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HomeRegional NewsAfricaExpedia, Inc. reports first quarter 2010 results
27% increase in gross bookings

Expedia, Inc. reports first quarter 2010 results

Expedia, Inc. announced financial results for its first quarter ended March 31, 2010. "Whatever the peak and trough of quarterly earnings, dependent upon world economic and secular events, Expedia is a consistently delivering cash machine–this quarter returning over $200 million in excess cash to our shareholders," said Barry Diller, Expedia, Inc.’s Chairman and Senior Executive.

"Expedia delivered solid first quarter results amidst a return to relatively normal economic and travel conditions," said Dara Khosrowshahi, Expedia, Inc.’s CEO and President. "We saw broad based strength across our businesses, with 18% growth in transactions and 34% growth in advertising revenues. We remain confident that Expedia’s diversified portfolio of business models, brands and geographies will serve us well in 2010 and beyond."

Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 27% (23% excluding the estimated benefit from year on year changes in foreign exchange rates) for the first quarter of 2010 compared with the first quarter of 2009, driven primarily by 18% growth in transactions and a 9% increase in average airfares. Domestic bookings increased 20% and international bookings increased 43% (33% excluding foreign exchange).

Revenue increased 13% (10% excluding foreign exchange) for the first quarter, primarily driven by an increase in hotel and advertising & media revenues. Domestic revenue increased 5% while international revenue increased 31% (24% excluding foreign exchange). Domestic revenue growth trailed international growth primarily due to lower gross bookings growth and a greater impact from our various fee reductions and eliminations.

Revenue as a percentage of gross bookings (-revenue margin?) was 10.8% for the first quarter, a decrease of 134 basis points compared to the first quarter of 2009. The decrease in revenue margin was primarily due to lower consumer fees and a higher mix of air bookings, which have a lower revenue margin than our other products and services.

Products & Services Detail
Worldwide hotel revenue increased 12% for the first quarter primarily due to an 18% increase in room nights stayed, including rooms delivered as a component of packages, partially offset by a 5% decline in revenue per room night. Revenue per room night declined due in part to lower hotel service fees in first quarter 2010 compared with the prior year period.

Worldwide air revenue increased 6% for the first quarter, primarily due to a 22% increase in air tickets sold, partially offset by a 13% decrease in revenue per ticket due largely to our elimination of booking fees on Expedia.com beginning in March 2009.

Advertising and media revenue (including net revenue from TripAdvisor Media Network) increased 34% for the first quarter, driven by a 39% increase in third-party revenue for TripAdvisor Media Network and a 24% increase in advertising revenue generated by our transaction sites. All other revenue sources (primarily car rentals and destination services) increased 6% for the first quarter.

Hotel revenues accounted for 58% of worldwide revenues in the first quarter of 2010, while air, advertising & media and all other revenues each accounted for 14% of worldwide revenues in the first quarter.

Profitability
OIBA for the first quarter increased 10% to $143 million primarily due to increased revenues. OIBA decreased 56 basis points as a percentage of revenue to 19.9% due to growth in selling & marketing expense in excess of revenue, partially offset by lower rates of growth in general & administrative expense and cost of revenue than growth in revenue. Operating income increased 21% due to the same factors impacting OIBA, as well as $9 million in non-recurring restructuring charges in the first quarter of 2009.

Adjusted net income for the first quarter increased $15 million compared to the prior year period primarily due to higher OIBA, a foreign exchange gain compared with a prior period loss and a lower effective tax rate, partially offset by lower interest income. Net income increased $20 million compared to the prior year period primarily due to higher operating income and the same factors impacting adjusted net income. Adjusted EPS increased 24% to $0.26 and diluted EPS increased 43% to $0.20.

Cash Flows
For the quarter ended March 31, 2010, net cash provided by operating activities was $620 million and free cash flow was $590 million. Both measures include $482 million from net changes in operating assets and liabilities, primarily driven by a seasonal working capital benefit from our merchant hotel business. Free cash flow increased $111 million compared to the first quarter of the prior year primarily due to higher relative growth in our merchant hotel business, lower cash tax payments and higher OIBA. Cash and cash equivalents excluding amounts related to non-wholly owned subsidiaries was $852 million as of March 31, 2010.

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