10-QPeriod: Q3 FY2019

Expedia Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 7, 2019For Securities:EXPE

Summary

Expedia Group, Inc. (EXPE) reported its financial results for the third quarter and the first nine months ended September 30, 2019. For the third quarter, revenue increased by 9% to $3.56 billion, and net income attributable to Expedia Group, Inc. decreased to $409 million from $525 million in the prior year period. Diluted earnings per share were $2.71, down from $3.43 in Q3 2018. For the nine months ended September 30, 2019, revenue grew 8% to $9.32 billion, while net income attributable to Expedia Group, Inc. rose to $489 million from $389 million in the same period last year. Diluted earnings per share for the nine-month period were $3.24, an increase from $2.54 in the prior year. The company highlighted growth in its Core OTA and Vrbo segments, offset by a decline in trivago's revenue. The company also completed a significant acquisition of Liberty Expedia Holdings during the period.

Financial Highlights

56 data points
Beta

Revenue

$3.56B

84.0% Gross Margin

Net Income

$409.00M

11.5% Net Margin

EPS (Diluted)

$2.71

Total Assets

$21.38B

Cash & Equivalents

$3.80B

Free Cash Flow

-$1.15B

Financial Statements
Beta
Revenue$3.56B
Cost of Revenue$569.00M
Gross Profit$2.99B
Operating Income$609.00M
Interest Expense$40.00M
Net Income$409.00M
EPS (Basic)$2.77
EPS (Diluted)$2.71
Shares Outstanding (Basic)147.23M
Shares Outstanding (Diluted)150.63M

Key Highlights

  • 1Revenue for Q3 2019 increased 9% year-over-year to $3.56 billion, driven by growth in Core OTA and Vrbo segments.
  • 2Net income attributable to Expedia Group, Inc. for Q3 2019 decreased to $409 million from $525 million in Q3 2018, impacted by a significant gain in the prior year's occupancy tax litigation.
  • 3Diluted EPS for Q3 2019 was $2.71, down from $3.43 in Q3 2018.
  • 4For the nine months ended September 30, 2019, revenue grew 8% to $9.32 billion, and net income attributable to Expedia Group, Inc. increased to $489 million from $389 million in the prior year.
  • 5The company acquired Liberty Expedia Holdings in July 2019 for approximately $2.9 billion in Expedia Group stock and assumed debt.
  • 6Cash and cash equivalents and short-term investments were $4.5 billion as of September 30, 2019.
  • 7Operating income for the nine months ended September 30, 2019 increased by 20% to $743 million, compared to $618 million in the prior year period.

Frequently Asked Questions

Revenue growth in the third quarter of 2019 was primarily driven by an 8% increase in the Core OTA segment and a 14% increase in the Vrbo segment. This was partially offset by a 5% decrease in trivago's revenue.

The decrease in net income for Q3 2019 was largely due to a significant gain of $78 million recorded in Q3 2018 related to the San Francisco pay-to-play occupancy tax refund. Without this one-time item, net income would have shown a more favorable comparison.

The acquisition of Liberty Expedia Holdings, completed in July 2019, was a significant event. It involved the exchange of approximately $2.9 billion in Expedia Group stock and the assumption of $400 million in debt. This transaction led to a reduction in Expedia Group's outstanding shares and is expected to contribute to future growth, although its immediate financial impact included transaction costs and integration efforts.

Expedia Group reported strong liquidity, with $4.5 billion in cash and cash equivalents and short-term investments as of September 30, 2019. They also have an untapped $2 billion revolving credit facility. The company anticipates that its operating cash flows, cash balances, and available credit will be sufficient to meet its foreseeable liquidity needs.