Home > Home > Expedia, Inc. Reports Fourth Quarter and Full Year 2010 Results

Expedia, Inc. Reports Fourth Quarter and Full Year 2010 Results

02/11/2011| 10:44:22 AM| 中文

BELLEVUE, Wash.—February 10, 2011—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for its fourth quarter and year ended December 31, 2010.

  BELLEVUE, Wash.—February 10, 2011—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for its fourth quarter and year ended December 31, 2010. 

   •  Fourth quarter revenue grew 16% year over year driven by strong unit growth in both hotel and air and continued strong performance in our advertising and media business.

  •  Egencia®, our corporate travel business, continued its strong performance with revenue growth of 33% and gross bookings growth of 27% compared to the fourth quarter of 2009.

  •  The company grew fourth quarter adjusted EPS by 10% year over year. Full year 2010 adjusted EPS increased by 24% year over year, primarily due to growth in operating income before amortization (―OIBA‖), a lower effective tax rate and the impact of $489 million in annual share repurchases.

  Discussion of Results – Fourth Quarter 2010

  Gross Bookings, Revenue & Revenue Margins


  Gross bookings increased 14% (15% excluding the estimated impact from year on year changes in foreign exchange rates) for the fourth quarter of 2010 compared with the fourth quarter of 2009, driven primarily by 13% growth in transactions, 5% increase in average airfares and a 2% increase in hotel average daily rates. Domestic bookings increased 13% and international bookings increased 16% (19% excluding foreign exchange).
 
  Revenue increased 16% (17% excluding foreign exchange) for the fourth quarter, primarily driven by an increase in hotel revenue and advertising and media revenue. Domestic revenue increased 15% while international revenue increased 17% (27% excluding foreign exchange).
 
  Revenue as a percentage of gross bookings (―revenue margin‖) was 14.0% for the fourth quarter, an increase of 23 basis points compared to the fourth quarter of 2009. The primary drivers include a shift to higher margin products, growth in advertising and media revenue and acceleration of air and other revenue, as described below, partially offset by higher average air ticket prices.@@
 
  Products & Services Detail
 

  Worldwide hotel revenue increased 15% for the fourth quarter due to a 15% increase in room nights stayed, including rooms delivered as a component of packages. Revenue per room night was flat.

  Worldwide air revenue increased 15% for the fourth quarter, primarily due to a 9% increase in revenue per ticket and a 6% increase in air tickets sold. Revenue per ticket increased primarily as a result of an acceleration of merchant air revenue leading to a one-time increase in air revenue of approximately $5 million.
 
  Advertising and media revenue increased 29% for the fourth quarter, driven by a 38% increase in third-party revenue for TripAdvisor. All other revenue (primarily car rentals and destination services) increased 10% for the fourth quarter, including a one-time acceleration of revenue on certain other products of $4 million during fourth quarter 2010.
 
  As a percentage of worldwide revenues in the fourth quarter of 2010, hotel accounted for 64%, advertising and media accounted for 12%, air accounted for 11% and all other revenues accounted for the remaining 13%.

  Profitability

  OIBA for the fourth quarter increased 7% (11% excluding foreign exchange) to $175 million primarily due to increased revenue, partially offset by increased costs and expenses. OIBA decreased 170 basis points as a percentage of revenue to 22% due to growth in cost of revenue and selling and marketing expenses in excess of revenue growth. For the fourth quarter of 2010, general and administrative expense included $8 million related to an increase in occupancy tax reserves and accruals, which is also included in OIBA. 

  Operating income increased 6% primarily due to the same factors impacting OIBA. In addition, operating income for fourth quarter 2010 included $6 million in occupancy tax assessments and legal reserves. During the fourth quarter of 2009 we agreed to an adjustment on the San Francisco occupancy tax assessment that was included in operating income and reduced the overall exposure by $7 million. These items were excluded from OIBA.

  Adjusted net income for the fourth quarter increased $3 million compared to the prior year period primarily due to higher OIBA partially offset by higher interest expense. Net income decreased $31 million compared to the prior year period primarily due to a higher effective tax rate and increased interest expense. Adjusted EPS increased 10% to $0.32 and diluted EPS decreased 29% to $0.25.

  Discussion of Results – Full Year 2010

  Gross Bookings, Revenue & Revenue Margins

  Gross bookings increased 19% (19% excluding the estimated impact from year on year changes in foreign exchange rates) in 2010 compared with 2009, driven primarily by 14% growth in transactions, a 10% increase in average airfares and a 1% increase in hotel average daily rates. Domestic bookings increased 16% and international bookings increased 25% (26% excluding foreign exchange).
 
  Revenue increased 13% (14% excluding foreign exchange) for the year, primarily driven by an increase in hotel revenue and advertising and media revenue. Domestic revenue increased 11% while international revenue increased 18% (26% excluding foreign exchange).
 
  Revenue as a percentage of gross bookings (―revenue margin‖) was 12.9% for the year, a decrease of 65 basis points compared to 2009, primarily due to higher average air ticket prices partially offset by growth in advertising and media revenue.@@
 
  Products & Services Detail

  Worldwide hotel revenue increased 11% for the year due to a 14% increase in room nights stayed, including rooms delivered as a component of packages. Revenue per room night decreased 3% year over year.
 
  Worldwide air revenue increased 12% for the year, primarily due to an 11% increase in air tickets sold and a 1% increase in revenue per ticket.
 
  Advertising and media revenue increased 36% for the year, driven by a 48% increase in third-party revenue for TripAdvisor. All other revenue (primarily car rentals and destination services) increased 6% for the year.
 
  As a percentage of worldwide revenue for 2010, hotel accounted for 63%, advertising and media accounted for 13%, air accounted for 12% and all other revenue accounted for the remaining 13%. 
  
  Profitability


  OIBA for the year increased 9% (10% excluding foreign exchange) to $831 million primarily due to increased revenues, partially offset by increased costs and expenses. OIBA decreased 96 basis points as a percentage of revenue to 25% due to growth in selling and marketing, cost of revenue, and technology and content expenses in excess of revenue growth.
 
  Operating income increased 28% due to the same factors impacting OIBA. In addition, operating income for 2009 included $68 million in occupancy tax assessments and legal reserves and $34 million of restructuring charges. These items were excluded from OIBA.
 
  Adjusted net income for the year increased $85 million or 21% compared to the prior year period primarily due to higher OIBA and a lower effective tax rate partially offset by higher interest expense. Net income increased $122 million or 41% compared to the prior year period primarily due to higher operating income. Adjusted EPS increased 24% to $1.70 and diluted EPS increased 42% to $1.46.
 
  Cash Flows

  For the year ended December 31, 2010, net cash provided by operating activities was $777 million and free cash flow was $622 million. Both measures include $101 million from net changes in operating assets and liabilities, primarily driven by a working capital benefit from our merchant hotel business. Free cash flow increased $38 million compared to the prior year primarily due to higher OIBA, significantly lower occupancy tax assessment payments and lower cash tax payments partially offset by higher capital expenditures, a decrease in our working capital benefit and higher payments made for legal settlements and restructuring. Cash and cash equivalents excluding amounts related to non-wholly owned subsidiaries was $649 million as of December 31, 2010.@@

  Recent Highlights

  Global Presence


  Gross bookings from the Expedia, Inc. international businesses totaled $2.2 billion in the fourth quarter, accounting for 38% of worldwide bookings. International revenues equaled $331 million in the fourth quarter, representing 41% of worldwide revenue.

  •  Expedia.ca reached $1.5 billion in gross bookings for the full year 2010 for the first time since the site launched in Canada in 2000.

  •  Expedia® launched its 20th localized site in Singapore.

  •  Hotwire® expanded its international hotel inventory, making properties in Singapore, Hong Kong, and in 34 new destinations across Europe available to book on Hotwire.com®.

  •  Expedia.co.jp™ rolled out an enhanced selection of product offerings, giving travelers in Japan the opportunity to book dynamic tour packages, flights and traveler pick-up service.

  •  Visitors to Expedia.co.in™ can now pay for their travel with debit cards and internet banking following the launch of alternate payments functionality on the India point of sale. The site also enhanced its air offerings with the addition of low-cost carrier flights. 

  •  TripAdvisor® launched localized sites in Argentina, Greece, Indonesia and Russia, extending TripAdvisor’s global footprint to 27 countries and 19 languages.
 
  Traveler Value Proposition and Innovation

  •  Expedia.com® announced new enhancements to its existing Elite Plus™ rewards program, including a VIP access feature, giving members in the U.S. eligibility for free hotel upgrades in cities across North America.

  • Expedia also announced the addition of 12-hour flash sales through ASAP (A Sudden Amazing Price) ™ deals.

  •  Hotels.com launched its WelcomeRewards loyalty program in Canada and Australia.

  •  Egencia in Europe launched its innovative Traveler Tracking Tool, granting businesses in Europe a higher level of traveler support and insight to better manage traveler security in the event of an emergency. Seat Maps and Flexible Date Search programs were also introduced in Europe.

  •  Expedia® Affiliate Network (EAN) introduced Merchandising Central, enabling EAN affiliates to build customized widgets, pages and feeds in an effort to further improve their online marketing efficiencies.@@

  •  Expedia sites in the U.S. and the U.K. launched opaque hotel bookings through the Unpublished Rates and Secret Saver Hotels programs, giving travelers the opportunity to book their stay at any of 25,000 participating properties at up to 50% off standard room rates.

  Media, Advertising and Distribution

  •  Expedia acquired Mobiata, creator of best-selling mobile travel applications including FlightTrack, in order to accelerate Expedia’s ability to offer mobile travel shopping across multiple booking platforms.

  •  TripAdvisor announced the launch of its new application for the iPad, giving users access to TripAdvisor hotel, restaurant and activities content on-the-go in 26 countries and 18 languages worldwide.

  •  Expedia® Media Solutions’ paid search advertising program TravelAds™ produced 65% revenue growth year on year in Q4, driven by a 39% increase in advertisers and an expanded offering of search advertising products.

  •  Expedia Affiliate Network signed agreements to power online travel bookings for a number of affiliates, including low-cost carrier, AirTran; Greyhound, the largest North American provider of intercity bus transport; Spain-based online hotel reservation website ToBook.com; and Scandinavian Airlines.

   Supply Portfolio

  •  At quarter end, Expedia global websites featured over 130,000 bookable properties, with over 55% operating under our merchant model and 25% representing agency properties where we have direct relationships. Expedia sites offer over 80,000 hotels in EMEA and APAC countries.

  •  Expedia Partner Services Group (PSG) signed partnership agreements with US Airways and WestJet, Canada’s leading low cost airline. PSG also executed agreements with APA Hotels & Resorts, one of Japan’s largest hotel chains and Protea Hotels, Africa’s leading hotel company, to offer these properties on all Expedia and Hotels.com sites worldwide.  

 

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