01—Abstract
Summary
Summary of the 10-Q filed May 7, 2021. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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%b 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.
02—Key points
Key Highlights
- Revenue for Q1 2021 was $1.25 billion, down 44% year-over-year from $2.21 billion, impacted by COVID-19.
- Net 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.
- Gross bookings decreased 14% to $15.42 billion in Q1 2021 from $17.89 billion in Q1 2020, but showed sequential improvement.
- The company successfully raised $2 billion in aggregate principal amount through issuances of 0% Convertible Senior Notes and 2.95% Senior Notes.
- Operating 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.
- Liquidity remains a focus, with $6.27 billion in cash, cash equivalents, and restricted cash as of March 31, 2021.
- The company is exploring strategic divestitures, having announced an agreement for the sale of Classic Vacations and a binding offer for Egencia (corporate travel arm).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed May 7, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $1.25B$2.21B | −43.6% |
| Operating Income | -$369.00M-$1.29B | +71.5% |
| Interest Expense | $98.00M$50.00M | +96.0% |
| Net Income | -$578.00M-$1.30B | +55.6% |
| EPS (Basic) | $-4.17$-9.24 | +54.9% |
| EPS (Diluted) | $-4.17$-9.24 | +54.9% |
| Shares Outstanding (Basic) | 145.18M140.82M | +3.1% |
| Shares Outstanding (Diluted) | 145.18M140.82M | +3.1% |
05—Questions
Frequently Asked Questions
How did Expedia's revenue and profitability perform in Q1 2021 compared to Q1 2020?
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.
What is the outlook for travel recovery based on this filing?
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.
How is Expedia managing its debt and liquidity?
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.
Are there any significant ongoing legal or tax issues that investors should be aware of?
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.
06—Continue