01—Abstract
Summary
Summary of the 10-Q filed April 27, 2018. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. reported its first-quarter 2018 results, showing a significant increase in revenue to $2.5 billiona, up 15% year-over-year.
Despite the revenue growth, the company posted a net loss of $149 millionb for the quarter, compared to a loss of $84 million in the prior year period. This widened loss was primarily driven by increased operating expenses, particularly in selling and marketing, technology and content, and general and administrative categories, which outpaced revenue growth. Key segments contributing to revenue growth include Core OTA (up 13%), HomeAway (up 26%), and Egencia (up 23%).
However, Adjusted EBITDA declined by 40% year-over-year to $124 millionc, largely due to a significant drop in trivago's and HomeAway's segment Adjusted EBITDA, alongside an increase in unallocated overhead costs. The company also noted changes in its effective tax rate, which decreased significantly to 12.0% from 35.6% in the prior year, largely attributable to the U.S. Tax Cuts and Jobs Act of 2017. The balance sheet shows an increase in cash and cash equivalents to $3.4 billion and a substantial increase in deferred merchant bookings, indicating strong future revenue potential.
02—Key points
Key Highlights
- Total revenue increased by 15% to $2.51 billion in Q1 2018 compared to $2.19 billion in Q1 2017, driven by growth across all segments, particularly HomeAway (+26%) and Egencia (+23%).
- Net loss widened to $149 million ($0.91 per share diluted) in Q1 2018 from $84 million ($0.57 per share diluted) in Q1 2017, attributed to higher operating expenses.
- Selling and marketing expenses increased by 19% to $1.52 billion, representing 60.4% of revenue, reflecting increased direct and indirect costs.
- Adjusted EBITDA, a key performance metric, decreased by 40% to $124 million from $208 million in the prior year, impacted by increased expenses across segments and unallocated overhead.
- The effective tax rate significantly decreased to 12.0% from 35.6% due to the U.S. Tax Cuts and Jobs Act of 2017 and a reduction in excess tax benefits for stock compensation.
- Cash and cash equivalents, including restricted cash, increased to $3.65 billion as of March 31, 2018, from $2.54 billion in the prior year, providing strong liquidity.
- Deferred merchant bookings saw a substantial increase, reflecting customer prepayments for future travel, indicating a robust pipeline for upcoming revenue.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2018, Expedia Group, Inc. lost $0.05.
- Revenue$2.51B100.0%
- Cost of revenue−$487.0M19.4%
- Gross profit$2.02B80.6%
- Operating costs−$2.19B87.2%
- Operating income−$165.0M6.6%
- Interest, other & tax$28.0M1.1%
- Net income−$137.0M5.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed April 27, 2018Financial Statements
Q1 FY2018 against Q1 FY2017
| Line item | Q1 FY2018Q1 FY2017 | Change |
|---|---|---|
| Revenue | $2.51B$2.19B | +14.6% |
| Cost of Revenue | $487.00M$422.00M | +15.4% |
| Gross Profit | $2.02B$1.77B | +14.4% |
| Operating Income | -$165.00M-$73.00M | −126.0% |
| Interest Expense | $51.00M$43.00M | +18.6% |
| Net Income | -$137.00M-$86.00M | −59.3% |
| EPS (Basic) | $-0.91$-0.57 | −59.6% |
| EPS (Diluted) | $-0.91$-0.57 | −59.6% |
| Shares Outstanding (Basic) | 151.82M150.53M | +0.9% |
| Shares Outstanding (Diluted) | 151.82M150.53M | +0.9% |
05—Questions
Frequently Asked Questions
What was Expedia's revenue performance in Q1 2018?
Expedia Group reported a 15% increase in revenue for the first quarter of 2018, reaching $2.51 billion, up from $2.19 billion in the same period of 2017. This growth was driven by contributions from all segments, notably HomeAway (+26%) and Egencia (+23%).
Why did Expedia report a wider net loss in Q1 2018 despite revenue growth?
Although revenue increased, Expedia Group's net loss widened to $149 million in Q1 2018 from $84 million in Q1 2017. This was primarily due to a significant increase in operating expenses, including higher costs in selling and marketing (up 19%), technology and content (up 23%), and general and administrative (up 26%), which outpaced the revenue growth.
How did the Tax Cuts and Jobs Act impact Expedia's financial results?
The Tax Cuts and Jobs Act of 2017 significantly reduced Expedia's effective tax rate. For the first quarter of 2018, the effective tax rate was 12.0%, a substantial decrease from 35.6% in the first quarter of 2017. This reduction was also influenced by a decrease in excess tax benefits related to stock compensation.
What is the company's liquidity position as of March 31, 2018?
Expedia Group maintained a strong liquidity position. Cash, cash equivalents, and restricted cash totaled $3.65 billion as of March 31, 2018, an increase from $2.54 billion at the end of 2017. The company also has an undrawn $1.5 billion revolving credit facility, providing ample financial flexibility.
06—Continue