Expedia Group, Inc. (NASDAQ: EXPE) announced financial results
today for the second quarter ended June 30, 2021.
“The second quarter saw continued improvement in many global
travel segments with North America in particular showing strength.
Expedia Group benefited from strong vacation rental performance and
improved conventional lodging, offset by continued softness in
international travel, corporate travel, and relatively high
consumer interest in smaller markets and lower-end accommodations.
While that strength has continued into Q3, recent Covid variant
news around the world continues to create uncertainty in the travel
industry,” said Vice Chairman and CEO, Peter Kern. “Unfortunately,
the road to full travel recovery remains bumpy until more of the
world is vaccinated. For our part, we just launched our Give the
World a Shot program in partnership with UNICEF to help support
global Covid-19 vaccine distribution. We invite other companies to
join this effort so we can all get the world back on its feet
again.”
Financial Summary & Operating Metrics ($ millions except
per share amounts)(1)
Expedia Group, Inc.
Metric
Q2 2021
Q2 2020
Δ Y/Y
Stayed room night growth
196%
(81)%
NM
Gross bookings
$20,815
$2,713
667%
Revenue
2,111
566
273%
Operating income (loss)
(132)
(849)
(84)%
Net income (loss) attributable to Expedia
Group common stockholders
(301)
(753)
(60)%
Diluted earnings (loss) per share
$(2.02)
$(5.34)
(62)%
Adjusted EBITDA(2)
201
(436)
NM
Adjusted net income (loss)(2)
(169)
(577)
(71)%
Adjusted EPS(2)
$(1.13)
$(4.09)
(72)%
Free cash flow(2)
2,331
(2,052)
NM
(1)All comparisons are against comparable period of 2020 unless
otherwise noted.
(2)"Adjusted EBITDA" (Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization), "Adjusted net income (loss),"
"Adjusted EPS" and "Free cash flow" are non-GAAP measures as
defined by the Securities and Exchange Commission (the "SEC"). See
"Definitions of Non-GAAP Measures" and "Tabular Reconciliations for
Non-GAAP Measures" on pages 10-16 herein for an explanation and
reconciliations of non-GAAP measures used throughout this release.
Expedia Group does not calculate or report net income by
segment.
Please refer to the "Glossary of Business Terms," located in
the Quarterly Results section on Expedia Group’s investor
relations website, for business and financial statement definitions
used throughout this release
Discussion of Results
The results for Expedia Group, Inc. ("Expedia Group" or "the
Company") include Brand Expedia®, Hotels.com®, Expedia® Partner
Solutions, Vrbo®, Egencia®, trivago®, HomeAway®, Orbitz®,
Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia
Group™ Media Solutions, CarRentals.com™, Expedia® Cruises™,
Traveldoo® and VacationRentals.com. Results include the related
international points of sale for all brands and the immaterial
impact of Bodybuilding.com since the Liberty Expedia Holdings, Inc.
transaction on July 26, 2019. In May 2020, Expedia Group completed
the sale of Bodybuilding.com. In October 2020, we completed the
sale of SilverRail™, and in April 2021, we completed the sale of
Classic Vacations®. All amounts shown are in U.S. dollars.
Gross Bookings & Revenue
Revenue by Segment ($
millions)
Revenue
Second Quarter
2021
2020
Δ%
Retail
$
1,715
$
463
270%
B2B
305
68
348%
Corporate (Bodybuilding.com)
—
20
NM
Expedia Group (excluding trivago)
$
2,020
$
551
266%
trivago
115
18
551%
Intercompany eliminations
(24)
(3)
781%
Total
$
2,111
$
566
273%
For the second quarter of 2021, total gross bookings and total
revenue both increased significantly compared to the second quarter
of 2020. Booking trends for lodging, air, and other travel products
all improved sequentially from the first quarter of 2021.
Both Retail and B2B segment revenue increased compared to the
second quarter of 2020. The growth in gross bookings and revenue
largely reflect continued improvement in leisure travel trends
during the quarter.
Product & Services Detail - Second Quarter 2021
As a percentage of total worldwide revenue in the second quarter
of 2021, lodging accounted for 73%, advertising and media accounted
for 8%, air accounted for 4% and all other revenues accounted for
the remaining 15%.
Lodging revenue increased in the second quarter of 2021 driven
by a significant increase in room nights stayed and growth in
revenue per room night. Revenue per room night benefited from
higher average daily rates ("ADRs") driven by an increase in
regional rates and a higher mix of U.S. hotels compared to the
second quarter of 2020.
Air revenue increased in the second quarter of 2021 driven
largely by an increase in tickets sold as air travel demand
improved.
Advertising and media revenue increased in the second quarter of
2021 due to increases at both trivago and Expedia Group Media
Solutions. Other revenue increased in the second quarter of 2021
driven by growth from both car and travel insurance products. Other
revenue included revenue related to Bodybuilding.com for the second
quarter of 2020, but not for the second quarter of 2021 as the
Bodybuilding.com business was disposed of in May 2020.
Costs and Expenses ($ millions)
Costs and Expenses
As a % of Revenue
Second Quarter
Second Quarter
2021
2020
Δ%
2021
2020
Δ (bps)
Generally Accepted Accounting
Principles (GAAP) Expenses - Expedia Group
Cost of revenue
$
374
$
381
(2)
%
17.7
%
67.2
%
(4,951)
Selling and marketing - direct
1,002
90
1,019
%
47.5
%
15.8
%
3,164
Selling and marketing - indirect
197
201
(2)
%
9.4
%
35.5
%
(2,613)
Selling and marketing
1,199
291
313
%
56.8
%
51.3
%
550
Technology and content
276
271
2
%
13.1
%
48.0
%
(3,488)
General and administrative
184
149
23
%
8.7
%
26.5
%
(1,776)
Total GAAP costs and expenses
$
2,033
$
1,092
86
%
96.3
%
193.0
%
(9,664)
Adjusted Expenses - Expedia
Group
Cost of revenue*
$
368
$
378
(3)
%
17.4
%
66.7
%
(4,925)
Selling and marketing - direct
1,002
90
1,019
%
47.5
%
15.8
%
3,164
Selling and marketing - indirect*
165
188
(12)
%
7.8
%
33.2
%
(2,539)
Selling and marketing*
1,167
278
320
%
55.3
%
49.0
%
625
Technology and content*
244
253
(4)
%
11.6
%
44.8
%
(3,326)
General and administrative*
134
129
4
%
6.4
%
22.9
%
(1,648)
Total adjusted costs and expenses
$
1,913
$
1,038
84
%
90.7
%
183.4
%
(9,274)
Adjusted Expenses - Expedia Group
(excluding trivago)**
Cost of revenue*
$
364
$
378
(4)
%
18.0
%
68.4
%
(5,042)
Selling and marketing*
1,107
270
312
%
54.8
%
48.8
%
601
Technology and content*
231
240
(4)
%
11.4
%
43.6
%
(3,220)
General and administrative*
126
121
4
%
6.3
%
22.0
%
(1,575)
Total adjusted costs and expenses
excluding trivago
$
1,828
$
1,009
81
%
90.5
%
182.9
%
(9,236)
Note: Expedia Group reclassified certain prior period
information to conform to the current period presentation primarily
related to the classification of licensing and maintenance costs
within operating expenses. Some numbers may not add due to
rounding. *Adjusted expenses are non-GAAP measures. See pages 10-16
herein for a description and reconciliation to the corresponding
GAAP measures.
**Expedia Group (excluding trivago) figures exclude both trivago
costs and expenses and trivago revenue when calculating 'As a % of
Revenue.'
Cost of Revenue
- For the second quarter of 2021, total GAAP and adjusted cost of
revenue decreased 2% and 3%, respectively, compared to the second
quarter of 2020, primarily due to decreased customer service and
personnel costs, lower bad debt expense, and the absence of
expenses related to Bodybuilding.com which was disposed of in May
2020.
Selling and Marketing
- For the second quarter of 2021, total GAAP and adjusted total
selling and marketing expense increased 313% and 320%,
respectively, compared to the second quarter of 2020, primarily due
to a $912 million increase in direct costs as marketing spend
increased in anticipation of a further recovery in travel demand.
Indirect costs, which represented 16% of total GAAP selling and
marketing costs in the second quarter of 2021, compared to 69% in
the second quarter of 2020, and 14% of total adjusted selling and
marketing expense in the second quarter of 2021, compared to 68% in
the second quarter of 2020, decreased 2% and 12%, respectively, due
to lower personnel costs in connection with previously announced
cost savings initiatives.
Technology and Content
- For the second quarter of 2021, total GAAP technology and
content expense increased 2%, and total adjusted technology and
content expense decreased 4%, compared to the second quarter of
2020, due to lower personnel and related costs in connection with
previously announced cost savings initiatives. The year-over-year
benefit for GAAP technology and content expense was offset by
higher stock-based compensation.
General and Administrative
- For the second quarter of 2021, total GAAP and adjusted general
and administrative expense increased 23% and 4%, respectively,
compared to the second quarter of 2020, mainly due to a shift in
personnel costs from bonus to salary. The year-over-year increase
in GAAP general and administrative expense was driven by higher
stock-based compensation.
Net Loss Attributable to Expedia Group and Adjusted
EBITDA*
Adjusted EBITDA by Segment ($
millions)
Second Quarter
2021
2020
Δ%
Retail
$
303
$
(203)
NM
B2B
(8)
(128)
(93)%
Unallocated overhead costs
(99)
(89)
11%
Expedia Group (excluding trivago)
$
196
$
(420)
NM
trivago(1)
5
(16)
NM
Total Adjusted EBITDA
$
201
$
(436)
NM
Net income (loss) attributable to Expedia
Group common stockholders(2)
$
(301)
$
(753)
(60)%
(1) trivago is a separately listed company on the Nasdaq Global
Select Market and, therefore, is subject to its own reporting and
filing requirements which could result in possible differences that
are not expected to be material to Expedia Group. (2) Expedia Group
does not calculate or report net income (loss) by segment.
* Adjusted EBITDA is a non-GAAP measure. See pages 10-16 herein
for a description and reconciliation to the corresponding GAAP
measure.
Note: Some numbers may not add due to rounding.
Depreciation and Amortization
Depreciation and amortization decreased 12% in the second
quarter of 2021, compared to the second quarter of 2020, primarily
due to the completion of amortization related to certain intangible
assets as well as the impact of definite-lived intangible
impairments in the prior year.
Impairment of Goodwill & Intangible Assets
There was no impairment of goodwill or intangible assets
recorded in the second quarter of 2021. Impairment charges of
goodwill and intangible assets totaled $30 million in the second
quarter of 2020 due to business simplification efforts in our
Retail segment.
Restructuring and Related Reorganization Charges
In connection with the restructuring actions announced in late
February 2020 to simplify our businesses and improve operational
efficiencies, as well as the acceleration of further actions to
adapt our business to the current environment, we recognized $13
million in restructuring and related reorganization charges in the
second quarter of 2021. Restructuring and related reorganization
charges were $53 million in the second quarter of 2020.
Interest and Other
Consolidated interest income decreased $2 million in the second
quarter of 2021, compared to the second quarter of 2020.
Consolidated interest expense decreased $12 million in the second
quarter of 2021, compared to the second quarter of 2020, primarily
as a result of interest related to our prior year draw on our
revolving credit facility, which we fully repaid in December
2020.
Consolidated other, net was a loss of $10 million in the second
quarter of 2021, compared to a loss of $12 million in the second
quarter of 2020. The loss in the second quarter of 2021 was
primarily due to foreign exchange losses and mark-to-market losses
on minority equity investments. The loss in the second quarter of
2020 included an impairment charge on a minority equity investment
partially offset by mark-to-market gains on minority equity
investments.
Income Taxes
The GAAP effective tax rate was 21%, compared to 22% in the
second quarter of 2020.
The effective tax rate on pretax adjusted net loss was (114)%,
compared to 23% in the second quarter of 2020. The change in the
effective tax rate was primarily due to a change in the forecast
between first quarter of 2021 and second quarter of 2021.
Preferred Stock
The preferred stock dividend related to the preferred equity
issued in May of 2020 was $22 million in the second quarter of
2021.
In May 2021, Expedia Group prepaid 50% of the outstanding Series
A Preferred Stock at a price equal to 103% of the Preference
Amount, plus accrued and unpaid distributions as to the redemption
date using cash on-hand of $640 million.
Balance Sheet, Cash Flows and Capitalization
For the three months ended June 30, 2021, consolidated net cash
provided by operating activities was $2.5 billion.
Consolidated free cash flow totaled $2.3 billion, an improvement
of $4.4 billion, compared to the prior year, primarily due to a
cash benefit from working capital and an improvement in Adjusted
EBITDA. The impact from COVID-19 resulted in a significant use of
cash for working capital in the prior year.
Cash, cash equivalents and short-term investments totaled $5.5
billion at June 30, 2021 compared to $4.3 billion at March 31,
2021. The increase was primarily driven by an improvement in free
cash flow. Restricted cash and cash equivalents, which primarily
relates to traveler deposits for bookings made through Vrbo, was
$2.5 billion at June 30, 2021 compared to $2.0 billion at March 31,
2021. Prepaid expenses and other current assets was $1.3 billion at
June 30, 2021 compared to $1.2 billion at March 31, 2021. Deferred
merchant bookings totaled approximately $8.2 billion at June 30,
2021, including approximately $760 million in deferred loyalty
rewards compared to $6.0 billion at March 31, 2021, including
approximately $750 million in deferred loyalty rewards. The
increase in deferred merchant bookings reflects the typical
seasonality of our business with higher stayed room nights
occurring during the summer months.
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except share and
per share data)
(Unaudited)
Three months ended
June 30,
Six months ended
June 30,
2021
2020
2021
2020
Revenue
$
2,111
$
566
$
3,357
$
2,775
Costs and expenses:
Cost of revenue (exclusive of depreciation
and amortization shown separately below) (1)
374
381
685
1,010
Selling and marketing (1)
1,199
291
1,863
1,496
Technology and content (1)
276
271
523
586
General and administrative (1)
184
149
340
334
Depreciation and amortization
205
232
414
461
Impairment of goodwill
—
20
—
785
Impairment of intangible assets
—
10
—
131
Legal reserves, occupancy tax and
other
(8)
8
(9)
(13)
Restructuring and related reorganization
charges
13
53
42
128
Operating loss
(132)
(849)
(501)
(2,143)
Other income (expense):
Interest income
1
3
3
13
Interest expense
(83)
(95)
(181)
(145)
Loss on debt extinguishment
—
—
(280)
—
Other, net
(10)
(12)
(15)
(157)
Total other expense, net
(92)
(104)
(473)
(289)
Loss before income taxes
(224)
(953)
(974)
(2,432)
Provision for income taxes
47
213
216
295
Net loss
(177)
(740)
(758)
(2,137)
Net loss attributable to non-controlling
interests
5
4
8
100
Net loss attributable to Expedia Group,
Inc.
(172)
(736)
(750)
(2,037)
Preferred stock dividend
(22)
(17)
(50)
(17)
Loss on redemption of preferred stock
(107)
—
(107)
—
Net loss attributable to Expedia Group,
Inc. common stockholders
$
(301)
$
(753)
$
(907)
$
(2,054)
Loss per share attributable to Expedia
Group, Inc. available to common stockholders:
Basic
$
(2.02)
$
(5.34)
$
(6.16)
$
(14.57)
Diluted
(2.02)
(5.34)
(6.16)
(14.57)
Shares used in computing earnings
(loss) per share (000's):
Basic
149,093
141,072
147,148
140,947
Diluted
149,093
141,072
147,148
140,947
(1) Includes stock-based compensation as
follows:
Cost of revenue
$
6
$
3
$
11
$
6
Selling and marketing
32
13
49
25
Technology and content
32
18
59
38
General and administrative
50
20
84
40
EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except number of
shares which are reflected in thousands and par value)
June 30, 2021
December 31, 2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
5,464
$
3,363
Restricted cash and cash equivalents
2,541
772
Short-term investments
11
24
Accounts receivable, net of allowance of
$86 and $101
1,440
701
Income taxes receivable
399
120
Prepaid expenses and other current
assets
1,258
654
Total current assets
11,113
5,634
Property and equipment, net
2,261
2,257
Operating lease right-of-use assets
467
574
Long-term investments and other assets
663
671
Deferred income taxes
850
659
Intangible assets, net
1,457
1,515
Goodwill
7,370
7,380
TOTAL ASSETS
$
24,181
$
18,690
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable, merchant
$
1,157
$
602
Accounts payable, other
778
496
Deferred merchant bookings
8,240
3,107
Deferred revenue
172
172
Income taxes payable
328
50
Accrued expenses and other current
liabilities
1,038
979
Total current liabilities
11,713
5,406
Long-term debt
8,480
8,216
Deferred income taxes
22
67
Operating lease liabilities
408
513
Other long-term liabilities
465
462
Commitments and contingencies
Series A Preferred Stock: $.001 par value,
Authorized shares: 100,000; Shares issued and outstanding: 600 and
1,200
511
1,022
Stockholders’ equity:
Common stock: $.0001 par value; Authorized
shares: 1,600,000
—
—
Shares issued: 269,239 and 261,564; Shares
outstanding: 145,197 and 138,074
Class B common stock: $.0001 par value;
Authorized shares: 400,000
—
—
Shares issued: 12,800 and 12,800; Shares
outstanding: 5,523 and 5,523
Additional paid-in capital
13,995
13,566
Treasury stock - Common stock and Class B,
at cost; Shares 131,318 and 130,767
(10,182)
(10,097)
Retained earnings (deficit)
(2,531)
(1,781)
Accumulated other comprehensive income
(loss)
(186)
(178)
Total Expedia Group, Inc. stockholders’
equity
1,096
1,510
Non-redeemable non-controlling
interests
1,486
1,494
Total stockholders’ equity
2,582
3,004
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
24,181
$
18,690
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Six months ended
June 30,
2021
2020
Operating activities:
Net loss
$
(758)
$
(2,137)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation of property and equipment,
including internal-use software and website development
361
376
Amortization of intangible assets
53
85
Impairment of goodwill and intangible
assets
—
916
Amortization of stock-based
compensation
203
109
Deferred income taxes
(241)
(279)
Foreign exchange loss on cash, restricted
cash and short-term investments, net
20
65
Realized (gain) loss on foreign currency
forwards
12
(79)
(Gain) loss on minority equity
investments, net
(4)
195
Loss on debt extinguishment
280
—
Provision for credit losses and other,
net
6
119
Changes in operating assets and
liabilities:
Accounts receivable
(729)
1,479
Prepaid expenses and other assets
(614)
(585)
Accounts payable, merchant
556
(1,389)
Accounts payable, other, accrued expenses
and other liabilities
353
(244)
Tax payable/receivable, net
2
(82)
Deferred merchant bookings
5,184
(1,058)
Deferred revenue
—
(121)
Net cash provided by (used in)
operating activities
4,684
(2,630)
Investing activities:
Capital expenditures, including
internal-use software and website development
(351)
(493)
Purchases of investments
(1)
(685)
Sales and maturities of investments
12
761
Other, net
(73)
76
Net cash used in investing
activities
(413)
(341)
Financing activities:
Revolving credit facility borrowings
—
1,900
Proceeds from issuance of long-term debt,
net of issuance costs
1,964
2,714
Payment of long-term debt
(1,706)
—
Debt extinguishment costs
(258)
—
Net proceeds from issuance of preferred
stock and warrants
—
1,132
Redemption of preferred stock
(618)
—
Purchases of treasury stock
(85)
(414)
Payment of dividends to common
stockholders
—
(48)
Payment of preferred stock dividends
(50)
(17)
Proceeds from exercise of equity awards
and employee stock purchase plan
379
96
Other, net
(4)
(30)
Net cash provided by (used in)
financing activities
(378)
5,333
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
(26)
(93)
Net increase in cash, cash equivalents
and restricted cash and cash equivalents
3,867
2,269
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
4,138
4,097
Cash, cash equivalents and restricted
cash and cash equivalents at end of period
$
8,005
$
6,366
Supplemental cash flow
information
Cash paid for interest
$
192
$
118
Income tax payments, net
16
63
Expedia Group, Inc. Trended Metrics (All
figures in millions)
The supplemental 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, methodology and appropriateness of any of our
supplemental metrics are subject to removal and/or change, and such
changes could be material. In the event of any discrepancy between
any supplemental metric and our historical financial statements,
you should rely on the information filed with the SEC and the
financial statements in our most recent earnings release.
2019
2020
2021
Y/Y
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Growth
Gross bookings by business model
Agency
$
14,585
$
11,956
$
9,823
$
1,363
$
3,530
$
3,405
$
6,737
$
10,362
661%
Merchant
12,342
11,289
8,062
1,350
5,101
4,162
8,685
10,453
674%
Total
$
26,927
$
23,245
$
17,885
$
2,713
$
8,631
$
7,567
$
15,422
$
20,815
667%
Revenue by segment
Retail
$
2,613
$
1,961
$
1,582
$
463
$
1,246
$
702
$
1,025
$
1,715
270%
B2B
731
635
485
68
203
186
184
305
348%
Corporate (Bodybuilding.com)
24
34
39
20
—
—
—
—
NM
Expedia Group (excluding trivago)
$
3,368
$
2,630
$
2,106
$
551
$
1,449
$
888
$
1,209
$
2,020
266%
trivago
279
171
154
18
70
38
46
115
551%
Intercompany eliminations
(89)
(54)
(51)
(3)
(15)
(6)
(9)
(24)
781%
Total
$
3,558
$
2,747
$
2,209
$
566
$
1,504
$
920
$
1,246
$
2,111
273%
Revenue by geography
Domestic
$
1,982
$
1,573
$
1,317
$
463
$
1,033
$
698
$
1,001
$
1,736
275%
International
1,576
1,174
892
103
471
222
245
375
264%
Total
$
3,558
$
2,747
$
2,209
$
566
$
1,504
$
920
$
1,246
$
2,111
273%
Revenue by business model
Agency
$
1,177
$
816
$
562
$
105
$
329
$
271
$
323
$
573
442%
Merchant
1,980
1,590
1,340
368
1,032
521
796
1,338
264%
Advertising & media and other
401
341
307
93
143
128
127
200
115%
Total
$
3,558
$
2,747
$
2,209
$
566
$
1,504
$
920
$
1,246
$
2,111
273%
Adjusted EBITDA by segment
Retail
$
876
$
502
$
22
$
(203)
$
429
$
6
$
94
$
303
NM
B2B
149
96
26
(128)
(52)
(54)
(60)
(8)
(93)%
Unallocated overhead costs
(125)
(149)
(123)
(89)
(80)
(108)
(88)
(99)
11%
Expedia Group (excluding trivago)
$
900
$
449
$
(75)
$
(420)
$
297
$
(156)
$
(54)
$
196
NM
trivago
12
29
(1)
(16)
7
(4)
(4)
5
NM
Total
$
912
$
478
$
(76)
$
(436)
$
304
$
(160)
$
(58)
$
201
NM
Net income (loss) attributable to Expedia
Group common stockholders
$
409
$
76
$
(1,301)
(753)
(221)
(412)
(606)
(301)
(60)%
Worldwide lodging (merchant &
agency)
Stayed room nights
116.5
91.6
69.4
19.2
48.8
36.1
37.1
56.6
Stayed room night growth
11
%
11
%
(14)
%
(81)
%
(58)
%
(61)
%
(47)
%
196
%
ADR growth
(1)
%
—
%
2
%
1
%
8
%
2
%
8
%
21
%
Revenue per night growth
—
%
(1)
%
6
%
15
%
14
%
6
%
10
%
7
%
Lodging revenue growth
11
%
9
%
(9)
%
(78)
%
(52)
%
(58)
%
(41)
%
215
%
Worldwide air (merchant & agency)
Tickets sold growth
8
%
—
%
(26)
%
(85)
%
(74)
%
(69)
%
(50)
%
299
%
Airfare growth
—
%
1
%
(5)
%
(35)
%
(36)
%
(31)
%
(26)
%
30
%
Revenue per ticket growth
(10)
%
(9)
%
(41)
%
NM
(48)
%
(35)
%
(10)
%
NM
Air revenue growth
(3)
%
(8)
%
(56)
%
NM
(87)
%
(80)
%
(55)
%
NM
Notes:
- Advertising & Media Revenue includes third party revenue
from trivago. All trivago revenue is classified as
international.
- Corporate includes product revenue subsequent to our
acquisition of Bodybuilding.com on July 26, 2019 through its sale
in May 2020.
- Some numbers may not add due to rounding. All percentages above
and throughout this release are calculated on precise, unrounded
numbers
Notes & Definitions:
Gross 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.
Retail: The Retail segment, which
consists of the aggregation of operating segments, provides a full
range of travel and advertising services to our worldwide customers
through a variety of consumer brands including: Expedia.com and
Hotels.com in the United States and localized Expedia and
Hotels.com websites throughout the world, Vrbo, Orbitz,
Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com,
CarRentals.com, and Expedia Cruises.
B2B: The B2B segment is comprised
of our Expedia Business Services organization including Expedia
Partner Solutions, which operates private label and co-branded
programs to make travel services available to leisure travelers
though third-party company branded websites, and Egencia, a
full-service travel management company that provides travel
services to businesses and their corporate customers.
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 as well as Bodybuilding.com subsequent to our
acquisition on July 26, 2019 through its sale in May 2020.
Lodging metrics: Reported on a
stayed basis and includes both merchant and agency model hotel and
alternative accommodation stays.
Room Nights: Room nights represent
stayed hotel room nights and property nights for our Retail
reportable segment and stayed hotel room nights for our B2B
reportable segment. Hotel room nights are reported on a stayed
basis and include both merchant and agency hotel stays. Property
nights, which are related to our alternative accommodation
business, are reported upon the first day of stay and check-in to a
property and represent the total number of nights for which a
property is rented.
Worldwide Air metrics: Reported on
a booked basis and includes both merchant and agency air
bookings.
Definitions of Non-GAAP Measures
Expedia Group reports Adjusted EBITDA, 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. The
definition of Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization was revised in the fourth quarter of
2012 and in the first quarter of 2016 and the definition for
Adjusted Net Income (Loss) was revised in the fourth quarters of
2010, 2011, 2012 and 2017. The definition of Adjusted Expenses was
revised in the first quarter of 2014 and in the second quarter
2015.
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.
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:
(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) since adoption of new accounting guidance in the first
quarter of 2018, 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.
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. We
added additional detail for the capital expenditures associated
with building our new headquarters facility in Seattle, Washington.
We believe separating out capital expenditures for this discrete
project is important to provide additional transparency to
investors related to operating versus project-related capital
expenditures. 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,
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 June 30,
2021
Retail
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
167
$
(34)
$
3
$
(268)
$
(132)
Realized gain (loss) on revenue hedges
3
—
—
—
3
Restructuring and related reorganization
charges
—
—
—
13
13
Legal reserves, occupancy tax and
other
—
—
—
(8)
(8)
Stock-based compensation
—
—
—
120
120
Amortization of intangible assets
—
—
—
26
26
Depreciation
133
26
2
18
179
Adjusted EBITDA(1)
$
303
$
(8)
$
5
$
(99)
$
201
Three months ended June 30,
2020
Retail
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating loss
$
(375)
$
(162)
$
(19)
$
(293)
$
(849)
Realized gain (loss) on revenue hedges
36
—
—
—
36
Restructuring and related reorganization
charges
—
—
—
53
53
Legal reserves, occupancy tax and
other
—
—
—
8
8
Stock-based compensation
—
—
—
54
54
Impairment of goodwill
—
—
—
20
20
Impairment of intangible assets
—
—
—
10
10
Amortization of intangible assets
—
—
—
41
41
Depreciation
136
34
3
18
191
Adjusted EBITDA(1)
$
(203)
$
(128)
$
(16)
$
(89)
$
(436)
(1) Adjusted EBITDA for our Retail 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
June 30,
Six months ended
June 30,
2021
2020
2021
2020
(In millions)
Net loss attributable to Expedia Group,
Inc.
$
(172)
$
(736)
$
(750)
$
(2,037)
Net loss attributable to non-controlling
interests
(5)
(4)
(8)
(100)
Provision for income taxes
(47)
(213)
(216)
(295)
Total other expense, net
92
104
473
289
Operating loss
(132)
(849)
(501)
(2,143)
Gain (loss) on revenue hedges related to
revenue recognized
3
36
(6)
30
Restructuring and related reorganization
charges
13
53
42
128
Legal reserves, occupancy tax and
other
(8)
8
(9)
(13)
Stock-based compensation
120
54
203
109
Depreciation and amortization
205
232
414
461
Impairment of goodwill
—
20
—
785
Impairment of intangible assets
—
10
—
131
Adjusted EBITDA
$
201
$
(436)
$
143
$
(512)
Adjusted Net Income (Loss) & Adjusted EPS
Three months ended
June 30,
Six months ended
June 30,
2021
2020
2021
2020
(In millions, except share and
per share data)
Net loss attributable to Expedia Group,
Inc.
$
(172)
$
(736)
$
(750)
$
(2,037)
Less: Net loss attributable to
non-controlling interests
5
4
8
100
Less: Provision for income taxes
47
213
216
295
Loss before income taxes
(224)
(953)
(974)
(2,432)
Amortization of intangible assets
26
41
53
85
Stock-based compensation
120
54
203
109
Legal reserves, occupancy tax and
other
(8)
8
(9)
(13)
Restructuring and related reorganization
charges
13
53
42
128
Impairment of goodwill
—
20
—
785
Impairment of intangible assets
—
10
—
131
Unrealized (gain) loss on revenue
hedges
—
35
(2)
(23)
(Gain) loss on minority equity
investments, net
4
7
(4)
195
Loss on debt extinguishment
—
—
280
—
(Gain) loss on sale of business
(1)
1
(1)
1
Adjusted loss before income taxes
(70)
(724)
(412)
(1,034)
GAAP Provision for income taxes
47
213
216
295
Provision for income taxes for
adjustments
(127)
(48)
(222)
(80)
Total Adjusted provision for income
taxes
(80)
165
(6)
215
Total Adjusted income tax rate
(113.6)
%
22.8
%
(1.5)
%
20.8
%
Non-controlling interests
3
(1)
5
1
Preferred stock dividend
(22)
(17)
(50)
(17)
Adjusted net loss attributable to Expedia
Group, Inc.
$
(169)
$
(577)
$
(463)
$
(835)
GAAP diluted weighted average shares
outstanding (000's)
149,093
141,072
147,148
140,947
Diluted loss per share
$
(2.02)
$
(5.34)
$
(6.16)
$
(14.57)
Adjusted loss per share attributable to
Expedia Group, Inc.
$
(1.13)
$
(4.09)
$
(3.15)
$
(5.92)
Ex-trivago Adjusted Net Loss and Adjusted
EPS
Adjusted net loss attributable to Expedia
Group, Inc.
$
(169)
$
(577)
$
(463)
$
(835)
Less: Adjusted net income (loss)
attributable to trivago
9
(13)
7
(20)
Adjusted net loss excluding trivago
$
(178)
$
(564)
$
(470)
$
(815)
Adjusted loss per share attributable to
Expedia Group, Inc.
$
(1.13)
$
(4.09)
$
(3.15)
$
(5.92)
Less: Adjusted earnings (loss) per share
attributable to trivago
0.06
(0.09)
0.05
(0.14)
Adjusted loss per share excluding
trivago
$
(1.19)
$
(4.00)
$
(3.19)
$
(5.79)
Free Cash Flow
Three months ended
June 30,
Six months ended
June 30,
2021
2020
2021
2020
(In millions)
Net cash provided by (used in) operating
activities
$
2,514
$
(1,846)
$
4,684
$
(2,630)
Headquarters capital expenditures
(10)
(34)
(23)
(113)
Non-headquarters capital expenditures
(173)
(172)
(328)
(380)
Less: Total capital expenditures
(183)
(206)
(351)
(493)
Free cash flow
$
2,331
$
(2,052)
$
4,333
$
(3,123)
Adjusted Expenses (Cost of revenue, Selling and marketing,
technology and content and general and administrative expenses)
Three months ended
June 30,
Six months ended
June 30,
2021
2020
2021
2020
(In millions)
Cost of revenue
$
374
$
381
$
685
$
1,010
Less: stock-based compensation
6
3
11
6
Adjusted cost of revenue
$
368
$
378
$
674
$
1,004
Less: trivago cost of revenue(1)
4
—
7
8
Adjusted cost of revenue excluding
trivago
$
364
$
378
$
667
$
996
Selling and marketing expense
$
1,199
$
291
$
1,863
$
1,496
Less: stock-based compensation
32
13
49
25
Adjusted selling and marketing expense
$
1,167
$
278
$
1,814
$
1,471
Less: trivago selling and marketing
expense(1)(2)
60
8
78
81
Adjusted selling and marketing expense
excluding trivago
$
1,107
$
270
$
1,736
$
1,390
Technology and content expense
$
276
$
271
$
523
$
586
Less: stock-based compensation
32
18
59
38
Adjusted technology and content
expense
$
244
$
253
$
464
$
548
Less: trivago technology and content
expense(1)
13
13
25
29
Adjusted technology and content expense
excluding trivago
$
231
$
240
$
439
$
519
General and administrative expense
$
184
$
149
$
340
$
334
Less: stock-based compensation
50
20
84
40
Adjusted general and administrative
expense
$
134
$
129
$
256
$
294
Less: trivago general and administrative
expense(1)
8
8
15
17
Adjusted general and administrative
expense excluding trivago
$
126
$
121
$
241
$
277
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 Retail
spend on trivago eliminated in consolidation.
Conference Call
Expedia Group, Inc. will webcast a conference call to discuss
second quarter 2021 financial results and certain forward-looking
information on Thursday, August 5, 2021 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 three months
subsequent to the initial broadcast.
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 June 30, 2021. 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.
About Expedia Group
Expedia Group is the world's travel platform, and our mission is
to power global travel for everyone, everywhere. We believe travel
is a force for good. Travel is an essential human experience that
strengthens connections, broadens horizons and bridges divides. We
leverage our platform and technology capabilities across an
extensive portfolio of businesses and brands to orchestrate the
movement of people and the delivery of travel experiences on both a
local and global basis. Our family of travel brands includes: Brand
Expedia®, Hotels.com®, Expedia® Partner Solutions, Vrbo®, Egencia®,
trivago®, HomeAway®, Orbitz®, Travelocity®, Hotwire®, Wotif®,
ebookers®, CheapTickets®, Expedia Group™ Media Solutions,
CarRentals.com™, Expedia® Cruises™, Traveldoo® and
VacationRentals.com.
© 2021 Expedia, Inc., an Expedia Group company. All rights
reserved. Trademarks and logos are the property of their respective
owners. CST: 2029030-50
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