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Expedia Group (EXPE) Q4 Earnings Beat, Revenues Rise Y/Y

Expedia Group, Inc. EXPE reported adjusted earnings of $1.06 per share for fourth-quarter 2021, which surpassed the Zacks Consensus Estimate by 9.3%.

Notably, the bottom line compares favorably with the prior-year quarter’s loss of $2.64 per share but declined 69.9% sequentially.

Revenues of $2.28 billion surged 148% year over year but declined 23.1% from the previous quarter. Further, the figure missed the Zacks Consensus Estimate of $2.36 billion.

Year-over-year revenues growth was driven by strong recovery across all its lines of business, owing to increasing travel resiliency of people. Moreover, improved travel demand from the year-ago quarter contributed well.

However, the sequential fall was primarily attributed to the travel disruptions caused by the rapidly spreading COVID variant, Omicron.

Nevertheless, the impacts of the current COVID-19 wave seem to be less severe than that of the previous waves, which remains a major positive.

Expedia Group’s gross bookings were $17.5 billion, which increased 131% year over year. However, the figure decreased 6.7% from the prior quarter, owing to a sequential decline in lodging, air, and other travel products due to the seasonality effect and disruptions caused by Omicron.

Although the coronavirus pandemic-led uncertainties continue to persist in the global travel industry, growing confidence among people regarding travel remains a tailwind. Optimism regarding the ongoing vaccination drive remains another positive.

Expedia Group, Inc. Price, Consensus and EPS Surprise

Expedia Group, Inc. Price, Consensus and EPS Surprise
Expedia Group, Inc. Price, Consensus and EPS Surprise

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

Revenues by Segment

Retail: The company generated $1.73 billion in revenues (75.9% of total revenues) from the segment, surging 146% year over year.

B2B: The segment yielded revenues of $481 million (21.1% of total revenues), up 159% from the year-ago quarter.

trivago: Revenues from the segment totaled $99 million (4.3% of revenues), up 162% year over year.

Revenues by Business Model

The Merchant model generated revenues of $1.48 billion (65% of revenues), up 184% year over year. Merchant gross bookings were $9.14 billion, up 120% from the prior-year quarter.

The Agency division generated revenues of $611 million (27% of revenues), improving 125% from the prior-year quarter. Agency gross bookings were $8.3 billion, up 144% year over year.

Advertising & Media and Other generated $188 million of revenues (8% of the top line), increasing 47% from the year-ago quarter. This can primarily be attributed to the strong performance of Expedia Group Media Solutions and trivago.

Revenues by Geography

Expedia Group generated $1.66 billion in revenues (72.6% of total revenues) from domestic regions, up 137% from the prior-year quarter.

Revenues generated from international regions totaled $624 million (27.4% of revenues), up 182% on a year-over-year basis.

Revenues by Product Line

Lodging revenues accounted for 75% of total revenues. The company witnessed 116% growth in Lodging revenues, owing to the solid momentum in stayed room nights, which grew 74%. The company witnessed a 24% rise in revenues per room night.

Air revenues accounted for 3% of revenues. Notably, the company witnessed 68% growth in Air revenues, owing to growth of 92% in air tickets sold.

Operating Details

Adjusted EBITDA was $479 million in the reported quarter compared with ($160) million in the year-ago quarter.

Adjusted selling and marketing expenses were $1.03 billion, up 107% year over year. As a percentage of revenues, the figure contracted 883 basis points (bps) year over year.

Adjusted general and administrative expenses were $133 million, up 30% year over year. The figure contracted 534 bps year over year as a percentage of revenues.

Adjusted technology and content expenses were $248 million, up 10% from the year-ago quarter. The figure contracted to 10.8% from 24.4% in the year-ago quarter as a percentage of revenues.

The company reported a fourth-quarter operating income of $163 million against the loss of $463 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash and cash equivalents were $4.11 billion, down from $5.03 billion as of Sep 30, 2021. Short-term investments were $200 million at the end of the reported quarter, which was nil as the end of the previous quarter.

Long-term debt was $7.715 billion at the end of the fourth quarter compared with $7.712 billion at the end of the third quarter.

Expedia Group generated $285 million of cash from operations in the quarter under review against $1.2 billion of cash used in operations in the last reported quarter.

Free cash flow was $142 million in the fourth quarter.

Zacks Rank & Stocks to Consider

Currently, Expedia carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the retail-wholesale sector are AutoNation AN, Dollar Tree DLTR and The Kroger KR, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AutoNation has gained 35% over a year. The long-term earnings growth rate for AN is currently projected at 23.55%.

Dollar Tree has gained 27.3% over a year. The long-term earnings growth rate for DLTR is currently projected at 12.18%.

Kroger has gained 33% over a year. The long-term earnings growth rate for KR is currently projected at 8.37%.

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