01—Abstract
Summary
Summary of the 10-Q filed July 25, 2019. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 billionb 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.
02—Key points
Key Highlights
- Net 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.
- Total 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.
- Operating 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.
- Cash and cash equivalents increased substantially to $4.26 billion as of June 30, 2019, up from $2.44 billion as of December 31, 2018.
- Adjusted EBITDA, a key non-GAAP metric, increased by 27% to $744 million for the first six months of 2019, indicating strong operational performance.
- The company reported $54 million in reserves for potential settlement of hotel occupancy and other tax litigation as of June 30, 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, Expedia Group, Inc. kept $0.06.
- Revenue$3.15B100.0%
- Cost of revenue−$522.0M16.6%
- Gross profit$2.63B83.4%
- Operating costs−$2.37B75.0%
- Operating income$265.0M8.4%
- Interest, other & tax−$82.0M2.6%
- Net income$183.0M5.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed July 25, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $3.15B$2.88B | +9.5% |
| Cost of Revenue | $522.00M$498.00M | +4.8% |
| Gross Profit | $2.63B$2.38B | +10.5% |
| Operating Income | $265.00M$111.00M | +138.7% |
| Interest Expense | $39.00M$51.00M | −23.5% |
| Net Income | $183.00M$1.00M | +18200.0% |
| EPS (Basic) | $1.23$0.01 | +12200.0% |
| EPS (Diluted) | $1.21$0.01 | +12000.0% |
| Shares Outstanding (Basic) | 149.05M150.08M | −0.7% |
| Shares Outstanding (Diluted) | 151.56M152.62M | −0.7% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of Expedia Group for the first half of 2019 compared to 2018?
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.
How has Expedia Group's liquidity position changed?
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.
What are the main drivers of revenue growth for Expedia Group?
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.
Are there any significant legal or contingent liabilities that investors should be aware of?
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.
06—Continue