Highest ever second quarter lodging gross
bookings, up 7% Record second quarter revenue, up 6% Significant
earnings growth and margin expansion Accelerated levels of share
repurchases at record $1.2 billion year-to-date Reiterates
full-year guidance
Expedia Group, Inc. (NASDAQ: EXPE) announced financial results
today for the second quarter ended June 30, 2023.
“The second quarter saw travel demand remain strong, and we were
pleased that along with the progress on our tech transformation we
were able to post another record quarter. Our focus on driving
consumers into our loyalty programs and apps has helped us build
the most valuable pool of consumers we have ever had. On top of
which, we recently took a major leap forward in our consumer
business with the launch of One Key in the U.S., the most flexible
and comprehensive rewards program in the industry. Yet another
compelling reason that the most desirable online travelers will
continue to choose Expedia,” said Peter Kern, Vice Chairman and
CEO, Expedia Group. “With the backdrop of continuing innovation in
our B2C business, and our B2B business significantly outpacing the
industry, we continued to repurchase our stock opportunistically
and have purchased a record $1.2 billion year-to-date."
Second Quarter Highlights
- Lodging gross bookings at $19.2 billion and revenue at $3.4
billion were at record levels for any second quarter.
- Significant earnings growth with net income of $385 million,
compared to a net loss of $185 million in 2022, with approximately
1,730 basis points of margin expansion. Adjusted net income was
$428 million, an increase of 38%, compared to 2022.
- Record second quarter Adjusted EBITDA was $747 million, an
increase of 15% with 190 basis points of margin expansion, compared
to 2022.
- B2B revenue at $861 million was a record and was an increase of
32%, compared to 2022.
- For the first half of 2023, net cash from operating activities
was $4.3 billion and free cash flow was $3.8 billion.
- Repurchased approximately 12 million shares for a record $1.2
billion year-to-date.
Financial Summary & Operating Metrics (In millions except
per share amounts)
Expedia Group, Inc.
Metric
Q2 2023
Q2 2022
Δ Y/Y
Booked room nights
89.7
82.5
9%
Gross bookings
$27,321
$26,139
5%
Revenue
$3,358
$3,181
6%
Operating income
$443
$345
28%
Net income (loss) attributable to Expedia
Group, Inc.
$385
$(185)
NM
Diluted earnings (loss) per share
$2.54
$(1.17)
NM
Adjusted EBITDA(1)
$747
$648
15%
Adjusted net income(1)
$428
$310
38%
Adjusted EPS(1)
$2.89
$1.96
48%
Net cash provided by operating
activities
$1,146
$1,628
(30)%
Free cash flow(1)
$923
$1,469
(37)%
(1) See Definitions of Non-GAAP Measures and
reconciliations of GAAP to non-GAAP measures beginning on page
8.
Conference Call
Expedia Group, Inc. will webcast a conference call to discuss
second quarter 2023 financial results and certain forward-looking
information on Thursday, August 3, 2023 at 6:30 a.m. Pacific Time
(PT). The webcast will be open to the public and available via
ir.expediagroup.com. Expedia Group expects to maintain access to
the webcast on the IR website for approximately twelve months
subsequent to the initial broadcast.
About Expedia Group
Expedia Group, Inc. (NASDAQ: EXPE) companies power travel for
everyone, everywhere through our global platform. Driven by the
core belief that travel is a force for good, we help people
experience the world in new ways and build lasting connections. Our
organization is made up of three pillars: Expedia Product and
Technology, focused on the group’s product and technical strategy
and offerings; Expedia Brands, housing all our consumer brands; and
Expedia for Business, consisting of business-to-business solutions
and relationships throughout the travel ecosystem. The Expedia
Group family of brands includes: Expedia®, Hotels.com®, Expedia®
Partner Solutions, Vrbo®, trivago®, Orbitz®, Travelocity®,
Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media
Solutions, CarRentals.com™, and Expedia Cruises™.
© 2023 Expedia, Inc., an Expedia Group company. All rights
reserved. Trademarks and logos are the property of their respective
owners. CST: 2029030-50
Expedia Group, Inc. Trended
Metrics (All figures in millions)
The supplemental metrics below are intended to supplement the
financial statements in this release and in our filings with the
SEC, and do not include adjustments for one-time items,
acquisitions, foreign exchange or other adjustments. The
definition, methodology and appropriateness of any of our
supplemental metrics are subject to removal and/or change, and such
changes could be material. In the event of any discrepancy between
any supplemental metric and our historical financial statements,
you should rely on the information filed with the SEC and the
financial statements in our most recent earnings release.
2021
2022
2023
Full Year
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2021
2022
Units sold
Booked room nights
54.0
68.4
65.4
59.7
77.0
82.5
81.6
70.8
94.5
89.7
247.5
312.0
Booked air tickets
8.9
13.4
12.7
11.3
13.1
13.5
12.2
11.1
14.0
13.6
46.3
49.9
Gross bookings by business model
Agency
$
6,737
$
10,362
$
8,855
$
8,325
$
11,346
$
12,773
$
10,904
$
9,469
$
13,425
$
12,370
$
34,279
$
44,492
Merchant
8,685
10,453
9,870
9,138
13,066
13,366
13,083
11,042
15,976
14,951
38,146
50,557
Total
$
15,422
$
20,815
$
18,725
$
17,463
$
24,412
$
26,139
$
23,987
$
20,511
$
29,401
$
27,321
$
72,425
$
95,049
Lodging gross bookings
$
12,002
$
14,431
$
13,046
$
12,000
$
17,756
$
17,867
$
17,099
$
14,117
$
21,055
$
19,167
$
51,479
$
66,839
Revenue by segment
B2C
$
1,025
$
1,715
$
2,351
$
1,730
$
1,740
$
2,420
$
2,707
$
1,874
$
1,921
$
2,415
$
6,821
$
8,741
B2B
184
305
490
481
432
650
788
676
668
861
1,460
2,546
trivago (third-party revenue)
37
91
121
68
77
111
124
68
76
82
317
380
Total
$
1,246
$
2,111
$
2,962
$
2,279
$
2,249
$
3,181
$
3,619
$
2,618
$
2,665
$
3,358
$
8,598
$
11,667
Revenue by product
Lodging
$
903
$
1,533
$
2,300
$
1,713
$
1,610
$
2,400
$
2,881
$
2,014
$
2,029
$
2,698
$
6,449
$
8,905
Air
50
78
61
65
74
95
100
93
113
111
254
362
Advertising and media
88
161
202
152
166
213
222
176
175
201
603
777
Other(1)
205
339
399
349
399
473
416
335
348
348
1,292
1,623
Total
$
1,246
$
2,111
$
2,962
$
2,279
$
2,249
$
3,181
$
3,619
$
2,618
$
2,665
$
3,358
$
8,598
$
11,667
Revenue by geography
U.S. points of sale
$
1,001
$
1,736
$
2,177
$
1,655
$
1,656
$
2,208
$
2,358
$
1,717
$
1,748
$
2,172
$
6,569
$
7,939
Non-U.S. points of sale
245
375
785
624
593
973
1,261
901
917
1,186
2,029
3,728
Total
$
1,246
$
2,111
$
2,962
$
2,279
$
2,249
$
3,181
$
3,619
$
2,618
$
2,665
$
3,358
$
8,598
$
11,667
Adjusted EBITDA by segment(3)
B2C
$
106
$
316
$
879
$
481
$
188
$
582
$
943
$
411
$
148
$
653
$
1,782
$
2,124
B2B
(57
)
(4
)
74
97
80
156
221
142
133
206
110
599
Other(2)
(107
)
(111
)
(98
)
(99
)
(95
)
(90
)
(85
)
(104
)
(96
)
(112
)
(415
)
(374
)
Total
$
(58
)
$
201
$
855
$
479
$
173
$
648
$
1,079
$
449
$
185
$
747
$
1,477
$
2,349
Net income (loss) attributable to Expedia Group common
stockholders(4)
$
(606
)
$
(301
)
$
362
$
276
$
(122
)
$
(185
)
$
482
$
177
$
(145
)
$
385
$
(269
)
$
352
(1) Other revenue primarily includes insurance, car rental,
destination services and cruise revenue. (2) Other is comprised of
trivago, corporate and intercompany eliminations. See the section
below titled "Tabular Reconciliations for Non-GAAP Measures —
Adjusted EBITDA by segment" for additional details. (3) See
Definitions of Non-GAAP Measures and reconciliations of GAAP to
non-GAAP measures beginning on page 8. (4) Expedia Group does not
calculate or report net income (loss) by segment.
Notes:
- All trivago revenue is classified as Non-U.S. point of
sale.
- B2B includes Egencia, our former full-service travel management
company, through its sale in November 2021.
- Some numbers may not add due to rounding. All percentages above
and throughout this release are calculated on precise, unrounded
numbers.
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except share and
per share data)
(Unaudited)
Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
Revenue
$
3,358
$
3,181
$
6,023
$
5,430
Costs and expenses:
Cost of revenue (exclusive of depreciation
and amortization shown separately below) (1)
407
419
821
790
Selling and marketing (1)
1,770
1,716
3,444
3,055
Technology and content (1)
344
284
661
554
General and administrative (1)
194
189
378
375
Depreciation and amortization
199
197
391
394
Impairment of intangible assets
—
29
—
29
Legal reserves, occupancy tax and
other
1
2
6
23
Operating income
443
345
322
210
Other income (expense):
Interest income
63
10
106
13
Interest expense
(61
)
(73
)
(122
)
(154
)
Loss on debt extinguishment
—
(24
)
—
(24
)
Other, net
19
(385
)
97
(380
)
Total other income (expense), net
21
(472
)
81
(545
)
Income (loss) before income taxes
464
(127
)
403
(335
)
Provision for income taxes
(77
)
(58
)
(156
)
27
Net income (loss)
387
(185
)
247
(308
)
Net (income) loss attributable to
non-controlling interests
(2
)
—
(7
)
1
Net income (loss) attributable to
Expedia Group, Inc.
$
385
$
(185
)
$
240
$
(307
)
Earnings (loss) per share attributable
to Expedia Group, Inc. available to common stockholders:
Basic
$
2.62
$
(1.17
)
$
1.60
$
(1.96
)
Diluted
2.54
(1.17
)
1.55
(1.96
)
Shares used in computing earnings
(loss) per share (000's):
Basic
147,168
157,290
149,808
156,831
Diluted
151,844
157,290
154,425
156,831
(1) Includes stock-based compensation as
follows:
Cost of revenue
$
4
$
3
$
7
$
6
Selling and marketing
20
17
40
32
Technology and content
36
27
70
54
General and administrative
46
46
92
91
EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except number of
shares which are reflected in thousands and par value)
June 30,
2023
December 31,
2022
June 30,
2022
(Unaudited)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
6,274
$
4,096
$
5,568
Restricted cash and cash equivalents
2,484
1,755
2,756
Short-term investments
27
48
26
Accounts receivable, net of allowance of
$51, $40 and $62
2,903
2,078
2,173
Income taxes receivable
70
40
105
Prepaid expenses and other current
assets
1,055
774
1,158
Total current assets
12,813
8,791
11,786
Property and equipment, net
2,318
2,210
2,163
Operating lease right-of-use assets
348
363
378
Long-term investments and other assets
1,202
1,184
1,151
Deferred income taxes
665
661
825
Intangible assets, net
1,180
1,209
1,306
Goodwill
7,150
7,143
7,135
TOTAL ASSETS
$
25,676
$
21,561
$
24,744
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable, merchant
$
1,775
$
1,709
$
1,548
Accounts payable, other
1,066
947
1,178
Deferred merchant bookings
11,523
7,151
10,041
Deferred revenue
185
163
173
Income taxes payable
61
21
36
Accrued expenses and other current
liabilities
819
787
861
Total current liabilities
15,429
10,778
13,837
Long-term debt
6,247
6,240
6,727
Deferred income taxes
35
52
45
Operating lease liabilities
302
312
334
Other long-term liabilities
447
451
420
Commitments and contingencies
Stockholders’ equity:
Common stock: $.0001 par value; Authorized
shares: 1,600,000
—
—
—
Shares issued: 280,006, 278,264 and
276,967; Shares outstanding: 138,885, 147,757 and 152,024
Class B common stock: $.0001 par value;
Authorized shares: 400,000
—
—
—
Shares issued: 12,800; Shares outstanding:
5,523
Additional paid-in capital
15,072
14,795
14,549
Treasury stock - Common stock and Class B,
at cost; Shares 148,398, 137,783 and 132,220
(11,937
)
(10,869
)
(10,331
)
Retained earnings (deficit)
(1,169
)
(1,409
)
(2,068
)
Accumulated other comprehensive income
(loss)
(207
)
(234
)
(240
)
Total Expedia Group, Inc. stockholders’
equity
1,759
2,283
1,910
Non-redeemable non-controlling
interests
1,457
1,445
1,471
Total stockholders’ equity
3,216
3,728
3,381
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
25,676
$
21,561
$
24,744
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Six months ended
June 30,
2023
2022
Operating activities:
Net income (loss)
$
247
$
(308
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation of property and equipment,
including internal-use software and website development
361
351
Amortization of intangible assets
30
43
Impairment of intangible assets
—
29
Amortization of stock-based
compensation
209
183
Deferred income taxes
(17
)
(83
)
Foreign exchange (gain) loss on cash,
restricted cash and short-term investments, net
(3
)
109
Realized (gain) loss on foreign currency
forwards, net
(26
)
75
(Gain) loss on minority equity
investments, net
(54
)
352
Loss on debt extinguishment
—
24
Other, net
28
(19
)
Changes in operating assets and
liabilities:
Accounts receivable
(846
)
(921
)
Prepaid expenses and other assets
(147
)
(330
)
Accounts payable, merchant
66
214
Accounts payable, other, accrued expenses
and other liabilities
175
547
Tax payable/receivable, net
(91
)
(1
)
Deferred merchant bookings
4,371
4,354
Net cash provided by operating
activities
4,303
4,619
Investing activities:
Capital expenditures, including
internal-use software and website development
(456
)
(315
)
Purchases of investments
—
(60
)
Sales and maturities of investments
22
200
Proceeds from initial exchange of
cross-currency interest rate swaps
—
337
Payments for initial exchange of
cross-currency interest rate swaps
—
(337
)
Other, net
46
(73
)
Net cash used in investing
activities
(388
)
(248
)
Financing activities:
Payment of long-term debt
—
(1,724
)
Debt extinguishment costs
—
(20
)
Purchases of treasury stock
(1,062
)
(69
)
Proceeds from exercise of equity awards
and employee stock purchase plan
40
114
Other, net
4
12
Net cash used in financing
activities
(1,018
)
(1,687
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
10
(165
)
Net increase in cash, cash equivalents
and restricted cash and cash equivalents
2,907
2,519
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
5,851
5,805
Cash, cash equivalents and restricted
cash and cash equivalents at end of period
$
8,758
$
8,324
Supplemental cash flow
information
Cash paid for interest
$
115
$
167
Income tax payments, net
193
56
Notes & Definitions:
Booked Room Nights: Booked room
nights represent booked hotel room nights and property nights for
our B2C reportable segment and booked hotel room nights for our B2B
reportable segment. Booked hotel room nights include both merchant
and agency hotel room nights. Property nights are related to our
alternative accommodation business.
Booked Air Tickets: Includes both
merchant and agency air bookings.
Gross Bookings: Gross bookings
generally represent the total retail value of transactions booked,
recorded at the time of booking reflecting the total price due for
travel by travelers, including taxes, fees and other charges,
adjusted for cancellations and refunds.
Lodging Metrics: Reported on a
booked basis except for revenue, which is on a stayed basis.
Lodging consists of both merchant and agency model hotel and
alternative accommodations.
B2C: The B2C segment (formerly
referred to as Retail) provides a full range of travel and
advertising services to our worldwide customers through a variety
of consumer brands including: Expedia, Hotels.com, Vrbo, Orbitz,
Travelocity, Wotif Group, ebookers, Hotwire.com, and
CarRentals.com.
B2B: The B2B segment is comprised
of Expedia Partner Solutions, which operates private label and
co-branded programs to make travel services available to leisure
travelers though third-party company branded websites and Egencia
through its sale on November 1, 2021. In addition, this segment
also includes Expedia Cruises and Traveldoo.
trivago: The trivago segment
generates advertising revenue primarily from sending referrals to
online travel companies and travel service providers from its
localized hotel metasearch websites.
Corporate: Includes unallocated
corporate expenses.
Definitions of Non-GAAP Measures
Expedia Group reports Adjusted EBITDA, Leverage Ratio, Adjusted
Net Income (Loss), Adjusted EPS, Free Cash Flow and Adjusted
Expenses (non-GAAP cost of revenue, non-GAAP selling and marketing,
non-GAAP technology and content and non-GAAP general and
administrative), all of which are supplemental measures to GAAP and
are defined by the SEC as non-GAAP financial measures. These
measures are among the primary metrics by which management
evaluates the performance of the business and on which internal
budgets are based. Management believes that investors should have
access to the same set of tools that management uses to analyze our
results. These non-GAAP measures should be considered in addition
to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP. Adjusted EBITDA,
Adjusted Net Income (Loss) and Adjusted EPS have certain
limitations in that they do not take into account the impact of
certain expenses to our consolidated statements of operations. We
endeavor to compensate for the limitation of the non-GAAP measures
presented by also providing the most directly comparable GAAP
measures and descriptions of the reconciling items and adjustments
to derive the non-GAAP measures. Adjusted EBITDA, Adjusted Net
Income (Loss) and Adjusted EPS also exclude certain items related
to transactional tax matters, which may ultimately be settled in
cash. We urge investors to review the detailed disclosure regarding
these matters in the Management Discussion and Analysis and Legal
Proceedings sections, as well as the notes to the financial
statements, included in the Company's annual and quarterly reports
filed with the Securities and Exchange Commission. The non-GAAP
financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies.
Adjusted EBITDA is defined as net
income (loss) attributable to Expedia Group adjusted for:
(1) net income (loss) attributable to non-controlling interests;
(2) provision for income taxes; (3) total other expenses, net; (4)
stock-based compensation expense, including compensation expense
related to certain subsidiary equity plans; (5) acquisition-related
impacts, including
(i) amortization of intangible assets and
goodwill and intangible asset impairment, (ii) gains (losses)
recognized on changes in the value of contingent consideration
arrangements; and (iii) upfront consideration paid to settle
employee compensation plans of the acquiree;
(6) certain other items, including restructuring; (7) items
included in legal reserves, occupancy tax and other, which includes
reserves for potential settlement of issues related to
transactional taxes (e.g. hotel and excise taxes), related to court
decisions and final settlements, and charges incurred, if any, for
monies that may be required to be paid in advance of litigation in
certain transactional tax proceedings; (8) that portion of gains
(losses) on revenue hedging activities that are included in other,
net that relate to revenue recognized in the period; and (9)
depreciation.
The above items are excluded from our Adjusted EBITDA measure
because these items are non-cash in nature, or because the amount
and timing of these items is unpredictable, not driven by core
operating results and renders comparisons with prior periods and
competitors less meaningful. We believe Adjusted EBITDA is a useful
measure for analysts and investors to evaluate our future on-going
performance as this measure allows a more meaningful comparison of
our performance and projected cash earnings with our historical
results from prior periods and to the results of our competitors.
Moreover, our management uses this measure internally to evaluate
the performance of our business as a whole and our individual
business segments. In addition, we believe that by excluding
certain items, such as stock-based compensation and
acquisition-related impacts, Adjusted EBITDA corresponds more
closely to the cash operating income generated from our business
and allows investors to gain an understanding of the factors and
trends affecting the ongoing cash earnings capabilities of our
business, from which capital investments are made and debt is
serviced.
Trailing Twelve Month Financial
Information
Expedia Group includes certain unaudited financial information
for the trailing twelve months ("TTM") ended June 30, 2023, which
is calculated as the six months ended June 30, 2023 plus the year
ended December 31, 2022 less the six months ended June 30, 2022.
This presentation is not in accordance with GAAP. However, we
believe that this presentation provides useful information to
investors regarding its recent financial performance, and it views
this presentation of the four most recently completed fiscal
quarters as a key measurement period for investors to assess its
historical results.
Adjusted Net Income (Loss)
generally captures all items on the statements of operations that
occur in normal course operations and have been, or ultimately will
be, settled in cash and is defined as net income (loss)
attributable to Expedia Group plus the following items, net of
tax(a):
(1) stock-based compensation expense, including compensation
expense related to equity plans of certain subsidiaries and
equity-method investments; (2) acquisition-related impacts,
including;
(i) amortization of intangible assets,
including as part of equity-method investments, and goodwill and
intangible asset impairment; (ii) gains (losses) recognized on
changes in the value of contingent consideration arrangements;
(iii) upfront consideration paid to settle employee compensation
plans of the acquiree; and (iv) gains (losses) recognized on
non-controlling investment basis adjustments when we acquire or
lose controlling interests;
(3) currency gains or losses on U.S. dollar denominated cash;
(4) the changes in fair value of equity investments; (5) certain
other items, including restructuring charges; (6) items included in
legal reserves, occupancy tax and other, which includes reserves
for potential settlement of issues related to transactional taxes
(e.g., hotel occupancy and excise taxes), related court decisions
and final settlements, and charges incurred, if any, for monies
that may be required to be paid in advance of litigation in certain
transactional tax proceedings, including as part of equity method
investments; (7) discontinued operations; (8) the non-controlling
interest impact of the aforementioned adjustment items; and (9)
unrealized gains (losses) on revenue hedging activities that are
included in other, net.
Adjusted Net Income (Loss) includes preferred share dividends.
We believe Adjusted Net Income (Loss) is useful to investors
because it represents Expedia Group's combined results, taking into
account depreciation, which management believes is an ongoing cost
of doing business, but excluding the impact of certain expenses and
items not directly tied to the core operations of our
businesses.
(a) Effective January 1, 2023, we changed our methodology for
the computation of the effective tax rate on pretax adjusted net
income to a long-term projected tax rate as our management believes
this tax rate provides better consistency across reporting periods
and produces results that are reflective of Expedia Group’s
long-term effective tax rate. This projected effective tax rate
excludes the income tax effects of Adjusted Net Income items
described above and eliminates the effects of non-recurring and
period specific items which can vary in size and frequency. Based
on our current long-term projections, we are using an effective tax
rate on pretax adjusted net income of 21.5% for 2023.
Adjusted EPS is defined as Adjusted
Net Income (Loss) divided by adjusted weighted average shares
outstanding, which, when applicable, include dilution from our
convertible debt instruments per the treasury stock method for
Adjusted EPS. The treasury stock method assumes we would elect to
settle the principal amount of the debt for cash and the conversion
premium for shares. If the conversion prices for such instruments
exceed our average stock price for the period, the instruments
generally would have no impact to adjusted weighted average shares
outstanding. This differs from the GAAP method for dilution from
our convertible debt instruments, which include them on an
if-converted method. We believe Adjusted EPS is useful to investors
because it represents, on a per share basis, Expedia Group's
consolidated results, taking into account depreciation, which we
believe is an ongoing cost of doing business, as well as other
items which are not allocated to the operating businesses such as
interest expense, taxes, foreign exchange gains or losses, and
minority interest, but excluding the effects of certain expenses
not directly tied to the core operations of our businesses.
Adjusted Net Income (Loss) and Adjusted EPS have similar
limitations as Adjusted EBITDA. In addition, Adjusted Net Income
(Loss) does not include all items that affect our net income (loss)
and net income (loss) per share for the period. Therefore, we think
it is important to evaluate these measures along with our
consolidated statements of operations.
Free Cash Flow is defined as net
cash flow provided by operating activities less capital
expenditures. Management believes Free Cash Flow is useful to
investors because it represents the operating cash flow that our
operating businesses generate, less capital expenditures but before
taking into account other cash movements that are not directly tied
to the core operations of our businesses, such as financing
activities, foreign exchange or certain investing activities. Free
Cash Flow has certain limitations in that it does not represent the
total increase or decrease in the cash balance for the period, nor
does it represent the residual cash flow for discretionary
expenditures. Therefore, it is important to evaluate Free Cash Flow
along with the consolidated statements of cash flows.
Adjusted Expenses (cost of revenue, direct
and indirect selling and marketing, technology and content and
general and administrative expenses) exclude stock-based
compensation related to expenses for stock options, restricted
stock units and other equity compensation under applicable
stock-based compensation accounting standards. Expedia Group
excludes stock-based compensation from these measures primarily
because they are non-cash expenses that we do not believe are
necessarily reflective of our ongoing cash operating expenses and
cash operating income. Moreover, because of varying available
valuation methodologies, subjective assumptions and the variety of
award types that companies can use when adopting applicable
stock-based compensation accounting standards, management believes
that providing non-GAAP financial measures that exclude stock-based
compensation allows investors to make meaningful comparisons
between our recurring core business operating results and those of
other companies, as well as providing management with an important
tool for financial operational decision making and for evaluating
our own recurring core business operating results over different
periods of time. There are certain limitations in using financial
measures that do not take into account stock-based compensation,
including the fact that stock-based compensation is a recurring
expense and a valued part of employees' compensation. Therefore, it
is important to evaluate both our GAAP and non-GAAP measures. See
the Notes to the Consolidated Statements of Operations for
stock-based compensation by line item.
Expedia Group, Inc. (excluding
trivago) In order to provide increased transparency on the
transaction-based component of the business, Expedia Group is
reporting results both in total and excluding trivago.
In addition, we evaluate certain operating and financial
measures, including revenue growth, on both an as-reported and
excluding the impact of foreign exchange, FX neutral, basis. FX
neutral results are among the primary metrics by which management
evaluates the performance of the business and management believes
that investors should have access to the same set of tools that
management uses to analyze our results. We estimate FX neutral
revenue growth by (i) excluding the FX impacts resulting from the
time period between a transaction's booking date and revenue
recognition date for both the current and prior year periods, and
(ii) converting our current-year period results for transactions
recorded in currencies other than U.S. Dollars using the
corresponding prior-year period exchange rates rather than the
current-year period exchange rates.
Tabular Reconciliations for Non-GAAP Measures
Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes,
Depreciation & Amortization) by Segment(1)
Three months ended June 30,
2023
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
529
$
175
$
12
$
(273
)
$
443
Realized gain (loss) on revenue hedges
(6
)
4
—
—
(2
)
Legal reserves, occupancy tax and
other
—
—
—
1
1
Stock-based compensation
—
—
—
106
106
Amortization of intangible assets
—
—
—
15
15
Depreciation
130
27
1
26
184
Adjusted EBITDA(1)
$
653
$
206
$
13
$
(125
)
$
747
Three months ended June 30,
2022
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
470
$
139
$
30
$
(294
)
$
345
Realized gain (loss) on revenue hedges
(15
)
(3
)
—
—
(18
)
Legal reserves, occupancy tax and
other
—
—
—
2
2
Stock-based compensation
—
—
—
93
93
Amortization of intangible assets
—
—
—
21
21
Depreciation
127
20
3
26
176
Impairment of intangible assets
—
—
—
29
29
Adjusted EBITDA(1)
$
582
$
156
$
33
$
(123
)
$
648
(1) Adjusted EBITDA for our B2C and B2B segments includes
allocations of certain expenses, primarily cost of revenue and
facilities, the total costs of our global travel supply
organizations, the majority of platform and marketplace technology
costs, and the realized foreign currency gains or losses related to
the forward contracts hedging a component of our net merchant
lodging revenue. We base the allocations primarily on transaction
volumes and other usage metrics. We do not allocate certain shared
expenses such as accounting, human resources, certain information
technology and legal to our reportable segments. We include these
expenses in Corporate and Eliminations. Our allocation methodology
is periodically evaluated and may change.
Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes,
Depreciation & Amortization)
Three months
ended June 30,
Six months
ended June 30,
Year Ended
December 31,
TTM
June 30,
2023
2022
2023
2022
2022
2023
($ in millions)
Net income (loss) attributable to Expedia
Group, Inc.
$
385
$
(185
)
$
240
$
(307
)
$
352
$
899
Net income (loss) attributable to
non-controlling interests
2
—
7
(1
)
(9
)
(1
)
Provision for income taxes
77
58
156
(27
)
195
378
Total other (income) expense, net
(21
)
472
(81
)
545
547
(79
)
Operating income
443
345
322
210
1,085
1,197
Gain (loss) on revenue hedges related to
revenue recognized
(2
)
(18
)
4
(18
)
(6
)
16
Legal reserves, occupancy tax and
other
1
2
6
23
23
6
Stock-based compensation
106
93
209
183
374
400
Depreciation and amortization
199
197
391
394
792
789
Impairment of intangible assets
—
29
—
29
81
52
Adjusted EBITDA
$
747
$
648
$
932
$
821
$
2,349
$
2,460
Net income margin(1)
11.5
%
(5.8
)%
4.0
%
(5.6
)%
3.0
%
7.3
%
Adjusted EBITDA margin(1)
22.2
%
20.4
%
15.5
%
15.1
%
20.1
%
20.1
%
Long-term debt
$
6,247
Long-term debt to net income ratio
7.0
Long-term debt
$
6,247
Unamortized discounts and debt issuance
costs
47
Adjusted debt
$
6,294
Leverage ratio(2)
2.6
(1) Net income and Adjusted EBITDA margins represent net income
(loss) attributable to Expedia Group, Inc. or Adjusted EBITDA
divided by revenue. (2) Leverage ratio represents adjusted debt
divided by TTM Adjusted EBITDA.
Adjusted Net Income (Loss) & Adjusted EPS
Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
(In millions, except share and
per share data)
Net income (loss) attributable to Expedia
Group, Inc.
$
385
$
(185
)
$
240
$
(307
)
Less: Net (income) loss attributable to
non-controlling interests
(2
)
—
(7
)
1
Less: Provision for income taxes
(77
)
(58
)
(156
)
27
Income (loss) before income taxes
464
(127
)
403
(335
)
Amortization of intangible assets
15
21
30
43
Stock-based compensation
106
93
209
183
Legal reserves, occupancy tax and
other
1
2
6
23
Impairment of intangible assets
—
29
—
29
Unrealized (gain) loss on revenue
hedges
17
(13
)
15
(6
)
(Gain) loss on minority equity
investments, net
(53
)
373
(54
)
352
Loss on debt extinguishment, net
—
24
—
24
TripAdvisor tax indemnification
adjustment
2
—
(67
)
—
Gain on sale of business
(4
)
—
(24
)
(2
)
Adjusted income before income taxes
548
402
518
311
GAAP Provision for income taxes
(77
)
(58
)
(156
)
27
Provision for income taxes for
adjustments
(40
)
(25
)
45
(86
)
Total Adjusted provision for income
taxes
(117
)
(83
)
(111
)
(59
)
Total Adjusted income tax rate
21.5
%
20.8
%
21.5
%
19.2
%
Non-controlling interests
(3
)
(9
)
(9
)
(16
)
Adjusted net income attributable to
Expedia Group, Inc.
$
428
$
310
$
398
$
236
GAAP diluted weighted average shares
outstanding (000's)
151,844
157,290
154,425
156,831
Adjustment to dilutive securities
(000's)
(3,921
)
1,227
(3,921
)
2,071
Adjusted weighted average shares
outstanding (000's)
147,923
158,517
150,504
158,902
GAAP diluted earnings (loss) per share
$
2.54
$
(1.17
)
$
1.55
$
(1.96
)
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
2.89
$
1.96
$
2.64
$
1.49
Ex-trivago Adjusted Net Income and
Adjusted EPS
Adjusted net income attributable to
Expedia Group, Inc.
$
428
$
310
$
398
$
236
Less: Adjusted net income attributable to
trivago
7
15
16
29
Adjusted net income excluding trivago
$
421
$
295
$
382
$
207
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
2.89
$
1.96
$
2.64
$
1.49
Less: Adjusted earnings per share
attributable to trivago
0.05
0.10
0.11
0.18
Adjusted earnings per share excluding
trivago
$
2.84
$
1.86
$
2.53
$
1.30
Free Cash Flow
Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
(In millions)
Net cash provided by operating
activities
$
1,146
$
1,628
$
4,303
$
4,619
Less: Total capital expenditures
(223
)
(159
)
(456
)
(315
)
Free cash flow
$
923
$
1,469
$
3,847
$
4,304
Adjusted Expenses (Cost of revenue, direct and indirect selling
and marketing, technology and content and general and
administrative expenses)
Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
(In millions)
Cost of revenue
$
407
$
419
$
821
$
790
Less: stock-based compensation
4
3
7
6
Adjusted cost of revenue
$
403
$
416
$
814
$
784
Less: trivago cost of revenue(1)
4
4
9
8
Adjusted cost of revenue excluding
trivago
$
399
$
412
$
805
$
776
Selling and marketing expense - direct
$
1,579
$
1,549
$
3,066
$
2,725
Selling and marketing expense -
indirect
191
167
378
330
Selling and marketing expense
1,770
1,716
3,444
3,055
Less: stock-based compensation
20
17
40
32
Adjusted selling and marketing expense
$
1,750
$
1,699
$
3,404
$
3,023
Less: trivago selling and marketing
expense(1)(2)
44
53
75
80
Adjusted selling and marketing expense
excluding trivago
$
1,706
$
1,646
$
3,329
$
2,943
Technology and content expense
$
344
$
284
$
661
$
554
Less: stock-based compensation
36
27
70
54
Adjusted technology and content
expense
$
308
$
257
$
591
$
500
Less: trivago technology and content
expense(1)
12
12
23
25
Adjusted technology and content expense
excluding trivago
$
296
$
245
$
568
$
475
General and administrative expense
$
194
$
189
$
378
$
375
Less: stock-based compensation
46
46
92
91
Adjusted general and administrative
expense
$
148
$
143
$
286
$
284
Less: trivago general and administrative
expense(1)
9
8
17
16
Adjusted general and administrative
expense excluding trivago
$
139
$
135
$
269
$
268
Total adjusted overhead expenses(3)
$
627
$
550
$
1,215
$
1,082
Note: Some numbers may not add due to rounding.
(1) trivago amount presented without stock-based compensation as
those are included with the consolidated totals above. (2) Selling
and marketing expense adjusted to add back B2C direct marketing
spend on trivago eliminated in consolidation. (3) Total adjusted
overhead expenses is the sum of adjusted expenses for Selling and
marketing - indirect, Technology and content, and General and
administrative.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
This release may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. These forward-looking
statements are based on assumptions that are inherently subject to
uncertainties, risks and changes in circumstances that are
difficult to predict. The use of words such as “believe,”
“estimate,” “expect” and “will,” or the negative of these terms or
other similar expressions, among others, generally identify
forward-looking statements. However, these words are not the
exclusive means of identifying such statements. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements and may include statements relating to
future revenues, expenses, margins, profitability, net income
(loss), earnings per share and other measures of results of
operations and the prospects for future growth of Expedia Group,
Inc.’s business. Actual results may differ materially from the
results predicted and reported results should not be considered as
an indication of future performance. The potential risks and
uncertainties that could cause actual results to differ from the
results predicted include, among others, those described in the
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections of our most
recently filed periodic reports on Form 10-K and Form 10-Q, which
are available on our investor relations website at
ir.expediagroup.com and on the SEC website at www.sec.gov. All
information provided in this release is as of August 3, 2023. Undue
reliance should not be placed on forward-looking statements in this
release, which are based on information available to us on the date
hereof. We undertake no duty to update this information unless
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20230802446058/en/
Investor Relations ir@expediagroup.com
Communications press@expediagroup.com
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