10-QPeriod: Q1 FY2021

Expedia Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 7, 2021For Securities:EXPE

Summary

Expedia Group, Inc.'s Q1 2021 filing shows a continued challenging environment due to COVID-19, though with signs of sequential improvement. Revenue for the quarter was $1.25 billion, a significant decrease from $2.21 billion in Q1 2020, reflecting ongoing impacts on travel demand. The company reported a net loss of $581 million, an improvement from a $1.4 billion loss in the prior year's quarter. This improvement was partly driven by the absence of substantial goodwill and intangible asset impairment charges that heavily impacted Q1 2020. Despite the revenue decline and net loss, there are positive indications. Gross bookings decreased by 14% year-over-year, but showed sequential improvement and year-over-year growth in lodging bookings, suggesting a nascent recovery. The company also successfully managed its liquidity, raising capital through convertible and senior note issuances and completing debt extinguishments. Operational expenses were reduced across most categories, demonstrating cost management efforts. While the full impact of COVID-19 remains uncertain, the sequential improvements in bookings and revenue, coupled with cost control, provide a cautiously optimistic outlook for the company's recovery trajectory.

Financial Highlights

48 data points
Beta

Revenue

$1.25B

Net Income

-$578.00M

-46.4% Net Margin

EPS (Diluted)

$-4.17

Total Assets

$21.87B

Cash & Equivalents

$4.29B

Free Cash Flow

$2.00B

Financial Statements
Beta
Revenue$1.25B
Operating Income-$369.00M
Interest Expense$98.00M
Net Income-$578.00M
EPS (Basic)$-4.17
EPS (Diluted)$-4.17
Shares Outstanding (Basic)145.18M
Shares Outstanding (Diluted)145.18M

Key Highlights

  • 1Revenue for Q1 2021 was $1.25 billion, down 44% year-over-year from $2.21 billion, impacted by COVID-19.
  • 2Net loss narrowed to $581 million in Q1 2021 from $1.397 billion in Q1 2020, largely due to the absence of significant impairment charges seen in the prior year.
  • 3Gross bookings decreased 14% to $15.42 billion in Q1 2021 from $17.89 billion in Q1 2020, but showed sequential improvement.
  • 4The company successfully raised $2 billion in aggregate principal amount through issuances of 0% Convertible Senior Notes and 2.95% Senior Notes.
  • 5Operating expenses were reduced significantly across the board, including cost of revenue (-51%), selling and marketing (-45%), and technology and content (-22%), reflecting cost-saving initiatives.
  • 6Liquidity remains a focus, with $6.27 billion in cash, cash equivalents, and restricted cash as of March 31, 2021.
  • 7The company is exploring strategic divestitures, having announced an agreement for the sale of Classic Vacations and a binding offer for Egencia (corporate travel arm).

Frequently Asked Questions

Expedia's revenue for Q1 2021 was $1.25 billion, a decrease of 44% from $2.21 billion in Q1 2020, largely due to the ongoing impact of COVID-19 on travel demand. The company reported a net loss of $581 million in Q1 2021, an improvement from a net loss of $1.40 billion in Q1 2020. This narrower loss was partly due to the absence of significant goodwill and intangible asset impairment charges that impacted the prior year's results.

The filing indicates sequential improvement in travel trends during Q1 2021. While overall travel volumes remain lower than pre-COVID levels, lodging bookings showed year-over-year growth, and gross bookings demonstrated sequential improvement. Management notes that the full duration and impact of COVID-19 remain uncertain, and recovery pace may vary by region, but the trends suggest a gradual recovery is underway.

Expedia has taken steps to strengthen its financial position. During Q1 2021, the company issued $1 billion in 0% Convertible Senior Notes and $1 billion in 2.95% Senior Notes. It also used proceeds to extinguish higher-cost debt, including the 7.0% Senior Notes and a portion of the 6.25% Senior Notes, resulting in a loss on debt extinguishment. As of March 31, 2021, the company had $6.27 billion in cash, cash equivalents, and restricted cash, indicating a strong liquidity position. Credit ratings remain at investment grade, though outlooks are negative.

Expedia continues to be involved in litigation concerning occupancy and other taxes, with several cases ongoing or at various stages. The company has established reserves for potential settlements, with $57 million reserved as of March 31, 2021. While management believes these matters will not have a material adverse effect, adverse outcomes could impact financial performance. Additionally, the company is subject to ongoing tax inquiries and audits in various jurisdictions.