Management Commentary
"We've had another great quarter, once again delivering strong financial results," says Brian Sharples, chief executive officer of HomeAway®. "During the quarter we welcomed our new chief marketing officer, Mariano Dima, to the leadership team. Mariano brings more than twenty years' experience across all aspects of marketing and we are thrilled he has taken the reins of our marketing organization."
Mr. Sharples continued, "We continue to deliver financially, while at the same time executing against our robust product roadmap, delivering new owner and manager tools and Mobile Hospitality Manager, our guest management app, within the quarter. Our pay-per-booking product is now available on all of our U.S. websites and our largest European websites and we now offer expanded distribution to these listings through our partnership with Expedia. As our marketplace evolves, we look forward to significantly increasing adoption of online booking across all of our listings."
Third Quarter 2014 Financial Highlights
· Total revenue increased 29.9% to $117.1 million from $90.1 million in the third quarter of 2013. On an FX neutral basis, year-over-year revenue growth was 29.7%. 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 27.2% to $96.6 million from $75.9 million in the third quarter of 2013. On an FX neutral basis, year-over-year listing revenue growth was 27.0%.
· Other revenue, which is comprised of ancillary revenue from owners and travelers, advertising, software and other items, increased 44.2% to $20.5 million from $14.2 million in the third quarter of 2013. Growth in other revenue primarily reflected increased adoption of value-added owner, manager and traveler products.
· Net income attributable to HomeAway was $4.9 million, or $0.05 per diluted share, compared to net income attributable to HomeAway of $8.5 million, or $0.10 per diluted share, in the third quarter of 2013.
· Adjusted EBITDA increased 8.8% to $31.6 million from $29.0 million in the third quarter of 2013. As a percentage of revenue, adjusted EBITDA was 27.0% compared to 32.2% in the third quarter of 2013.
· Free cash flow increased 17.6% to $20.0 million from $17.0 million in the third quarter of 2013. On a trailing twelve month basis, free cash flow increased 28.1% to $117.2 million from $91.5 million in the comparable trailing twelve month period for the prior year.
· Non-GAAP net income was $18.9 million, or $0.20 per diluted share, compared to non-GAAP net income of $16.7 million, or $0.19 per diluted share, in the third quarter of 2013.
Key Business Metrics
· Paid listings at the end of the third quarter were 1,034,847, a year-over-year increase of 33.8% from 773,352 at the end of the third quarter of 2013. At the end of the third quarter, 715,990 of the listings were subscription listings and 318,857 were performance-based listings.
· Average revenue per subscription listing during the third quarter was $479, an FX neutral increase of 11.7% compared to the prior year, up 11.9% as reported.
· Renewal rate was 71.7% at the end of the third quarter, compared to 71.7% at the end of the third quarter of 2013 and 72.8% at the end of the second quarter of 2014. Adjusting for the impact of consolidated listings and network bundles, renewal rate for the third quarter of 2014 would have been 72.6%, compared to 74.2% at the end of the third quarter of 2013 and 74.3% at the end of the second quarter of 2014.
· Visits were 232.1 million during the third quarter, a year-over-year increase of 17.3%.
Business Outlook
HomeAway management currently expects to achieve the following results for fourth quarter and full year ending December 31,2014:
Fourth Quarter 2014
· Total revenue is expected to be in the range of $107.0 to $109.0 million.
· Adjusted EBITDA is expected to be in the range of $25.3 to $28.3 million.
Full Year 2014
· Total revenue is expected to be in the range of $444.0 to $446.0 million.
· Adjusted EBITDA is expected to be in the range of $116.0 to $119.0 million.
