10-QPeriod: Q3 FY2017

Expedia Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 27, 2017For Securities:EXPE

Summary

Expedia Group, Inc. reported solid financial results for the nine months ended September 30, 2017. Revenue increased by 16% year-over-year to $7.74 billion, driven by strong performance across its Core OTA segment, HomeAway, and trivago. Net income attributable to Expedia, Inc. grew significantly to $322.8 million from $202.4 million in the prior year period, reflecting improved operational efficiencies and revenue growth. The company also demonstrated robust cash flow generation, with net cash provided by operating activities increasing by $378 million to $1.92 billion. Expedia continues to expand its global footprint and invest in product innovation, while managing its financial position effectively, including a substantial cash balance of $3.24 billion at the end of the period. Key operational highlights include a 13% increase in total gross bookings to $68.6 billion and a growing revenue margin. The company is actively managing its debt, having recently placed $1 billion in senior unsecured notes. While facing ongoing legal and tax-related contingencies, particularly concerning occupancy taxes, the company has reserved approximately $40 million for potential settlements and believes these matters will not materially impact its financial condition. Expedia's strategic focus on product innovation, global expansion, and new channel penetration, particularly mobile, positions it for continued growth in the dynamic online travel market.

Financial Highlights

53 data points
Beta

Revenue

$2.97B

84.5% Gross Margin

Net Income

$352.00M

11.9% Net Margin

EPS (Diluted)

$2.23

Total Assets

$19.04B

Cash & Equivalents

$3.24B

Free Cash Flow

-$612.00M

Financial Statements
Beta
Revenue$2.97B
Cost of Revenue$459.00M
Gross Profit$2.51B
Operating Income$481.00M
Interest Expense$44.00M
Net Income$352.00M
EPS (Basic)$2.32
EPS (Diluted)$2.23
Shares Outstanding (Basic)152.09M
Shares Outstanding (Diluted)157.76M

Key Highlights

  • 1Revenue for the first nine months of 2017 increased 16% year-over-year to $7.74 billion, driven by strong performance across segments.
  • 2Net income attributable to Expedia, Inc. saw a substantial increase to $322.8 million for the nine months ended September 30, 2017, up from $202.4 million in the prior year period.
  • 3Total gross bookings grew 13% to $68.6 billion for the nine months ended September 30, 2017.
  • 4Net cash provided by operating activities rose significantly by $378 million to $1.92 billion for the nine months ended September 30, 2017.
  • 5The company maintained a strong liquidity position with $3.24 billion in cash and cash equivalents and short-term investments as of September 30, 2017.
  • 6Expedia successfully raised $1 billion in senior unsecured notes in September 2017, reinforcing its financial flexibility.
  • 7A reserve of $40 million has been established for potential settlements related to hotel occupancy tax litigation.

Frequently Asked Questions

For the nine months ended September 30, 2017, Expedia reported a total revenue of $7.74 billion, representing a 16% increase compared to $6.68 billion in the same period of 2016. This growth was primarily driven by an 12% increase in the Core OTA segment, a 36% increase in HomeAway revenue, and a 47% increase in trivago's third-party revenue.

Net income attributable to Expedia, Inc. significantly increased to $322.8 million for the nine months ended September 30, 2017, compared to $202.4 million for the same period in 2016. This improvement was supported by revenue growth and effective cost management.

As of September 30, 2017, Expedia maintained a strong liquidity position with cash and cash equivalents and short-term investments totaling $3.24 billion. Additionally, the company has an undrawn $1.5 billion revolving credit facility.

Expedia is involved in ongoing litigation concerning hotel occupancy and other taxes, for which it has established a reserve of $40 million as of September 30, 2017. While the company is actively defending these matters and believes statutes do not apply to its services, significant pay-to-play payments or adverse outcomes could potentially impact liquidity.