Expedia (EXPE) Third-quarter earnings and revenue beat estimates, up year-over-year

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Expedia Group, Inc. EXPE reported adjusted earnings of $4.05 per share for the third quarter of 2022, beating Zacks’ consensus estimate by 4.1%. The figure has increased by 15% on an annual basis.

Revenue of $3.62 billion was up 22% year over year. Additionally, the figure topped Zacks’ consensus estimate of $3.55 billion.

Year-over-year revenue growth was driven by strong performance across all lines of business due to strong travel demand in the third quarter.

Expedia’s gross bookings were $23.99 billion, up 28% year-over-year. The strong momentum in accommodation and flight bookings contributed significantly. In addition, the strong growth in “booked nights” and “stayed nights” was positive.

We note that an uncertain macroeconomic environment should prevail.

Year-to-date, Expedia has lost 50.2% compared to the industry’s 44.8% decline.

Nonetheless, EXPE’s growing efforts to strengthen its product and technology offerings for customers remain noteworthy.

Expedia shares rose 2.5% in after-hours trading, which can be attributed to strong travel demand for the remainder of 2022 and 2023.

Expedia Group, Inc. Pricing, Consensus and EPS Surprise

Expedia Group, Inc. price-consensus-eps-surprise-chart | Expedia Group, Inc. Quote

Revenue by segment

Detail: Expedia generated $2.71 billion in revenue (74.8% of total revenue) from this segment, up 15% year-over-year.

B2B: The segment generated revenue of $788 million (21.8% of total revenue), up 61% from the year-ago quarter level.

trivago: Segment revenue totaled $185 million (5.1% of total revenue), up 13% year-over-year.

Revenue by Business Model

The merchant model generated revenue of $2.43 billion (67.1% of total revenue), up 26% year-over-year. Merchant gross bookings were $13.1 billion, up 33% from the year-ago quarter figure.

The Agency Division generated revenue of $935 million (25.8% of total revenue), a 17% improvement over the prior year quarter tally. Gross agency bookings were $10.9 billion, up 23% year-over-year.

Advertising and Media and Other generated $257 million in revenue (7.1% of revenue), up 7% from the year-ago quarter level. This can mainly be attributed to the strong performance of Expedia Media Solutions. In addition, the growing momentum of travel insurance products helped.

Revenue by geography

Expedia generated $2.4 billion in revenue (65.2% of total revenue) from outlets in the United States, up 8% from the year-ago quarter level.

Revenue from non-US outlets totaled $1.3 billion (34.8% of total revenue), up 61% year-over-year.

Turnover by product line

Lodging revenue was $2.9 billion, or 80% of total revenue. EXPE recorded 25% growth in its accommodation turnover thanks to the good momentum in room nights, which increased by 20%. In addition, the 25% growth in overnight stays made a significant contribution. Expedia recorded a 5% increase in revenue per night.

Airline revenue was $100 million, or 3% of total revenue. EXPE recorded a 61% increase in air revenue thanks to a 69% growth in revenue per ticket and 32% in air fares.

Operation details

Adjusted EBITDA was $1.1 billion in the current quarter, up 26% from the year-ago quarter level.

Adjusted selling and marketing expenses were $1.65 billion, up 28% year-over-year. As a percentage of revenue, the figure was up 220 basis points (bps) year over year.

Adjusted general and administrative expenses were $143 million, up 4% year over year. The figure contracted 60 basis points year-over-year as a percentage of revenue.

Adjusted technology and content spend was $257 million, up 15% from the year-ago quarter level. The figure contracted 50 basis points from the year-ago quarter figure as a percentage of revenue.

EXPE reported third-quarter operating profit of $747 million, up 42% year-over-year. Operating margin increased 290 basis points year over year to 20.6% in the current quarter.

Balance sheet and cash flow

As of September 30, 2022, cash and cash equivalents were $4.6 billion, compared to $5.6 billion as of June 30, 2022. Short-term investments were $49 million, compared to $26 million at the end of the previous quarter.

Long-term debt was $6.2 billion at the end of the third quarter, compared to $6.7 billion at the end of the second quarter.

Expedia used $997 million of cash from operations in the quarter under review, while $1.6 billion of cash was generated from operations in the last reported quarter.

Free cash flow was ($1.2) billion in the third quarter.

Zacks Ranking and Other Stocks to Consider

Currently, Expedia carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the retail and wholesale sector are DICK Sporting Goods DKS, Home deposit HD and Ross Stores ROST, each currently carrying a Zacks rank of 2. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DICK’s is expected to release its third quarter 2022 results on November 22. The stock has lost 3.1% since the start of the year. DKS’ long-term earnings growth rate is currently projected at 5%.

Home Depot is expected to release its third quarter 2022 results on November 15. The stock has lost 32.1% since the start of the year. The long-term earnings growth rate for HD is currently projected at 11.2%.

Ross Stores is expected to release its third quarter 2022 results on November 17. The stock has lost 18.4% since the start of the year. ROST’s long-term earnings growth rate is currently projected at 10.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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