The company also announced that it has entered into a definitive agreement under which Expedia, Inc. (NASDAQ:EXPE) has agreed to acquire HomeAway®, including all of its brands, for an equity value of approximately $3.9 billion in cash and Expedia common stock, representing a per share price for HomeAway shares of$38.31, based on Expedia's closing price on November 3, 2015. Under the terms of the transaction, Expedia will offer to acquire each outstanding share of common stock of HomeAway in exchange for $10.15 in cash and 0.2065 of a share of Expedia common stock. Under the terms of the transaction, Expedia will acquire each outstanding share of common stock ofHomeAway through a tender offer, followed by a second-step merger.
The Boards of Directors of both companies unanimously approved the transaction, which remains subject to customary closing conditions, including regulatory approvals and the tender of a majority of the outstanding shares of HomeAway common stock. The companies expect the transaction to close in the first quarter of 2016.
"Today we're announcing business model changes, including the addition of a traveler service fee in mid-2016, which will dramatically change our ability to compete and thrive in the coming years," says Brian Sharples, chief executive officer of HomeAway. "Better monetization will allow us to accelerate revenue growth, but most importantly will provide more resources for an even better product and service experience for our owners, property managers and travelers." Mr. Sharples noted traveler service fee, which will be based on a sliding scale, will begin rolling out in Q2 of 2016 and is expected to add an average of roughly 6% to most transactions that run through its online shopping cart. In conjunction with the new traveler service fee, the Company plans to lower commission rates for most of their pay-per-booking customers and provide financial incentives to subscribers based on their annual booking volume throughHomeAway's platform.
Third Quarter 2015 Financial Highlights
· Total revenue increased 11.6% to $130.7 million from $117.1 million in the third quarter of 2014. On an FX neutral basis, year-over-year revenue growth was 19.8%. Growth in total revenue primarily reflected an increase in average revenue per subscription listing as a result of tiered pricing and bundled product offerings, the benefit of ancillary product and services revenue and an increase in listings.
· Listing revenue increased 10.2% to $106.5 million from $96.6 million in the third quarter of 2014. On an FX neutral basis, year-over-year listing revenue growth was 19.7%.
· Other revenue, which is comprised of ancillary revenue from owners, managers, and travelers, advertising, software and other items, increased 18.0% to $24.2 million from $20.5 million in the third quarter of 2014. Growth in other revenue primarily reflected increased adoption of value-added owner, manager and traveler products.
· Net income attributable to HomeAway was $10.4 million, or $0.11 per diluted share, compared to net income attributable to HomeAway of $4.9 million, or $0.05 per diluted share, in the third quarter of 2014.
· Adjusted EBITDA increased 27.2% (increased 39.7% FX neutral) to $40.2 million from $31.6 million in the third quarter of 2014. As a percentage of revenue, adjusted EBITDA was 30.8% compared to 27.0% in the third quarter of 2014.
· Free cash flow increased 24.5% to $24.9 million from $20.0 million in the third quarter of 2014. On a trailing twelve month basis, free cash flow increased 8.6% to $127.2 million from$117.2 million in the comparable trailing twelve month period in the prior year.
Non-GAAP net income was $23.5 million, or $0.24 per diluted share, compared to non-GAAP net income of $18.9 million, or $0.20 per diluted share, in the third quarter of 2014.