BELLEVUE, Wash.—July 26, 2012—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for the second quarter ended June 30, 2012.
• Room nights grew 22% year-over-year to a record 30 million room nights driven by 16% year-over-year growth in domestic room nights. Standalone room night growth at Brand Expedia accelerated for the third consecutive quarter showing significant improvement versus the first quarter of 2012.
• During the quarter, Expedia® expanded the global corporate travel footprint of Egencia® by completing the acquisition of VIA Travel®, the largest travel management company in the Nordics.
• Adjusted EBITDA* increased 18% year-over-year driven by strong revenue performance. In addition, adjusted earnings per share increased 24% as compared to second quarter 2011.
• Year-to-date, Expedia allocated $521 million to share repurchases, acquisitions and dividends; returning over $320 million directly to shareholders. In addition, subsequent to quarter end, the Executive Committee of Expedia’s Board of Directors approved raising Expedia’s quarterly dividend to $0.13 per share of outstanding common stock.
Financial Summary & Operating Metrics (figures in $MMs except transactions and per share amounts)
|
Metric |
Quarter Ended 6.30.12 |
Quarter Ended 6.30.11 |
Y / Y Growth |
|
Transactions (mm) |
23.1 |
19.4 |
20% |
|
Room night growth |
22% |
21% |
78 bps |
|
Gross bookings |
8,956.9 |
7,953.8 |
13% |
|
Revenue |
1,040.0 |
913.6 |
14% |
|
Adjusted EBITDA* |
222.9 |
189.0 |
18% |
|
Operating income |
154.4 |
143.7 |
7% |
|
Adjusted net income * |
125.0 |
100.6 |
24% |
|
Income from continuing operations |
105.2 |
87.7 |
20% |
|
Adjusted EPS * |
$0.89 |
$0.72 |
24% |
|
Diluted EPS from continuing operations |
$0.76 |
$0.63 |
21% |
|
Free cash flow * |
486.4 |
341.4 |
42% |
Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 13% (16% excluding foreign exchange) for the second quarter of 2012, primarily driven by a 22% increase in hotel room nights. The VIA Travel acquisition added approximately 2% to year-over-year gross bookings growth for the second quarter of 2012.
For the second quarter of 2012, average daily room rates declined 1%, and average airfares grew 5% year-over-year. Air tickets sold grew by 3% year-over-year primarily due to the VIA Travel acquisition. Domestic bookings increased 13% and international bookings increased 12% (20% excluding foreign exchange) for the second quarter of 2012. International bookings totaled $3.4 billion for the second quarter of 2012, accounting for 38% of worldwide bookings consistent with the prior year.
Revenue increased 14% (18% excluding foreign exchange) for the second quarter of 2012, primarily driven by an increase in hotel room nights stayed partially offset by a decrease in revenue per room night and revenue per ticket. The VIA Travel acquisition added approximately 2% to year-over-year revenue growth for the second quarter of 2012. During the quarter, Expedia recorded an out-of-period adjustment to hotel revenue of $8 million. Excluding this adjustment, revenue increased 13% for the second quarter of 2012. Domestic revenue increased 14% and international revenue increased 13% (23% excluding foreign exchange) for the second quarter of 2012. International revenue equaled $439 million for the second quarter of 2012, representing 42% of worldwide revenue consistent with the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 11.6% for the second quarter of 2012, an increase of 12 basis points compared to the second quarter of 2011. The increase primarily relates to the out-of-period hotel revenue adjustment noted above. Excluding the adjustment, revenue as a percentage of gross bookings was largely consistent with the prior year.
Product & Services Detail
As a percentage of total worldwide revenue in the second quarter of 2012, hotel accounted for 74%, air accounted for 9% and all other revenue sources accounted for the remaining 17%.
Worldwide hotel revenue increased 16% for the second quarter of 2012 driven by a 22% increase in room nights stayed partially offset by a 5% decrease in revenue per room night. Revenue per room night decreased primarily due to changes in our hotel product mix, impacts from foreign currency, accruals for loyalty programs at Brand Expedia and Hotels.com and discounting at the Hotwire brand.
Worldwide air revenue decreased 8% for the second quarter of 2012 due primarily to an 11% decrease in revenue per ticket partially offset by a 3% increase in air tickets sold. The increase in ticket volume primarily relates to the VIA Travel acquisition and was partially offset by volume pressure associated with a 5% increase in average air ticket prices. Revenue per ticket declined due to lower net supplier economics and impacts from foreign exchange partially offset by certain regional and interline consumer booking fees.
All other revenue (excluding hotel and air) increased 17% for the second quarter of 2012 through strong growth in corporate travel fees - partially due to the VIA Travel acquisition – and advertising revenue.
Recent Highlights
Global Presence
• Hotels.com launched a Spanish-language site in the U.S., making it easier for Spanish speaking consumers in the States to search and book their hotel stay on Hotels.com. Hotwire also introduced its first-ever local language booking site in Norway.
• Expedia Affiliate Network signed agreements to power travel bookings for international travel suppliers Airtickets.gr, a leading online travel agency in Greece; and low-cost carrier Scoot, based out of Singapore.
• Egencia expanded services to Costa Rica, Ecuador, Peru, Russia, Sri Lanka, Ukraine, and Venezuela through the Egencia Global Alliance, a network of strategic partnerships with leading local travel management companies. Egencia now has a presence in 54 countries worldwide. In addition, Egencia saw strong growth in certain international markets, such as Germany which showed a 44% year-over-year improvement in second quarter gross bookings excluding the impacts of foreign exchange.
• Welcome Rewards®, the loyalty rewards programs for Hotels.com guests, surpassed a significant program milestone by reaching more than 5 million rewards members globally.
• Expedia, Inc. announced partnership agreements with Alaska Airlines, the seventh-largest U.S. carrier; Virgin Atlantic, one of the world’s most-popular airlines; Gol Intelligent Airlines, the largest low-fare low-cost airline in Latin America; and TRIP Airlines, South America’s largest regional airline. The company also signed multi-year agreements with leading rental car companies Hertz, the world’s largest airport general use car rental brand; and internationally recognized rental car brand Enterprise Holdings, the world’s largest car rental service provider. Under the agreements, inventory from Hertz and Enterprise Rent-A-Car, Alamo Rent A Car and National Car Rental will continue to be available on Expedia.com, Hotwire.com, Egencia and CarRentals.com sites in North America, South America and Asia Pacific.
Technology Platform Investment and Innovation
• Brand Expedia unveiled a unique, new Find Yours™ branding campaign aimed at helping travelers celebrate the transformative power of travel by featuring personal photo and video content generated during travel.
• Expedia Affiliate Network rolled out a series of enhancements to its hotel application program interface (API) functionality, increasing query response times six-fold and drastically improving search efficiency for affiliate partners worldwide.
• Expedia® Media Solutions experienced strong growth in the sales of its TravelAds sponsored search listings generating a record number of participating hotels during the second quarter and contributing to a 12% year-over-year increase in advertising and media revenue.
• Egencia unveiled a comprehensive and intuitive new booking tool Egencia® Hotels, aimed at helping business travelers easily research and book stays at an extended selection of worldwide hotels through richer property content.
Worldwide Hotel Portfolio
• At quarter end, Expedia global websites featured almost 155,000 bookable properties increasing its direct relationships with hotels by 14% year-over-year. Expedia sites offer over 98,000 hotels in EMEA and APAC countries.
• Expedia, Inc. signed new agreements, that include provisions allowing for distribution under our Expedia® Traveler Preference program, with several global hotel brands, including leading global hospitality company Hilton Hotels Worldwide; leading lodging company Marriott International; La Quinta, one of the largest operators of limited-service hotels in the U.S.; and Barcelo Hotels & Resorts, part of the Barceló Group, one of Spain’s leading travel companies.
New Distribution Channels
• Several brands within Expedia, Inc. have been recognized by notable tech and travel industry organizations for their web- and mobile-based offerings. UK Keynote Competitive Research, the global leader in Internet and mobile cloud testing and monitoring, ranked Hotels.com second in Overall Customer Experience; the Hotels.com brand also received top honors in the Mobile Marketing category at the Marketing Society Awards. Mobiata® received a Webby Award, the leading international award honoring excellence on the Internet, for their FlightBoard™ app.
• Egencia released its mobile app for Android and mobile web devices enabling business travelers to view itineraries and receive travel information on-the-go from their mobile device in 13 countries and 8 languages. Hotwire launched mobile websites in the UK, Ireland, Australia, New Zealand, Denmark, Norway and Sweden, enabling smartphone users to view room rates and pay for hotel bookings in their native currency. Hotels.com also released a Windows 7 version of its popular hotel booking app.
