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Key Takeaways from Liberty Interactive’s 2Q15 Earnings

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Liberty Interactive’s earnings

In the last part of this series, we learned about Liberty Interactive’s (QVCA) acquisition of Zulily (ZU). In this part of the series, we’ll look at Liberty Interactive’s earnings in 2Q15.

Liberty Interactive announced its earnings on August 5, 2015. The company had revenue of ~$2.3 billion. This was a fall of 9% over the revenue in the same quarter last year. The company had an operating income of $269 million. This was a rise of ~4% over 2Q14.

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Liberty Interactive consists of two groups—the QVC Group and the Liberty Ventures Group. The company’s digital commerce group consists of its subsidiaries Bodybuilding.com, CommerceHub, Evite, and Right Start. The company reports the results of its digital commerce group under Liberty Ventures for GAAP (generally accepted accounting principles) purposes.

Liberty Ventures closed the sale of its outdoor gear online retailer Backcountry.com to TSG Consumer Partners for $350 million on June 30, 2015. However, the sales of Backcountry.com are included in the sales of digital commerce companies through June 30, 2015. The continuing e-commerce enterprises in the digital commerce group—excluding Backcountry.com—had sales of $149 million in 2Q15.

QVC dominates sales for Liberty

As the above chart indicates, the QVC Group contributed ~89% to the company’s total revenue of $2.3 billion in 2Q15 while Liberty Ventures accounted for the remaining 11% in revenue with sales of $254 million in 2Q15.

The QVC Group sells products across different categories through televised programs, on mobile, and through its website. Internationally, the group sells its products in countries including Germany (EWG), Japan (EWJ), the United Kingdom, Italy, China (FXI), and France. QVC also holds 38% equity interest in one of its competitors—HSN (HSNI).

QVC is shifting its focus to other platforms besides television to grab consumers across different age groups. Liberty stated in its earnings call for 2Q15 that QVC’s mobile platform had a 48% penetration in the US. Its customer engagement on social media platforms like Instagram was up by nearly 700% in 2Q15. Instagram drove the second-highest amount of traffic to QVC.com in 2Q15.

You can get diversified exposure to Liberty Interactive by investing in the PowerShares QQQ Trust Series 1 ETF (QQQ). It holds 0.26% of the stock.

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