01—Abstract
Summary
Summary of the 10-Q filed October 26, 2018. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported its third-quarter and nine-month results for the period ending September 30, 2018.
The company demonstrated strong revenue growth, with a 10% increase in the third quarter and a 12% increase for the nine-month period, reaching $3.28 billiona and $8.66 billion, respectively. This growth was primarily driven by its Core OTA segment and a significant uplift in HomeAway's performance. Profitability also saw a substantial improvement, with operating income increasing by 39% year-over-year for the third quarter to $672 million and by 21% for the nine-month period to $618 million.
This was further bolstered by a $78 millionb refund related to the San Francisco occupancy tax litigation. The company maintained a healthy cash position, with $3.1 billion in cash, cash equivalents, and restricted cash, and an undrawn $2 billion revolving credit facility, demonstrating solid financial footing.
02—Key points
Key Highlights
- Revenue increased by 10% to $3.28 billion for Q3 2018 and by 12% to $8.66 billion for the first nine months of 2018.
- Operating income saw significant growth, up 39% to $672 million in Q3 2018 and up 21% to $618 million for the nine-month period.
- HomeAway segment revenue grew by 35% for the nine-month period, driven by transactional revenue.
- Adjusted EBITDA increased by 29% to $912 million in Q3 2018, indicating strong operational performance.
- The company received a $78 million refund and $19 million in interest related to the San Francisco occupancy tax litigation, positively impacting 'Legal reserves, occupancy tax and other' and 'Interest income'.
- Cash and cash equivalents, including restricted cash, stood at $3.1 billion as of September 30, 2018.
- Expedia continued its share repurchase program, with approximately 14.7 million shares remaining under its authorization as of September 30, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, Expedia Group, Inc. kept $0.16.
- Revenue$3.28B100.0%
- Cost of revenue−$504.0M15.4%
- Gross profit$2.77B84.6%
- Operating costs−$2.10B64.1%
- Operating income$672.0M20.5%
- Interest, other & tax−$147.0M4.5%
- Net income$525.0M16.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed October 26, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $3.28B$2.97B | +10.5% |
| Cost of Revenue | $504.00M$459.00M | +9.8% |
| Gross Profit | $2.77B$2.51B | +10.6% |
| Operating Income | $672.00M$481.00M | +39.7% |
| Interest Expense | $47.00M$44.00M | +6.8% |
| Net Income | $525.00M$352.00M | +49.1% |
| EPS (Basic) | $3.51$2.32 | +51.3% |
| EPS (Diluted) | $3.43$2.23 | +53.8% |
| Shares Outstanding (Basic) | 149.48M152.09M | −1.7% |
| Shares Outstanding (Diluted) | 153.15M157.76M | −2.9% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in this quarter?
Revenue growth was primarily driven by the Core OTA segment, which includes brands like Expedia.com and Hotels.com, as well as significant growth in the HomeAway segment.
How did the company's profitability fare in this period?
Profitability improved substantially. Operating income increased by 39% year-over-year in the third quarter, reaching $672 million. This was further enhanced by a significant refund related to the San Francisco occupancy tax litigation.
What is the company's cash position and liquidity outlook?
Expedia Group maintained a strong financial position with $3.1 billion in cash, cash equivalents, and restricted cash. Additionally, the company had an undrawn $2 billion revolving credit facility, indicating robust liquidity for its operations and future investments.
Are there any significant legal matters that impacted the financial results?
Yes, the company received a $78 million refund plus $19 million in interest related to the San Francisco occupancy tax litigation, which positively impacted the 'Legal reserves, occupancy tax and other' line item and 'Interest income', respectively, in the third quarter.
06—Continue