Posts record revenue and profitability
Reiterates full year guidance of double-digit topline growth
with margin expansion Announces new $5 billion share
repurchase authorization
Expedia Group, Inc. (NASDAQ: EXPE) announced financial results
today for the third quarter ended September 30, 2023.
"Our strong third quarter results with record revenue and
profitability came in ahead of our guidance and reflect the
resilience of travel demand and continued improvements stemming
from the execution of our strategy. Our B2B business continues to
demonstrate strong year-over-year revenue growth, while more
importantly, our B2C revenue growth accelerated over 400 basis
points sequentially. Our new unified loyalty program, One Key, is
showing good early results following its July launch in the US. In
addition, we have just completed the final leg of the Vrbo
migration to our single front-end stack,” said Peter Kern, Vice
Chairman and CEO, Expedia Group. “With the last of our major
migrations behind us, we are now well positioned to further
accelerate our business and drive stronger shareholder returns. To
that end, we have completed a record $1.8 billion in share
repurchases year-to-date and have a new $5 billion share repurchase
authorization from our Board.”
Third Quarter Highlights
- Lodging gross bookings at $18.5 billion grew 8% compared to
2022, and were at record levels for any third quarter.
- Revenue at $3.9 billion grew 9% compared to 2022 and was a
record for any quarter. B2C revenue growth compared to 2022
accelerated over 400 basis points sequentially. B2B revenue at $995
million was a record and was an increase of 26%, compared to
2022.
- Net income was $425 million for the third quarter. Adjusted net
income at $778 million was a record for any quarter.
- Record adjusted EBITDA was $1.2 billion, an increase of 13%
with 110 basis points of margin expansion, compared to 2022.
- Repurchased approximately 17 million shares for a record $1.8
billion year-to-date.
Financial Summary &
Operating Metrics (In millions except per share amounts)
Expedia Group, Inc.
Metric
Q3 2023
Q3 2022
Δ Y/Y
Booked room nights
89.3
81.6
9%
Gross bookings
$25,685
$23,987
7%
Revenue
$3,929
$3,619
9%
Operating income
$607
$747
(19)%
Net income attributable to Expedia Group,
Inc.
$425
$482
(12)%
Diluted earnings per share
$2.87
$2.98
(3)%
Adjusted EBITDA
$1,216
$1,079
13%
Adjusted net income
$778
$640
21%
Adjusted EPS
$5.41
$4.05
33%
Net cash used in operating activities
$(1,375)
$(997)
38%
Free cash flow
$(1,588)
$(1,167)
36%
* A reconciliation of non-GAAP financial
measures to the most comparable GAAP measures is provided at the
end of this release.
Conference Call
Expedia Group, Inc. will webcast a conference call to discuss
third quarter 2023 financial results and certain forward-looking
information on Thursday, November 2, 2023 at 1:30 p.m. Pacific Time
(PT). The webcast will be open to the public and available via
ir.expediagroup.com. Expedia Group expects to maintain access to
the webcast on the IR website for approximately twelve months
subsequent to the initial broadcast.
About Expedia Group
Expedia Group, Inc. (NASDAQ: EXPE) companies power travel for
everyone, everywhere through our global platform. Driven by the
core belief that travel is a force for good, we help people
experience the world in new ways and build lasting connections. Our
organization is made up of three pillars: Expedia Product and
Technology, focused on the group’s product and technical strategy
and offerings; Expedia Brands, housing all our consumer brands; and
Expedia for Business, consisting of business-to-business solutions
and relationships throughout the travel ecosystem. The Expedia
Group family of brands includes: Expedia®, Hotels.com®, Expedia®
Partner Solutions, Vrbo®, trivago®, Orbitz®, Travelocity®,
Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media
Solutions, CarRentals.com™, and Expedia Cruises™.
© 2023 Expedia, Inc., an Expedia Group company. All rights
reserved. Trademarks and logos are the property of their respective
owners. CST: 2029030-50
Expedia Group, Inc. Trended Metrics (All figures
in millions) The metrics below are intended to
supplement the financial statements in this release and in our
filings with the SEC, and do not include adjustments for one-time
items, acquisitions, foreign exchange or other adjustments. The
definition or methodology of any of our supplemental metrics are
subject to change, and such changes could be material. We may also
discontinue certain supplemental metrics as our business evolves
over time. In the event of any discrepancy between any supplemental
metric and our historical financial statements, you should rely on
the information included in the financial statements filed with or
furnished to the SEC.
2021
2022
2023
Full Year
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2021
2022
Units sold
Booked room nights
54.0
68.4
65.4
59.7
77.0
82.5
81.6
70.8
94.5
89.7
89.3
247.5
312.0
Booked air tickets
8.9
13.4
12.7
11.3
13.1
13.5
12.2
11.1
14.0
13.6
12.8
46.3
49.9
Gross bookings by business model
Agency
$6,737
$10,362
$8,855
$8,325
$11,346
$12,773
$10,904
$9,469
$13,425
$12,370
$10,927
$34,279
$44,492
Merchant
8,685
10,453
9,870
9,138
13,066
13,366
13,083
11,042
15,976
14,951
14,758
38,146
50,557
Total
$15,422
$20,815
$18,725
$17,463
$24,412
$26,139
$23,987
$20,511
$29,401
$27,321
$25,685
$72,425
$95,049
Lodging gross bookings
$12,002
$14,431
$13,046
$12,000
$17,756
$17,867
$17,099
$14,117
$21,055
$19,167
$18,513
$51,479
$66,839
Revenue by segment
B2C
$1,025
$1,715
$2,351
$1,730
$1,740
$2,420
$2,707
$1,874
$1,921
$2,415
$2,819
$6,821
$8,741
B2B
184
305
490
481
432
650
788
676
668
861
995
1,460
2,546
trivago (third-party revenue)
37
91
121
68
77
111
124
68
76
82
115
317
380
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$8,598
$11,667
Revenue by product
Lodging
$903
$1,533
$2,300
$1,713
$1,610
$2,400
$2,881
$2,014
$2,029
$2,698
$3,233
$6,449
$8,905
Air
50
78
61
65
74
95
100
93
113
111
100
254
362
Advertising and media(1)
88
161
202
152
166
213
222
176
175
201
240
603
777
Other(2)
205
339
399
349
399
473
416
335
348
348
356
1,292
1,623
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$8,598
$11,667
Revenue by geography
U.S. points of sale
$1,001
$1,736
$2,177
$1,655
$1,656
$2,208
$2,358
$1,717
$1,748
$2,172
$2,440
$6,569
$7,939
Non-U.S. points of sale
245
375
785
624
593
973
1,261
901
917
1,186
1,489
2,029
3,728
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$8,598
$11,667
Adjusted EBITDA by segment(3)
B2C
$106
$316
$879
$481
$188
$582
$943
$411
$148
$653
$1,056
$1,782
$2,124
B2B
(57)
(4)
74
97
80
156
221
142
133
206
266
110
599
Other(4)
(107)
(111)
(98)
(99)
(95)
(90)
(85)
(104)
(96)
(112)
(106)
(415)
(374)
Total
$(58)
$201
$855
$479
$173
$648
$1,079
$449
$185
$747
$1,216
$1,477
$2,349
Net income (loss) attributable to Expedia
Group common stockholders(5)
$(606)
$(301)
$362
$276
$(122)
$(185)
$482
$177
$(145)
$385
$425
$(269)
$352
(1) Our advertising and media business consists of Expedia Group
Media Solutions, which is responsible for generating advertising
revenue on our global online travel brands, and trivago, a leading
hotel metasearch site. (2) Other revenue primarily includes
insurance, car rental, destination services and cruise revenue. (3)
See the section below titled "Tabular Reconciliations for Non-GAAP
Measures — Adjusted EBITDA by segment" for additional details. (4)
Other is comprised of trivago, corporate and intercompany
eliminations. (5) Expedia Group does not calculate or report net
income (loss) by segment.
Notes:
- All trivago revenue is classified as Non-U.S. point of
sale.
- B2B includes Egencia, our former full-service travel management
company, through its sale in November 2021.
- Some numbers may not add due to rounding. All percentages
throughout this release are calculated on precise, unrounded
numbers.
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except share and
per share data)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Revenue
$
3,929
$
3,619
$
9,952
$
9,049
Costs and expenses:
Cost of revenue (exclusive of depreciation
and amortization shown separately below) (1)
412
455
1,233
1,245
Selling and marketing (1)
1,856
1,669
5,300
4,724
Technology and content (1)
340
310
1,001
864
General and administrative (1)
194
187
572
562
Depreciation and amortization
208
199
599
593
Impairment of goodwill
297
—
297
—
Impairment of intangible assets
15
52
15
81
Legal reserves, occupancy tax and
other
—
—
6
23
Operating income
607
747
929
957
Other income (expense):
Interest income
56
20
162
33
Interest expense
(62
)
(63
)
(184
)
(217
)
Gain on debt extinguishment, net
—
73
—
49
Other, net
(157
)
(87
)
(60
)
(467
)
Total other expense, net
(163
)
(57
)
(82
)
(602
)
Income before income taxes
444
690
847
355
Provision for income taxes
(139
)
(214
)
(295
)
(187
)
Net income
305
476
552
168
Net loss attributable to non-controlling
interests
120
6
113
7
Net income attributable to Expedia
Group, Inc.
$
425
$
482
$
665
$
175
Earnings per share attributable to
Expedia Group, Inc. available to common stockholders:
Basic
$
2.98
$
3.05
$
4.51
$
1.11
Diluted
2.87
2.98
4.37
1.08
Shares used in computing earnings per
share (000's):
Basic
142,228
157,628
147,253
157,100
Diluted
147,748
161,829
152,172
162,495
(1) Includes stock-based compensation as
follows:
Cost of revenue
$
3
$
4
$
10
$
10
Selling and marketing
20
18
60
50
Technology and content
35
28
105
82
General and administrative
47
47
139
138
EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except number of
shares which are reflected in thousands and par value)
September 30,
2023
December 31, 2022
September 30,
2022
(Unaudited)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
5,056
$
4,096
$
4,588
Restricted cash and cash equivalents
1,436
1,755
1,778
Short-term investments
—
48
49
Accounts receivable, net of allowance of
$52, $40 and $61
2,753
2,078
1,991
Income taxes receivable
84
40
65
Prepaid expenses and other current
assets
765
774
799
Total current assets
10,094
8,791
9,270
Property and equipment, net
2,354
2,210
2,169
Operating lease right-of-use assets
330
363
360
Long-term investments and other assets
1,155
1,184
1,122
Deferred income taxes
595
661
626
Intangible assets, net
1,149
1,209
1,223
Goodwill
6,845
7,143
7,109
TOTAL ASSETS
$
22,522
$
21,561
$
21,879
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable, merchant
$
1,887
$
1,709
$
1,535
Accounts payable, other
1,130
947
1,132
Deferred merchant bookings
8,394
7,151
7,457
Deferred revenue
167
163
160
Income taxes payable
108
21
46
Accrued expenses and other current
liabilities
874
787
789
Total current liabilities
12,560
10,778
11,119
Long-term debt
6,250
6,240
6,237
Deferred income taxes
34
52
50
Operating lease liabilities
288
312
315
Other long-term liabilities
464
451
445
Commitments and contingencies
Stockholders’ equity:
Common stock: $.0001 par value; Authorized
shares: 1,600,000
—
—
—
Shares issued: 280,957, 278,264 and
277,607; Shares outstanding: 134,331, 147,757 and 150,966
Class B common stock: $.0001 par value;
Authorized shares: 400,000
—
—
—
Shares issued: 12,800; Shares outstanding:
5,523
Additional paid-in capital
15,227
14,795
14,674
Treasury stock - Common stock and Class B,
at cost; Shares 153,903, 137,783 and 133,917
(12,550
)
(10,869
)
(10,503
)
Retained earnings (deficit)
(764
)
(1,409
)
(1,586
)
Accumulated other comprehensive income
(loss)
(240
)
(234
)
(317
)
Total Expedia Group, Inc. stockholders’
equity
1,673
2,283
2,268
Non-redeemable non-controlling
interests
1,253
1,445
1,445
Total stockholders’ equity
2,926
3,728
3,713
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
22,522
$
21,561
$
21,879
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Nine months ended
September 30,
2023
2022
Operating activities:
Net income
$
552
$
168
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property and equipment,
including internal-use software and website development
555
527
Amortization of intangible assets
44
66
Impairment of goodwill and intangible
assets
312
81
Amortization of stock-based
compensation
314
280
Deferred income taxes
49
106
Foreign exchange loss on cash, restricted
cash and short-term investments, net
32
193
Realized loss on foreign currency
forwards, net
35
170
Loss on minority equity investments,
net
73
423
Gain on debt extinguishment, net
—
(49
)
Other, net
34
(26
)
Changes in operating assets and
liabilities:
Accounts receivable
(704
)
(748
)
Prepaid expenses and other assets
43
31
Accounts payable, merchant
178
202
Accounts payable, other, accrued expenses
and other liabilities
223
422
Tax payable/receivable, net
(55
)
6
Deferred merchant bookings
1,243
1,770
Net cash provided by operating
activities
2,928
3,622
Investing activities:
Capital expenditures, including
internal-use software and website development
(669
)
(485
)
Purchases of investments
—
(60
)
Sales and maturities of investments
49
200
Proceeds from initial exchange of
cross-currency interest rate swaps
—
337
Payments for initial exchange of
cross-currency interest rate swaps
—
(337
)
Other, net
(15
)
(169
)
Net cash used in investing
activities
(635
)
(514
)
Financing activities:
Payment of long-term debt
—
(2,141
)
Debt extinguishment costs
—
(22
)
Purchases of treasury stock
(1,669
)
(241
)
Proceeds from exercise of equity awards
and employee stock purchase plan
53
125
Other, net
17
34
Net cash used in financing
activities
(1,599
)
(2,245
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
(53
)
(302
)
Net increase in cash, cash equivalents
and restricted cash and cash equivalents
641
561
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
5,851
5,805
Cash, cash equivalents and restricted
cash and cash equivalents at end of period
$
6,492
$
6,366
Supplemental cash flow
information
Cash paid for interest
$
197
$
254
Income tax payments, net
228
71
Notes & Definitions:
Booked Room Nights: Represents
booked hotel room nights and property nights for our B2C reportable
segment and booked hotel room nights for our B2B reportable
segment. Booked hotel room nights include both merchant and agency
hotel room nights. Property nights are related to our alternative
accommodation business.
Booked Air Tickets: Includes both
merchant and agency air bookings.
Gross Bookings: Generally represent
the total retail value of transactions booked, recorded at the time
of booking reflecting the total price due for travel by travelers,
including taxes, fees and other charges, adjusted for cancellations
and refunds.
Lodging Metrics: Reported on a
booked basis except for revenue, which is on a stayed basis.
Lodging consists of both merchant and agency model hotel and
alternative accommodations.
B2C: The B2C segment (formerly
referred to as Retail) provides a full range of travel and
advertising services to our worldwide customers through a variety
of consumer brands including: Expedia, Hotels.com, Vrbo, Orbitz,
Travelocity, Wotif Group, ebookers, Hotwire.com, and
CarRentals.com.
B2B: The B2B segment is comprised
primarily of Expedia Partner Solutions, which operates private
label and co-branded programs to make travel services available
through third-party company branded websites and Egencia through
its sale on November 1, 2021. The B2B segment also includes Expedia
Cruises and Traveldoo.
trivago: The trivago segment
generates advertising revenue primarily from sending referrals to
online travel companies and travel service providers from its
localized hotel metasearch websites.
Corporate: Includes unallocated
corporate expenses.
Non-GAAP Measures
Expedia Group reports Adjusted EBITDA, Adjusted EBITDA Margin,
Leverage Ratio, Adjusted Net Income (Loss), Adjusted EPS, Free Cash
Flow and Adjusted Expenses (non-GAAP cost of revenue, non-GAAP
selling and marketing, non-GAAP technology and content and non-GAAP
general and administrative), all of which are supplemental measures
to GAAP and are defined by the SEC as non-GAAP financial measures.
These measures are among the primary metrics by which management
evaluates the performance of the business and on which internal
budgets are based. Management believes that investors should have
access to the same set of tools that management uses to analyze our
results. These non-GAAP measures should be considered in addition
to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP. Adjusted EBITDA,
Adjusted Net Income (Loss) and Adjusted EPS have certain
limitations in that they do not take into account the impact of
certain expenses to our consolidated statements of operations. We
endeavor to compensate for the limitation of the non-GAAP measures
presented by also providing the most directly comparable GAAP
measures and descriptions of the reconciling items and adjustments
to derive the non-GAAP measures. Adjusted EBITDA, Adjusted Net
Income (Loss) and Adjusted EPS also exclude certain items related
to transactional tax matters, which may ultimately be settled in
cash. We urge investors to review the detailed disclosure regarding
these matters in the Management Discussion and Analysis and Legal
Proceedings sections, as well as the notes to the financial
statements, included in the Company's annual and quarterly reports
filed with the Securities and Exchange Commission. The non-GAAP
financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies.
Adjusted EBITDA is defined as net
income (loss) attributable to Expedia Group adjusted for:
(1) net income (loss) attributable to non-controlling interests;
(2) provision for income taxes; (3) total other expenses, net; (4)
stock-based compensation expense, including compensation expense
related to certain subsidiary equity plans; (5) acquisition-related
impacts, including
(i) amortization of intangible assets and
goodwill and intangible asset impairment, (ii) gains (losses)
recognized on changes in the value of contingent consideration
arrangements; and (iii) upfront consideration paid to settle
employee compensation plans of the acquiree;
(6) certain other items, including restructuring; (7) items
included in legal reserves, occupancy tax and other, which includes
reserves for potential settlement of issues related to
transactional taxes (e.g. hotel and excise taxes), related to court
decisions and final settlements, and charges incurred, if any, for
monies that may be required to be paid in advance of litigation in
certain transactional tax proceedings; (8) that portion of gains
(losses) on revenue hedging activities that are included in other,
net that relate to revenue recognized in the period; and (9)
depreciation. The above items are excluded from our Adjusted EBITDA
measure because these items are non-cash in nature, or because the
amount and timing of these items is unpredictable, not driven by
core operating results and renders comparisons with prior periods
and competitors less meaningful. We believe Adjusted EBITDA is a
useful measure for analysts and investors to evaluate our future
on-going performance as this measure allows a more meaningful
comparison of our performance and projected cash earnings with our
historical results from prior periods and to the results of our
competitors. Moreover, our management uses this measure internally
to evaluate the performance of our business as a whole and our
individual business segments. In addition, we believe that by
excluding certain items, such as stock-based compensation and
acquisition-related impacts, Adjusted EBITDA corresponds more
closely to the cash operating income generated from our business
and allows investors to gain an understanding of the factors and
trends affecting the ongoing cash earnings capabilities of our
business, from which capital investments are made and debt is
serviced.
Trailing Twelve Month Financial
Information
Expedia Group includes certain unaudited financial information
for the trailing twelve months ("TTM") ended September 30, 2023,
which is calculated as the nine months ended September 30, 2023
plus the year ended December 31, 2022 less the nine months ended
September 30, 2022. This presentation is not in accordance with
GAAP. However, we believe that this presentation provides useful
information to investors regarding its recent financial
performance, and it views this presentation of the four most
recently completed fiscal quarters as a key measurement period for
investors to assess its historical results.
Adjusted Net Income (Loss)
generally captures all items on the statements of operations that
occur in normal course operations and have been, or ultimately will
be, settled in cash and is defined as net income (loss)
attributable to Expedia Group plus the following items, net of
tax(a):
(1) stock-based compensation expense, including compensation
expense related to equity plans of certain subsidiaries and
equity-method investments; (2) acquisition-related impacts,
including;
(i) amortization of intangible assets,
including as part of equity-method investments, and goodwill and
intangible asset impairment; (ii) gains (losses) recognized on
changes in the value of contingent consideration arrangements;
(iii) upfront consideration paid to settle employee compensation
plans of the acquiree; and (iv) gains (losses) recognized on
non-controlling investment basis adjustments when we acquire or
lose controlling interests;
(3) currency gains or losses on U.S. dollar denominated cash;
(4) the changes in fair value of equity investments; (5) certain
other items, including restructuring charges; (6) items included in
legal reserves, occupancy tax and other, which includes reserves
for potential settlement of issues related to transactional taxes
(e.g., hotel occupancy and excise taxes), related court decisions
and final settlements, and charges incurred, if any, for monies
that may be required to be paid in advance of litigation in certain
transactional tax proceedings, including as part of equity method
investments; (7) discontinued operations; (8) the non-controlling
interest impact of the aforementioned adjustment items; and (9)
unrealized gains (losses) on revenue hedging activities that are
included in other, net. Adjusted Net Income (Loss) includes
preferred share dividends. We believe Adjusted Net Income (Loss) is
useful to investors because it represents Expedia Group's combined
results, taking into account depreciation, which management
believes is an ongoing cost of doing business, but excluding the
impact of certain expenses and items not directly tied to the core
operations of our businesses.
(a)Effective January 1, 2023, we changed our methodology for the
computation of the effective tax rate on pretax adjusted net income
to a long-term projected tax rate as our management believes this
tax rate provides better consistency across reporting periods and
produces results that are reflective of Expedia Group’s long-term
effective tax rate. This projected effective tax rate excludes the
income tax effects of Adjusted Net Income items described above and
eliminates the effects of non-recurring and period specific items
which can vary in size and frequency. Based on our current
long-term projections, we are using an effective tax rate on pretax
adjusted net income of 21.5% for 2023.
Adjusted EPS is defined as Adjusted
Net Income (Loss) divided by adjusted weighted average shares
outstanding, which, when applicable, include dilution from our
convertible debt instruments per the treasury stock method for
Adjusted EPS. The treasury stock method assumes we would elect to
settle the principal amount of the debt for cash and the conversion
premium for shares. If the conversion prices for such instruments
exceed our average stock price for the period, the instruments
generally would have no impact to adjusted weighted average shares
outstanding. This differs from the GAAP method for dilution from
our convertible debt instruments, which include them on an
if-converted method. We believe Adjusted EPS is useful to investors
because it represents, on a per share basis, Expedia Group's
consolidated results, taking into account depreciation, which we
believe is an ongoing cost of doing business, as well as other
items which are not allocated to the operating businesses such as
interest expense, taxes, foreign exchange gains or losses, and
minority interest, but excluding the effects of certain expenses
not directly tied to the core operations of our businesses.
Adjusted Net Income (Loss) and Adjusted EPS have similar
limitations as Adjusted EBITDA. In addition, Adjusted Net Income
(Loss) does not include all items that affect our net income (loss)
and net income (loss) per share for the period. Therefore, we think
it is important to evaluate these measures along with our
consolidated statements of operations.
Free Cash Flow is defined as net
cash flow provided by operating activities less capital
expenditures. Management believes Free Cash Flow is useful to
investors because it represents the operating cash flow that our
operating businesses generate, less capital expenditures but before
taking into account other cash movements that are not directly tied
to the core operations of our businesses, such as financing
activities, foreign exchange or certain investing activities. Free
Cash Flow has certain limitations in that it does not represent the
total increase or decrease in the cash balance for the period, nor
does it represent the residual cash flow for discretionary
expenditures. Therefore, it is important to evaluate Free Cash Flow
along with the consolidated statements of cash flows.
Adjusted Expenses (cost of revenue, direct
and indirect selling and marketing, technology and content and
general and administrative expenses) exclude stock-based
compensation related to expenses for stock options, restricted
stock units and other equity compensation under applicable
stock-based compensation accounting standards. Expedia Group
excludes stock-based compensation from these measures primarily
because they are non-cash expenses that we do not believe are
necessarily reflective of our ongoing cash operating expenses and
cash operating income. Moreover, because of varying available
valuation methodologies, subjective assumptions and the variety of
award types that companies can use when adopting applicable
stock-based compensation accounting standards, management believes
that providing non-GAAP financial measures that exclude stock-based
compensation allows investors to make meaningful comparisons
between our recurring core business operating results and those of
other companies, as well as providing management with an important
tool for financial operational decision making and for evaluating
our own recurring core business operating results over different
periods of time. There are certain limitations in using financial
measures that do not take into account stock-based compensation,
including the fact that stock-based compensation is a recurring
expense and a valued part of employees' compensation. Therefore, it
is important to evaluate both our GAAP and non-GAAP measures. See
the Notes to the Consolidated Statements of Operations for
stock-based compensation by line item.
Expedia Group, Inc. (excluding
trivago) In order to provide increased transparency on the
transaction-based component of the business, Expedia Group is
reporting results both in total and excluding trivago.
In addition, we evaluate certain operating and financial
measures, including revenue growth, on both an as-reported and
excluding the impact of foreign exchange, FX neutral, basis. FX
neutral results are among the primary metrics by which management
evaluates the performance of the business and management believes
that investors should have access to the same set of tools that
management uses to analyze our results. We estimate FX neutral
revenue growth by (i) excluding the FX impacts resulting from the
time period between a transaction's booking date and revenue
recognition date for both the current and prior year periods, and
(ii) converting our current-year period results for transactions
recorded in currencies other than U.S. Dollars using the
corresponding prior-year period exchange rates rather than the
current-year period exchange rates.
Tabular Reconciliations for Non-GAAP
Measures
Adjusted EBITDA (Adjusted Earnings Before
Interest, Taxes, Depreciation & Amortization) by Segment(1)
Three months ended September
30, 2023
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income
$
935
$
237
$
16
$
(581
)
$
607
Realized gain (loss) on revenue hedges
(16
)
—
—
—
(16
)
Stock-based compensation
—
—
—
105
105
Amortization of intangible assets
—
—
—
14
14
Depreciation
137
29
2
26
194
Impairment of goodwill
—
—
—
297
297
Impairment of intangible assets
—
—
—
15
15
Adjusted EBITDA(1)
$
1,056
$
266
$
18
$
(124
)
$
1,216
Three months ended September
30, 2022
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income
$
827
$
205
$
32
$
(317
)
$
747
Realized gain (loss) on revenue hedges
(10
)
(6
)
—
—
(16
)
Stock-based compensation
—
—
—
97
97
Amortization of intangible assets
—
—
—
23
23
Depreciation
126
22
2
26
176
Impairment of intangible assets
—
—
—
52
52
Adjusted EBITDA(1)
$
943
$
221
$
34
$
(119
)
$
1,079
(1) Adjusted EBITDA for our B2C and B2B
segments includes allocations of certain expenses, primarily cost
of revenue and facilities, the total costs of our global travel
supply organizations, the majority of platform and marketplace
technology costs, and the realized foreign currency gains or losses
related to the forward contracts hedging a component of our net
merchant lodging revenue. We base the allocations primarily on
transaction volumes and other usage metrics. We do not allocate
certain shared expenses such as accounting, human resources,
certain information technology and legal to our reportable
segments. We include these expenses in Corporate and Eliminations.
Our allocation methodology is periodically evaluated and may
change.
Adjusted EBITDA (Adjusted Earnings Before
Interest, Taxes, Depreciation & Amortization)
Three months ended
September 30,
Nine months ended
September 30,
Year Ended December
31,
TTM September
30,
2023
2022
2023
2022
2022
2023
($ in millions)
Net income attributable to Expedia Group,
Inc.
$
425
$
482
$
665
$
175
$
352
$
842
Net loss attributable to non-controlling
interests
(120
)
(6
)
(113
)
(7
)
(9
)
(115
)
Provision for income taxes
139
214
295
187
195
303
Total other expense, net
163
57
82
602
547
27
Operating income
607
747
929
957
1,085
1,057
Gain (loss) on revenue hedges related to
revenue recognized
(16
)
(16
)
(12
)
(34
)
(6
)
16
Legal reserves, occupancy tax and
other
—
—
6
23
23
6
Stock-based compensation
105
97
314
280
374
408
Depreciation and amortization
208
199
599
593
792
798
Impairment of goodwill
297
—
297
—
—
297
Impairment of intangible assets
15
52
15
81
81
15
Adjusted EBITDA
$
1,216
$
1,079
$
2,148
$
1,900
$
2,349
$
2,597
Net income margin(1)
10.8
%
13.3
%
6.7
%
1.9
%
3.0
%
6.7
%
Adjusted EBITDA margin(1)
30.9
%
29.8
%
21.6
%
21.0
%
20.1
%
20.7
%
Long-term debt
$
6,250
Long-term debt to net income ratio
7.4
Long-term debt
$
6,250
Unamortized discounts and debt issuance
costs
44
Adjusted debt
$
6,294
Leverage ratio(2)
2.4
(1) Net income and Adjusted EBITDA margins
represent net income (loss) attributable to Expedia Group, Inc. or
Adjusted EBITDA divided by revenue.
(2) Leverage ratio represents adjusted
debt divided by TTM Adjusted EBITDA.
Adjusted Net Income (Loss) & Adjusted
EPS
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(In millions, except share and
per share data)
Net income attributable to Expedia Group,
Inc.
$
425
$
482
$
665
$
175
Less: Net loss attributable to
non-controlling interests
120
6
113
7
Less: Provision for income taxes
(139
)
(214
)
(295
)
(187
)
Income before income taxes
444
690
847
355
Amortization of intangible assets
14
23
44
66
Stock-based compensation
105
97
314
280
Legal reserves, occupancy tax and
other
—
—
6
23
Impairment of goodwill
297
—
297
—
Impairment of intangible assets
15
52
15
81
Unrealized (gain) loss on revenue
hedges
(4
)
(9
)
11
(15
)
Loss on minority equity investments,
net
127
71
73
423
Gain on debt extinguishment, net
—
(73
)
—
(49
)
TripAdvisor tax indemnification
adjustment
—
—
(67
)
—
Gain on sale of business
—
—
(24
)
(2
)
Adjusted income before income taxes
998
851
1,516
1,162
GAAP Provision for income taxes
(139
)
(214
)
(295
)
(187
)
Provision for income taxes for
adjustments
(76
)
12
(31
)
(74
)
Total Adjusted provision for income
taxes
(215
)
(202
)
(326
)
(261
)
Total Adjusted income tax rate
21.5
%
23.7
%
21.5
%
22.5
%
Non-controlling interests
(5
)
(9
)
(14
)
(25
)
Adjusted net income attributable to
Expedia Group, Inc.
$
778
$
640
$
1,176
$
876
GAAP diluted weighted average shares
outstanding (000's)
147,748
161,829
152,172
162,495
Adjustment to dilutive securities
(000's)
(3,921
)
(3,921
)
(3,921
)
(3,921
)
Adjusted weighted average shares
outstanding (000's)
143,827
157,908
148,251
158,574
GAAP diluted earnings per share
$
2.87
$
2.98
$
4.37
$
1.08
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
5.41
$
4.05
$
7.93
$
5.53
Ex-trivago Adjusted Net Income and
Adjusted EPS
Adjusted net income attributable to
Expedia Group, Inc.
$
778
$
640
$
1,176
$
876
Less: Adjusted net income attributable to
trivago
9
17
25
46
Adjusted net income excluding trivago
$
769
$
623
$
1,151
$
830
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
5.41
$
4.05
$
7.93
$
5.53
Less: Adjusted earnings per share
attributable to trivago
0.06
0.11
0.17
0.29
Adjusted earnings per share excluding
trivago
$
5.35
$
3.94
$
7.76
$
5.23
Free Cash Flow
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(In millions)
Net cash provided by operating
activities
$
(1,375
)
$
(997
)
$
2,928
$
3,622
Less: Total capital expenditures
(213
)
(170
)
(669
)
(485
)
Free cash flow
$
(1,588
)
$
(1,167
)
$
2,259
$
3,137
Adjusted Expenses (Cost of revenue, direct
and indirect selling and marketing, technology and content and
general and administrative expenses)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(In millions)
Cost of revenue
$
412
$
455
$
1,233
$
1,245
Less: stock-based compensation
3
4
10
10
Adjusted cost of revenue
$
409
$
451
$
1,223
$
1,235
Less: trivago cost of revenue(1)
5
5
14
13
Adjusted cost of revenue excluding
trivago
$
404
$
446
$
1,209
$
1,222
Selling and marketing expense - direct
$
1,671
$
1,504
$
4,737
$
4,229
Selling and marketing expense -
indirect
185
165
563
495
Selling and marketing expense
1,856
1,669
5,300
4,724
Less: stock-based compensation
20
18
60
50
Adjusted selling and marketing expense
$
1,836
$
1,651
$
5,240
$
4,674
Less: trivago selling and marketing
expense(1)(2)
74
68
149
148
Adjusted selling and marketing expense
excluding trivago
$
1,762
$
1,583
$
5,091
$
4,526
Technology and content expense
$
340
$
310
$
1,001
$
864
Less: stock-based compensation
35
28
105
82
Adjusted technology and content
expense
$
305
$
282
$
896
$
782
Less: trivago technology and content
expense(1)
11
11
34
36
Adjusted technology and content expense
excluding trivago
$
294
$
271
$
862
$
746
General and administrative expense
$
194
$
187
$
572
$
562
Less: stock-based compensation
47
47
139
138
Adjusted general and administrative
expense
$
147
$
140
$
433
$
424
Less: trivago general and administrative
expense(1)
7
7
24
23
Adjusted general and administrative
expense excluding trivago
$
140
$
133
$
409
$
401
Total adjusted overhead expenses(3)
$
617
$
569
$
1,832
$
1,651
Note: Some numbers may not add due to
rounding.
(1) trivago amount presented without
stock-based compensation as those are included with the
consolidated totals above.
(2) Selling and marketing expense adjusted
to add back B2C direct marketing spend on trivago eliminated in
consolidation.
(3) Total adjusted overhead expenses is
the sum of adjusted expenses for Selling and marketing - indirect,
Technology and content, and General and administrative.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
This release may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. These forward-looking
statements are based on assumptions that are inherently subject to
uncertainties, risks and changes in circumstances that are
difficult to predict. The use of words such as “believe,”
“estimate,” “expect” and “will,” or the negative of these terms or
other similar expressions, among others, generally identify
forward-looking statements. However, these words are not the
exclusive means of identifying such statements. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements and may include statements relating to
future revenues, expenses, margins, profitability, net income
(loss), earnings per share and other measures of results of
operations and the prospects for future growth of Expedia Group,
Inc.’s business. Actual results may differ materially from the
results predicted and reported results should not be considered as
an indication of future performance. The potential risks and
uncertainties that could cause actual results to differ from the
results predicted include, among others, those described in the
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections of our most
recently filed periodic reports on Form 10-K and Form 10-Q, which
are available on our investor relations website at
ir.expediagroup.com and on the SEC website at www.sec.gov. All
information provided in this release is as of November 2, 2023.
Undue reliance should not be placed on forward-looking statements
in this release, which are based on information available to us on
the date hereof. We undertake no duty to update this information
unless required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102917284/en/
Investor Relations ir@expediagroup.com
Communications press@expediagroup.com
Expedia (NASDAQ:EXPE)
Historical Stock Chart
From Jan 2025 to Feb 2025
Expedia (NASDAQ:EXPE)
Historical Stock Chart
From Feb 2024 to Feb 2025
