Expedia Raises Outlook as Quarterly Profit Climbs
Second-quarter revenue rose 14% to $4.315 billion.
Expedia Group (EXPE), the online travel company, reported a 166% increase in second-quarter net income to $878 million, reversing a $6 million loss in the preceding quarter.
The quarter paired stronger profitability with a slight moderation in demand growth. Gross bookings rose 12% from a year earlier to $33.928 billion, easing from 13% growth in the first quarter and declining 5% sequentially.
Revenue increased 14% from a year earlier, compared with 15% growth in the prior quarter, while diluted earnings rose 188% to $7.16 a share. Operating income climbed 65% to $800 million, extending the turnaround that began when Expedia posted $251 million of operating income in the first quarter.
Lodging demand remained positive from a year earlier but softened sequentially. Booked room nights rose 6% year over year and fell 2% from the first quarter to 111.5 million, while the booked average daily rate increased 5% from a year earlier and declined 3% sequentially to $220.60. Booked air tickets fell 5% year over year and 10% sequentially to 14.2 million.
Business-to-business operations remained Expedia’s faster-growing unit, with revenue up 23% and gross bookings up 21%, though both rates eased from the first quarter. Consumer revenue and gross bookings each increased 8%. The consumer segment drove the consolidated margin improvement, with its adjusted EBITDA margin expanding 380 basis points to 33.2%, while the business-to-business margin contracted 258 basis points to 24.8%.
Adjusted EBITDA rose 23% to $1.119 billion, and its margin expanded 196 basis points to 25.9%. That compared with an 83% increase in adjusted EBITDA and 591 basis points of margin expansion in the first quarter.
Expedia raised its full-year gross-bookings forecast to $129.5 billion to $130.8 billion from $127 billion to $129 billion. Revenue guidance now calls for $16.05 billion to $16.22 billion, while the projected adjusted EBITDA margin expansion increased to 1.5 to 1.75 percentage points.
Free cash flow increased 39% to $1.279 billion, accelerating from 36% growth in the first quarter. Expedia repurchased about 880,000 shares for $200 million during the quarter, down from roughly 3.3 million shares for $700 million in the preceding period, when it announced a new $5 billion authorization.