Home > > Expedia, Inc. Reports Third Quarter 2008 Results

Expedia, Inc. Reports Third Quarter 2008 Results

11/02/2008| 4:56:00 PM| 中文

BELLEVUE, Wash., Oct. 30 /PRNewswire-FirstCall/ -- Expedia, Inc. (Nasdaq: EXPE) today announced financial results for its third quarter ended September 30, 2008.

BELLEVUE, Wash., Oct. 30 /PRNewswire-FirstCall/ -- Expedia, Inc. (Nasdaq: EXPE) today announced financial results for its third quarter ended September 30, 2008.

"Yes, it´s a difficult environment, but that´s everyone´s news, and for travel any predictions about its depth or duration would be foolish," said Barry Diller, Expedia, Inc.´s Chairman and Senior Executive. "What is important for shareholders of Expedia to know is that the Company is well capitalized, focused only on operating its sole travel services business, with no distractions, and a conviction that it will emerge stronger in every line of its business."

"Our sixth consecutive quarter of double digit room night growth and a robust advertising and media business drove respectable 10% revenue growth in this challenging environment," said Dara Khosrowshahi, Expedia, Inc.´s CEO and President. "Because the economic turmoil caused a broad pull back in travel spend in September and October, we have adjusted our investment and spending levels, and will push for further efficiencies in the fourth quarter and beyond as we look for maximum return for every dollar that we spend."

Discussion of Results

Gross Bookings & Revenue

Gross bookings increased 7% for the third quarter of 2008 compared with the third quarter of 2007. North America bookings increased 1%, Europe bookings increased 18% (13% excluding the net benefit from foreign exchange) and Other bookings (primarily Egencia(TM) and our Asia Pacific operations) increased 25%.

Revenue increased 10% for the third quarter, primarily driven by increased worldwide merchant hotel revenue and advertising and media revenue. North America revenue increased 7%, Europe revenue increased 16% (10% excluding foreign exchange) and Other revenue increased 24%.

Worldwide merchant hotel revenue increased 7% for the third quarter due to a 15% increase in room nights stayed, including rooms delivered as a component of packages, partially offset by a 6% decrease in revenue per room night.

Worldwide air revenue decreased 7% for the third quarter due to a 5% decrease in air tickets sold and a 2% decrease in revenue per air ticket.

Worldwide revenue from products and services other than merchant hotel and air (including advertising and media, car rentals, destination services, agency hotel and cruises) increased 27% for the third quarter due primarily to increased revenue from our advertising and media and agency hotel businesses. Package revenue decreased 5% for the quarter primarily due to weakness in key North American package markets such as Las Vegas and Hawaii.

Revenue as a percentage of gross bookings ("revenue margin") was 15.40% for the third quarter, an increase of 38 basis points. North America revenue margin increased 80 basis points to 15.99%, Europe revenue margin decreased 40 basis points to 16.64%, and Other revenue margin decreased 7 basis points to 9.01%. Worldwide and North America revenue margins increased primarily from growth of advertising and media revenue. The decrease in the Europe revenue margin was primarily driven by the impact on revenue from currency depreciation in the British pound during the quarter. In addition, revenue margins were higher due to slower bookings growth late in the third quarter of 2008 compared to the prior year period.


Gross profit for the third quarter of 2008 was $656 million, an increase of 8% compared with the third quarter of 2007 primarily due to increased revenue, partially offset by a lower gross margin primarily related to our gas card promotion.

OIBA for the third quarter increased 8% to $231 million, driven primarily by higher revenue. OIBA as a percentage of revenue decreased 32 basis points to 27.69%, primarily reflecting higher growth in technology and content expenses excluding stock-based compensation as a percentage of revenue. Operating income increased 11% to $200 million primarily due to the same factors driving OIBA, as well as lower intangible amortization as a percentage of revenue.

Adjusted net income for the third quarter decreased $6 million and net income decreased $5 million compared to the prior year period due primarily to a $21 million foreign exchange loss from holding Euros in order to economically hedge the purchase price of an acquisition and higher net interest expense resulting from $400 million of new notes issued in June 2008. These were partially offset by higher OIBA and operating income. Third quarter adjusted EPS and diluted EPS were $0.39 and $0.33, compared to $0.39 and $0.32, respectively, in the prior year. The EPS impact from decreases in adjusted net income and net income were offset by declines in weighted average shares outstanding.

Cash Flows & Working Capital

For the nine months ended September 30, 2008, net cash provided by operating activities was $768 million and free cash flow was $649 million. Both measures include $308 million from net changes in operating assets and liabilities, primarily driven by our merchant hotel business. Free cash flow decreased $259 million from the prior year period primarily due to decreased net changes in operating assets and liabilities (primarily from slower bookings growth and to a lesser extent faster hotelier payment processing), increased capital expenditures and higher cash taxes, offsetting increased OIBA.

 Recent Highlights

Global Presence

-- Gross bookings from Expedia, Inc.´s international businesses were $1.92 billion in the third quarter, accounting for 35% of worldwide bookings, up from 31% in the prior year period. Revenue from international businesses was $304 million in the third quarter, or 36% of worldwide revenue, up from 33% in the prior year period.

-- TripAdvisor(R) launched
www.tripadvisor.in, with localized features, reviews and recommendations providing comprehensive travel information to India-based travelers. In addition, Cleartrip.com, an India-based online travel agency, began integrating TripAdvisor hotel ratings and reviews.

-- hotels.com(R) continued its expansion in the Asia Pacific region with the launch of local language sites in Hong Kong, Japan, and Korea.

-- Expedia completed the acquisition of Venere SpA, expanding its European, Middle Eastern and African lodging footprint by over 10,000 properties, and adding an agency model booking option for hotel suppliers.

Brand Portfolio

-- AARP selected Expedia(R) Travel Network to provide its over 40 million members with exclusive travel booking services and other travel-related benefits. The new travel center, at
www.expedia-aarp.com, features no airline booking fees, hotel and car rental discounts through AARP preferred chains and vacation package discounts.

-- Expedia, the Official Travel Team of the NFL, kicked off the Go Like Pro(TM) campaign with unique travel options for NFL cities and other popular destinations. The program showcases personal travel tips on uniquely designed Expedia pages from Matt Hasselbeck of the Seattle Seahawks and Jason Campbell of the Washington Redskins.

-- Classic Vacations(R) was awarded "Best FIT/Custom Tour Operator" by leading luxury travel network Virtuoso for excellence in creating exceptional vacation experiences.

-- hotels.com was named a winner of Budget Travel magazine´s 2008 Extra Mile Awards for its new loyalty program, welcomerewards(TM), which awards one free night´s stay for every 10 nights booked at hotels.com.

-- TripAdvisor purchased a majority stake in FlipKey(TM), a leading vacation rental listing and review site.

Content & Innovation

-- Hotwire(R) launched a local car rental offering, enabling travelers to pick up their rental cars at non-airport locations across the country.

-- Expedia launched flight booking services on Expedia.co.in, providing access to international airfares from more than 70 airlines worldwide to travelers in India. The launch also included Dynamic Packaging Technology, providing significant savings to customers when booking two travel products together.

-- Egencia launched its Egencia Promise in Europe, part of its global initiative to deliver value, savings and service, including a best price guarantee for flights.

Partner Services Group ("PSG")

-- Expedia signed long-term, strategic agreements with Carlson Hospitality Corporation, Destination Hotels & Resorts, Marriott International, and Red Lion Hotels Corporation, making their hotel rooms available on Expedia and hotels.com worldwide points of sale.

-- Expedia continued to grow its European hotel base, adding over 2,700 merchant properties during the third quarter. Expedia´s worldwide merchant hotel portfolio features nearly 46,000 properties, including over 25,000 hotels in the Americas, over 18,000 in Europe, the Middle East & Africa, and over 2,000 in the APAC region.

-- Expedia signed a multi-year strategic agreement with Virgin America, making all fares, schedules, and inventory available on Expedia.com. Virgin America flights are also available to managed business travel clients of Egencia(TM).

-- Expedia expanded its international low cost carrier offering, signing agreements with Windjet and Vueling in Europe, Virgin Blue in Australia as well as Chinese carrier Hainan Airlines.
TAGS: Expedia | Egencia | TripAdvisor
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