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Online travel agency Expedia (NASDAQ:EXPE) reported Q1 CY2024 results topping analysts' expectations, with revenue up 8.4% year on year to $2.89 billion. It made a non-GAAP profit of $0.21 per share, improving from its loss of $0.20 per share in the same quarter last year.
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Expedia (EXPE) Q1 CY2024 Highlights:
- Revenue: $2.89 billion vs analyst estimates of $2.81 billion (2.8% beat)
- EPS (non-GAAP): $0.21 vs analyst estimates of -$0.17 ($0.38 beat)
- Gross Margin (GAAP): 87.6%, up from 84.5% in the same quarter last year
- Free Cash Flow of $2.70 billion is up from -$415 million in the previous quarter
- Room Nights Booked: 101.2 million, up 6.7 million year on year
- Market Capitalization: $17.64 billion
Originally founded as a part of Microsoft (NASDAQ:MSFT), Expedia (NASDAQ:EXPE) is one of the world’s leading online travel agencies.
Online TravelBecause 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 GrowthExpedia's revenue growth over the last three years has been incredible, averaging 61.4% annually. This quarter, Expedia beat analysts' estimates but reported mediocre 8.4% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 9.1% over the next 12 months.
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 15.2% annually to 101.2 million. This is solid growth for a consumer internet company.
In Q1, Expedia added 6.7 million nights booked, translating into 7.1% year-on-year growth.
Revenue Per BookingAverage 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 subpar over the last two years, averaging 1.8%. The company's ability to increase prices while maintaining its nights booked, however, shows the value of its platform. This quarter, ARPB grew 1.2% year on year to $28.55 per booking.
Key Takeaways from Expedia's Q1 Results It was great to see Expedia top analysts' revenue and EPS expectations this quarter. Despite the beat, its growth regrettably slowed and its gross bookings fell short of management's expectations, indicating weaker demand going forward. A reason for the lower bookings was Vrbo, whose recent re-platforming is progressing slower than anticipated. Zooming out, we think this was still a decent but mixed quarter due to the lower bookings and demand trends. The market was likely expecting more, and the stock is down 8.5% after reporting, trading at $124.5 per share.
