01—Abstract
Summary
Summary of the 10-Q filed May 1, 2015. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. reported a significant turnaround in its first quarter of 2015 compared to the same period in 2014.
The company swung from a net loss of $19.8 milliona in Q1 2014 to a net income of $32.6 million in Q1 2015. This improvement is driven by a substantial increase in revenue, up 14% year-over-year to $1.37 billion, and a successful acquisition strategy, including the recent purchase of the Travelocity brand and increased stake in AAE Travel Pte. Ltd. Despite the overall profitability, the company saw a decrease in its revenue margin from 9.5% to 9.2%, primarily due to lower revenue per room night, influenced by foreign exchange rates and promotional activities.
However, gross bookings saw a healthy 19%b increase, demonstrating strong underlying demand and operational growth. Investors should monitor the ongoing integration of acquisitions and the impact of foreign currency fluctuations on future profitability and margins.
02—Key points
Key Highlights
- Reported a net income of $32.6 million for Q1 2015, a significant improvement from a net loss of $19.8 million in Q1 2014.
- Total revenue increased by 14% to $1.37 billion in Q1 2015, driven by growth in the Core OTA and trivago segments.
- Gross bookings rose by 19% to $15.0 billion in Q1 2015, indicating robust demand, with the Core OTA segment being the primary driver.
- The company completed the acquisition of the Travelocity brand and associated assets and increased its stake in AAE Travel Pte. Ltd., signaling an active M&A strategy.
- Selling and marketing expenses increased by 22% to $763 million, reflecting increased investment in direct and indirect costs to drive growth.
- Operating loss widened from $3 million in Q1 2014 to $51 million in Q1 2015, largely due to increased operating expenses outpacing revenue growth.
- The company maintained a strong liquidity position with $2.0 billion in cash, cash equivalents, and short-term investments as of March 31, 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2015, Expedia Group, Inc. kept $0.03.
- Revenue$1.37B100.0%
- Cost of revenue−$321.9M23.4%
- Gross profit$1.05B76.6%
- Operating costs−$1.10B80.3%
- Operating income−$51.0M3.7%
- Interest, other & tax$95.1M6.9%
- Net income$44.1M3.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed May 1, 2015Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $1.37B$1.20B | +14.4% |
| Cost of Revenue | $321.92M$294.62M | +9.3% |
| Gross Profit | $1.05B$905.75M | +16.1% |
| Operating Income | -$51.00M-$3.00M | −1601.2% |
| Interest Expense | $27.99M$21.80M | +28.4% |
| Net Income | $44.14M-$14.30M | +408.6% |
| EPS (Basic) | $0.35$-0.11 | +418.2% |
| EPS (Diluted) | $0.34$-0.11 | +409.1% |
| Shares Outstanding (Basic) | 127.56M130.56M | −2.3% |
| Shares Outstanding (Diluted) | 131.40M130.56M | +0.6% |
05—Questions
Frequently Asked Questions
What was Expedia's profitability in Q1 2015 compared to Q1 2014?
Expedia reported a net income of $32.6 million for the first quarter of 2015, a significant improvement from a net loss of $19.8 million in the same period of 2014. This represents a strong turnaround in profitability.
How did Expedia's revenue and bookings perform in Q1 2015?
Total revenue increased by 14% to $1.37 billion in Q1 2015 compared to Q1 2014. Gross bookings also saw substantial growth, rising by 19% to $15.0 billion, driven primarily by the Core OTA segment.
What is the company's strategy regarding acquisitions?
Expedia is actively pursuing strategic acquisitions. In Q1 2015, they acquired the Travelocity brand and increased their ownership in AAE Travel Pte. Ltd. to 75%. They also announced a definitive agreement to acquire Orbitz Worldwide, Inc. for approximately $1.6 billion.
What are the key factors impacting Expedia's revenue margin?
The revenue margin decreased slightly from 9.5% to 9.2% in Q1 2015. This was primarily due to lower revenue per room night, influenced by unfavorable foreign exchange impacts, promotional activities, and efforts to expand global hotel supply. These factors were partially offset by a favorable mix shift towards higher-margin products like advertising and media revenue.
06—Continue