and cash equivalents and short-term investments stood at $2.4 billion as of September 30, 2012, indicating strong liquidity.
- Operating income for the nine months grew by 11% to $430.2 million, though operating margin decreased slightly.
- The company repurchased approximately 9.9 million shares of common stock for $351 million during the first nine months of 2012.
- Significant ongoing litigation related to hotel occupancy taxes continues, with reserves established for potential settlements.
- Expedia is subject to investigations by the UK Office of Fair Trading and has faced multiple class-action lawsuits in the US concerning hotel booking practices.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Expedia Group, Inc. kept $0.14.
- Revenue$1.20B100.0%
- Cost of revenue−$243.6M20.3%
- Gross profit$955.4M79.7%
- Operating costs−$728.3M60.7%
- Operating income$227.1M18.9%
- Interest, other & tax−$55.6M4.6%
- Net income$171.5M14.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed October 26, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $1.20B$1.02B | +17.5% |
| Cost of Revenue | $243.63M$206.45M | +18.0% |
| Gross Profit | $955.39M$814.00M | +17.4% |
| Operating Income | $227.09M$209.10M | +8.6% |
| Interest Expense | $22.10M$23.23M | −4.9% |
| Net Income | $171.48M$209.53M | −18.2% |
| EPS (Basic) | $1.26$1.54 | −18.2% |
| EPS (Diluted) | $1.21$1.50 | −19.3% |
| Shares Outstanding (Basic) | 135.97M136.18M | −0.2% |
| Shares Outstanding (Diluted) | 141.42M139.68M | +1.2% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of Expedia Group in the nine months ended September 30, 2012?
Expedia Group reported a 15% increase in revenue for the nine months ended September 30, 2012, reaching $3.06 billion. Operating income also grew by 11% to $430.2 million. The company maintained a strong liquidity position with $2.4 billion in cash and equivalents and short-term investments.
What are the main drivers of revenue growth?
Revenue growth was primarily driven by a 25% increase in hotel room nights stayed and a 32% increase in gross bookings within the Egencia corporate travel segment, following its acquisition of VIA Travel. The Leisure segment also contributed significantly, with a 14% increase in gross bookings.
What are the key risks or challenges facing Expedia?
Key challenges include ongoing litigation regarding hotel occupancy taxes, with reserves set aside for potential settlements. Additionally, the company faces antitrust investigations in the UK and US related to hotel booking practices, and has experienced a decline in revenue per hotel room night and revenue per air ticket, impacting its overall revenue margin.
How is Expedia managing its capital and returning value to shareholders?
Expedia maintained a strong balance sheet with substantial cash reserves and an undrawn credit facility. The company actively repurchased approximately 9.9 million shares of its common stock for $351 million in the first nine months of 2012 and continued to pay quarterly dividends to shareholders.
06—Continue