10-QPeriod: Q3 FY2022

Expedia Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 4, 2022For Securities:EXPE

Summary

Expedia Group, Inc. (EXPE) reported a strong rebound in the third quarter of 2022, with total revenue increasing by 22% year-over-year to $3.6 billion, driven by robust recovery in travel demand across its Retail and B2B segments. This revenue growth translated into a significant improvement in profitability, with operating income rising 42% to $747 million and net income attributable to common stockholders reaching $482 million, up from $362 million in the prior year period. The company's gross bookings also saw substantial growth of 28%, indicating a strong recovery towards pre-pandemic levels. Financially, Expedia demonstrated improved operational efficiency, with selling and marketing expenses as a percentage of revenue decreasing slightly. The company also actively managed its debt, completing several tender offers and redemptions to reduce its outstanding debt obligations and capitalize on favorable market conditions. Despite ongoing macroeconomic uncertainties, Expedia's liquidity remains strong, supported by healthy operating cash flows and an untapped revolving credit facility, positioning the company to navigate the evolving travel landscape.

Financial Highlights

50 data points
Beta

Revenue

$3.62B

Net Income

$482.00M

13.3% Net Margin

EPS (Diluted)

$2.98

Total Assets

$21.88B

Cash & Equivalents

$4.59B

Free Cash Flow

-$1.17B

Financial Statements
Beta
Revenue$3.62B
Operating Income$747.00M
Interest Expense$63.00M
Net Income$482.00M
EPS (Basic)$3.05
EPS (Diluted)$2.98
Shares Outstanding (Basic)157.63M
Shares Outstanding (Diluted)161.83M

Key Highlights

  • 1Total revenue increased 22% year-over-year to $3.6 billion, driven by strong recovery in travel demand.
  • 2Net income attributable to common stockholders rose to $482 million from $362 million in the prior year period.
  • 3Gross bookings grew 28% year-over-year, indicating a significant recovery towards pre-COVID levels.
  • 4Operating income improved by 42% to $747 million, reflecting improved profitability.
  • 5The company actively managed its debt, completing multiple debt extinguishments and tender offers.
  • 6Selling and marketing expenses as a percentage of revenue decreased slightly, indicating improved efficiency.
  • 7Expedia maintained a strong liquidity position with substantial cash and cash equivalents and an undrawn credit facility.

Frequently Asked Questions

Revenue growth was primarily driven by the significant recovery in travel demand across Expedia's Retail and B2B segments. Lodging revenue increased by 25% and air revenue saw a 61% surge, both contributing to the overall 22% year-over-year increase in total revenue.

Expedia has been actively managing its debt by completing several tender offers and redemptions of its senior notes during the nine months ended September 30, 2022. This strategy aimed to reduce outstanding debt obligations and capitalize on favorable market conditions, resulting in a net gain on debt extinguishment in some instances and a loss in others, but ultimately reducing interest expense.

While the company has shown strong profitability improvements in Q3 2022, it acknowledges ongoing macroeconomic uncertainties including inflation and rising interest rates. However, the company believes its cost savings initiatives and improved operational efficiencies are likely to lead to higher Adjusted EBITDA margins as revenue returns to more normalized levels, suggesting a positive outlook for sustained profitability.

Expedia continues to actively defend itself in various legal proceedings, particularly those related to occupancy and other taxes. The company has established reserves for potential settlements, and while it believes it has strong defenses, acknowledges the inherent uncertainty in litigation. For tax matters, significant transfer pricing adjustments have been proposed by the IRS, which Expedia intends to protest, indicating potential for future disputes.