Posts record revenue and profitability
Fourth quarter revenue and profitability growth accelerate from the
third quarter Delivers on full-year guidance of double-digit
topline growth with margin expansion Drives largest annual share
repurchase on record at over $2 billion
Expedia Group, Inc. (NASDAQ: EXPE) announced financial results
today for the fourth quarter and full year ended December 31,
2023.
"We delivered on our full year guidance and drove record
results, all while completing a massive transformation and
navigating the inherent volatility that comes with that. Our work
is finally starting to deliver results, and we are in the best
place we've ever been technologically," said Peter Kern, Vice
Chairman and CEO, Expedia Group. "Moving forward, we are now able
to execute without the numerous constraints we have faced in recent
years. We will continue to focus on acquiring and retaining the
right customers, driving share growth in our B2C and B2B
businesses, and providing the best product and partner experience
in the industry. It is really exciting to be in position to go back
on offense and lead the industry."
Key Highlights
- Record full year lodging gross bookings growing 11% with record
hotel gross bookings growing 18%, compared to 2022.
- Highest ever full year and fourth quarter revenue, both of
which grew 10%, compared to 2022.
- Fourth quarter year over year B2C revenue growth accelerates
from the third quarter.
- Record quarterly and full year B2B revenue, increasing 28% and
33%, respectively, compared to 2022.
- Highest ever full year GAAP net income grew 127%, compared to
2022.
- Record full year adjusted EBITDA grew 14%, compared to
2022.
- Significant adjusted EBITDA margin expansion at over 130 basis
points for the fourth quarter and nearly 75 basis points for the
year, compared to 2022.
- Repurchased over 19 million shares for a record $2 billion in
2023.
Financial Summary & Operating Metrics
(In millions, except per share amounts) - Fourth Quarter
2023
Expedia Group, Inc.
Metric
Q4 2023
Q4 2022
Δ Y/Y
Booked room nights
77.4
70.8
9%
Gross bookings
$21,672
$20,511
6%
Revenue
$2,887
$2,618
10%
Operating income
$104
$128
(19)%
Net income attributable to Expedia Group
common stockholders
$132
$177
(25)%
Diluted earnings per share
$0.92
$1.11
(17)%
Adjusted EBITDA
$532
$449
19%
Adjusted net income
$242
$196
24%
Adjusted EPS
$1.72
$1.26
37%
Net cash provided by (used in) operating
activities
$(238)
$(182)
31%
Free cash flow
$(415)
$(359)
16%
* A reconciliation of non-GAAP financial
measures to the most comparable GAAP measures is provided at the
end of this release.
Financial Summary & Operating Metrics
(In millions, except per share amounts) - Full Year 2023
Expedia Group, Inc.
Metric
2023
2022
Δ Y/Y
Booked room nights
350.9
312.0
12%
Gross bookings
$104,079
$95,049
10%
Revenue
$12,839
$11,667
10%
Operating income
$1,033
$1,085
(5)%
Net income attributable to Expedia Group
common stockholders
$797
$352
127%
Diluted earnings per share
$5.31
$2.17
144%
Adjusted EBITDA
$2,680
$2,349
14%
Adjusted net income
$1,418
$1,072
32%
Adjusted EPS
$9.69
$6.79
43%
Net cash provided by operating
activities
$2,690
$3,440
(22)%
Free cash flow
$1,844
$2,778
(34)%
* A reconciliation of non-GAAP financial
measures to the most comparable GAAP measures is provided at the
end of this release.
Conference Call
Expedia Group, Inc. will webcast a conference call to discuss
fourth quarter 2023 financial results and certain forward-looking
information on Thursday, February 8, 2024 at 1:30 p.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. brands 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. We provide industry-leading
technology solutions to fuel partner growth and success, while
facilitating memorable experiences for travelers. Our organization
is made up of three pillars: Expedia Brands, housing all our
consumer brands; Expedia Product & Technology, focused on the
group’s product and technical strategy and offerings; and Expedia
for Business, consisting of business-to-business solutions and
relationships throughout the travel ecosystem.
Expedia Group’s three flagship consumer brands includes:
Expedia®, Hotels.com®, and Vrbo®. One Key™ is our comprehensive
loyalty program that unifies Expedia, Hotels.com and Vrbo into one
simple, flexible travel rewards experience. To enroll in One Key,
download Expedia, Hotels.com and Vrbo mobile apps for free on iOS
and Android devices. One Key is currently available in the U.S. and
will become available globally soon.
© 2024 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 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 or methodology of any of our supplemental metrics are
subject to change, and such changes could be material. We may also
discontinue certain supplemental metrics as our business evolves
over time. In the event of any discrepancy between any supplemental
metric and our historical financial statements, you should rely on
the information included in the financial statements filed with or
furnished to the SEC.
2021
2022
2023
Full Year
Y/Y Growth
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2021
2022
2023
Q423
2023
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
89.3
77.4
247.5
312.0
350.9
9%
12%
Booked air tickets
8.9
13.4
12.7
11.3
13.1
13.5
12.2
11.1
14.0
13.6
12.8
11.4
46.3
49.9
51.9
3%
4%
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
$10,927
$9,439
$34,279
$44,492
$46,161
—%
4%
Merchant
8,685
10,453
9,870
9,138
13,066
13,366
13,083
11,042
15,976
14,951
14,758
12,233
38,146
50,557
57,918
11%
15%
Total
$15,422
$20,815
$18,725
$17,463
$24,412
$26,139
$23,987
$20,511
$29,401
$27,321
$25,685
$21,672
$72,425
$95,049
$104,079
6%
10%
Lodging gross bookings
$12,002
$14,431
$13,046
$12,000
$17,756
$17,867
$17,099
$14,117
$21,055
$19,167
$18,513
$15,253
$51,479
$66,839
$73,987
8%
11%
Revenue by segment
B2C
$1,025
$1,715
$2,351
$1,730
$1,740
$2,420
$2,707
$1,874
$1,921
$2,415
$2,819
$1,958
$6,821
$8,741
$9,113
4%
4%
B2B
184
305
490
481
432
650
788
676
668
861
995
864
1,460
2,546
3,388
28%
33%
trivago (third-party revenue)
37
91
121
68
77
111
124
68
76
82
115
65
317
380
338
(5)%
(11)%
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$2,887
$8,598
$11,667
$12,839
10%
10%
Revenue by product
Lodging
$903
$1,533
$2,300
$1,713
$1,610
$2,400
$2,881
$2,014
$2,029
$2,698
$3,233
$2,304
$6,449
$8,905
$10,264
14%
15%
Air
50
78
61
65
74
95
100
93
113
111
100
86
254
362
410
(7)%
13%
Advertising and media(1)
88
161
202
152
166
213
222
176
175
201
240
205
603
777
821
16%
6%
Other(2)
205
339
399
349
399
473
416
335
348
348
356
292
1,292
1,623
1,344
(13)%
(17)%
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$2,887
$8,598
$11,667
$12,839
10%
10%
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
$2,440
$1,787
$6,569
$7,939
$8,147
4%
3%
Non-U.S. points of sale
245
375
785
624
593
973
1,261
901
917
1,186
1,489
1,100
2,029
3,728
4,692
22%
26%
Total
$1,246
$2,111
$2,962
$2,279
$2,249
$3,181
$3,619
$2,618
$2,665
$3,358
$3,929
$2,887
$8,598
$11,667
$12,839
10%
10%
Adjusted EBITDA by segment(3)
B2C
$106
$316
$879
$481
$188
$582
$943
$411
$148
$653
$1,056
$468
$1,782
$2,124
$2,325
14%
10%
B2B
(57)
(4)
74
97
80
156
221
142
133
206
266
193
110
599
798
36%
33%
Other(4)
(107)
(111)
(98)
(99)
(95)
(90)
(85)
(104)
(96)
(112)
(106)
(129)
(415)
(374)
(443)
25%
18%
Total
$(58)
$201
$855
$479
$173
$648
$1,079
$449
$185
$747
$1,216
$532
$1,477
$2,349
$2,680
19%
14%
Net income (loss) attributable to Expedia
Group common stockholders(5)
$(606)
$(301)
$362
$276
$(122)
$(185)
$482
$177
$(145)
$385
$425
$132
$(269)
$352
$797
(25)%
127%
(1) Our advertising and media business consists of Expedia Group
Media Solutions, which is responsible for generating advertising
revenue on our global online travel brands, and trivago, a leading
hotel metasearch site. (2) Other revenue primarily includes
insurance, car rental, destination services and cruise revenue. (3)
See the section below titled "Tabular Reconciliations for Non-GAAP
Measures — Adjusted EBITDA by segment" for additional details. (4)
Other is comprised of trivago, corporate and intercompany
eliminations. (5) 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
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
December 31,
Year ended
December 31,
2023
2022
2023
2022
Revenue
$
2,887
$
2,618
$
12,839
$
11,667
Costs and expenses:
Cost of revenue (exclusive of depreciation
and amortization shown separately below) (1)
340
412
1,573
1,657
Selling and marketing - direct
1,370
1,199
6,107
5,428
Selling and marketing - indirect (1)
193
177
756
672
Technology and content (1)
357
317
1,358
1,181
General and administrative (1)
199
186
771
748
Depreciation and amortization
208
199
807
792
Impairment of goodwill
—
—
297
—
Intangible and other long-term asset
impairment
114
—
129
81
Legal reserves, occupancy tax and
other
2
—
8
23
Operating income
104
128
1,033
1,085
Other income (expense):
Interest income
45
27
207
60
Interest expense
(61
)
(60
)
(245
)
(277
)
Gain on debt extinguishment, net
—
—
—
49
Gain on sale of business, net
1
4
25
6
Other, net
82
84
(2
)
(385
)
Total other income (expense), net
67
55
(15
)
(547
)
Income before income taxes
171
183
1,018
538
Provision for income taxes
(35
)
(8
)
(330
)
(195
)
Net income
136
175
688
343
Net (income) loss attributable to
non-controlling interests
(4
)
2
109
9
Net income attributable to Expedia
Group, Inc.
$
132
$
177
$
797
$
352
Earnings per share attributable to
Expedia Group, Inc. available to common stockholders:
Basic
$
0.96
$
1.14
$
5.50
$
2.24
Diluted
0.92
1.11
5.31
2.17
Shares used in computing earnings per
share (000's):
Basic
138,184
155,404
144,967
156,672
Diluted
144,470
159,532
150,228
161,751
(1) Includes stock-based compensation as
follows:
Cost of revenue
$
4
$
4
$
14
$
14
Selling and marketing
19
17
79
67
Technology and content
33
29
138
111
General and administrative
43
44
182
182
EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except number of
shares which are reflected in thousands and par value)
December 31, 2023
December 31, 2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
4,225
$
4,096
Restricted cash and cash equivalents
1,436
1,755
Short-term investments
28
48
Accounts receivable, net of allowance of
$46 and $40
2,786
2,078
Income taxes receivable
47
40
Prepaid expenses and other current
assets
708
774
Total current assets
9,230
8,791
Property and equipment, net
2,359
2,210
Operating lease right-of-use assets
357
363
Long-term investments and other assets
1,238
1,184
Deferred income taxes
586
661
Intangible assets, net
1,023
1,209
Goodwill
6,849
7,143
TOTAL ASSETS
$
21,642
$
21,561
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable, merchant
$
2,041
$
1,709
Accounts payable, other
1,077
947
Deferred merchant bookings
7,723
7,151
Deferred revenue
164
163
Income taxes payable
26
21
Accrued expenses and other current
liabilities
752
787
Total current liabilities
11,783
10,778
Long-term debt
6,253
6,240
Deferred income taxes
33
52
Operating lease liabilities
314
312
Other long-term liabilities
473
451
Commitments and contingencies
Stockholders’ equity:
Common stock: $.0001 par value; Authorized
shares: 1,600,000
—
—
Shares issued: 282,149 and 278,264; Shares
outstanding: 131,522 and 147,757
Class B common stock: $.0001 par value;
Authorized shares: 400,000
—
—
Shares issued: 12,800 and 12,800; Shares
outstanding: 5,523 and 5,523
Additional paid-in capital
15,398
14,795
Treasury stock - Common stock and Class B,
at cost; Shares 157,903 and 137,783
(13,023
)
(10,869
)
Retained earnings (deficit)
(632
)
(1,409
)
Accumulated other comprehensive income
(loss)
(209
)
(234
)
Total Expedia Group, Inc. stockholders’
equity
1,534
2,283
Non-redeemable non-controlling
interest
1,252
1,445
Total stockholders’ equity
2,786
3,728
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
21,642
$
21,561
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Year ended
December 31,
2023
2022
Operating activities:
Net income
$
688
$
343
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property and equipment,
including internal-use software and website development
748
704
Amortization of stock-based
compensation
413
374
Amortization of intangible assets
59
88
Impairment of goodwill, intangible and
other long-term assets
426
81
Deferred income taxes
62
70
Foreign exchange (gain) loss on cash,
restricted cash and short-term investments, net
(16
)
128
Realized loss on foreign currency
forwards, net
—
78
(Gain) loss on minority equity
investments, net
(16
)
345
Gain on debt extinguishment, net
—
(49
)
Gain on sale of business, net
(25
)
(6
)
Other
80
23
Changes in operating assets and
liabilities, net of effects from acquisitions and dispositions:
Accounts receivable
(741
)
(838
)
Prepaid expenses and other assets
98
55
Accounts payable, merchant
332
375
Accounts payable, other, accrued expenses
and other liabilities
101
194
Tax payable/receivable, net
(91
)
11
Deferred merchant bookings
572
1,464
Net cash provided by operating
activities
2,690
3,440
Investing activities:
Capital expenditures, including
internal-use software and website development
(846
)
(662
)
Purchases of investments
(28
)
(60
)
Sales and maturities of investments
49
205
Cash and restricted cash divested from
sale of business, net of proceeds
25
4
Proceeds from initial exchange of
cross-currency interest rate swaps
—
337
Payments for initial exchange of
cross-currency interest rate swaps
—
(337
)
Other, net
—
(67
)
Net cash used in investing
activities
(800
)
(580
)
Financing activities:
Payment of long-term debt
—
(2,141
)
Debt extinguishment costs
—
(22
)
Purchases of treasury stock
(2,137
)
(607
)
Proceeds from exercise of equity awards
and employee stock purchase plan
101
131
Other, net
(60
)
15
Net cash used in financing
activities
(2,096
)
(2,624
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
16
(190
)
Net increase (decrease) in cash, cash
equivalents and restricted cash and cash equivalents
(190
)
46
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of year
5,851
5,805
Cash, cash equivalents and restricted
cash and cash equivalents at end of year
$
5,661
$
5,851
Supplemental cash flow
information
Cash paid for interest
$
231
$
291
Income tax payments, net
281
102
Notes & Definitions:
Booked Room Nights: Represents
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: 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 fuels a wide
range of travel and non-travel companies including airlines,
offline travel agents, online retailers, corporate travel
management and financial institutions, who leverage our leading
travel technology and tap into our diverse supply to augment their
offerings and market Expedia Group rates and availabilities to
their travelers.
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.
Non-GAAP Measures
Expedia Group reports Adjusted EBITDA, Adjusted EBITDA Margin,
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.
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 income
tax 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.
Tabular Reconciliations for Non-GAAP
Measures
Adjusted EBITDA (Adjusted Earnings Before
Interest, Taxes, Depreciation & Amortization) by Segment(1)
Three months ended December
31, 2023
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
328
$
163
$
4
$
(391
)
$
104
Realized gain (loss) on revenue hedges
7
(2
)
—
—
5
Legal reserves, occupancy tax and
other
—
—
—
2
2
Stock-based compensation
—
—
—
99
99
Intangible and other long-term asset
impairment
—
—
—
114
114
Amortization of intangible assets
—
—
—
15
15
Depreciation
133
32
1
27
193
Adjusted EBITDA(1)
$
468
$
193
$
5
$
(134
)
$
532
Three months ended December
31, 2022
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
260
$
114
$
20
$
(266
)
$
128
Realized gain (loss) on revenue hedges
23
5
—
—
28
Stock-based compensation
—
—
—
94
94
Amortization of intangible assets
—
—
—
22
22
Depreciation
128
23
1
25
177
Adjusted EBITDA(1)
$
411
$
142
$
21
$
(125
)
$
449
Year ended December 31,
2023
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
1,810
$
681
$
51
$
(1,509
)
$
1,033
Realized gain (loss) on revenue hedges
(11
)
4
—
—
(7
)
Legal reserves, occupancy tax and
other
—
—
—
8
8
Stock-based compensation
—
—
—
413
413
Impairment of goodwill
—
—
—
297
297
Intangible and other long-term asset
impairment
—
—
—
129
129
Amortization of intangible assets
—
—
—
59
59
Depreciation
526
113
5
104
748
Adjusted EBITDA(1)
$
2,325
$
798
$
56
$
(499
)
$
2,680
Year ended December 31,
2022
B2C
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
Operating income (loss)
$
1,617
$
518
$
105
$
(1,155
)
$
1,085
Realized gain (loss) on revenue hedges
(2
)
(4
)
—
—
(6
)
Legal reserves, occupancy tax and
other
—
—
—
23
23
Stock-based compensation
—
—
—
374
374
Intangible and other long-term asset
impairment
—
—
—
81
81
Amortization of intangible assets
—
—
—
88
88
Depreciation
509
85
8
102
704
Adjusted EBITDA(1)
$
2,124
$
599
$
113
$
(487
)
$
2,349
(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
December 31,
Year ended
December 31,
2023
2022
2023
2022
(In millions)
Net income attributable to Expedia Group,
Inc.
$
132
$
177
$
797
$
352
Net income (loss) attributable to
non-controlling interests
4
(2
)
(109
)
(9
)
Provision for income taxes
35
8
330
195
Total other (income) expense, net
(67
)
(55
)
15
547
Operating income
104
128
1,033
1,085
Gain (loss) on revenue hedges related to
revenue recognized
5
28
(7
)
(6
)
Legal reserves, occupancy tax and
other
2
—
8
23
Stock-based compensation
99
94
413
374
Depreciation and amortization
208
199
807
792
Impairment of goodwill
—
—
297
—
Intangible and other long-term asset
impairment
114
—
129
81
Adjusted EBITDA
$
532
$
449
$
2,680
$
2,349
Net income margin(1)
4.6
%
6.8
%
6.2
%
3.0
%
Adjusted EBITDA margin(1)
18.5
%
17.2
%
20.9
%
20.1
%
Long-term debt
$
6,253
$
6,240
Long-term debt to net income ratio
7.8
17.7
Long-term debt
$
6,253
$
6,240
Unamortized discounts and debt issuance
costs
41
54
Adjusted debt
$
6,294
$
6,294
Leverage ratio(2)
2.3
2.7
(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
December 31,
Year ended
December 31,
2023
2022
2023
2022
(In millions, except share and
per share data)
Net income attributable to Expedia Group,
Inc.
$
132
$
177
$
797
$
352
Less: Net (income) loss attributable to
non-controlling interests
(4
)
2
109
9
Less: Provision for income taxes
(35
)
(8
)
(330
)
(195
)
Income before income taxes
171
183
1,018
538
Amortization of intangible assets
15
22
59
88
Stock-based compensation
99
94
413
374
Legal reserves, occupancy tax and
other
2
—
8
23
Impairment of goodwill
—
—
297
—
Intangible and other long-term asset
impairment
114
—
129
81
Unrealized (gain) loss on revenue
hedges
2
12
13
(3
)
(Gain) loss on minority equity
investments, net
(89
)
(78
)
(16
)
345
Gain on debt extinguishment, net
—
—
—
(49
)
TripAdvisor tax indemnification
adjustment
—
—
(67
)
—
Gain on sale of business, net
(1
)
(4
)
(25
)
(6
)
Adjusted income before income taxes
313
229
1,829
1,391
GAAP Provision for income taxes
(35
)
(8
)
(330
)
(195
)
Provision for income taxes for
adjustments
(32
)
(26
)
(63
)
(100
)
Total Adjusted provision for income
taxes
(67
)
(34
)
(393
)
(295
)
Total Adjusted income tax rate
21.5
%
14.8
%
21.5
%
21.2
%
Non-controlling interests
(4
)
1
(18
)
(24
)
Adjusted net income attributable to
Expedia Group, Inc.
$
242
$
196
$
1,418
$
1,072
GAAP diluted weighted average shares
outstanding (000's)
144,470
159,532
150,228
161,751
Adjustment to dilutive securities
(000's)
(3,921
)
(3,921
)
(3,921
)
(3,921
)
Adjusted weighted average shares
outstanding (000's)
140,549
155,611
146,307
157,830
GAAP diluted earnings per share
$
0.92
$
1.11
$
5.31
$
2.17
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
1.72
$
1.26
$
9.69
$
6.79
Ex-trivago Adjusted Net Income and
Adjusted EPS
Adjusted net income attributable to
Expedia Group, Inc.
$
242
$
196
$
1,418
$
1,072
Less: Adjusted net income attributable to
trivago
2
3
27
49
Adjusted net income excluding trivago
$
240
$
193
$
1,391
$
1,023
Adjusted earnings per share attributable
to Expedia Group, Inc.
$
1.72
$
1.26
$
9.69
$
6.79
Less: Adjusted earnings per share
attributable to trivago
0.01
0.02
0.18
0.31
Adjusted earnings per share excluding
trivago
$
1.71
$
1.24
$
9.50
$
6.48
Free Cash Flow
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
(In millions)
Net cash provided by (used in) operating
activities
$
(238
)
$
(182
)
$
2,690
$
3,440
Less: Total capital expenditures
(177
)
(177
)
(846
)
(662
)
Free cash flow
$
(415
)
$
(359
)
$
1,844
$
2,778
Adjusted Expenses (Cost of revenue, direct
and indirect selling and marketing, technology and content and
general and administrative expenses)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
(In millions)
Cost of revenue
$
340
$
412
$
1,573
$
1,657
Less: stock-based compensation
4
4
14
14
Adjusted cost of revenue
$
336
$
408
$
1,559
$
1,643
Less: trivago cost of revenue(1)
3
4
17
17
Adjusted cost of revenue excluding
trivago
$
333
$
404
$
1,542
$
1,626
Selling and marketing expense - direct
$
1,370
$
1,199
$
6,107
$
5,428
Less: trivago selling and marketing
expense - direct(2)
32
22
173
160
Adjusted selling and marketing expense
excluding trivago - direct
$
1,338
$
1,177
$
5,934
$
5,268
Selling and marketing expense -
indirect
$
193
$
177
$
756
$
672
Less: stock-based compensation
19
17
79
67
Adjusted selling and marketing expense -
indirect
$
174
$
160
$
677
$
605
Less: trivago selling and marketing
expense - indirect(1)
3
2
11
12
Adjusted selling and marketing expense
excluding trivago - indirect
$
171
$
158
$
666
$
593
Technology and content expense
$
357
$
317
$
1,358
$
1,181
Less: stock-based compensation
33
29
138
111
Adjusted technology and content
expense
$
324
$
288
$
1,220
$
1,070
Less: trivago technology and content
expense(1)
12
11
46
47
Adjusted technology and content expense
excluding trivago
$
312
$
277
$
1,174
$
1,023
General and administrative expense
$
199
$
186
$
771
$
748
Less: stock-based compensation
43
44
182
182
Adjusted general and administrative
expense
$
156
$
142
$
589
$
566
Less: trivago general and administrative
expense(1)
10
7
34
30
Adjusted general and administrative
expense excluding trivago
$
146
$
135
$
555
$
536
Total adjusted overhead expenses(3)
$
654
$
590
$
2,486
$
2,241
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 February 8, 2024.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240208053551/en/
Investor Relations ir@expediagroup.com
Communications press@expediagroup.com
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