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Expedia Inc. Reports Operating Results (10-Q)

October 26, 2012 | About:
10qk

10qk

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Expedia Inc. (EXPE) filed Quarterly Report for the period ended 2012-09-30.

Expedia, Inc. has a market cap of $7.07 billion; its shares were traded at around $54.98 with a P/E ratio of 17.3 and P/S ratio of 2.1. The dividend yield of Expedia, Inc. stocks is 1%. Expedia, Inc. had an annual average earning growth of 4.1% over the past 5 years.

Highlight of Business Operations:

Global Expansion. Our Expedia, Hotels.com, Egencia, EAN, and Hotwire brands operate both domestically and through international points of sale, including in Europe, Asia Pacific, Canada and Latin America. We own a majority share of eLong, which is the second largest online travel company in China. We also own Venere, a European brand, which focuses on marketing hotel rooms in Europe. Egencia, our corporate travel business, operates in 54 countries around the world and continues to expand aggressively, including its recent acquisition of VIA Travel, a travel management company in the Nordics. We also partner in a 50/50 joint venture with AirAsia a low cost carrier serving the Asia-Pacific region to jointly grow an online travel agency business. Although the results for the joint venture are not consolidated in our financial statements, we consider this business to be a key part of our Asia Pacific strategy. In 2011, approximately 39% of our worldwide gross bookings and 42% of worldwide revenue were international up from 22% for both worldwide gross bookings and revenue in 2005. For the first nine months of 2012, 40% of our gross bookings and 43% of our revenue were international. We have a stated goal of driving more than half of our gross bookings and revenue through international points of sale.

Worldwide hotel revenue increased 20% and 18% for the three and nine months ended September 30, 2012, compared to the same periods in 2011. The increase was primarily due to a 27% and 25% increase in room nights stayed, partially offset by a 6% and 5% decrease in revenue per room night for the respective periods. Revenue per room night decreased primarily due to changes in our hotel product mix, of which mix shift to regions with lower hotel economics is becoming a significant component, as well as impacts from foreign currency and accruals for loyalty programs.

Worldwide air revenue decreased 10% and 12% for the three and nine months ended September 30, 2012, compared to the same periods in 2011, due to a 19% and 17% decrease in revenue per air ticket, partially offset by an 11% and 6% increase in air tickets sold. The increase in air tickets sold primarily relates to the VIA Travel acquisition and was partially offset by volume pressure associated with a 1% and 4% increase in average ticket prices for the periods. In addition, the year-over-year increase for air tickets sold for nine months ended September 30, 2012 was also due to the availability of American Airlines tickets in the current year that were not available to our leisure consumers during the first quarter of 2011. Revenue per air ticket declined for both the quarterly and year-to-date periods due to lower net supplier economics and impacts from foreign exchange. The decline in the three months ended September 30, 2012 was also impacted by fewer consumer and interline booking fees while the decline in the nine months ended September 30, 2012 was partially offset by increases in those fees.

Our effective tax rate was 17.7% and 19.2% for the three and nine months ended September 30, 2012, which was lower than the 35% federal statutory rate primarily due to estimated earnings in jurisdictions outside the United States, release of a valuation allowance related to foreign deferred tax assets, and to a lesser extent adjustments resulting from a reconciliation of the prior years income tax return to our provision for income taxes, partially offset by state income taxes.

Our effective tax rate was 15.1% and 20.0% for the three and nine months ended September 30, 2011, which was lower than the 35% federal statutory rate primarily due to estimated earnings in jurisdictions outside the United States and to a lesser extent adjustments resulting from a reconciliation of the prior years income tax return to our provision for income taxes, partially offset by state income taxes.

Read the The complete Report

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