Management Commentary
"We've had another great quarter, once again delivering results above our expectations," says Brian Sharples, chief executive officer of HomeAway®. "We also achieved a significant milestone, reaching one million live listings on our global network of sites. Due to our industry leading breadth of vacation home inventory, it's now easier than ever for travelers to find and book a vacation with HomeAway."
Mr. Sharples continued, "Looking back on the first half of the year, I'm pleased with our accomplishments. We continue to deliver financially, while at the same time executing against our robust product roadmap and e-commerce initiatives. Our new pay-per-booking product is now available to both homeowners and property managers on HomeAway.com and VRBO.com in the US as well as three of our largest European sites. And in regards to our e-commerce initiatives, we've seen a sharp acceleration in adoption in recent quarters. With much of our platform and product investment behind us, the next few years will mark a renewed focus on marketing as we strive to make HomeAway one of the most recognized and respected travel brands in the world."
Second Quarter 2014 Financial Highlights
• Total revenue increased 31.9% to $114.3 million from $86.6 million in the second quarter of 2013. On an FX neutral basis, year-over-year revenue growth was 29.9%. 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 28.7% to $94.5 million from $73.4 million in the second quarter of 2013. On an FX neutral basis, year-over-year listing revenue growth was 26.5%.
• Other revenue, which is comprised of ancillary revenue from owners and travelers, advertising, software and other items, increased 49.7% to $19.7 million from $13.2 million in the second quarter of 2013. Growth in other revenue primarily reflected increased adoption of value-added owner, manager and traveler products.
• Adjusted EBITDA increased 32.7% to $33.0 million from $24.8 million in the second quarter of 2013. As a percentage of revenue, adjusted EBITDA was 28.8% compared to 28.7% in the second quarter of 2013.
• Free cash flow increased 82.5% to $35.0 million from $19.2 million in the second quarter of 2013.
• Net income attributable to HomeAway was $3.9 million, or $0.04 per diluted share, compared to net income attributable to HomeAwayof $5.5 million, or $0.06 per diluted share, in the second quarter of 2013.
• Non-GAAP net income was $14.3 million, or $0.15 per diluted share, compared to non-GAAP net income of $14.0 million, or $0.16 per diluted share, in the second quarter of 2013.
Key Business Metrics
• Paid listings at the end of the second quarter were 1,040,547, a year-over-year increase of 34.2% from 775,232 at the end of the second quarter of 2013. At the end of the second quarter, 744,878 of the listings were subscription listings and 295,669 were performance-based listings.
Average revenue per subscription listing during the second quarter was $473, an FX neutral increase of 11.5% compared to the prior year, up 13.7% as reported.
• Renewal rate was 72.8% at the end of the second quarter, compared to 72.4% at the end of the second quarter of 2013 and 73.1% at the end of the first quarter of 2014. Adjusting for the impact of consolidated listings and network bundles, renewal rate for the second quarter of 2014 would have been 74.3%, compared to 74.5% at the end of the second quarter of 2013 and 74.9% at the end of the first quarter of 2014.
• Visits were 229.5 million during the second quarter, a year-over-year increase of 14.2%.
Business Outlook
HomeAway management currently expects to achieve the following results for third quarter ending September 30, 2014 and full year ending December 31, 2014:
Third Quarter 2014
• Total revenue is expected to be in the range of $114.5 to $116.5 million.
• Adjusted EBITDA is expected to be in the range of $31.0 to $32.3 million.
Full Year 2014
• Total revenue is expected to be in the range of $444.0 to $449.0 million.
• Adjusted EBITDA is expected to be in the range of $118.0 to $123.0 million.
