Expedia, Inc. (NASDAQ:EXPE) will report its fourth quarter and full year results for the period ended Dec. 31, 2013 on Feb. 6, 2014 via an earnings release and accompanying webcast at 1:30 PM Pacific Standard Time / 4:30 PM Eastern Standard Time.
Expedia is the largest online travel company in the world, with an extensive brand portfolio that includes some of the world's leading online travel brands, including Expedia.com, Hotels.com, and Hotwire.
Wall Street expects Expedia to post earnings of 86 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies 36.5 percent growth from 63 cents it earned last year.
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Expedia's earnings have topped Street view twice and missed them on two occasions in the past four quarters. Wall Street has a bullish view on Expedia with thirteen analysts raising their profit view on the company.
Quarterly revenue is expected to increase 16.8 percent to $1.14 billion from $974.86 million in the same quarter last year.
The key metrics will be gross bookings and average room rates. The company should see more growth in international versus domestic. For the third quarter, gross bookings increased 15 percent to $10.43 billion. Average daily room rates were essentially flat year-over-year while average airfares rose by 3 percent.
Expedia's strength has traditionally been in the US. However, the company is increasing its presence in international markets over the past few years. Domestic bookings increased 13 percent and international bookings rose 18 percent for the third quarter. International bookings totaled $4.6 billion, accounting for 44 percent of worldwide bookings versus 43 percent in the prior year.
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Increased online and offline marketing spend, investment behind trivago and eLong, and an ongoing mix shift to lower margin regions could be key drivers of growth. There should be incremental technology-related spend being directed toward the Expedia Traveler Preference Program (ETP) as new hotels come onto the platform.
UBS analyst Eric Sheridan expects Expedia to produce gross bookings of $8.4 billion (11 percent growth), driven by international bookings growth of 13 percent and domestic bookings growth of 10 percent.
Meanwhile, hotel bookings should show strong momentum, driven by the contributions of eLong to hotel room night growth. For the third quarter, Expedia reported 44.1 million room nights and eLong reported 7.7mm room nights, representing growth of 68 percent.
Investors would be looking at how Trivago investment is contributing to the bottom-line as the management has indicated that Trivago to contribute positively to EBITDA in the back half of the year.
Expedia management originally stated during the first quarter 2013 earnings call that investors should expect a $20 million- $30 million adjusted EBITDA contribution from trivago for the full year. Investors may look for any change in the company's outlook for Trivago.
Founded in Germany in 2005, trivago is an increasingly global hotel meta-search engine operating in over 30 markets worldwide. According to management, the trivago brand is recognized by approximately two thirds of European consumers, largely due to a history of offline brand marketing in the region.
Expedia may update its Expedia Traveler Preference Program (ETP) traction. The company recently noted that over 40k hotels are now participating in the ETP program. For context, as of the end of the third quarter 2013, Expedia has approximately 240k bookable properties on its platform.
Sheridan expects a bullish update on the progress of this initiative, which has significant ramifications in terms of European hotel selection and conversion (albeit potentially at the expense of revenue margins, EBITDA margins, and cash flow).
A few additional items that may be brought up on the call or mentioned in some form include updates related to Travelocity implementation and color on the upcoming Home Away partnership/pilot, whereby 12k Home Away vacation rentals listings will be incorporated into Expedia's inventory.
The market could focus on any thoughts around competitive dynamics relating to online and offline advertising behaviors and incremental observations related to TripAdvisor's meta-display transition and associated competitive behaviors/changes within the bidding platform. The 2014 outlook is another key focus.
Bellevue, Washington-based Expedia's third-quarter profit was $170.86 million, or $1.22 a share, compared to $171.48 million, or $1.21 a share, in the same quarter last year. Revenues rose 17 percent to $1.40 billion.
Expedia has demonstrated disappointing performance following its fourth quarter earnings announcements in each of the previous five years, trading down 3 percent, 2 percent, 17 percent, 4 percent, and 7 percent after reporting Q4 results in 2012, 2011, 2010, 2009, and 2008, respectively. The average price change post Q4 results is a loss of 7 percent.
Shares of EXPE, which trade for 17 times forward earnings, traded between $45.69 and $72.1 during the past 52-weeks. They have gained 28 percent since last quarterly report.
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