Thanks to savings from lower gas prices and improvement in the labor market, consumers have started spending more on travel. Online travel booking companies appear to be in a great position to benefit from this macro environment.
About the Company
Based in Bellevue, Washington, Expedia Inc. (EXPE - Analyst Report) is one of the leading online travel companies in the world, providing travel search and booking option to customers. It has an extensive brand portfolio. Its most popular corporate brands include Expedia.com, Hotels.com, Hotwire.com, Venere, and Travelocity.
The company has a strong global presence with 150+ travel booking sites in over 70 countries, 140+ mobile web sites and 18,000+ employees in more than 30 countries. It has a solid foothold in fast growing emerging markets.
As of March 31, 53% from its TTM revenue came from the US, while 47% was generated from international locations. Diversified revenue mix positions the company for solid growth in the coming years.
Mixed Q1 2015 Results, Maintains Guidance
Expedia Inc. first-quarter loss was much worse than the Zacks Consensus Estimate of $0.06 per share, however the results indicated strong execution by the management. Significant acquisitions and growth investments over the past few years appear to be delivering results now.
Revenue for the quarter increased 14.4% year over year to $1.37 billion, ahead of the Zacks Consensus Estimate of $1.35 billion, with healthy growth across all major geographies.
Excluding the impact of foreign exchange, gross bookings increased 25% and revenue increased 23% year-over-year. Room night growth increased to 32% year-over-year, with domestic and international room nights growing 23% and 41% year-over-year, respectively.
During the quarter, the company substantially completed the migration of Wotif.com to Expedia platform. In February, the company had announced that it had entered into an agreement to acquire Orbitz.
The management maintained their FY 2015 guidance for 10-15% EBITDA growth excluding eLong.
Rising Estimates
Based on solid execution and strong growth drivers, analysts have been raising their estimates for the company. Zacks Consensus Estimate for next fiscal year has increased to $4.70 per share, from $4.54 per share, 60 days ago.
The Bottom Line
Online travel market has been growing rapidly in the past few years and has a solid growth potential, particularly in emerging markets. The company has been gaining share in the fragmented hotel segment of the travel industry, which has a significant room for additional growth. Solid technology investments made by the company, including mobile initiatives will also drive growth in coming years. Further, the company has been benefiting from the recent acquisitions, deriving revenue and cost synergies.
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