01—Abstract
Summary
Summary of the 10-Q filed July 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported its second-quarter 2013 financial results, showing a notable increase in revenue, driven primarily by strong performance in its Leisure segment, particularly in hotel bookings.
The company saw a 16% year-over-year increase in total revenue to $1.2 billiona for the quarter and a 19% increase for the six months ended June 30, 2013, reaching $2.2 billion. This growth was supported by an 11% increase in total gross bookings for the quarter to $10.1 billion, and a 15% increase for the six months to $19.9 billion. However, profitability was impacted by significant legal reserves and other expenses, particularly related to ongoing occupancy tax litigation and the Hawaii general excise tax case, which resulted in a net loss of $44.3 million for the six-month period, compared to a net income of $103.8 million in the prior year.
Despite this, the company's balance sheet remains robust with substantial cash and equivalents. The acquisition of a majority stake in trivago in the first quarter of 2013 is also beginning to contribute to revenue growth, particularly in the advertising and media segment.
02—Key points
Key Highlights
- Total revenue increased by 16% year-over-year to $1.205 billion for the three months ended June 30, 2013, and by 19% to $2.217 billion for the six months ended June 30, 2013.
- Total gross bookings increased by 13% to $10.121 billion for the three months and by 15% to $19.902 billion for the six months ended June 30, 2013.
- The company incurred a net loss of $32.7 million attributable to Expedia, Inc. for the six months ended June 30, 2013, a significant shift from a net income of $101.9 million in the prior year, primarily due to substantial legal reserves related to occupancy tax and Hawaii tax litigation.
- Operating income for the three months ended June 30, 2013, declined 39% year-over-year to $94.3 million, impacted by increased operating expenses.
- The acquisition of trivago in March 2013 contributed to a 147% increase in Advertising and Media revenue for the quarter and a 98% increase for the six-month period.
- Selling and marketing expenses increased significantly by 33% year-over-year for the quarter and 32% for the six months, largely due to increased offline, online, and mobile marketing spend, including trivago's contribution.
- The company's cash and cash equivalents and short-term investments totaled $2.3 billion as of June 30, 2013, providing a strong liquidity position.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Expedia Group, Inc. kept $0.06.
- Revenue$1.21B100.0%
- Cost of revenue−$262.6M21.8%
- Gross profit$942.4M78.2%
- Operating costs−$848.1M70.4%
- Operating income$94.3M7.8%
- Interest, other & tax−$22.8M1.9%
- Net income$71.5M5.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed July 26, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $1.21B$1.04B | +15.9% |
| Cost of Revenue | $262.61M$229.74M | +14.3% |
| Gross Profit | $942.41M$810.24M | +16.3% |
| Operating Income | $94.29M$154.44M | −39.0% |
| Interest Expense | $21.63M$21.99M | −1.6% |
| Net Income | $71.50M$105.24M | −32.1% |
| EPS (Basic) | $0.52$0.79 | −34.2% |
| EPS (Diluted) | $0.51$0.76 | −32.9% |
| Shares Outstanding (Basic) | 136.35M132.56M | +2.9% |
| Shares Outstanding (Diluted) | 141.11M138.19M | +2.1% |
05—Questions
Frequently Asked Questions
What drove the significant increase in revenue for the second quarter and first half of 2013?
Revenue growth was primarily driven by increases in worldwide hotel revenue, stemming from higher room nights stayed, particularly at brands like Expedia.com and eLong. The acquisition of trivago also contributed significantly to the growth in advertising and media revenue. Total revenue rose 16% to $1.205 billion for the quarter and 19% to $2.217 billion for the six months.
Why did Expedia report a net loss for the first six months of 2013, despite revenue growth?
The net loss for the first six months of 2013 was largely due to significant increases in 'Legal reserves, occupancy tax and other' expenses. These included approximately $60 million related to amounts paid in advance for Hawaii's general excise tax litigation, and other provisions for ongoing occupancy tax lawsuits, which impacted profitability despite revenue growth.
How is the acquisition of trivago impacting Expedia's financial performance?
The acquisition of trivago, completed in March 2013, is contributing to revenue growth, particularly in the 'Advertising and media' category, which saw a 147% increase for the quarter. It also led to higher selling and marketing expenses due to increased marketing spend, and contributed to higher amortization of intangible assets.
What is the company's liquidity position, and how is it being managed?
Expedia maintained a strong liquidity position with $2.3 billion in cash and cash equivalents and short-term investments as of June 30, 2013. The company also has a $1 billion revolving credit facility. The company's working capital showed a deficit of $947 million, an increase from the prior year-end, attributed to financing and investing activities like acquisitions and share repurchases. Management believes current resources are sufficient for foreseeable needs.
06—Continue