Expedia.com Expedia, Inc. Reports Record Revenue and Earnings for Third Quarter
BELLEVUE, Washington October 23, 2002 Expedia, Inc. (NASDAQ: EXPE) today reported record gross bookings of $1.47 billion for the third quarter ended Sept. 30, 2002, more than twice the bookings of the year-ago quarter. The company also reported record quarterly net revenue of $166 million, up 109% year-over-year.
After-tax adjusted earnings were $30.8 million, or 49 cents per diluted share, compared with $15.1 million, or 24 cents per share for the year-ago quarter. The company reported net income for the quarter on a GAAP basis of $20.1 million, or 32 cents per diluted share, on 63 million shares. This compares with a net loss of $4.8 million, or 9 cents per share, for the quarter ended Sept. 30, 2001.
“Expedia® had an excellent quarter as our investments over the years in advanced technology, business diversification, and international expansion continue to bear fruit,” said Richard N. Barton, president and CEO of Expedia, Inc. “Of particular interest this quarter is the growth in revenues from our non-US businesses, which more than tripled from a year ago. Additionally, our merchant revenue nearly tripled year-over-year, driven by continued success of our merchant hotels and packages businesses.”
Another investment the company expects will drive growth is the company's expansion into corporate travel services. Expedia plans to launch its first online offering for corporate travelers in the fourth quarter, which will include negotiated airfare management and reporting tools for corporations along with Expedia's cutting-edge ESP technology.
“Launching this new corporate product will give travelers from small- and medium-sized businesses the convenience, cost savings and efficiency of online travel planning and booking, plus customer services tailored to the demanding needs of the corporations and their travelers,” said Byron Bishop, senior vice president for corporate travel.
For the third quarter, merchant revenue rose 189% over the year-ago level to $98.5 million on increased revenue from Expedia® Special Rate hotels and the addition of the Classic Custom Vacations® business. Merchant hotel bookings in the quarter increased 18% sequentially, not including Classic. Agency revenue, which is primarily derived from the sale of airline tickets, rose 59% year-over-year to $62.5 million despite a decline in revenue per ticket.
For the quarter, the company reported conversion, or the average monthly percentage of visitors who purchased travel on Expedia.com®, increased to 6.7% from 5.5% year-over-year. The company reported 3.2 million total hotel room-nights stayed in the quarter, including 2.6 million merchant room-nights, up from 1.3 million total room-nights and 1 million merchant room-nights in the year-ago quarter.
Expedia ended the September quarter with $525 million in cash and short-term investments, compared with $238 million at the end of 2001, and cash flow from operations in the quarter was $70 million. Gross profit rose to $111 million, up 109% year-over-year and gross margin was 67%. The company reported a non-cash provision for income taxes of $15.4 million in the quarter.
Nine months results
For the nine months ended Sept. 30, Expedia reported net revenue of $427 million, compared with $215 million in year-earlier period. Adjusted earnings were $88.3 million, or $1.40 per diluted share, and net income on a GAAP basis was $44.9 million, or 71 cents a diluted share. In the nine-month period ended Sept. 30, 2001, adjusted earnings were $34.5 million, or 58 cents per diluted share, and net loss on a GAAP basis was $26.7 million, or 54 cents a share. In the year-ago nine-month period, the company did not report a tax provision.
USA Interactive
On Oct. 10, 2002, USA Interactive announced that it was ending the ongoing processes to acquire all of the publicly held shares of Expedia that it does not now own. The Company continues to believe that its prospects within the USA Interactive family are excellent. USA Interactive will continue to own a controlling stake in Expedia and will also continue to own a controlling stake in Hotels.com.
As Expedia and Hotels.com have a common controlling shareholder, Expedia previously has said that it would explore areas where it might work together with Hotels.com in a way that would benefit all Expedia customers and stockholders. Although there continue to be many areas of our business where Expedia has decided that it can best achieve its goals through separate strategies and practices, there have been instances where, fully consistent with its existing contractual agreements, it has worked cooperatively with Hotels.com, and it anticipates that it will continue to explore such possibilities in the future.
Financial Outlook
On Jan. 28, 2002, Expedia publicly released its 2002 budget for revenue and adjusted earnings. Based upon actual results achieved in the first, second and third quarters, and also based upon current business trends and the company's current plans for the remainder of 2002, Expedia expects to exceed its budgeted 2002 revenue of $450 million by approximately 30%, and to exceed its budgeted fourth quarter revenue of $120 million by 30% to 33%. Expedia also expects to exceed its budgeted 2002 pre-tax adjusted earnings of $80 million by 98% and to exceed its budgeted fourth quarter pre- tax adjusted earnings of $21 million by about 75% and by about 20% on an after-tax basis.
The company's preliminary budget for 2003 calls for revenue of $820 million, pre-tax adjusted earnings of $213 million, adjusted earnings of $147 million and adjusted EPS of $2.25.
This outlook is based upon our analysis of current trends and a variety of other factors, but does not assume a further dramatic shock to the travel industry.
Recent operating highlights:
Earlier this month, Expedia announced the acquisition of Newtrade Technologies Inc. to provide enhanced connectivity to hotels and improve Expedia's efficiency and reliability as a merchant of hotel rooms.
Expedia.com introduced an expanded ski section in time for the winter season that lets travelers combine the components they want, such as flights, hotels, condos, lift tickets and mountain tours. The section includes 30 resorts, 300 hotels, trail maps and aprés ski activities.
Enhanced content, including 360-degree videos of rooms and grounds, was added to Expedia's hotel displays, giving consumers more information by which to choose from the more than 6,000 merchant hotels on our sites.
Notes on Attached Exhibits
Exhibit 1 outlines the Sept. 30, 2002, consolidated Statements of Operations for Expedia, Inc. as compared with the prior-year numbers.
Exhibit 2 outlines the nine-month consolidated Statements of Operations for Expedia, Inc. as compared with the prior-year numbers.
Exhibit 3 outlines key operating metrics for Expedia, Inc. and its subsidiaries.
Exhibit 4 presents a consolidated condensed balance sheet for Expedia, Inc.
About Expedia, Inc.
Expedia, Inc. (NASDAQ: EXPE) is the world's leading online travel service and was the eighth largest travel agency in the United States in 2001. To meet the needs of travelers around the globe, it operates Expedia.com in the United States and localized versions throughout Europe and Canada. Expedia.com helps travelers travel right with a wide variety of travel products and services, such as Expedia® Special Rate hotels and vacation rentals with the guaranteed lowest prices. Expedia operates Classic Custom Vacations, Inc., a leading wholesaler of premiere vacation packages to destinations such as Hawaii, Mexico, Europe and the Caribbean; and Metropolitan Travel, a corporate travel agency. Travelscape, Inc., wholly owned by Expedia, also operates as WWTE, a private-label online travel business that supplies car and hotel inventory to third parties. Expedia is a majority-owned subsidiary of USA Interactive (NASDAQ: USAI).
This press release contains forward-looking statements relating to future events or future financial performance that involve risks and uncertainties. Such statements can be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or comparable terms. These statements are only predictions and actual results could differ materially from those anticipated in these statements based upon a number of factors including final adjustments made in closing the quarter and those identified in the company's filings with the SEC.
Expedia, Expedia.com and the Expedia logo are either registered trademarks or trademarks of Expedia, Inc. in the U.S., Canada and/or other countries. The names of actual companies and products mentioned herein may be trademarks of their respective owners.
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