Management Commentary
"I'm very pleased with our start to the year, and our team's continued focus and execution which has, once again, allowed us to deliver financial results ahead of our expectations," says Brian Sharples, chief executive officer of HomeAway. "Revenue growth of 33% accelerated sharply from 2013 levels, benefitting from both expansion of our marketplace as well as improved network monetization, a result of our continued success with tiered pricing and bundled product offerings."
Mr. Sharples continued, "Importantly, on the heels of our successful pay-per-booking launch in the fourth quarter of 2013, the health of our subscription business remains strong, as evidenced by two consecutive quarters of improving renewal rates. With respect to pay-per-booking, while still early in the rollout, the team continued to make strong progress in both the deployment and rollout of our integrated and platform pay-per-booking products. With this in mind, we look forward to making our platform pay-per-booking product available to our largest European sites in the coming quarter."
First Quarter 2014 Financial Highlights
• Total revenue increased 33.0% to $105.7 million from $79.5 million in the first quarter of 2013. On an FX neutral basis, year-over-year revenue growth was 31.8%. Growth in total revenue primarily reflected an increase in average revenue per listing as a result of tiered pricing and bundled product offerings, an increase in new listings and the benefit of ancillary product and services revenue.
• Listing revenue increased 30.5% to $87.3 million from $66.9 million in the first quarter of 2013. On an FX neutral basis, year-over-year listing revenue growth was 29.1%
• Other revenue, which is comprised of ancillary revenue from owners and travelers, advertising, software and other items, increased 46.6% to $18.4 million from $12.5 million in the first quarter of 2013. Growth in other revenue primarily reflected increased adoption of value-added owner, manager and traveler products.
• Adjusted EBITDA increased 19.9% to $26.2 million from $21.8 million in the first quarter of 2013. As a percentage of revenue, adjusted EBITDA was 24.8% compared to 27.4% in the first quarter of 2013. Impacting year-over-year comparability of Adjusted EBITDA in the first quarter of 2014 was approximately $1.8 million in one-time expenses related to a reserve for operating taxes outside of the United States.
• Free cash flow increased 16.2% to $38.7 million from $33.3 million in the first quarter of 2013. On a trailing twelve month basis, free cash flow increased 8.8% to $98.4 million from $90.4 million in the comparable trailing twelve month period for the prior year.
• Net income attributable to HomeAway was $4.4 million, or $0.05 per diluted share, compared to net income attributable to HomeAway of $5.3 million, or $0.06 per diluted share, in the first quarter of 2013.
• Non-GAAP net income was $13.2 million, or $0.14 per diluted share, compared to non-GAAP net income of $12.2 million, or $0.14 per diluted share, in the first quarter of 2013.
Key Business Metrics
• Paid listings at the end of the first quarter were 951,843, a year-over-year increase of 28.2% from 742,299 at the end of the first quarter of 2013. At the end of the first quarter, 724,699 of the listings were subscription listings and 227,144 were performance-based listings.
• Average revenue per subscription listing during the first quarter was $442, an FX neutral increase of 10.7% compared to the prior year.
• Renewal rate was 73.1% at the end of the first quarter, compared to 73.6% at the end of the first quarter of 2013 and 72.5% at the end of the fourth quarter of 2013. Adjusting for the impact of consolidated listings and network bundles, renewal rate for the first quarter of 2014 would have been 76.2%, compared to 74.9% at the end of the first quarter of 2013 and 75.3% at the end of the fourth quarter of 2013.
• Visits were 245.1 million during the first quarter, a year-over-year increase of 18.3%.
