01—Abstract
Summary
Summary of the 10-Q filed April 28, 2017. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported its first-quarter 2017 results, showcasing a notable increase in revenue and gross bookings.
Revenue grew by 15% year-over-year to $2.19 billiona, driven by strong performance across its segments, particularly in Core OTA and Advertising & Media (driven by trivago). While the company reported a net loss of $86.1 million for the quarter, this is an improvement from the $108.6 million net loss in the prior year's quarter. This improvement in net loss can be attributed to lower restructuring charges and amortization of intangible assets, despite an increase in selling and marketing expenses.
The company's liquidity remains strong, with significant cash and cash equivalents and an undrawn credit facility, supported by positive operating cash flows and benefits from working capital, especially deferred merchant bookings. Investors should monitor the ongoing legal proceedings, particularly those related to occupancy taxes, and the company's strategy for integrating its various brands and expanding globally.
02—Key points
Key Highlights
- Revenue increased by 15% to $2.19 billion in Q1 2017 compared to $1.90 billion in Q1 2016, driven by growth in Core OTA, trivago, and HomeAway segments.
- Total gross bookings increased by 14% to $23.61 billion in Q1 2017 compared to $20.70 billion in Q1 2016, with significant growth in the HomeAway segment (+48%).
- Net loss attributable to Expedia, Inc. narrowed to $86.1 million ($0.57 per share) from $108.6 million ($0.72 per share) in the prior year's quarter.
- Selling and marketing expenses increased by 22% to $1.27 billion, largely due to higher direct costs related to online and offline marketing for brands like trivago, Brand Expedia, Hotels.com, and HomeAway.
- Amortization of intangible assets decreased by 26% to $67 million, primarily due to the completion of amortization for certain intangible assets.
- The company maintained a strong liquidity position with $3.4 billion in cash and cash equivalents and short-term investments as of March 31, 2017, and an undrawn $1.5 billion revolving credit facility.
- Expedia continued to actively repurchase shares, with 0.3 million shares repurchased in Q1 2017 under its existing authorization.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2017, Expedia Group, Inc. lost $0.04.
- Revenue$2.19B100.0%
- Cost of revenue−$422.0M19.3%
- Gross profit$1.77B80.7%
- Operating costs−$1.84B84.1%
- Operating income−$73.0M3.3%
- Interest, other & tax−$13.0M0.6%
- Net income−$86.0M3.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2017filed April 28, 2017Financial Statements
Q1 FY2017 against Q1 FY2016
| Line item | Q1 FY2017Q1 FY2016 | Change |
|---|---|---|
| Revenue | $2.19B$1.90B | +15.0% |
| Cost of Revenue | $422.00M$402.57M | +4.8% |
| Gross Profit | $1.77B$1.50B | +17.7% |
| Operating Income | -$73.00M-$97.30M | +25.0% |
| Interest Expense | $43.00M$43.96M | −2.2% |
| Net Income | -$86.00M-$108.59M | +20.8% |
| EPS (Basic) | $-0.57$-0.72 | +20.8% |
| EPS (Diluted) | $-0.57$-0.72 | +20.8% |
| Shares Outstanding (Basic) | 150.53M151.05M | −0.3% |
| Shares Outstanding (Diluted) | 150.53M151.05M | −0.3% |
05—Questions
Frequently Asked Questions
What was Expedia's revenue performance in the first quarter of 2017?
Expedia reported a 15% increase in total revenue for the first quarter of 2017, reaching $2.19 billion, up from $1.90 billion in the same period of 2016. This growth was primarily driven by increases in revenue from its Core OTA segment, advertising and media (led by trivago), and the HomeAway segment.
How did Expedia's profitability change in Q1 2017?
While Expedia reported a net loss of $86.1 million for the first quarter of 2017, this represents an improvement from the net loss of $108.6 million in the first quarter of 2016. The reduction in net loss was influenced by lower restructuring charges and amortization of intangible assets, partially offset by increased selling and marketing expenses.
What is the company's financial position and liquidity status?
Expedia maintained a strong financial position with $3.4 billion in cash, cash equivalents, and short-term investments as of March 31, 2017. The company also had an undrawn $1.5 billion revolving credit facility, indicating robust liquidity to meet its obligations and fund ongoing operations and strategic initiatives.
Are there any significant legal or tax-related matters that investors should be aware of?
Yes, Expedia is involved in several legal proceedings, most notably a significant number of lawsuits related to hotel occupancy taxes. The company has established a reserve of $90 million for potential settlements related to these issues. Additionally, the IRS issued proposed adjustments regarding transfer pricing, which Expedia intends to protest. Investors should monitor these ongoing legal and tax matters as they could potentially impact financial results.
06—Continue