Form 8-K Expedia, Inc. For: Feb 10

February 10, 2016 4:12 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) February 10, 2016

EXPEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-37429

20-2705720

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

333 108^th Avenue NE

Bellevue, Washington 98004

(Address of principal executive offices) (Zip code)

(425) 679-7200

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

On February 10, 2016, Expedia, Inc. announced its financial results for the quarter and year ended December 31, 2015. The full text of this earnings release is furnished as Exhibit 99.1 hereto.

Expedia makes reference to non-GAAP financial measures in the earnings release, and includes information regarding such measures in the earnings release.

Pursuant to General Instruction B.2. to Form 8-K, the information set forth in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01.

Regulation FD Disclosure.

Expedia management intends to make presentations to various investors, analysts and others during February, March, April and May of 2016, using the slides containing company information attached to this report as Exhibit 99.2.

Pursuant to General Instruction B.2. to Form 8-K, the information set forth in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01.

Other Events.

On February 10, 2016, Expedia announced that its Executive Committee, acting on behalf of its Board of Directors, has declared a quarterly cash dividend of $0.24 per share of outstanding common stock payable on March 30, 2016 to stockholders of record as of the close of business on March 10, 2016.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


Exhibit Number		Description

99.1		Press Release of Expedia, Inc., dated February 10, 2016

99.2		Expedia, Inc. Fourth Quarter 2015 Company Overview

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


EXPEDIA, INC.

By:		/s/ MARK D. OKERSTROM
		Mark D. Okerstrom
		Chief Financial Officer

Dated: February 10, 2016

EXHIBIT INDEX


Exhibit Number		Description

99.1		Press Release of Expedia, Inc., dated February 10, 2016

99.2		Expedia, Inc. Fourth Quarter 2015 Company Overview

Exhibit 99.1

LOGO

Expedia, Inc. Reports Fourth Quarter and Full Year 2015 Results

BELLEVUE, WA – February 10, 2016 – Expedia, Inc. (NASDAQ: EXPE) announced financial results today for the fourth quarter and full year ended December 31, 2015.

All figures below exclude eLong and include the impact from acquisitions, unless otherwise noted.

Key Highlights

•

Room night growth accelerated to 39% year-over-year in the fourth quarter of 2015, with domestic and international room nights growing 33% and 47% year-over-year, respectively.

•

Gross bookings increased 40% and revenue increased 29% year-over-year in the fourth quarter of 2015. Foreign exchange had a negative impact of 6 percentage points on gross bookings growth and 5 percentage points on revenue growth in the fourth quarter of 2015.

•

For full year 2015, Expedia delivered $1.2 billion of Adjusted EBITDA⁽¹⁾ representing growth of 11% year-over year. The Paris terrorist attacks in November 2015 negatively impacted Adjusted EBITDA by an estimated $10 million to $15 million.

•

On December 15, 2015, Expedia, Inc. completed its acquisition of HomeAway, Inc., including all of its brands, capping off a year in which Expedia completed a total of over $6 billion in strategic transactions.

Inorganic Impacts

•

Inorganic impact from acquisitions added approximately 15 percentage points of room night growth, 28 points of gross bookings growth and 19 points of revenue growth in the fourth quarter of 2015.

•

For full year 2015, the consolidation of Orbitz Worldwide and HomeAway financial statements (including deal and integration costs) negatively impacted Adjusted EBITDA by approximately $39 million and Adjusted EBITDA growth by 4 percentage points.

Financial Summary & Operating Metrics ($ millions except per share amounts)


	Fourth Quarter												Full Year
	Expedia (excluding eLong)⁽²⁾						Expedia, Inc.						Expedia (excluding eLong)⁽²⁾						Expedia, Inc.
Metric	2015			D Y/Y			2015			D Y/Y			2015			D Y/Y			2015			D Y/Y
Room night growth		39	%		1,149	bps		12	%		(1,594	) bps		36	%		1,154	bps		19	%		(635	) bps
Gross bookings	$	14,950			40	%	$	14,950			32	%	$	59,680			24	%	$	60,830			21	%
Revenue		1,699			29	%		1,699			25	%		6,631			19	%		6,672			16	%
Adjusted EBITDA⁽¹⁾		280			1	%		280			12	%		1,165			11	%		1,103			8	%
Operating income		29			(76	%)		29			(69	%)		499			(12	%)		414			(20	%)
Adjusted net income⁽¹⁾		107			(18	%)		107			(6	%)		540			(1	%)		497			(6	%)
Adjusted EPS ⁽¹⁾	$	0.77			(22	%)	$	0.77			(11	%)	$	4.02			(1	%)	$	3.70			(6	%)
Net income (loss) attributable to the Company		(13	)		(114	%)		(13	)		(119	%)		415			(2	%)		764			92	%
Diluted EPS							$	(0.09	)		(119	%)							$	5.70			91	%
Free cash flow⁽¹⁾								(335	)		16	%								581			(44	%)

⁽¹⁾

“Adjusted EBITDA” (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization), “Adjusted net income,” “Adjusted EPS” and “Free cash flow” are non-GAAP measures as defined by the Securities and Exchange Commission (the “SEC”). Please see “Definitions of Non-GAAP Measures” and “Tabular Reconciliations for Non-GAAP Measures” on pages 14-18 herein for an explanation and reconciliations of non-GAAP measures used throughout this release.

⁽²⁾

Expedia sold its ownership interest in eLong, Inc. on May 22, 2015 and eLong is excluded from our results from that point forward. Expedia (excluding eLong) measures are non-GAAP measures as they also exclude eLong, Inc. results prior to May 22, 2015. Please see “Definitions of Non-GAAP Measures” and “Tabular Reconciliations for Non-GAAP Measures” on pages 14-18 herein for an explanation and reconciliations of these non-GAAP measures. The classification of certain revenue and expense items as well as foreign exchange rates used for reporting purposes may result in immaterial differences between the above reported amounts and eLong, Inc.’s standalone results.

Please refer to the Glossary in the Quarterly Results section on Expedia’s investor relations website for definitions of the business and financial terms discussed within this release.

Page 1 of 20

Discussion of Results

The results include Expedia.com^® (“Brand Expedia”), Hotels.com^®, Hotwire.com^®, Expedia^® Affiliate Network (“EAN”), Classic Vacations^®, Expedia Local Expert^®, Expedia^® CruiseShipCenters^®, Egencia^®, eLong (through May 22, 2015 unless otherwise noted), Venere^® Net SpA, trivago GmbH (“trivago^®”), Wotif.com^® Holdings Limited (“Wotif Group”), Travelocity^®, Orbitz Worldwide, Inc. (“Orbitz^® Worldwide”), AirAsia Expedia™, CarRentals.com™ and HomeAway^®, in addition to the related international points of sale.

The results include the impact of the strategic marketing agreement with Travelocity launched during the fourth quarter of 2013 and the subsequent acquisition of Travelocity in January 2015, results of Wotif Group following the acquisition by Expedia in November 2014, results of AirAsia Expedia following Expedia’s purchase of an additional 25% equity interest in the joint venture in March 2015, results of Orbitz Worldwide following the acquisition by Expedia in September 2015, as well as results of HomeAway following the acquisition by Expedia in December 2015. The impact from acquisitions noted below excludes Travelocity due to the previously implemented commercial agreement. Unless otherwise noted, all comparisons below are versus the fourth quarter and full year 2014.

Due to Expedia’s sale of its eLong ownership stake in May 2015, all discussion below refers to results for Expedia, Inc. excluding eLong unless otherwise noted.

Impact of Recent Major Acquisitions (including deal and integration costs)

The recently completed acquisitions by Expedia of Orbitz Worldwide and HomeAway have had significant impact on Expedia’s financial and operating metrics. The table below provides a summary of impacts from these two acquisitions (including deal and integration costs) on the fourth quarter and full year 2015 results in order to allow for a more consistent comparison with prior periods.


Fourth Quarter
Metric ($ millions)	Expedia (excluding eLong)			Orbitz Worldwide			HomeAway			Expedia (excluding eLong, Orbitz & HomeAway)
	2015			2015			2015			2015			2014			D
Room night growth		39	%		NM			NM			31	%		28	%		306	bps
Gross bookings	$	14,950		$	2,428		$	—		$	12,522		$	10,657			17	%
Revenue		1,699			177			20			1,501			1,319			14	%
Adjusted EBITDA*		280			1			(14	)		292			277			6	%

Full Year
Metric ($ millions)	Expedia (excluding eLong)			Orbitz Worldwide			HomeAway			Expedia (excluding eLong, Orbitz & HomeAway)
	2015			2015			2015			2015			2014			D
Room night growth		36	%		NM			NM			34	%		24	%		925	bps
Gross bookings	$	59,680		$	2,849		$	—		$	56,831		$	48,018			18	%
Revenue		6,631			196			20			6,415			5,585			15	%
Adjusted EBITDA*		1,165			(25	)		(14	)		1,204			1,052			15	%

*	Adjusted EBITDA is a non-GAAP measure. See pages 14-18 below for a description and reconciliation to the corresponding GAAP measure.

Note: Some numbers may not add due to rounding. In addition to the above, reported results also include impacts from the acquisitions of Wotif Group and AirAsia Expedia Joint Venture.

Page 2 of 20

Gross Bookings & Revenue (excluding eLong)

Gross Bookings by Segment (In millions)


	Fourth Quarter										Full Year
	2015		2014		D$			D%			2015		2014		D$			D%
Core OTA	$	13,563	$	9,431	$	4,132			44	%	$	54,252	$	42,869	$	11,383			27	%
Egencia		1,387		1,226		161			13	%		5,427		5,149		278			5	%

Expedia (excluding eLong)	$	14,950	$	10,657	$	4,293			40	%	$	59,680	$	48,018	$	11,661			24	%
eLong		—		650		(650	)		(100	%)		1,151		2,429		(1,278	)		-53	%

Total	$	14,950	$	11,307	$	3,643			32	%	$	60,830	$	50,447	$	10,384			21	%

Note: Some numbers may not add due to rounding.

For the fourth quarter of 2015, total gross bookings increased 40% (including a negative 6 percentage points of foreign exchange impact), driven primarily by 28 percentage points of inorganic impact from acquisitions, as well as growth in the Core OTA business, including strong performance at Brand Expedia and Hotels.com. Domestic gross bookings increased 50% and international gross bookings increased 26% (including a negative 13 percentage points of foreign exchange impact). International bookings totaled $5.3 billion and accounted for 36% of worldwide bookings, compared with 40% in the fourth quarter of 2014.

For the full year 2015, total gross bookings increased 24% (including a negative 6 percentage points of foreign exchange impact), driven primarily by 11 percentage points of inorganic impact from acquisitions, as well as growth in the Core OTA business, including strong performance at Brand Expedia and Hotels.com. Domestic gross bookings increased 26% and international gross bookings increased 21% (including a negative 17 percentage points of foreign exchange impact). International bookings totaled $22.3 billion and accounted for 37% of worldwide bookings, compared with 38% in the prior year. The decrease in international gross bookings mix was primarily due to the acquisition of Orbitz Worldwide, which bolstered domestic gross bookings for both the fourth quarter and the full year 2015.

Revenue by Segment (In millions)


	Fourth Quarter												Full Year
	2015			2014			D$			D%			2015			2014			D$			D%
Core OTA	$	1,505		$	1,159		$	346			30	%	$	5,877		$	4,905		$	972			20	%
trivago		110			87			23			27	%		548			414			134			32	%
Egencia		107			100			7			7	%		400			400			0			0	%
HomeAway		20			—			20			NM			20			—			20			NM
Intercompany Eliminations		(44	)		(27	)		(16	)		(59	%)		(215	)		(133	)		(82	)		(61	%)

Expedia (excluding eLong)	$	1,699		$	1,318		$	380			29	%	$	6,631		$	5,585		$	1,045			19	%
eLong		—			38			(38	)		(100	%)		42			178			(136	)		(77	%)

Total	$	1,699		$	1,356		$	343			25	%	$	6,672		$	5,763		$	909			16	%

Note: Some numbers may not add due to rounding.

For the fourth quarter of 2015, total revenue increased 29% (including a negative 5 percentage points of foreign exchange impact), driven primarily by 19 percentage points of inorganic impact from acquisitions, growth in the Core OTA business, including strong performance at Brand Expedia, Hotels.com and EAN, as well as at trivago. Domestic revenue increased 34% and international revenue increased 22% (including a negative 9 percentage points of foreign exchange impact). International revenue equaled $721 million, representing 42% of worldwide revenue, compared to 45% in the fourth quarter of 2014.

For the full year 2015, total revenue increased 19% (including a negative 9 percentage points of foreign exchange impact), driven primarily by 8 percentage points of inorganic impact from acquisitions, growth in the Core OTA business, including strong performance at Brand Expedia, Hotels.com and EAN, as well as at trivago. Domestic revenue increased 22% and international revenue increased 15% (including a negative 16 percentage points of foreign exchange impact). International revenue equaled $2.9 billion, representing 44% of worldwide revenue, compared to 45% in the prior year. The decrease in international revenue mix was primarily due to the acquisition of Orbitz Worldwide, which bolstered domestic revenue for both the fourth quarter and the full year 2015.

Page 3 of 20

Product & Services Detail (excluding eLong) – Fourth Quarter 2015

As a percentage of total worldwide revenue in the fourth quarter of 2015, hotel accounted for 67%, air accounted for 10%, advertising and media accounted for 8% and all other revenues accounted for the remaining 15%.

Hotel revenue increased 24% in the fourth quarter of 2015 on a 39% increase in room nights stayed driven by the inorganic impact of acquisitions as well as the healthy growth in Brand Expedia and Hotels.com, partially offset by an 11% decrease in revenue per room night. Revenue per room night decreased primarily due to deliberate margin reductions aimed at expanding the size and availability of the global hotel supply portfolio, an unfavorable foreign exchange translation impact, as well as increased promotional activities such as growing loyalty programs, partially offset by a favorable book-to-stay impact. Revenue per room night is expected to continue to decrease year-over-year in 2016. Average daily room rates (“ADRs”) decreased 5% year-over-year in the fourth quarter of 2015, primarily due to an unfavorable foreign exchange translation impact. Acquisitions added approximately 14 percentage points of inorganic hotel revenue growth and 15 percentage points of room night growth for the quarter.

Air revenue increased 61% in the fourth quarter of 2015 on a 70% increase in air tickets sold, partially offset by a 5% decrease in revenue per ticket. Acquisitions added approximately 55 percentage points of inorganic air revenue growth and 48 percentage points of air ticket growth for the quarter.

Advertising and media revenue increased 22% in the fourth quarter of 2015 due to continued growth in Expedia^® Media Solutions and trivago. All other revenue increased 37% in the fourth quarter of 2015 primarily on growth in car rental and travel insurance products.

Product & Services Detail (excluding eLong) – Full Year 2015

As a percentage of total worldwide annual revenue, hotel accounted for 69%, advertising and media accounted for 9%, air accounted for 8% and all other revenues accounted for the remaining 14%.

Hotel revenue increased 17% in 2015 on a 36% increase in room nights stayed driven by the inorganic impact of acquisitions as well as the healthy growth in Hotels.com and Brand Expedia, partially offset by a 14% decrease in revenue per room night. Revenue per room night decreased primarily due to deliberate margin reductions aimed at expanding the size and availability of the global hotel supply portfolio, an unfavorable foreign exchange impact, both in translation and in book-to-stay, as well as increased promotional activities such as growing loyalty programs. ADRs decreased 5% year-over-year in 2015, primarily due to an unfavorable foreign exchange translation impact. Acquisitions added approximately 7 percentage points of inorganic hotel revenue growth and 9 percentage points of room night growth for the year.

Air revenue increased 25% in 2015 on a 35% increase in air tickets sold, partially offset by a 7% decrease in revenue per ticket. Acquisitions added approximately 19 percentage points of inorganic air revenue growth and 16 percentage points of air ticket growth for the year.

Advertising and media revenue increased 20% in 2015 due to continued growth in Expedia Media Solutions and trivago. All other revenue increased 21% in 2015 primarily on growth in car rental and travel insurance products.

Page 4 of 20

Adjusted Expenses – Expedia (excluding eLong)


	Costs and Expenses							As a % of Revenue
	Three months ended December 31,							Three months ended December 31,
	2015		2014		D%			2015			2014			Dbps
	($ in millions)
Adjusted cost of revenue *	$	324	$	255		27	%		19.1	%		19.4	%		(28	)
Adjusted selling and marketing *		775		584		33	%		45.6	%		44.3	%		132
Adjusted technology and content *		170		115		48	%		10.0	%		8.7	%		130
Adjusted general and administrative *		158		102		55	%		9.3	%		7.8	%		157

Total adjusted costs and expenses	$	1,428	$	1,057		35	%		84.0	%		80.1	%		391

Total depreciation		96		69		39	%		5.6	%		5.2	%		42
Total stock based compensation		44		16		176	%		2.6	%		1.2	%		138

Total costs and expenses	$	1,567	$	1,141		37	%		92.3	%		86.6	%		571


	Costs and Expenses							As a % of Revenue
	Twelve months ended December 31,							Twelve months ended December 31,
	2015		2014		D%			2015			2014			Dbps
	($ in millions)
Adjusted cost of revenue *	$	1,224	$	1,088		13	%		18.5	%		19.5	%		(101	)
Adjusted selling and marketing *		3,282		2,662		23	%		49.5	%		47.7	%		185
Adjusted technology and content *		528		431		22	%		8.0	%		7.7	%		24
Adjusted general and administrative *		474		362		31	%		7.1	%		6.5	%		66

Total adjusted costs and expenses	$	5,509	$	4,543		21	%		83.1	%		81.3	%		174

Total depreciation		333		259		29	%		5.0	%		4.6	%		39
Total stock based compensation		159		69		131	%		2.4	%		1.2	%		117

Total costs and expenses	$	6,002	$	4,872		23	%		90.5	%		87.2	%		330

*	Adjusted EBITDA is a non-GAAP measure. See pages 14-18 below for a description and reconciliation to the corresponding GAAP measure.

Note: Some numbers may not add due to rounding.

Adjusted Cost of Revenue

•

For the fourth quarter of 2015, total adjusted cost of revenue increased 27%, compared to the fourth quarter of 2014, due to $35 million more in customer operations expenses, $18 million more in data center and other costs, as well as $16 million more in credit card processing costs, primarily due to an increase in transaction volumes.

•

For the full year 2015, total adjusted cost of revenue increased 13%, compared to the prior year, due to $54 million more in customer operations expenses, $46 million more in data center and other costs, as well as $36 million more in credit card processing costs, primarily due to an increase in transaction volumes (offset by a decrease in fraud and chargeback expenses).

•

Acquisitions contributed approximately 19 and 9 percentage points of inorganic growth to adjusted cost of revenue growth during the fourth quarter and full year 2015, respectively.

Adjusted Selling and Marketing

•

For the fourth quarter of 2015, total adjusted selling and marketing expense increased 33%, compared to the fourth quarter of 2014, due to a $152 million or 34% increase in direct costs, including online and offline marketing expenses. Brand Expedia, trivago, Hotwire and Hotels.com accounted for a majority of the total increase in direct selling and marketing expenses in the fourth quarter of 2015.

•

For the fourth quarter of 2015, indirect costs increased $39 million or 29%, primarily driven by additional personnel due to an accelerated pace of hiring in the lodging supply organization. As a percentage of total adjusted selling and marketing, indirect costs represented 22% in the fourth quarter of 2015, down from 23% in the fourth quarter of 2014.

•

For the full year 2015, total adjusted selling and marketing expense increased 23%, compared to prior year, due to $518 million or 24% increase in direct costs, including online and offline marketing expenses. Brand Expedia, trivago, Hotels.com and Hotwire accounted for a majority of the total increase in direct selling and marketing expenses in 2015.

Page 5 of 20

•

For the full year 2015, indirect costs increased $103 million, primarily driven by additional personnel due to an accelerated pace of hiring in the lodging supply organization. As a percentage of total selling and marketing, indirect costs represented 18% in 2015, down from 19% in the prior year.

•

Acquisitions contributed approximately 21 and 8 percentage points of inorganic growth to adjusted selling and marketing growth during the fourth quarter and full year 2015, respectively.

Adjusted Technology and Content

•

For the fourth quarter of 2015, total adjusted technology and content expense increased 48%, compared to the fourth quarter of 2014, primarily due to $45 million more in personnel and overhead costs, net of capitalized salary costs, to support key technology projects primarily for the corporate technology function and Brand Expedia, as well as a $10 million increase in direct costs to support the growth of the technology platforms.

•

For the full year 2015, total adjusted technology and content expense increased 22%, compared to prior year, primarily due to $72 million more in personnel and overhead costs, net of capitalized salary costs, to support key technology projects primarily for the corporate technology function and Brand Expedia, as well as a $25 million increase in direct costs to support the growth of the technology platforms.

•

Acquisitions contributed approximately 27 and 10 percentage points of inorganic growth to adjusted technology and content growth during the fourth quarter and full year 2015, respectively.

Adjusted General and Administrative

•

For the fourth quarter of 2015, total adjusted general and administrative expense increased 55%, compared to the fourth quarter of 2014, primarily due to a $28 million increase in consulting and legal fees related to the heightened M&A activity for the quarter, as well as a $28 million increase in personnel costs.

•

For the full year 2015, total adjusted general and administrative expense increased 31%, compared to prior year, primarily due to a $61 million increase in consulting and legal fees related to the heightened M&A activity for the year, as well as a $51 million increase in personnel costs.

•

Acquisitions contributed approximately 40 and 19 percentage points of inorganic growth to adjusted general and administrative growth during the fourth quarter and full year 2015, respectively.

Depreciation Expense

Depreciation expense increased $27 million or 39% to $96 million in the fourth quarter of 2015 and $74 million or 29% to $333 million in 2015, primarily due to increased expenses related to previously capitalized software development costs for completed technology projects which have been placed into service as well as investments in the corporate technology infrastructure. Depreciation expense is expected to continue to increase as additional projects are completed.

Stock-Based Compensation Expense

Stock-based compensation expense increased $28 million or 176% to $44 million in the fourth quarter of 2015 and $90 million or 131% to $159 million in 2015, primarily due to the acceleration of stock-based awards related to the acquisitions of Orbitz Worldwide and HomeAway, as well as increases in the overall and executive stock-based compensation.

Adjusted EBITDA*

Adjusted EBITDA by Segment (In millions)


	Fourth Quarter												Full Year
	2015			2014			D$			D%			2015			2014			D$			D%
Core OTA	$	407		$	359		$	48			13	%	$	1,600		$	1,387		$	213			15	%
trivago		16			14			2			14	%		3			4			(1	)		(27	%)
Egencia		10			11			(0	)		(2	%)		68			61			7			12	%
HomeAway		4			—			4			NM			4			—			4			NM
Unallocated Overhead Costs		(158	)		(107	)		(50	)		(47	%)		(510	)		(401	)		(109	)		(27	%)

Expedia (excluding eLong)	$	280		$	277		$	3			1	%	$	1,165		$	1,051		$	114			11	%
eLong		—			(27	)		27			NM			(62	)		(27	)		(36	)		NM

Total	$	280		$	250		$	30			12	%	$	1,103		$	1,025		$	78			8	%

*	Adjusted EBITDA is a non-GAAP measure. See pages 14-18 below for a description and reconciliation to the corresponding GAAP measure.

Note: Some numbers may not add due to rounding.

Page 6 of 20

For the fourth quarter of 2015, Adjusted EBITDA (excluding eLong) increased 1% compared to the fourth quarter of 2014. Core OTA Adjusted EBITDA increased 13% in the fourth quarter of 2015, driven primarily by Hotels.com, Travelocity, EAN, Wotif Group and Brand Expedia, partially offset by Hotwire. Consolidation of the HomeAway and Orbitz Worldwide financial statements (including related deal and integration costs) reduced fourth quarter 2015 Expedia (excluding eLong) Adjusted EBITDA growth by 4 percentage points.

For the full year 2015, Adjusted EBITDA (excluding eLong) increased 11% compared to 2014. Core OTA Adjusted EBITDA increased 15% in 2015, driven primarily by Hotels.com, Brand Expedia, EAN, Travelocity and Wotif Group, partially offset by Hotwire. Consolidation of the HomeAway and Orbitz Worldwide financial statements (including related deal and integration costs) reduced 2015 Expedia (excluding eLong) Adjusted EBITDA growth by 4 percentage points.

In addition, the Paris terrorist attacks in November 2015 negatively impacted Adjusted EBITDA by an estimated $10 million to $15 million and Adjusted EBITDA growth by approximately 4 to 5 percentage points for the fourth quarter of 2015 and 1 percentage point for the full year 2015.

Legal reserves, occupancy tax and other

During 2015, we received a refund of prepaid pay-to-play payments of $132 million from the State of Hawaii in connection with the general excise tax litigation. In addition, during 2015, we recorded a $24 million benefit in legal reserves, occupancy tax and other for the recovery of costs related to occupancy tax litigation matters. These gains were partially offset by charges for changes in our reserve related to hotel occupancy and other taxes. During 2014, we recognized approximately $25.5 million related to monies paid in advance of litigation in the San Francisco occupancy tax proceedings.

Restructuring and Related Reorganization Charges

In connection with the migration of technology platforms and centralization of technology, supply and other operations, primarily related to acquisition integrations including Orbitz Worldwide and the Wotif Group, we recognized $23 million in restructuring and related reorganization charges during the three months ended December 31, 2015 and $105 million during 2015. The charges were primarily related to employee severance and benefits related to the Orbitz integration and represent estimated severance amounts under pre-existing written plans and contracts Orbitz had with its employees, as well as stock-compensation charges of $33 million for acceleration of replacement awards pursuant to certain of these agreements. We expect to incur approximately $30 million to $40 million of additional restructuring costs in 2016 related to these integrations.

In conjunction with the migration of technology platforms and centralization of technology, supply and other operations primarily related to acquisition integration including Wotif Group, we recognized $26 million in restructuring charges during the fourth quarter ended December 31, 2014. These charges were primarily related to severance and related benefits as well as an Australian stamp duty tax that is payable to certain Australian jurisdictions related to business restructuring events.

Interest and Other

Consolidated interest income decreased $4 million or 65% in the fourth quarter of 2015 and $11 million or 39% in 2015, compared to the prior year periods, primarily due to lower invested balances and lower rates of return for the fourth quarter and lower rates of return for full year 2015. Lower investment balances in the fourth quarter of 2015 were the result of acquisition activity including Orbitz Worldwide and HomeAway. Lower rates of return were due to a shift out of higher-yielding currencies due to the sale of eLong and funding U.S. dollar denominated acquisitions, as well as lower market rates in certain currencies. Consolidated interest expense increased $8 million or 28% in the fourth quarter of 2015 and $28 million or 29% in 2015, primarily due to higher long-term debt balances.

Consolidated other, net was a loss of $1 million in the fourth quarter of 2015, compared to a gain of $15 million in the fourth quarter of 2014. The gain in the fourth quarter of 2014 was primarily related to foreign exchange hedging. Consolidated other, net was a gain of $113 million in 2015, compared to a gain of $18 million in 2014. The gain in 2015 was primarily related to a noncontrolling interest basis adjustment related to the acquisition of a majority stake in the AirAsia joint venture, as well as impacts from foreign exchange. The gain in 2014 was primarily related to income from

Page 7 of 20

joint ventures as well as foreign exchange. Foreign currency rate fluctuations negatively impacted fourth quarter and full year 2015 revenue growth rates reflecting depreciation in certain foreign currencies compared to the prior year periods. Expedia’s revenue hedging program is designed to offset the book-to-stay impact on merchant hotel revenue. Expedia includes any realized gains or losses from the revenue hedging program in the calculation of Adjusted EBITDA.

Income Taxes

The consolidated effective tax rate on GAAP pre-tax income was (117%) and 22% for the fourth quarter and full year 2015, respectively, compared with 36% and 20% in the prior year periods. The change in the effective tax rate for the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily due to certain non-deductible items in both periods, as well as reserves for uncertain tax positions recorded in the fourth quarter of 2015. For the fourth quarter of 2015, taxes are measured against a pretax loss resulting in a negative tax rate. The change in the effective tax rate for 2015 compared to 2014 is primarily due to the effective tax rate on the gain on the sale of eLong during 2015, and the release of liabilities related to uncertain tax positions in 2014. In addition to these factors, our effective tax rate for 2015 was lower than the 35% federal statutory rate due to earnings in foreign jurisdictions outside of the United States, predominately Switzerland, where our statutory income tax rate is lower, as well as the effective tax rate on the gain on the sale of eLong. The effective tax rate on pre-tax adjusted net income (“ANI”) was 24% and 25% for the fourth quarter and full year 2015, respectively, compared with 33% and 25% in the prior year period. The change in the ANI rate for the fourth quarter of 2015 compared to 2014 is primarily due to the tax treatment of certain losses in foreign jurisdictions for which we did not record a tax benefit in 2014. The ANI effective tax rate for 2015 was essentially consistent with the prior year period.

Balance Sheet, Cash Flows and Capitalization

Cash, cash equivalents, restricted cash and short-term investments totaled $1.7 billion at December 31, 2015. For the year ended December 31, 2015, consolidated net cash provided by operating activities was $1.4 billion and consolidated free cash flow totaled $581 million. Both measures include $525 million from net changes in operating assets and liabilities, primarily driven by an increase in deferred merchant bookings. For the three months ended December 31, 2015, consolidated free cash flow decreased $47 million, compared to the prior year period, primarily due to increased capital expenditures driven by investments in the corporate technology infrastructure, real estate projects and capitalized labor increases. For the year ended December 31, 2015, consolidated free cash flow decreased $458 million, compared to the prior year period, primarily due to increased capital expenditures driven by the acquisition of Expedia’s future corporate headquarters for $229 million, investments in the corporate technology infrastructure, capitalized labor increases and other real estate projects.

Long-term debt totaled $3.2 billion at December 31, 2015 consisting of $746 million, net of discount, in 5.0% senior notes due 2026; $497 million, net of discount, in 4.5% senior notes due 2024; $707 million, net of discount, in 2.5% (€650 million) senior notes due 2022; $750 million, net of discount, in 5.95% senior notes due 2020 and $500 million in 7.456% senior notes due 2018. In addition, as of December 31, 2015, Expedia had a $1 billion unsecured revolving credit facility which was essentially untapped. Subsequent to year-end, Expedia increased the facility to $1.5 billion and extended the term through January 2021.

At December 31, 2015, Expedia, Inc. had stock-based awards outstanding representing approximately 18.5 million shares of Expedia common stock, consisting of options to purchase approximately 17.1 million common shares with a $71.77 weighted average exercise price and weighted average remaining life of 4.9 years, and approximately 1.4 million restricted stock units (“RSUs”).

During 2015, Expedia, Inc. repurchased 0.5 million shares of Expedia, Inc. common stock for an aggregate purchase price of $45 million excluding transaction costs (an average of $85.27 per share). As of December 31, 2015, there were approximately 11.2 million shares remaining under the April 2012 and the February 2015 repurchase authorizations.

On December 10, 2015, Expedia, Inc. paid a quarterly dividend of $31 million ($0.24 per common share). In addition, on February 8, 2016, the Executive Committee of Expedia’s Board of Directors declared a cash dividend of $0.24 per share of outstanding common stock to be paid to stockholders of record as of the close of business on March 10, 2016, with a payment date of March 30, 2016. Based on current shares outstanding, the total payment for this quarterly dividend is estimated to be approximately $36 million. Future declaration of dividends and the establishment of future record and payment dates are subject to the final determination of Expedia’s Board of Directors.

Page 8 of 20

Recent Highlights

Core OTA

•

Brand Expedia launched a local-language site in China, the brand’s 33^rd country; Expedia Australia celebrated its 10^th anniversary.

•

Brand Expedia expanded its Expedia+ rewards “Travel with Points” option, which now enables members in Canada, Australia and New Zealand to redeem earned points toward merchant hotel purchases.

•

Expedia won the award for World’s Leading Online Travel Agency at the 2015 World Travel Awards, and Glassdoor UK recognized Expedia as its #1 Best Place to Work in 2016.

•

Hotels.com amassed nearly 20 million cumulative genuine guest reviews, verified as being written by guests that booked through the site and stayed at the properties.

•

In the fourth quarter, activations of Hotels.com gift cards increased more than 230% year over year. Additionally, Hotels.com signed gift card partnership distribution agreements with Goyoda AB; Loyalty Source; Manna Group Scrip Company; SVM Global; SVM, LP; Tribit iVouchers and UnitedScrip.

•

The Hotwire mobile app was named one of the “Best Apps for Booking Travel” by CNET and both the Expedia and Hotwire apps were named in the “Top 10 Best Car Rental Apps” for Android by AndroidHeadlines. Expedia added the car rental platform to its Windows phone app.

•

EAN entered into agreements to power online hotel bookings for Hotelplan Suisse, one of the largest Swiss tour operators, and eSKY, one of Poland’s largest OTAs, and to provide technology solutions and access to global hotel content for Nirvana Travel and Tourism, a leading Abu Dhabi-based tour operator.

•

Orbitz Rewards, with nearly 6 million members, celebrated its second anniversary and has saved loyalty members over $45 million since its launch.

trivago

•

trivago has remained on its strong growth track, growing its standalone revenue by 32% year-over-year in 2015, with foreign exchange negatively impacting the growth rate by 25 percentage points. At the same time, trivago has continued to invest profits from established markets into newer, growth markets. Markets outside of trivago’s 16 most mature European markets contributed approximately 48% of total revenue in 2015, compared with 14% two years ago.

•

trivago has continued aggressive efforts to build direct relationships with hoteliers. Since launching the paid premium subscription of trivago Hotel Manager ‘PRO’ locally in 2015, trivago has on-boarded approximately 15,000 independent hoteliers in Europe alone.

Egencia

•

As part of the larger Orbitz Worldwide integration project, Egencia successfully migrated its first Orbitz for Business customers to the Egencia technology platform.

•

In addition, Egencia completed its migration of clients from VIA Egencia to the Egencia technology platform. The migration included four countries, four languages, more than 2,700 clients and €600 million in gross bookings. In January 2016, VIA Egencia rebranded to Egencia.

•

Egencia expanded its global reach by launching a localized Egencia site in Singapore in December 2015 and announced plans to open and expand call centers in Europe, including locations in Lyon, Glasgow and Dublin.

HomeAway

•

In December 2015, Expedia, Inc. completed its acquisition of HomeAway, Inc., including all of its brands.

Expedia, Inc.

•

During the fourth quarter of 2015, Expedia added more than 18,000 directly contracted properties to its global supply portfolio, offset by the removal of nearly 20,000 indirect or third-party properties. Expedia hotel count now stands at approximately 269,000 properties available on Expedia, Inc. sites.

•

Expedia, Inc. renewed supply agreements with a number of airlines, including Delta Air Lines and Hainan Airlines.

•

Expedia, Inc. announced a connectivity partnership with SilverRail, to help power the company’s global entrance into the rail market in 2016.

Page 9 of 20

EXPEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data)

(Unaudited)


	Three months ended December 31,						Year ended December 31,
	2015			2014			2015			2014
Revenue	$	1,698,567		$	1,355,978		$	6,672,317		$	5,763,485

Costs and expenses:
Cost of revenue (1) (2)		338,493			284,253			1,309,559			1,179,081
Selling and marketing (1) (2)		788,936			624,214			3,381,086			2,808,329
Technology and content (1) (2)		250,570			181,350			830,244			686,154
General and administrative (1) (2)		185,954			118,789			573,913			425,373
Amortization of intangible assets		80,343			24,340			163,665			79,615
Legal reserves, occupancy tax and other		1,924			2,696			(104,587	)		41,539
Restructuring and related reorganization charges (1)		22,870			25,630			104,871			25,630

Operating income		29,477			94,706			413,566			517,764

Other income (expense):
Interest income		2,292			6,532			16,695			27,288
Interest expense		(36,427	)		(28,406	)		(126,195	)		(98,089	)
Gain on sale of business		—			—			508,810			—
Other, net		(1,275	)		15,164			113,086			17,678

Total other income (expense), net		(35,410	)		(6,710	)		512,396			(53,123	)

Income (loss) before income taxes		(5,933	)		87,996			925,962			464,641
Provision for income taxes		(6,953	)		(31,717	)		(203,214	)		(91,691	)

Net income (loss)		(12,886	)		56,279			722,748			372,950
Net loss attributable to noncontrolling interests		348			9,690			41,717			25,147

Net income (loss) attributable to Expedia, Inc.	$	(12,538	)	$	65,969		$	764,465		$	398,097

Earnings (loss) per share attributable to Expedia, Inc. available to common stockholders:
Basic	$	(0.09	)	$	0.52		$	5.87		$	3.09
Diluted		(0.09	)		0.50			5.70			2.99

Shares used in computing earnings (loss) per share:
Basic		134,128			127,683			130,159			128,912
Diluted		134,128			131,639			134,018			133,168
Dividends declared per common share	$	0.24		$	0.18		$	0.84		$	0.66

(1) Includes stock-based compensation as follows:
Cost of revenue	$	1,721		$	731		$	5,307		$	3,921
Selling and marketing		9,274			4,269			33,164			18,067
Technology and content		7,361			4,208			26,766			22,100
General and administrative		22,157			7,664			80,082			40,923
Restructuring and related reorganization charges		3,519			—			32,749			—
(2) Includes depreciation as follows:
Cost of revenue	$	12,753		$	9,838		$	45,451		$	35,392
Selling and marketing		4,335			2,025			11,754			7,782
Technology and content		73,320			56,372			265,100			214,262
General and administrative		5,394			2,421			14,375			8,381

Page 10 of 20

EXPEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)


	December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	1,676,299		$	1,402,700
Restricted cash and cash equivalents		11,324			34,888
Short-term investments		33,739			355,780
Accounts receivable, net of allowance of $27,035 and $13,760		1,082,406			778,334
Deferred income taxes		—			169,269
Income taxes receivable		13,805			17,161
Prepaid expenses and other current assets		161,188			166,357

Total current assets		2,978,761			2,924,489
Property and equipment, net		1,064,259			553,126
Long-term investments and other assets		658,439			286,882
Deferred income taxes		15,458			10,053
Intangible assets, net		2,793,954			1,290,087
Goodwill		7,992,941			3,955,901

TOTAL ASSETS	$	15,503,812		$	9,020,538

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, merchant	$	1,329,870		$	1,188,483
Accounts payable, other		485,557			361,382
Deferred merchant bookings		2,337,037			1,761,258
Deferred revenue		235,809			62,206
Income taxes payable		68,019			59,661
Accrued expenses and other current liabilities		1,469,725			753,625

Total current liabilities		5,926,017			4,186,615
Long-term debt		3,201,277			1,746,787
Deferred income taxes		473,841			452,958
Other long-term liabilities		314,432			180,376

Commitments and contingencies
Redeemable noncontrolling interests		658,478			560,073

Stockholders’ equity:
Common stock $.0001 par value		22			20
Authorized shares: 1,600,000
Shares issued: 220,383 and 196,802
Shares outstanding: 137,459 and 114,267
Class B common stock $.0001 par value		1			1
Authorized shares: 400,000
Shares issued and outstanding: 12,800 and 12,800
Additional paid-in capital		8,696,508			5,921,140
Treasury stock - Common stock, at cost		(4,054,909	)		(3,998,120	)
Shares: 82,924 and 82,535
Retained earnings		507,666			—
Accumulated other comprehensive income (loss)		(284,894	)		(138,774	)

Total Expedia, Inc. stockholders’ equity		4,864,394			1,784,267
Non-redeemable noncontrolling interest		65,373			109,462

Total stockholders’ equity		4,929,767			1,893,729

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	15,503,812		$	9,020,538

Page 11 of 20

EXPEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Year ended December 31,
	2015			2014
Operating activities:
Net income	$	722,748		$	372,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment, including internal-use software and website development		336,680			265,817
Amortization of stock-based compensation		178,068			85,011
Amortization of intangible assets		163,665			79,615
Deferred income taxes		(21,635	)		(79,031	)
Foreign exchange (gain) loss on cash, cash equivalents and short-term investments, net		88,528			79,410
Realized (gain) loss on foreign currency forwards		(54,226	)		5,481
Gain on sale of business		(508,810	)		—
Noncontrolling interest basis adjustment		(77,400	)		—
Other		15,865			8,966
Changes in operating assets and liabilities, net of effects from acquisitions and disposals:
Accounts receivable		(198,262	)		(157,957	)
Prepaid expenses and other current assets		97,701			(65,203	)
Accounts payable, merchant		97,248			110,603
Accounts payable, other, accrued expenses and other current liabilities		194,458			271,454
Tax payable/receivable, net		39,776			39,971
Deferred merchant bookings		299,534			331,133
Deferred revenue		(5,893	)		18,739

Net cash provided by operating activities		1,368,045			1,366,959

Investing activities:
Capital expenditures, including internal-use software and website development		(787,041	)		(328,387	)
Purchases of investments		(521,329	)		(1,194,210	)
Sales and maturities of investments		410,923			1,162,557
Acquisitions, net of cash acquired		(2,063,649	)		(560,668	)
Proceeds from sale of business, net of cash divested and disposal costs		523,882			—
Net settlement of foreign currency forwards		54,226			(5,481	)
Other, net		11,728			1,932

Net cash used in investing activities		(2,371,260	)		(924,257	)

Financing activities:
Proceeds from issuance of long-term debt, net of issuance costs		1,441,860			492,894
Purchases of treasury stock		(60,546	)		(537,861	)
Proceeds from issuance of treasury stock		22,575			20,404
Payment of dividends to stockholders		(108,527	)		(84,697	)
Proceeds from exercise of equity awards and employee stock purchase plan		97,716			108,121
Excess tax benefit on equity awards		90,855			58,156
Withholding taxes for stock option exercises		(85,033	)		—
Other, net		5,299			(8,868	)

Net cash provided by financing activities		1,404,199			48,149

Effect of exchange rate changes on cash and cash equivalents		(127,385	)		(109,184	)

Net increase in cash and cash equivalents		273,599			381,667
Cash and cash equivalents at beginning of year		1,402,700			1,021,033

Cash and cash equivalents at end of year	$	1,676,299		$	1,402,700

Supplemental cash flow information
Cash paid for interest	$	109,507		$	87,555
Income tax payments, net		96,834			70,339

Page 12 of 20

Expedia, Inc. (excluding eLong)

Trended Metrics

(All figures in millions)

•

The following metrics are intended as a supplement to the financial statements found in this release and in our filings with the SEC. In the event of discrepancies between amounts in these tables and our historical financial statements, readers should rely on our filings with the SEC and financial statements in our most recent earnings release.

•

We intend to periodically review and refine the definition, methodology and appropriateness of each of our supplemental metrics. As a result, metrics are subject to removal and/or change, and such changes could be material.

•

These metrics do not include adjustments for one-time items, acquisitions, foreign exchange or other adjustments.

•

Some numbers may not add due to rounding.


	2014												2015												Full Year						Y / Y Growth
	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			2014			2015			Q415			2015
Gross Bookings by Segment
Core OTA	$	10,811		$	11,174		$	11,453		$	9,431		$	12,907		$	13,692		$	14,091		$	13,563		$	42,869		$	54,252			44	%		27	%
Egencia		1,310			1,328			1,285			1,226			1,366			1,371			1,302			1,387			5,149			5,427			13	%		5	%

Total	$	12,121		$	12,502		$	12,738		$	10,657		$	14,273		$	15,063		$	15,393		$	14,950		$	48,018		$	59,680			40	%		24	%
Gross Bookings by Geography
Domestic	$	7,427		$	7,889		$	7,861		$	6,432		$	8,887		$	9,301		$	9,584		$	9,616		$	29,609		$	37,388			50	%		26	%
International		4,693			4,613			4,877			4,226			5,386			5,762			5,809			5,335			18,409			22,292			26	%		21	%

Total	$	12,121		$	12,502		$	12,738		$	10,657		$	14,273		$	15,063		$	15,393		$	14,950		$	48,018		$	59,680			40	%		24	%
Gross Bookings by Agency/Merchant
Agency	$	6,848		$	7,003		$	6,894		$	5,851		$	7,737		$	8,175		$	8,206		$	8,430		$	26,597		$	32,549			44	%		22	%
Merchant		5,272			5,499			5,844			4,807			6,536			6,888			7,187			6,520			21,422			27,130			36	%		27	%

Total	$	12,121		$	12,502		$	12,738		$	10,657		$	14,273		$	15,063		$	15,393		$	14,950		$	48,018		$	59,680			40	%		24	%
Revenue by Segment
Core OTA	$	1,001		$	1,268		$	1,477		$	1,159		$	1,170		$	1,463		$	1,739		$	1,505		$	4,905		$	5,877			30	%		20	%
trivago		83			104			139			87			119			143			176			110			414			548			27	%		32	%
Egencia		100			103			97			100			98			101			94			107			400			400			7	%		0	%
HomeAway		—			—			—			—			—			—			—			20			—			20			NM			NM
Intercompany Eliminations		(24	)		(32	)		(49	)		(27	)		(47	)		(52	)		(71	)		(44	)		(133	)		(215	)		59	%		61	%

Total	$	1,160		$	1,443		$	1,664		$	1,318		$	1,340		$	1,654		$	1,938		$	1,699		$	5,585		$	6,631			29	%		19	%
Revenue by Geography
Domestic	$	642		$	789		$	888		$	728		$	768		$	910		$	1,047		$	978		$	3,047		$	3,703			34	%		22	%
International		518			654			775			591			572			745			890			721			2,539			2,927			22	%		15	%

Total	$	1,160		$	1,443		$	1,664		$	1,318		$	1,340		$	1,654		$	1,938		$	1,699		$	5,585		$	6,631			29	%		19	%
Revenue by Type
Agency	$	297		$	357		$	436		$	346		$	360		$	452		$	555		$	495		$	1,438		$	1,861			43	%		29	%
Merchant		766			965			1,090			858			858			1,060			1,222			1,044			3,679			4,185			22	%		14	%
Advertising & Media		97			120			138			114			121			143			161			139			469			564			22	%		20	%
HomeAway		—			—			—			—			—			—			—			20			—			20			NM			NM

Total	$	1,160		$	1,443		$	1,664		$	1,318		$	1,340		$	1,654		$	1,938		$	1,699		$	5,585		$	6,631			29	%		19	%
Adjusted EBITDA by Segment
Core OTA	$	183		$	345		$	501		$	359		$	219		$	384		$	589		$	407		$	1,387		$	1,600			13	%		15	%
trivago		(1	)		(10	)		0			14			5			(9	)		(9	)		16			4			3			14	%		-27	%
Egencia		17			18			16			11			20			24			14			10			61			68			-2	%		12	%
HomeAway		—			—			—			—			—			—			—			4			—			4			NM			NM
Unallocated Overhead Costs		(91	)		(101	)		(102	)		(107	)		(109	)		(118	)		(125	)		(158	)		(401	)		(510	)		47	%		27	%

Total	$	108		$	252		$	415		$	277		$	135		$	281		$	469		$	280		$	1,051		$	1,165			1	%		11	%
Worldwide Hotel (Merchant & Agency)
Room Nights		28.9			37.6			45.1			37.9			38.3			50.6			61.5			52.8			149.5			203.1
Room Night Growth		20	%		25	%		24	%		28	%		32	%		35	%		36	%		39	%		24	%		36	%
Domestic Room Night Growth		20	%		24	%		24	%		25	%		23	%		24	%		25	%		33	%		23	%		26	%
International Room Night Growth		19	%		25	%		25	%		32	%		46	%		50	%		50	%		47	%		26	%		48	%
ADR Growth		3	%		4	%		4	%		0	%		-3	%		-6	%		-6	%		-5	%		3	%		-5	%
Revenue per Night Growth		-7	%		-1	%		-2	%		-9	%		-13	%		-16	%		-15	%		-11	%		-5	%		-14	%
Revenue Growth		12	%		23	%		22	%		16	%		15	%		14	%		17	%		24	%		19	%		17	%
Worldwide Air (Merchant & Agency)
Tickets Sold Growth		32	%		30	%		34	%		26	%		17	%		26	%		31	%		70	%		30	%		35	%
Airfare Growth		0	%		2	%		-2	%		-4	%		-7	%		-12	%		-12	%		-12	%		-1	%		-11	%
Revenue per Ticket Growth		-2	%		-5	%		-7	%		-5	%		-5	%		-10	%		-9	%		-5	%		-5	%		-7	%
Revenue Growth		29	%		23	%		24	%		20	%		12	%		14	%		19	%		61	%		24	%		25	%

Notes:

•

The metrics above exclude eLong for all periods presented due to Expedia’s sale of its eLong stake on May 22, 2015.

•

The metrics above include trivago following the acquisition of a controlling interest on March 8, 2013, Travelocity following the strategic marketing agreement launched during the fourth quarter of 2013, as well as the subsequent acquisition of Travelocity on January 23, 2015, Wotif Group following the acquisition on November 13, 2014, AirAsia Expedia following Expedia’s purchase of an additional 25% equity interest in the former joint venture on March 10, 2015, Orbitz Worldwide following the acquisition on September 17, 2015 and HomeAway following the acquisition on December 15, 2015.

•

Advertising & Media Revenue includes revenue from trivago. All trivago revenue is classified as international.

•

Beginning in Q1 2014, Expedia moved to a new Enterprise Accounting System of Record, which caused immaterial changes to some of the metrics above due to remapping.

Page 13 of 20

Notes & Definitions:

Gross Bookings: Total retail value of transactions booked for both agency and merchant transactions, recorded at the time of booking. Bookings include the total price due for travel, including taxes, fees and other charges, and are generally reduced for cancellations and refunds.

Core OTA: Core Online Travel Agencies (“Core OTA”) segment provides a full range of travel and advertising services to our worldwide customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized Expedia.com and Hotels.com websites throughout the world, Expedia Affiliate Network, Hotwire.com, Travelocity, Venere, Wotif Group, AirAsia Expedia, CarRentals.com, and Classic Vacations. The results of Orbitz Worldwide, with the exception of Orbitz for Business, are included within the Core OTA segment.

trivago: trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its localized hotel metasearch websites.

Egencia: Egencia segment provides managed travel services to corporate customers worldwide. The results of Orbitz for Business are included within the Egencia segment.

HomeAway: HomeAway segment provides a range of travel services for the vacation rental industry through a global portfolio of brands including: HomeAway, VRBO, VacationRentals.com and BedandBreakfsast.com.

Corporate: Includes unallocated corporate expenses.

Worldwide Hotel metrics: Reported on a stayed basis and includes both merchant and agency model hotel stays.

Worldwide Air metrics: Reported on a booked basis and includes both merchant and agency air bookings.

Definitions of Non-GAAP Measures

Expedia, Inc. reports Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Free Cash Flow and Adjusted Expenses (non-GAAP cost of revenue, non-GAAP selling and marketing, non-GAAP technology and content and non-GAAP general and administrative) and certain measures excluding eLong, Inc., all of which are supplemental measures to GAAP and are defined by the SEC as non-GAAP financial measures. These measures are among the primary metrics by which management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the same set of tools that management uses to analyze our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA, Adjusted Net Income, Adjusted EPS have certain limitations in that they do not take into account the impact of certain expenses to our consolidated statements of operations. We endeavor to compensate for the limitation of the non-GAAP measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP measures. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS also exclude certain items related to transactional tax matters, which may ultimately be settled in cash, and we urge investors to review the detailed disclosure regarding these matters in the Management Discussion and Analysis, Legal Proceedings sections, as well as the notes to the financial statements, included in the Company’s annual and quarterly reports filed with the Securities and Exchange Commission. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The definition of Adjusted Net Income was revised in the fourth quarters of 2010, 2011 and 2012 and the definition for Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization was revised in the fourth quarter of 2012. The definition of Adjusted Expenses was revised in the first quarter of 2014 and in the second quarter 2015.

Adjusted EBITDA is defined as operating income / (loss) plus: (1) stock-based compensation expense, including compensation expense related to certain subsidiary equity plans; (2) acquisition-related impacts, including (i) amortization of intangible assets and goodwill and intangible asset impairment, (ii) gains (losses) recognized on changes in the value of contingent consideration arrangements; and (iii) upfront consideration paid to settle employee compensation plans of the acquiree; (3) certain infrequently occurring items, including restructuring; (4) items included in Legal reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g. hotel and excise taxes), related to court decisions and final settlements, and charges incurred, if any, for monies that may be required to be paid in advance of litigation in certain transactional tax proceedings; (5) gains (losses) realized on revenue hedging activities that are included in other, net; and (6) depreciation.

The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing of these items is unpredictable, not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA is a useful measure for analysts and

Page 14 of 20

investors to evaluate our future on-going performance as this measure allows a more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. In addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business and allows investors to gain an understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made and debt is serviced. The definition for Adjusted EBITDA was revised in the fourth quarter of 2012.

Adjusted Net Income generally captures all items on the statements of operations that occur in normal course operations and have been, or ultimately will be, settled in cash and is defined as net income/(loss) attributable to Expedia, Inc. plus net of tax: (1) stock-based compensation expense, including compensation expense related to equity plans of certain subsidiaries and equity-method investments; (2) acquisition-related impacts, including (i) amortization of intangible assets, including as part of equity-method investments, and goodwill and intangible asset impairment, (ii) gains (losses) recognized on changes in the value of contingent consideration arrangements, and (iii) upfront consideration paid to settle employee compensation plans of the acquiree and (iv) gains (losses) recognized on noncontrolling investment basis adjustments when we acquire controlling interests; (3) currency gains or losses on U.S. dollar denominated cash or investments held by eLong; (4) certain other infrequently occurring items, including restructuring charges; (5) items included in Legal reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g., hotel occupancy and excise taxes), related court decisions and final settlements, and charges incurred, if any, for monies that may be required to be paid in advance of litigation in certain transactional tax proceedings, including as part of equity method investments; (6) discontinued operations; (7) the noncontrolling interest impact of the aforementioned adjustment items and (8) unrealized gains (losses) on revenue hedging activities that are included in other, net. We believe Adjusted Net Income is useful to investors because it represents Expedia, Inc.’s combined results, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of certain expenses, infrequently occurring items and items not directly tied to the core operations of our businesses. The definition for adjusted net income was revised in the fourth quarters of 2010, 2011 and 2012.

Adjusted EPS is defined as Adjusted Net Income divided by adjusted weighted average shares outstanding, which include dilution from options per the treasury stock method and include all shares relating to RSUs in shares outstanding for Adjusted EPS. This differs from the GAAP method for including RSUs, which treats them on a treasury method basis. Shares outstanding for Adjusted EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, Expedia’s consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest expense, taxes, foreign exchange gains or losses, and minority interest, but excluding the effects of certain expenses not directly tied to the core operations of our businesses. Adjusted Net Income and Adjusted EPS have similar limitations as Adjusted EBITDA. In addition, Adjusted Net Income does not include all items that affect our net income / (loss) and net income / (loss) per share for the period. Therefore, we think it is important to evaluate these measures along with our consolidated statements of operations.

Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures. Management believes Free Cash Flow is useful to investors because it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash movements that are not directly tied to the core operations of our businesses, such as financing activities, foreign exchange or certain investing activities. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate Free Cash Flow along with the consolidated statements of cash flows.

Adjusted Expenses (cost of revenue, selling and marketing, technology and content and general and administrative expenses) exclude stock-based compensation related to expenses for stock options, restricted stock units and other equity compensation under applicable stock-based compensation accounting standards as well as depreciation expense. Expedia, Inc. excludes stock-based compensation and depreciation expenses from these measures primarily because they are non-cash expenses that we do not believe are necessarily reflective of our ongoing cash operating expenses and cash operating income. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting applicable stock-based compensation accounting standards,

Page 15 of 20

management believes that providing non-GAAP financial measures that exclude stock-based compensation allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies, as well as providing management with an important tool for financial operational decision making and for evaluating our own recurring core business operating results over different periods of time. Exclusion of depreciation expense also allows the year-over-year comparison of expenses on a basis that is consistent with the year-over-year comparison of Adjusted EBITDA. There are certain limitations in using financial measures that do not take into account stock-based compensation and depreciation expense, including the fact that stock-based compensation is a recurring expense and a valued part of employees’ compensation and depreciation expense is also a recurring expense and is a direct result of previous capital investment decisions made by management. Therefore it is important to evaluate both our GAAP and non-GAAP measures. See the Notes to the Consolidated Statements of Operations for stock-based compensation and depreciation expense by line item. In addition, in the second quarter of 2015, we included an adjustment to remove operating expenses related to eLong due to our sale on May 22, 2015.

Expedia, Inc. (excluding eLong). Expedia sold its ownership interest in eLong, Inc. on May 22, 2015. In order to allow comparison with prior periods for the ongoing Expedia businesses, Expedia, Inc. (excluding eLong) gross bookings, revenue, adjusted EBITDA, operating income (loss), adjusted net income (loss), adjusted EPS, Net income (loss) attributable to the Company, Diluted EPS and free cash flow each exclude the impact of eLong.

Tabular Reconciliations for Non-GAAP Measures

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization)


	Three months ended December 31,						Year ended December 31,
	2015			2014			2015			2014
	(In thousands)
Adjusted EBITDA	$	279,945		$	249,691		$	1,103,111		$	1,024,788
Depreciation		(95,802	)		(70,656	)		(336,680	)		(265,817	)
Amortization of intangible assets		(80,343	)		(24,340	)		(163,665	)		(79,615	)
Stock-based compensation		(44,032	)		(16,872	)		(178,068	)		(85,011	)
Legal reserves, occupancy tax and other		(1,924	)		(2,696	)		104,587			(41,539	)
Restructuring and related reorganization charges		(19,351	)		(25,630	)		(72,122	)		(25,630	)
Realized (gain) loss on revenue hedges		(9,016	)		(14,791	)		(43,597	)		(9,412	)

Operating income		29,477			94,706			413,566			517,764
Interest expense, net		(34,135	)		(21,874	)		(109,500	)		(70,801	)
Gain on sale of business		—			—			508,810			—
Other, net		(1,275	)		15,164			113,086			17,678

Income (loss) before income taxes		(5,933	)		87,996			925,962			464,641
Provision for income taxes		(6,953	)		(31,717	)		(203,214	)		(91,691	)

Net income (loss)		(12,886	)		56,279			722,748			372,950
Net loss attributable to noncontrolling interests		348			9,690			41,717			25,147

Net income (loss) attributable to Expedia, Inc.	$	(12,538	)	$	65,969		$	764,465		$	398,097

Page 16 of 20

Adjusted Net Income (Loss) & Adjusted EPS


	Three months ended December 31,						Year ended December 31,
	2015			2014			2015			2014
	(in thousands, except per share data)
Net income (loss) attributable to Expedia, Inc.	$	(12,538	)	$	65,969		$	764,465		$	398,097
Amortization of intangible assets		80,343			24,340			163,665			79,615
Stock-based compensation		44,032			16,872			178,068			85,011
Legal reserves, occupancy tax and other		1,924			2,696			(104,587	)		41,539
Restructuring and related reorganization charges		19,351			25,630			72,122			25,630
Foreign currency (gain) loss on U.S. dollar cash balances held by eLong		—			(233	)		(13	)		(249	)
Unrealized (gain) loss on revenue hedges		6,505			(845	)		3,314			(10,680	)
Stock-based compensation as part of equity method investments		—			511			—			730
Gain on sale of asset		—			—			(11,501	)		—
Gain on sale of business		—			—			(508,810	)		—
Noncontrolling interest basis adjustment		—			(2,783	)		(77,400	)		(2,783	)
Other-than-temporary investment impairment		—			5,666			—			5,666
Provision for income taxes		(27,579	)		(21,776	)		44,820			(77,388	)
Noncontrolling interests		(5,374	)		(3,077	)		(26,762	)		(17,092	)

Adjusted Net Income	$	106,664		$	112,970		$	497,381		$	528,096

GAAP diluted weighted average shares outstanding		134,128			131,639			134,018			133,168
Additional dilutive securities		4,533			238			260			245

Adjusted weighted average shares outstanding		138,661			131,877			134,278			133,413

Diluted earnings (loss) per share	$	(0.09	)	$	0.50		$	5.70		$	2.99
Adjusted earnings per share		0.77			0.86			3.70			3.96

Free Cash Flow


	Three months ended December 31,						Year ended December 31,
	2015			2014			2015			2014
	(in thousands)
Net cash provided by operating activities	$	(173,481	)	$	(199,843	)	$	1,368,045		$	1,366,959
Less: capital expenditures		(161,602	)		(88,709	)		(787,041	)		(328,387	)

Free cash flow	$	(335,083	)	$	(288,552	)	$	581,004		$	1,038,572

Page 17 of 20

Adjusted Expenses (cost of revenue, selling and marketing, technology and content and general and administrative expenses)


	Three months ended December 31,						Year ended December 31,
	2015			2014			2015			2014
	(in thousands)
Cost of revenue	$	338,493		$	284,253		$	1,309,559		$	1,179,081
Less: stock-based compensation		(1,721	)		(731	)		(5,307	)		(3,921	)
Less: depreciation		(12,753	)		(9,838	)		(45,451	)		(35,392	)
Less: eLong⁽¹⁾		—			(18,534	)		(34,358	)		(51,738	)

Adjusted cost of revenue	$	324,019		$	255,150		$	1,224,443		$	1,088,030

Selling and marketing expense	$	788,936		$	624,214		$	3,381,086		$	2,808,329
Less: stock-based compensation		(9,274	)		(4,269	)		(33,164	)		(18,067	)
Less: depreciation		(4,335	)		(2,025	)		(11,754	)		(7,782	)
Less: eLong⁽¹⁾		—			(33,470	)		(54,080	)		(120,807	)

Adjusted selling and marketing expense	$	775,327		$	584,450		$	3,282,088		$	2,661,673

Technology and content expense	$	250,570		$	181,350		$	830,244		$	686,154
Less: stock-based compensation		(7,361	)		(4,208	)		(26,766	)		(22,100	)
Less: depreciation		(73,320	)		(56,372	)		(265,100	)		(214,262	)
Less: eLong⁽¹⁾		—			(6,048	)		(10,072	)		(18,439	)

Adjusted technology and content expense	$	169,889		$	114,722		$	528,306		$	431,353

General and administrative expense	$	185,954		$	118,789		$	573,913		$	425,373
Less: stock-based compensation		(22,157	)		(7,664	)		(80,082	)		(40,923	)
Less: depreciation		(5,394	)		(2,421	)		(14,375	)		(8,381	)
Less: eLong⁽¹⁾		—			(6,342	)		(5,399	)		(13,752	)

Adjusted general and administrative expense	$	158,403		$	102,362		$	474,057		$	362,317

(1)

eLong amount presented without stock-based compensation and depreciation as those are included within the consolidated totals above.

Expedia, Inc. (excluding eLong) measures (gross bookings, revenue, adjusted EBITDA, operating income (loss), adjusted net income (loss), adjusted EPS, Net income (loss) attributable to the Company)


	Expedia (ex-eLong)									eLong								Expedia, Inc.
	Fourth Quarter									Fourth Quarter								Fourth Quarter
Metric	2015			2014			D			2015			2014			D		2015			2014			D
Room night growth		39	%		28	%		1,149	bps		0	%		27	%		NM		12	%		28	%		(1,594	) bps
Gross bookings	$	14,950.4		$	10,657.4			40	%	$	—		$	649.7			NM	$	14,950.4		$	11,307.1			32	%
Revenue		1,698.6			1,318.5			29	%		—			37.5			NM		1,698.6			1,356.0			25	%
Adjusted EBITDA		279.9			276.6			1	%		—			(26.9	)		NM		279.9			249.7			12	%
Operating income		29.5			125.0			(76	%)		—			(30.3	)		NM		29.5			94.7			(69	%)
Adjusted net income		106.7			130.8			(18	%)		—			(17.8	)		NM		106.7			113.0			(6	%)
Adjusted EPS	$	0.77		$	0.99			(22	%)	$	—		$	(0.14	)		NM	$	0.77		$	0.86			(11	%)
Net income (loss) attributable to the Company		(12.5	)		86.5			(114	%)		—			(20.5	)		NM		(12.5	)		66.0			(119	%)
Diluted EPS																		$	(0.09	)	$	0.50			(119	%)
Free cash flow																			(335.1	)		(288.6	)		16	%

	Full Year									Full Year								Full Year
Metric	2015			2014			D			2015			2014			D		2015			2014			D
Room night growth		36	%		24	%		1,154	bps		(53	%)		32	%		NM		19	%		26	%		(635	) bps
Gross bookings	$	59,679.5		$	48,018.1			24	%	$	1,150.9		$	2,428.7			NM	$	60,830.4		$	50,446.8			21	%
Revenue		6,630.6			5,585.4			19	%		41.7			178.1			NM		6,672.3			5,763.5			16	%
Adjusted EBITDA		1,165.3			1,051.5			11	%		(62.2	)		(26.7	)		NM		1,103.1			1,024.8			8	%
Operating income		499.1			568.6			(12	%)		(85.5	)		(50.8	)		NM		413.6			517.8			(20	%)
Adjusted net income		540.2			544.5			(1	%)		(42.9	)		(16.4	)		NM		497.4			528.1			(6	%)
Adjusted EPS	$	4.02		$	4.08			(1	%)	$	(0.32	)	$	(0.12	)		NM	$	3.70		$	3.96			(6	%)
Net income (loss) attributable to the Company		415.3			425.2			(2	%)		349.2			(27.1	)		NM		764.5			398.1			92	%
Diluted EPS																		$	5.70		$	2.99			91	%
Free cash flow																			581.0			1,038.6			(44	%)

Page 18 of 20

Conference Call

Expedia, Inc. will webcast a conference call to discuss fourth quarter and full year 2015 financial results and certain forward-looking information on Wednesday, February 10, 2016 at 1:30 p.m. Pacific Time (PT). The webcast will be open to the public and available via http://ir.expediainc.com. Expedia, Inc. expects to maintain access to the webcast on the IR website for approximately three months subsequent to the initial broadcast.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements are based on management’s expectations as of February 10, 2016 and assumptions which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as “intends” and “expects,” among others, generally identify forward-looking statements. However, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements and may include statements relating to future revenues, expenses, margins, profitability, net income / (loss), earnings per share and other measures of results of operations and the prospects for future growth of Expedia, Inc.’s business.

Actual results and the timing and outcome of events may differ materially from those expressed or implied in the forward-looking statements for a variety of reasons, including, among others:

•

an increasingly competitive global environment;

•

our failure to modify to our current business models and practices or adopt new business models or practices in order to compete in a dynamic industry;

•

changes in search engine algorithms and dynamics or other traffic-generating arrangements;

•

our failure to maintain and expand our relationships and contractual agreements with travel suppliers or travel distribution partners;

•

our failure to maintain and expand our brand awareness or increased costs to do so;

•

our failure to adapt to technological developments or industry trends;

•

risks related to our acquisitions, investments or significant commercial arrangements;

•

risks relating to our operations in international markets;

•

our failure to comply with current laws, rules and regulations, or changes to such laws, rules and regulations;

•

adverse application of existing tax or unclaimed property laws, rules or regulations are subject to interpretation by taxing authorities;

•

unfavorable amendment to existing tax laws, rules or regulations or enactment of new unfavorable laws, rules or regulations;

•

adverse outcomes in legal proceedings to which we are a party;

•

declines or disruptions in the travel industry;

•

risks related to payments and fraud;

•

fluctuations in foreign exchange rates;

•

volatility in our stock price;

•

liquidity constraints or our inability to access the capital markets when necessary or desirable;

•

interruption, security breaches and lack of redundancy in our information systems;

•

our failure to comply with governmental regulation and other legal obligations related to our processing, storage, use, disclosure and protection of personal information, payment card information and other consumer data;

•

our failure to retain or motivate key personnel or hire, retain and motivate qualified personnel, including senior management;

•

changes in control of the Company;

•

management and director conflicts of interest;

•

risks related to actions taken by our business partners and third party service providers, including failure to comply with our requirements or standards or the requirements or standards of governmental authorities, or any cessation of their operations;

•

risks related to the failure of counterparties to perform on financial obligations;

Page 19 of 20

•

risks related to our long-term indebtedness, including our failure to effectively operate our businesses due to restrictive covenants in the agreements governing our indebtedness;

•

our failure to protect our intellectual property and proprietary information from copying or use by others, including potential competitors;

as well as other risks detailed in our public filings with the SEC, including our quarterly report on Form 10-K for the year ended December 31, 2015. Except as required by law, we undertake no obligation to update any forward-looking or other statements in this release, whether as a result of new information, future events or otherwise.

About Expedia, Inc.

Expedia, Inc. (NASDAQ: EXPE) is one of the world’s leading travel companies, with an extensive brand portfolio that includes leading online travel brands, such as:

•

Expedia.com^®, a leading full service online travel agency with localized sites in 33 countries

•

Hotels.com^®, the lodging specialist that offers Hotels.com^® Rewards and Secret Prices through its mobile booking apps and localized websites in more than 65 countries

•

Hotwire^®, a leading discount travel site that offers Hot Rate^® Hotels, Hot Rate^® Cars and Hot Rate^® Airfares, as well as vacation packages

•

HomeAway^®, a global online marketplace for the vacation rental industry, which also includes the VRBO, VacationRentals.com and BedandBreakfast.com brands, among others

•

Orbitz Worldwide, a global travel portfolio including Orbitz, ebookers and CheapTickets brands; and business-to-business offerings including Orbitz Partner Network and Orbitz for Business

•

Travelocity^®, a pioneer in online travel and a leading online travel agency in the US and Canada

•

Egencia^®, a leading corporate travel management company

•

Venere.com™, an online hotel reservation specialist in Europe

•

trivago^®, a leading online hotel search with sites in 55 countries worldwide

•

Wotif Group, a leading portfolio of travel brands operating in the Australia/New Zealand region, including Wotif.com^®, Wotif.co.nz, lastminute.com.au^®, lastminute.com.nz and travel.com.au^®

•

Expedia Local Expert^®, a provider of online and in-market concierge services, activities, experiences and ground transportation in hundreds of destinations worldwide

•

Classic Vacations^®, a top luxury travel specialist

•

Expedia^® CruiseShipCenters^®, a provider of exceptional value and expert advice for travelers booking cruises and vacations through its network of over 200 retail travel agency franchises across North America

•

CarRentals.com™, a premier online car rental booking company with localized sites in 13 countries

•

Expedia Affiliate Network (EAN), a global B2B business that powers the hotel business of leading airlines, top consumer brands, online travel agencies and thousands of other partners through its API and template solutions

•

Expedia^® Media Solutions, the advertising sales division of Expedia, Inc. that builds media partnerships and enables brand advertisers to target a highly-qualified audience of travel consumers

For corporate and industry news and views, visit us at www.expediainc.com or follow us on Twitter @expediainc.


Contacts
Investor Relations		Communications
(425) 679-3759		(425) 679-4317
[email protected]		[email protected]

Page 20 of 20

INVESTOR

PRESENTATION

February 10, 2016

Exhibit 99.2

Safe Harbor

Forward-Looking

Statements.

This

presentation

contains

"forward-looking

statements"

within

the

meaning

the

Private

Securities

Litigation

Reform

Act

1995.

These

statements

are

not

guarantees

future

performance.

These

forward-looking

statements

are

based

management’s

expectations

February

10,

2016

and

assumptions

which

are

inherently

subject

uncertainties,

risks

and

changes

circumstances

that

are

difficult

predict.

The

use

words

such

"intends"

and

“expects,”

among

others,

generally

identifies

forward-looking

statements.

However,

these

words

are

not

the

exclusive

means

identifying

such

statements.

addition,

any

statements

that

refer

expectations,

projections

other

characterizations

future

events

circumstances

are

forward-looking

statements

and

may

include

statements

relating

future

revenues,

expenses,

margins,

profitability,

net

income

(loss),

earnings

per

and

other

measures

results

operations

and

the

prospects

for

future

growth

Expedia,

Inc.’s

business.

Actual

results

and

the

timing

and

outcome

events

may

differ

materially

from

those

expressed

implied

the

forward-looking

statements

for

variety

reasons,

including,

among

others:

increasingly

competitive

global

environment;

modifications

our

current

business

models

and

practices

our

adoption

new

business

models

practices

order

compete;

changes

engine

algorithms

and

dynamics

other

traffic-generating

arrangements;

our

failure

maintain

and

expand

our

relationships

and

contractual

agreements

with

travel

suppliers

travel

distribution

partners;

our

failure

maintain

and

expand

our

brand

awareness

increased

costs

so;

our

failure

adapt

technological

developments

industry

trends;

risks

our

acquisitions,

investments

significant

commercial

arrangements;

risks

relating

our

operations

international

markets;

our

failure

comply

with

current

laws,

rules

and

regulations,

changes

such

laws,

rules

and

regulations;

adverse

application

existing

tax

unclaimed

property

laws,

rules

regulations

are

subject

interpretation

taxing

authorities;

unfavorable

amendment

existing

tax

laws,

rules

regulations

enactment

new

unfavorable

laws,

rules

regulations;

adverse

outcomes

legal

proceedings

which

are

party;

declines

disruptions

the

travel

industry;

risks

payments

and

fraud;

fluctuations

foreign

exchange

rates;

volatility

our

stock

price;

liquidity

constraints

our

inability

access

the

capital

markets

when

necessary

desirable;

interruption,

security

breaches

and

lack

redundancy

our

information

systems;

our

failure

comply

with

governmental

regulation

and

other

legal

obligations

our

processing,

storage,

use,

disclosure

and

protection

personal

information,

payment

card

information

and

other

consumer

data;

our

failure

retain

motivate

key

personnel

hire,

retain

and

motivate

qualified

personnel,

including

senior

management;

changes

control

the

Company;

management

and

director

conflicts

interest;

risks

actions

taken

our

business

partners

and

third

party

service

providers,

including

failure

comply

with

our

requirements

standards

the

requirements

standards

governmental

authorities,

any

cessation

their

operations;

risks

the

failure

counterparties

perform

financial

obligations;

risks

our

long-term

indebtedness,

including

our

failure

effectively

operate

our

businesses

due

restrictive

covenants

the

agreements

governing

our

indebtedness;

our

failure

protect

our

intellectual

property

and

proprietary

information

from

copying

use

others,

including

potential

competitors;

and

other

risks

detailed

Expedia,

Inc.’s

public

filings

with

the

SEC,

including

our

annual

report

Form

10-K

for

the

year

ended

December

31,

2015.

Except

required

law,

undertake

obligation

update

any

forward-looking

other

statements

this

presentation,

whether

result

new

information,

future

events

otherwise.

Non-GAAP

Measures.

Reconciliations

GAAP

measures

non-GAAP

measures

included

this

presentation

are

included

the

Appendix.

These

measures

are

intended

supplement,

not

substitute

for,

GAAP

comparable

measures.

Investors

are

urged

consider

carefully

the

comparable

GAAP

measures

and

reconciliations.

Industry

Market

Data.

Industry

and

market

data

used

this

presentation

have

been

obtained

from

industry

publications

and

sources

well

from

research

reports

prepared

for

other

purposes.

have

not

independently

verified

the

data

obtained

from

these

sources

and

cannot

assure

you

the

data’s

accuracy

completeness.

Trademarks

Logos.

Trademarks

and

logos

are

the

property

their

respective

owners.

2016

Expedia,

Inc.

All

rights

reserved.

CST:

2029030-50

July 2014

Important Note

May

2015,

Expedia

sold

its

62.4%

equity

stake

eLong

for

approximately

$671

million

several

purchasers

including

Ctrip.

Expedia

and

Ctrip

also

reached

agreement

cooperation

for

certain

travel

products

specified

geographic

markets.

Unless

otherwise

noted,

due

Expedia’s

sale

its

eLong

stake,

all

discussion

these

slides

refers

results

for

Expedia,

Inc.

excluding

eLong.

July 2014

Investment Highlights

A Leading Global Player in ~$1.4 Trillion

Travel

Market

Significant Growth Opportunities Across Geographies

Consistently Strong Financial Execution

Technology Platform Innovation Driving Higher Conversion

Success in Growing Mobile Channels

A Growth

Company

High Growth Advertising & Media Business

Rapid Expansion in Highly Fragmented Lodging Industry

Supported by Multi-Product Offering

Solid Track Record of Disciplined Capital Allocation

Travel market size estimates based on Phocuswright data for full year 2016.

One of the Largest Travel

Companies in the World

Depth and

Breadth of

SUPPLY

~269,000 Hotels &

1.2 Million

Vacation Rentals

In 200+ Countries

400+ Airlines

7.1 Million

Packages

Mutually

Beneficial

Supply

Agreements

Value to

Travelers

Scale Enables

Virtuous Circle

Diverse Demand:

Geography AND Travel Type

8.6 Billion+

Flight Searches

Travelers in

~75 Countries

Corporate and

Leisure Travel;

Online and Offline

Volume and

Diversity of

Global Travel

DEMAND

Established Brands with Global Reach

Brand Recognition in

EVERY Established Market

Solid Foothold in Emerging Markets

Presence in

65 Countries

Sites in

55 Countries

1.2M Vacation Properties across

190 Countries

A Leading Hotel

Metasearch Company

A Leader in Global

Corporate Travel

A Leader in

Alternative Lodging

Dynamic

portfolio

travel

brands

with

than

200

sites

over

countries

featuring

the

world’s

broadest

supply

portfolio

including

269,000 properties in 200 countries, 400 airlines, packages, rental cars, cruises and destination services and activities

Diversifying Revenue Mix Reduces Risk

and Positions the Business for Growth

2005

Revenue

2015

Revenue

2005 Geography excludes eLong; Product includes eLong

GEOGRAPHY

International

21%

Domestic

79%

International

44%

Domestic

56%

Ad & Media

Car, Cruise &

Other

13%

Ad & Media

PRODUCT

Hotels

63%

Hotels

69%

Car, Cruise &

Other

14%

Air

22%

Expedia

Other

Expedia

Other

Expedia

17%

Other

Expedia

Other

ONLINE

TRAVEL

SEGMENT

56%

25%

47%

35%

45% of Total

Travel Market

Global Leader and Significant

Headroom for Further Growth

Sources: Phocuswright estimates and Expedia data; travel market size estimates based on Phocuswright data for full year 2016.

Note: Expedia’s share of travel market defined as gross bookings during FY15. Beginning in Q4 2014, total travel market definition was expanded to include Canada, Eastern Europe and Middle East.

Expedia Share:

UNITED

STATES

+ .

CANADA

LATIN

AMERICA

EMEA

Expedia

10%

Other

2016 TOTAL

TRAVEL

MARKET

Other

Expedia

Other

$388B

$99B

$492B

$393B

Total Travel

Market ~$1.4T

ASIA

PACIFIC

Expedia

Already Has Scale in Hotels…

Leading Position in Attractive

Lodging Market

… And HomeAway Adds Significantly

More Lodging Alternatives

Other includes Car, Advertising, Destination Services, Insurance, Cruise, Agency Packages, and Other.

Sources: Smith Travel Research and Expedia data.

Hotel data for TripAdvisor and Booking.com obtained from respective company websites. TripAdvisor and Booking.com numbers include 740,000 and 393,000 vacation rental properties, respectively.

Total assumes no overlap between HomeAway and Expedia properties.

Hotels

69%

$6.6B

2015 Revenues

~269k Hotels in

200+ Countries

~Only 8% Share

of Rooms Booked

the

Number

Hotels

Lodging

Alternatives

1,690,000

Air

Other

1,508,000

1,239,000

269,000

855,000

Have Completed Significant Technology

Investments That Fortify the Business

CUSTOMIZED

Front-End

Technology

for

Rapid

Innovation

and

Powerful

Analytics

…

Improving

Conversion

CENTRALIZED Transactional Infrastructure:

Financials

Order

Management

Inventory

Management

CENTRALIZED Customer Operations Technology

Opening Up Significant Opportunities in Travel

Industry Leading Mobile Initiatives Drive Traffic

and Revenue

…Expedia, Inc. Leads the Way

The World Is

Changing …

PC-Connected

Users

24 x 7

Mobile Users

Over 40%

of Traffic Arrives

Via Mobile

More than

One in Four

Room Nights

Booked on a

Mobile Device

•

Hotels.com recognized as the 2015 Travel Weekly

Silver Magellan Award Winner in the Online Travel

Services App category

•

Hotwire included in the Top 10 Best Car Rental

Apps for Android

•

Hotwire included in the Best Apps for Booking

Travel by CNET

•

Hotwire ranked as one of the “Best Travel Apps of

2015” by PCMag

Based on global mobile bookings in Q4 2015.

Based on Brand Expedia, Hotels.com, Travelocity and Orbitz mobile traffic in Q4 2015.

Expedia PartnerCentral App for Hoteliers

Helping hoteliers

manage their

Expedia business

and solve

everyday

problems via

Apple and Android

mobile devices

Mobile Accolades

Significant Acceleration in the

Advertising and Media Business

ADVERTISING & MEDIA REVENUE

$ Millions

’12-’15 CAGR : 65.8%

Note: Reported numbers are net of any intercompany revenue

Controlling interest in trivago GmbH (”trivago”) acquired in March 2013

#1 hotel metasearch in Europe

$124

$310

$469

$564

2012

2013

2014

2015

$33

$38

$48

$60

2012

2013

2014

2015

’12-’15 CAGR: 22.2%

$804

$891

$1,051

$1,165

2012

2013

2014

2015

Consistent Financial Execution

ADJUSTED EBITDA

ROOM NIGHTS

$ Millions

103

120

150

203

2012

2013

2014

2015

REVENUE

$ Billions

$3.9

$4.6

$5.6

$6.6

2012

2013

2014

2015

Non-GAAP measure. See Appendix A for Non-GAAP to GAAP Reconciliation

’12-’15 CAGR: 19.2%

’12-’15 CAGR: 13.2%

’12-’15 CAGR: 25.3%

Millions

GROSS BOOKINGS

$ Billions

Solid

Track

Record

Disciplined

Capital

Allocation

FREE CASH FLOW

$495

$469

$618

$1,001

$455

$1,039

$581

2009

2010

2011

2012

2013

2014

2015

Non-GAAP

measure,

including

eLong.

See

Appendix

for

Non-GAAP

GAAP

Reconciliation.

Expedia

acquired

additional

25%

equity

interest

the

former

joint

venture

March

2015.

On May 22, Expedia sold its 62.4% ownership in eLong to a group of purchasers based in China

$ Millions

’09-’15 CAGR: 3%

SHARE REPURCHASES

AND DIVIDENDS

KEY TRANSACTIONS

$489

$283

$397

$515

$537

$45

$79

$77

$130

$76

$85

$108

$100

$200

$300

$400

$500

$600

2010

2011

2012

2013

2014

2015

Share Repurchases

Dividends

$ in Millions

2011 |

2012 |

2013 |

2014 |

2015

Orbitz and HomeAway Impact

to Adjusted EBITDA

Q4 2015

$ millions

2015

$ millions

Q4 2015 Y/Y

Growth

FY 2015 Y/Y

Growth

Expedia (excluding

eLong) Adjusted

EBITDA*

280

1,165

11%

Total impact from Orbitz Worldwide

(including deal & integration costs)

(25)

n/a

Total impact from HomeAway

(including deal & integration costs)

(14)

n/a

Expedia

Adjusted EBITDA (excluding

eLong, Orbitz Worldwide and

HomeAway)*

292

1,204

15%

•

2016 Guidance:

•

Full Year 2016 Expedia (excluding eLong) Adjusted EBITDA y/y growth of 35% to 45%.

•

We expect a full year Adjusted EBITDA contribution from Orbitz Worldwide and HomeAway

combined of $275 million to $325 million.

•

In terms of the shape of the year, we are not expecting any adjusted EBITDA dollar growth in

the first half, with particular pressure on Q1.

Non-GAAP measure. See Appendix A for Non-GAAP to GAAP Reconciliation.

Investment Highlights

A Leading Global Player in ~$1.4 Trillion Travel

Market

Significant Growth Opportunities Across Geographies

Consistently Strong Financial Execution

Technology Platform Innovation Driving Higher Conversion

Success in Growing Mobile Channels

A Growth

Company

High Growth Advertising & Media Business

Rapid Expansion in Highly Fragmented Lodging Industry

Supported by Multi-Product Offering

Solid Track Record of Disciplined Capital Allocation

APPENDICES

Non-GAAP Definitions

Expedia, Inc. (excluding eLong). Expedia sold its ownership interest in eLong, Inc. on May 22, 2015. In order to allow comparison with prior

periods for the ongoing Expedia businesses, Expedia, Inc. (excluding eLong) gross bookings, revenue, adjusted EBITDA, operating income (loss),

adjusted net income (loss), adjusted EPS, Net income (loss) attributable to the Company, Diluted EPS and free cash flow each exclude the impact

of eLong.

Adjusted EBITDA is defined as operating income plus: (1) stock-based compensation expense, including compensation expense related to certain

subsidiary equity plans; (2) acquisition-related impacts, including (i) amortization of intangible assets and goodwill and intangible asset impairment,

(ii)

gains

(losses)

recognized

changes

the

value

contingent

consideration

arrangements;

and

(iii)

upfront

consideration

paid

settle

employee compensation plans of the acquiree; (3) certain infrequently occurring items, including restructuring; (4) items included in Legal

reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g. hotel and excise

taxes),

court

decisions

and

final

settlements,

and

charges

incurred,

any,

for

monies

that

may

required

paid

advance

litigation

certain

transactional

tax

proceedings;

(5)

gains

(losses)

realized

revenue

hedging

activities

that

are

included

other,

net;

and

(6)

depreciation.

The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing

these

items

unpredictable,

not

driven

core

operating

results

and

renders

comparisons

with

prior

periods

and

competitors

less

meaningful.

We believe Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future on-going performance as this measure allows a

more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our

competitors.

Moreover,

our

management

uses

this

measure

internally

evaluate

the

performance

our

business

whole

and

our

individual

business segments. In addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts,

Adjusted EBITDA corresponds more closely to the cash operating income generated from our business and allows investors to gain an

understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made

and debt is serviced.

Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures. Management believes Free Cash Flow is

useful to investors because it represents the operating cash flow that our operating businesses generate, less capital expenditures but before

taking into account other cash movements that are not directly tied to the core operations of our businesses, such as financing activities, foreign

exchange or certain investing activities. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the

cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate Free

Cash Flow along with the consolidated statements of cash flows.

Non-GAAP / GAAP Reconciliation:

Revenue

Note: Numbers may not sum due to rounding and include eLong

$ Millions

2012

2013

2014

2015

Revenue excluding eLong

$3,912

$4,607

$5,585

$6,631

eLong Revenue

118

164

178

Revenue Attributable to Expedia, Inc.

$4,030

$4,771

$5,763

$6,672

$ Millions

2012

2013

2014

2015

Adjusted EBITDA excluding eLong

$804

$891

$1,051

$1,165

eLong Adjusted EBITDA

(1)

(12)

(27)

(62)

Adjusted EBITDA

$803

$879

$1,025

$1,103

Depreciation

(164)

(212)

(266)

(337)

Amortization of Intangible Assets

(32)

(72)

(80)

(164)

Legal Reserves

, Occupancy Tax and Other

(117)

(78)

(42)

105

Stock-Based

Compensation

(65)

(130)

(85)

(178)

Acquisition-related

and Other

(10)

Restructuring Charges

(26)

(72)

Realized Loss (Gain) on Revenue Hedges

(11)

(9)

(44)

Operating Income (Loss)

$432

$366

$518

$414

Gain on Sale of Business

509

Total Other Expense, Net

(82)

(65)

(53)

Income (Loss)

from Continuing Operations before Income Taxes

350

301

465

926

Provision for Income Taxes

(47)

(84)

(92)

(203)

Income

(Loss) from Continuing Operations

303

216

373

723

Discontinued Operations, Net of Taxes

(23)

Net Income (Loss)

280

216

373

723

Net

(Income)

Loss

Attributable

Noncontrolling

Interests

Net Income (Loss)

Attributable to Expedia, Inc.

$280

$233

$398

$764

Non-GAAP

GAAP

Reconciliation:

Adjusted EBITDA

Note: Numbers may not sum due to rounding

Non-GAAP / GAAP Reconciliation:

Free Cash Flow

Note: Numbers may not sum due to rounding and include eLong

$ Millions

2009

2010

2011

2012

2013

2014

2015

Cash provided by operations

$574

$605

$826

$1,237

$763

$1,367

$1,368

Capital expenditures

(79)

(136)

(208)

(236)

(309)

(328)

(787)

Free cash flow

$495

$469

$618

$1,001

$455

$1,039

$581

$ Millions

4Q15

FY15

Expedia

(excluding

eLong)

Adjusted

EBITDA

excluding

the

Impacts

Orbitz

Worldwide

and

HomeAway

$292

$1,204

Total Impact from Orbitz Worldwide

(25)

Total Impact from HomeAway

(14)

Expedia (excluding eLong) Adjusted EBITDA

$280

$1,165

eLong Adjusted EBITDA

(62)

Adjusted EBITDA

$280

$1,103

Depreciation

(96)

(337)

Amortization of Intangible Assets

(80)

(164)

Legal Reserves

, Occupancy Tax and Other

(2)

105

Stock-Based

Compensation

(44)

(178)

Restructuring Charges

(19)

(72)

Realized Loss (Gain) on Revenue Hedges

(9)

(44)

Operating Income (Loss)

$29

$414

Interest Expense, Net

(34)

(110)

Gain on Sale of Business

509

Other Expense, Net

(1)

113

Income (Loss)

from Continuing Operations before Income Taxes

(6)

926

Provision for Income Taxes

(7)

(203)

Income

(Loss) from Continuing Operations

(13)

723

Net

(Income)

Loss

Attributable

Noncontrolling

Interests

Net Income (Loss)

Attributable to Expedia, Inc.

($13)

$764

Non-GAAP / GAAP Reconciliation:

Adjusted EBITDA

Note: Numbers may not sum due to rounding

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