21 Feb

How Did Expedia Perform in Q4?

WRITTEN BY Anirudha Bhagat

Expedia’s performance

Expedia (EXPE) reported strong fourth-quarter results on February 7. The company’s adjusted EPS of $1.24 beat analysts’ expectation of $1.08. The EPS registered strong ~48% YoY (year-over-year) growth compared to the fourth quarter of 2017. The strong bottom-line result was mainly driven by higher revenues, efficient cost management, and the lower tax rate.

How Did Expedia Perform in Q4?

Expedia’s fourth-quarter revenues grew 10% YoY to $2.56 billion and beat analysts’ forecast of $2.54 billion. The company recorded strong performances across its Core OTA, Egencia, and HomeAway segments. An improvement in the nights stayed and its enhanced lodging portfolio also added to the company’s top-line results. However, a weak performance in the company’s Trivago (TRVG) subsidiary partially offset the YoY growth.

The total adjusted costs and expenses rose 9% YoY to $2.31 billion in the quarter due to higher selling and marketing expenses, a rise in general and administrative expenses, an increased headcount, and increased investment in technology. Despite the increase, as a percentage of the revenues, the total costs and expenses fell by 90 basis points YoY to 81.9%. As a result of higher revenues and efficient cost management, Expedia’s adjusted EBITDA increased 17% YoY to $471 million in the fourth quarter.

Expedia’s fourth-quarter EPS also benefited from a lower effective tax rate. Expedia’s adjusted effective tax rate was 24% in the fourth quarter—7% lower than its adjusted effective tax rate in the fourth quarter of 2017.

Optimistic outlook

Expedia expects its growth momentum to continue in 2019. The company expects its adjusted EBITDA to grow 10%–15% this year, which in absolute terms signifies $2.17 billion–$2.27 billion (midpoint is $2.22 billion). The forecast was higher than analysts’ estimate of $2.17 billion at the time of the earnings release.

TripAdvisor (TRIP) also reported strong fourth-quarter results on February 12. TripAdvisor’s EPS rose almost 350% YoY to $0.27 from $0.06 in the same quarter the previous year.

Among online travel agencies (IYW), Booking Holdings (BKNG) is projected to report 15.2% higher EPS and reach $19.42. However, Ctrip.com International (CTRP) is expected to report a loss of $0.22 compared to its earnings of $1.56 in the fourth quarter of 2017.

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