Expedia's (NASDAQ:EXPE) Posts Q4 Sales In Line With Estimates But Stock Drops
Online travel agency Expedia (NASDAQ:EXPE) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 10.3% year on year to $2.89 billion. It made a non-GAAP profit of $1.72 per share, improving from its profit of $1.26 per share in the same quarter last year.
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Expedia (EXPE) Q4 FY2023 Highlights:
Revenue: $2.89 billion vs analyst estimates of $2.88 billion (small beat)
EPS (non-GAAP): $1.72 vs analyst estimates of $1.70 (1.4% beat)
Free Cash Flow was -$415 million compared to -$1.59 billion in the previous quarter
Gross Margin (GAAP): 88.2%, up from 84.3% in the same quarter last year
Booked Room Nights: 77.4 million, up 6.6 million year on year
Market Capitalization: $21.44 billion
"We delivered on our full year guidance and drove record results, all while completing a massive transformation and navigating the inherent volatility that comes with that. Our work is finally starting to deliver results, and we are in the best place we've ever been technologically," said Peter Kern, Vice Chairman and CEO, Expedia Group.
Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world’s leading online travel agencies.
Online Travel
Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.
Sales Growth
Expedia's revenue growth over the last three years has been exceptional, averaging 57.1% annually. This quarter, Expedia reported mediocre 10.3% year-on-year revenue growth, in line with what analysts were expecting.
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Usage Growth
As an online travel company, Expedia generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.
Over the last two years, Expedia's nights booked, a key performance metric for the company, grew 19.6% annually to 77.4 million. This is strong growth for a consumer internet company.
In Q4, Expedia added 6.6 million nights booked, translating into 9.3% year-on-year growth.
Revenue Per Booking
Average revenue per booking (ARPB) is a critical metric to track for consumer internet businesses like Expedia because it not only measures how much users book on its platform but also the commission that Expedia can charge.
Expedia's ARPB growth has been decent over the last two years, averaging 5%. The company's ability to increase prices while constantly growing its nights booked demonstrates the value of its platform. This quarter, ARPB grew 0.9% year on year to $37.30 per booking.
Key Takeaways from Expedia's Q4 Results
It was good to see Expedia beat analysts' adjusted EBITDA expectations this quarter. On the other hand, its revenue growth stalled as its gross bookings came in lower than expected. Overall, this was a mediocre quarter for Expedia, and the market was likely looking for more bookings. The company is down 7.8% on the results and currently trades at $147.27 per share.
So should you invest in Expedia right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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