10-QPeriod: Q3 FY2018

Expedia Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 26, 2018For Securities:EXPE

Summary

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 billion 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 million 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.

Financial Highlights

54 data points
Beta

Revenue

$3.28B

84.6% Gross Margin

Net Income

$525.00M

16.0% Net Margin

EPS (Diluted)

$3.43

Total Assets

$19.14B

Cash & Equivalents

$2.92B

Free Cash Flow

-$594.00M

Financial Statements
Beta
Revenue$3.28B
Cost of Revenue$504.00M
Gross Profit$2.77B
Operating Income$672.00M
Interest Expense$47.00M
Net Income$525.00M
EPS (Basic)$3.51
EPS (Diluted)$3.43
Shares Outstanding (Basic)149.48M
Shares Outstanding (Diluted)153.15M

Key Highlights

  • 1Revenue increased by 10% to $3.28 billion for Q3 2018 and by 12% to $8.66 billion for the first nine months of 2018.
  • 2Operating income saw significant growth, up 39% to $672 million in Q3 2018 and up 21% to $618 million for the nine-month period.
  • 3HomeAway segment revenue grew by 35% for the nine-month period, driven by transactional revenue.
  • 4Adjusted EBITDA increased by 29% to $912 million in Q3 2018, indicating strong operational performance.
  • 5The 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'.
  • 6Cash and cash equivalents, including restricted cash, stood at $3.1 billion as of September 30, 2018.
  • 7Expedia continued its share repurchase program, with approximately 14.7 million shares remaining under its authorization as of September 30, 2018.

Frequently Asked Questions

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.

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.

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.

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.