10-QPeriod: Q2 FY2019

Expedia Group, Inc. Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 25, 2019For Securities:EXPE

Summary

Expedia Group, Inc. reported a significant turnaround in financial performance for the six months ended June 30, 2019, compared to the same period in 2018. Net income attributable to Expedia Group, Inc. was $80 million, a substantial improvement from a net loss of $136 million in the prior year. This recovery was driven by strong revenue growth across most segments, particularly in Core OTA and Vrbo, contributing to an increase in total revenue to $5.76 billion from $5.39 billion. Operating income also turned positive, reaching $134 million compared to a loss of $54 million. The company's balance sheet shows increased cash and cash equivalents, rising to $4.26 billion from $2.44 billion. While total assets grew to $22.2 billion from $18.03 billion, liabilities also increased, driven by higher deferred merchant bookings. The company's focus on operational efficiency and strategic growth initiatives appears to be yielding positive results, although ongoing legal proceedings, particularly concerning occupancy taxes, represent a notable contingent liability.

Financial Highlights

52 data points
Beta

Revenue

$3.15B

83.4% Gross Margin

Net Income

$183.00M

5.8% Net Margin

EPS (Diluted)

$1.21

Total Assets

$22.20B

Cash & Equivalents

$4.26B

Free Cash Flow

$839.00M

Financial Statements
Beta
Revenue$3.15B
Cost of Revenue$522.00M
Gross Profit$2.63B
Operating Income$265.00M
Interest Expense$39.00M
Net Income$183.00M
EPS (Basic)$1.23
EPS (Diluted)$1.21
Shares Outstanding (Basic)149.05M
Shares Outstanding (Diluted)151.56M

Key Highlights

  • 1Net income attributable to Expedia Group, Inc. improved to $80 million for the six months ended June 30, 2019, from a net loss of $136 million in the prior year period.
  • 2Total revenue increased by 7% to $5.76 billion for the first six months of 2019, driven by growth in the Core OTA and Vrbo segments.
  • 3Operating income turned positive, reaching $134 million for the first six months of 2019, a significant improvement from an operating loss of $54 million in the prior year.
  • 4Cash and cash equivalents increased substantially to $4.26 billion as of June 30, 2019, up from $2.44 billion as of December 31, 2018.
  • 5Adjusted EBITDA, a key non-GAAP metric, increased by 27% to $744 million for the first six months of 2019, indicating strong operational performance.
  • 6The company reported $54 million in reserves for potential settlement of hotel occupancy and other tax litigation as of June 30, 2019.

Frequently Asked Questions

Expedia Group showed a significant improvement in its financial performance for the six months ended June 30, 2019, compared to the same period in 2018. The company swung from a net loss of $136 million to a net income of $80 million. Total revenue increased by 7% to $5.76 billion, and operating income became positive at $134 million, a reversal from a $54 million loss in the prior year. This was supported by a strong increase in Adjusted EBITDA.

Expedia Group's liquidity has strengthened. Cash and cash equivalents significantly increased from $2.44 billion at the end of 2018 to $4.26 billion as of June 30, 2019. The company also maintains a largely untapped $2 billion revolving credit facility, providing ample financial flexibility.

Revenue growth was primarily driven by the Core OTA segment, which saw increases from brands like Expedia.com and Hotels.com, as well as Expedia Partner Solutions. The Vrbo segment also showed strong growth in transactional revenue. Lodging revenue, in particular, increased by 10% for the first six months of 2019, reflecting higher room nights stayed.

Yes, Expedia Group has ongoing litigation related to hotel occupancy and other taxes, for which it has established a reserve of $54 million as of June 30, 2019. While many cases have been dismissed in the company's favor, the ultimate resolution of these matters remains a contingent liability.