Form 8-K Expedia, Inc. For: Feb 08

February 8, 2018 4:05 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 8, 2018
 
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 108th 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))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
 






Item 2.02.    Results of Operations and Financial Condition.

On February 8, 2018, Expedia, Inc. issued a press release and will hold a conference call regarding its financial results for the quarter and year ended December 31, 2017. A copy of the earnings release is furnished as Exhibit 99.1 hereto.
Expedia is making reference to non-GAAP financial measures in both the earnings release and the conference call. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures is contained in the attached Exhibit 99.1 press 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 using the slides containing company information attached to this report as Exhibit 99.2 hereto.
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 8, 2018, Expedia announced that its Executive Committee, acting on behalf of its Board of Directors, has declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on March 28, 2018 to stockholders of record as of the close of business on March 8, 2018.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits
 
Exhibit
Number
  
Description
99.1
  
99.2
 





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/ ALAN PICKERILL
 
 
Alan Pickerill
 
 
Chief Financial Officer
Dated: February 8, 2018





EXHIBIT INDEX
 
Exhibit
Number
  
Description
99.1
  
99.2
 


Exhibit 99.1

expediainc72717a01.jpg
Expedia, Inc. Reports Fourth Quarter and Full Year 2017 Results
BELLEVUE, WA – February 8, 2018 – Expedia, Inc. (NASDAQ: EXPE) announced financial results today for the fourth quarter and full year ended December 31, 2017.

"I am excited to report that Expedia began 2018 firmly on a path toward faster growth and greater share gains in the $1.6 trillion travel industry. Over the past several months, we have made key organizational changes, aligned our company around common objectives and began executing on a new direction aimed at accelerating the geographic expansion of our global travel platform," said CEO Mark Okerstrom. "We are now operating with a clear focus on our highest priority markets, making concentrated investments across the platform including a step function change in our pace of adding new properties to our marketplace. These efforts combined with the impact of our ongoing cloud migration result in expectations for full year 2018 Adjusted EBITDA growth of 6% to 11%*."
Key Highlights
Gross bookings increased $2.4 billion or 14% year-over-year to $19.8 billion in the fourth quarter of 2017. Revenue increased 11% year-over-year to $2.3 billion in the fourth quarter.
Room nights stayed for Brand Expedia, Hotels.com, Expedia Affiliate Network and Egencia combined increased 17% year-over-year in the fourth quarter of 2017, with HomeAway room nights stayed up 30% year-over-year for the same period.
In 2017, gross bookings on the HomeAway platform increased 46% year-over-year to $8.7 billion. Total revenue of $906 million included transactional revenue of $617 million, which grew 115% year-over-year. 
Expedia, Inc.'s global Core OTA lodging portfolio increased to more than 590,000 properties available as of December 31, 2017, up 69% year-over-year, including 150,000 instantly bookable HomeAway listings.
In the fourth quarter of 2017, Expedia repurchased 1.3 million shares for $156 million and paid $46 million in dividends. During 2017, Expedia generated nearly $1.1 billion in free cash flow.

*A reconciliation of Adjusted EBITDA guidance to the closest corresponding GAAP measure is not provided because we are unable to predict the ultimate outcome of certain significant items without unreasonable efforts. These items include, but are not limited to, foreign exchange, returns on investment spending, and acquisition-related or restructuring expenses. As such, the items that are excluded from our non-GAAP guidance are uncertain, depend on various factors, and could have a material impact on GAAP results for the guidance period.
Financial Summary & Operating Metrics ($ millions except per share amounts) - Fourth Quarter 2017
Metric
Q4 2017
Q4 2016
Δ Y/Y
Room night growth(1)
15%
23%
(757) bps
Gross bookings(1)
$19,765.9
$17,402.5
14%
Revenue
2,319.2
2,092.8
11%
Operating income
113.5
147.2
(23)%
Net income attributable to Expedia, Inc.
55.2
79.5
(31)%
Diluted EPS
$0.35
$0.51
(31)%
Adjusted EBITDA(2)
402.5
441.5
(9)%
Adjusted net income(2)
131.6
182.9
(28)%
Adjusted EPS(2)
$0.84
$1.17
(28)%
Free cash flow(2)
(307.6)
(161.6)
(90)%

(1) Expedia acquired HomeAway on December 15, 2015. Beginning in the first quarter of 2017, HomeAway results are included in lodging room nights and gross bookings operating metrics, with quarterly results for 2016 adjusted to reflect this change.

Page 1 of 22


(2) “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”). See “Definitions of Non-GAAP Measures” and “Tabular Reconciliations for Non-GAAP Measures” on pages 16-20 herein for an explanation and reconciliations of non-GAAP measures used throughout this release.
Financial Summary & Operating Metrics ($ millions except per share amounts) - Full Year 2017
Metric
2017
2016
Δ Y/Y
Room night growth(1)
16%
32%(2)
(1,594) bps
Gross bookings(1)
$88,410.5
$78,410.7
13%
Revenue
10,059.8
8,773.6
15%
Operating income
625.1
461.7
35%
Net income attributable to Expedia, Inc.
378.0
281.8
34%
Diluted EPS
$2.42
$1.82
33%
Adjusted EBITDA(3)
1,712.5
1,615.7
6%
Adjusted net income(3)
678.5
698.8
(3)%
Adjusted EPS(3)
$4.30
$4.49
(4)%
Free cash flow(3)
1,088.8
815.0
34%

(1) Expedia acquired HomeAway on December 15, 2015. Beginning in the first quarter of 2017, HomeAway results are included in lodging room nights and gross bookings operating metrics, with quarterly results for 2016 adjusted to reflect this change.
(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, Inc. 2016 room night growth also excludes eLong, Inc. results prior to May 22, 2015.
(3) “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”). See “Definitions of Non-GAAP Measures” and “Tabular Reconciliations for Non-GAAP Measures” on pages 16-20 herein for an explanation and reconciliations of non-GAAP measures used throughout this release.

Please refer to the "Glossary of Business Terms," located in the Quarterly Results section on Expedia’s investor relations website, for business and financial statement definitions used throughout this release.

Discussion of Results
The results for Expedia, Inc. ("Expedia" or "the Company") include Expedia.com® ("Brand Expedia"), Hotels.com®, Expedia® Affiliate Network ("EAN"), trivago®, HomeAway®, Egencia®, Orbitz®, Travelocity®, Hotwire.com®, Wotif Group, CheapTickets®, ebookers®, CarRentals.comTM, Classic Vacations®, Expedia Local Expert®, Expedia® CruiseShipCenters®, SilverRail Technologies, Inc. ("SilverRail"), ALICE and AirAsia ExpediaTM, including the related international points of sale for all brands. All amounts shown are in U.S. dollars.

The results include the impacts of SilverRail and ALICE following Expedia's acquisition of majority ownership stakes in June 2017 and August 2017, respectively. All comparisons, unless otherwise noted, are to the corresponding 2016 periods.


Gross Bookings & Revenue
Gross Bookings by Segment ($ millions)
 
 
Fourth Quarter
 
 
Full Year
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ%
Core OTA
$
16,182

 
$
14,650

 
10%
 
 
$
72,701

 
$
66,064

 
10
%
HomeAway
1,913

 
1,299

 
47%
 
 
8,746

 
5,979

 
46
%
Egencia
1,670

 
1,454

 
15%
 
 
6,963

 
6,368

 
9
%
Total
$
19,766

 
$
17,403

 
14%
 
 
$
88,410

 
$
78,411

 
13
%
Note: Some numbers may not add due to rounding.
Fourth Quarter 2017: Total gross bookings increased 14% (including 2 percentage points of positive foreign exchange impact), driven primarily by growth in Brand Expedia, HomeAway, Hotels.com, EAN and Egencia.

Page 2 of 22



Domestic gross bookings increased 7% and international gross bookings increased 26% (including 6 percentage points of positive foreign exchange impact). International gross bookings totaled $8.0 billion and accounted for 40% of worldwide bookings, compared with 36% in the fourth quarter of 2016.
Full Year 2017: Total gross bookings increased 13%, driven primarily by growth in Brand Expedia, HomeAway, Hotels.com and EAN. Foreign exchange impact on total gross bookings growth was negligible. Domestic gross bookings increased 8% and international gross bookings increased 21% (including 1 percentage point of positive foreign exchange impact). International gross bookings totaled $33.2 billion and accounted for 38% of worldwide bookings, compared with 35% in the prior year.
Revenue by Segment ($ millions)
 
 
Fourth Quarter
Full Year
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ%
Core OTA
$
1,857

 
$
1,695

 
10%
 
 
$
7,881

 
$
7,084

 
11%
trivago
215

 
183

 
18%
 
 
1,166

 
836

 
40%
HomeAway
193

 
166

 
16%
 
 
906

 
689

 
32%
Egencia
137

 
116

 
18%
 
 
521

 
462

 
13%
Intercompany eliminations
(83
)
 
(67
)
 
(24)%
 
 
(414
)
 
(297
)
 
(39)%
Total
$
2,319

 
$
2,093

 
11%
 
 
$
10,060

 
$
8,774

 
15%
Note: Some numbers may not add due to rounding.
Fourth Quarter 2017: Total revenue increased 11% (including 3 percentage points of positive foreign exchange impact), driven primarily by growth in Brand Expedia, EAN and Hotels.com. Domestic revenue increased 4% and international revenue increased 19% (including 9 percentage points of positive foreign exchange impact). International revenue equaled $1.1 billion, representing 46% of worldwide revenue, compared to 43% in the fourth quarter of 2016.
Full Year 2017: Total revenue increased 15%, driven primarily by growth in Brand Expedia, trivago, HomeAway and EAN. Foreign exchange impact on total revenue growth was negligible. Domestic revenue increased 10% and international revenue increased 21% (including 3 percentage points of positive foreign exchange impact). International revenue equaled $4.5 billion, representing 45% of worldwide revenue, compared to 43% in the prior year.

Product & Services Detail - Fourth Quarter 2017
As a percentage of total worldwide revenue in the fourth quarter of 2017, lodging accounted for 69%, advertising and media accounted for 9%, air accounted for 8% and all other revenues accounted for the remaining 14%.
Lodging revenue, which includes hotel and HomeAway revenue, increased 11% in the fourth quarter of 2017 on a 15% increase in room nights stayed driven by growth in Brand Expedia, EAN, Hotels.com and HomeAway, partially offset by a 4% decrease in revenue per room night.
Air revenue was essentially flat in the fourth quarter of 2017 on a 3% increase in air tickets sold, offset by a 3% decrease in revenue per ticket year-over-year.
Advertising and media revenue increased 13% (including 6 percentage points of positive foreign exchange impact) in the fourth quarter of 2017 due to continued growth in Expedia® Media Solutions and trivago. All other revenue increased 14% in the fourth quarter of 2017 reflecting growth in travel insurance and car rental products.

Product & Services Detail - Full Year 2017
As a percentage of total worldwide annual revenue, lodging accounted for 68%, advertising and media accounted for 11%, air accounted for 8% and all other revenues accounted for the remaining 13%.

Page 3 of 22



Lodging revenue increased 14% in 2017 on a 16% increase in room nights stayed driven by growth in Brand Expedia, HomeAway and EAN, partially offset by a 2% decrease in revenue per room night.
Air revenue increased 1% in 2017 on a 4% increase in air tickets sold, partially offset by a 3% decrease in revenue per ticket.
Advertising and media revenue increased 33% in 2017 due to continued growth in trivago and Expedia® Media Solutions. All other revenue increased 16% in 2017 reflecting growth in travel insurance and car rental products.
Generally Accepted Accounting Principles (GAAP) Expenses
 
 
Costs and Expenses
 
 
As a % of Revenue
 
Fourth Quarter
 
 
Fourth Quarter
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ in bps
 
($ millions)
 
 
 
 
 
 
 
 
 
GAAP cost of revenue
$
437

 
$
371

 
18
%
 
 
18.9
%
 
17.7
%
 
114

GAAP selling and marketing
1,124

 
969

 
16
%
 
 
48.5
%
 
46.3
%
 
217

GAAP technology and content
372

 
324

 
15
%
 
 
16.0
%
 
15.5
%
 
56

GAAP general and administrative
198

 
174

 
14
%
 
 
8.5
%
 
8.3
%
 
21

Total GAAP costs and expenses
$
2,131

 
$
1,838

 
16
%
 
 
91.9
%
 
87.8
%
 
408

 
Costs and Expenses
 
 
As a % of Revenue
 
Full Year
 
 
Full Year
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ in bps
 
($ millions)
 
 
 
 
 
 
 
 
 
GAAP cost of revenue
$
1,757

 
$
1,597

 
10
 %
 
 
17.5
%
 
18.2
%
 
(74
)
GAAP selling and marketing
5,298

 
4,367

 
21
 %
 
 
52.7
%
 
49.8
%
 
288

GAAP technology and content
1,387

 
1,235

 
12
 %
 
 
13.8
%
 
14.1
%
 
(29
)
GAAP general and administrative
676

 
678

 
 %
 
 
6.7
%
 
7.7
%
 
(101
)
Total GAAP costs and expenses
$
9,118

 
$
7,877

 
16
 %
 
 
90.6
%
 
89.8
%
 
84

GAAP Cost of Revenue
Fourth Quarter 2017: Total GAAP cost of revenue increased 18%, compared to the fourth quarter of 2016, due to $39 million more in data center, cloud and other costs, as well as $19 million more in customer operations expenses, the largest driver being growth of operations to support our partner solutions business. Cloud expense in GAAP cost of revenue was $18 million during the fourth quarter of 2017, compared to $2 million in the fourth quarter of 2016.
Full Year 2017: Total GAAP cost of revenue increased 10%, compared to the prior year, driven by $122 million more in data center, cloud and other costs, including a $37 million increase in depreciation expense that is primarily data center related, as well as $40 million more in customer operations expenses. Cloud expense in GAAP cost of revenue was $57 million during 2017, compared to $4 million in 2016.
GAAP Selling and Marketing
Fourth Quarter 2017: Total GAAP selling and marketing expense increased 16%, compared to the fourth quarter of 2016, due to a $121 million increase in direct costs, including online and offline marketing expenses. trivago, Brand Expedia, EAN and HomeAway accounted for a majority of the increase in direct selling and marketing expenses in the fourth quarter of 2017.
For the fourth quarter of 2017, indirect costs increased $34 million, primarily driven by growth in personnel due to an accelerated pace of hiring in the lodging supply organization as well as increased headcount at Egencia.

Page 4 of 22



Full Year 2017: Total GAAP selling and marketing expense increased 21%, compared to the prior year, due to an $830 million increase in direct costs, including online and offline marketing expenses. trivago, Brand Expedia, EAN and Hotels.com accounted for the majority of the increase in direct selling and marketing expenses in 2017.
For the full year 2017, indirect costs increased $101 million, compared to the prior year. The increase was primarily driven by growth in personnel at Egencia as well as in the lodging supply organization.

GAAP Technology and Content
Fourth Quarter 2017: Total GAAP technology and content expense increased 15%, compared to the fourth quarter of 2016, due to $26 million more in personnel and overhead costs from increased headcount. Depreciation and amortization of technology assets also increased $19 million, compared to the fourth quarter of 2016. Cloud expense in GAAP technology and content expense was $11 million during the fourth quarter of 2017, compared to $12 million in the fourth quarter of 2016.
Full Year 2017: Total GAAP technology and content expense increased 12%, compared to the prior year, due to an increase of $83 million in depreciation and amortization and $67 million more in personnel and overhead costs from increased headcount. Cloud expense in GAAP technology and content expense was $38 million in 2017, compared to $35 million in 2016.
GAAP General and Administrative
Fourth Quarter 2017: Total GAAP general and administrative expense increased 14%, compared to the fourth quarter of 2016, primarily due to a $19 million increase in personnel and overhead expenses from increased headcount.
Full Year 2017: Total GAAP general and administrative expense was relatively flat compared to the prior year, primarily due to a decrease in stock-based compensation of $63 million, from the current year reversal of approximately $41 million of previously recognized stock-based compensation expense related to the departure of the former CEO as well as the absence of prior year increases related to trivago. This is offset by an increase of $42 million in personnel and overhead expenses from increased headcount and, to a lesser extent, an increase in professional fees.
Adjusted Expenses
 
 
Costs and Expenses
 
 
As a % of Revenue
 
Fourth Quarter
 
 
Fourth Quarter
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ in bps
 
($ millions)
 
 
 
 
 
 
 
 
 
Adjusted cost of revenue *
$
409

 
$
352

 
16
%
 
 
17.6
%
 
16.8
%
 
83

Adjusted selling and marketing *
1,104

 
951

 
16
%
 
 
47.6
%
 
45.5
%
 
214

Adjusted technology and content *
239

 
210

 
14
%
 
 
10.3
%
 
10.0
%
 
26

Adjusted general and administrative *
168

 
147

 
14
%
 
 
7.2
%
 
7.0
%
 
20

Total adjusted costs and expenses
$
1,920

 
$
1,660

 
16
%
 
 
82.8
%
 
79.3
%
 
343

Total depreciation
165

 
132

 
25
%
 
 
7.1
%
 
6.3
%
 
81

Total stock-based compensation
46

 
45

 
2
%
 
 
2.0
%
 
2.1
%
 
(17
)
Total costs and expenses
$
2,131

 
$
1,837

 
16
%
 
 
91.9
%
 
87.8
%
 
408


Page 5 of 22



 
Costs and Expenses
 
 
As a % of Revenue
 
Full Year
 
 
Full Year
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ in bps
 
($ millions)
 
 
 
 
 
 
 
 
 
Adjusted cost of revenue *
$
1,647

 
$
1,523

 
8
 %
 
 
16.4
%
 
17.4
%
 
(99
)
Adjusted selling and marketing *
5,220

 
4,292

 
22
 %
 
 
51.9
%
 
48.9
%
 
297

Adjusted technology and content *
887

 
810

 
10
 %
 
 
8.8
%
 
9.2
%
 
(41
)
Adjusted general and administrative *
599

 
546

 
10
 %
 
 
6.0
%
 
6.2
%
 
(26
)
Total adjusted costs and expenses
$
8,354

 
$
7,171

 
16
 %
 
 
83.0
%
 
81.7
%
 
131

Total depreciation
614

 
477

 
29
 %
 
 
6.1
%
 
5.4
%
 
67

Total stock-based compensation
149

 
242

 
(38
)%
 
 
1.5
%
 
2.8
%
 
(128
)
Total costs and expenses
$
9,117

 
$
7,890

 
16
 %
 
 
90.6
%
 
89.9
%
 
70

*Adjusted expenses are non-GAAP measures. See pages 16-20 herein for a description and reconciliation to the corresponding GAAP measures.
Note: Some numbers may not add due to rounding.
Adjusted Cost of Revenue
Fourth Quarter 2017: Total adjusted cost of revenue increased 16%, compared to the fourth quarter of 2016, due to $32 million more in data center, cloud and other costs and $17 million more in customer operations expenses, the largest driver being growth of operations to support our partner solutions business. Cloud expense in adjusted cost of revenue was $18 million during the fourth quarter of 2017, compared to $2 million in the fourth quarter of 2016.
Full Year 2017: Total adjusted cost of revenue increased 8%, compared to the prior year, due to $93 million more in data center, cloud and other costs and $33 million more in customer operations expenses. Cloud expense in adjusted cost of revenue was $57 million during 2017, compared to $4 million in 2016.
Adjusted Selling and Marketing
Fourth Quarter 2017: Total adjusted selling and marketing expense increased 16%, compared to the fourth quarter of 2016, due to $121 million more in direct costs, including online and offline marketing expenses. trivago, Brand Expedia, EAN and HomeAway accounted for a majority of the increase in direct selling and marketing expenses in the fourth quarter of 2017.
For the fourth quarter of 2017, indirect costs increased $31 million, primarily driven by growth in personnel due to an accelerated pace of hiring in the lodging supply organization as well as increased headcount at Egencia. As a percentage of total adjusted selling and marketing, indirect costs represented 21% in the fourth quarter of 2017, consistent with 21% in the fourth quarter of 2016.
Full Year 2017: Total adjusted selling and marketing expense increased 22%, compared to the prior year, due to an $830 million increase in direct costs, including online and offline marketing expenses. trivago, Brand Expedia, EAN and Hotels.com accounted for a majority of the increase in direct selling and marketing expenses in 2017.
For the full year 2017, indirect costs increased $98 million, compared to the prior year. The increase was primarily driven by growth in personnel at Egencia as well as in the lodging supply organization. As a percentage of total adjusted selling and marketing, indirect costs represented 16% in 2017, down from 18% in 2016.
Adjusted Technology and Content
Fourth Quarter 2017: Total adjusted technology and content expense increased 14%, compared to the fourth quarter of 2016, due to $26 million more in total personnel and overhead costs from increased headcount. Cloud expense in adjusted technology and content expense was $11 million during the fourth quarter of 2017, compared to $12 million in the fourth quarter of 2016.
Full Year 2017: Total adjusted technology and content expense increased 10%, compared to the prior year, due to $67 million more in total personnel and overhead costs from increased headcount. Cloud expense in adjusted technology and content expense was $38 million during 2017, compared to $35 million in 2016.

Page 6 of 22



Adjusted General and Administrative
Fourth Quarter 2017: Total adjusted general and administrative expense increased 14%, compared to the fourth quarter of 2016, primarily due to a $17 million increase in personnel and overhead from increased headcount.
Full Year 2017: Total adjusted general and administrative expense increased 10%, compared to the prior year, primarily due to a $34 million increase in personnel and overhead from increased headcount and, to a lesser extent, an increase in professional fees.
Depreciation Expense
Depreciation expense increased $33 million to $165 million in the fourth quarter of 2017 and $137 million to $614 million in 2017, primarily due to previously capitalized software development costs for completed technology projects which have been placed into service, as well as investments in corporate technology infrastructure.
Stock-Based Compensation Expense
Stock-based compensation expense increased $1 million to $46 million in the fourth quarter of 2017. Stock-based compensation expense decreased $93 million to $149 million in 2017, due to the exercise of Expedia's call right on certain trivago shares held by employees in 2016, as described below, as well as the reversal of approximately $41 million in the third quarter of 2017 of previously recognized stock-based compensation expense related to Expedia's former CEO.

During the second quarter of 2016, Expedia exercised its call right on certain shares held by trivago employees, which were originally awarded in the form of stock options pursuant to the trivago employee stock option plan and subsequently exercised by such employees, and elected to do so at a premium to fair value, which resulted in an incremental stock-based compensation charge of approximately $49 million in the second quarter of 2016 pursuant to liability award treatment. The acquisition of these employee minority interests increased Expedia's ordinary ownership of trivago by a nominal amount.

Net Income Attributable to Expedia and Adjusted EBITDA*
Adjusted EBITDA by Segment ($ millions)
 
 
Fourth Quarter
 
 
Full Year
 
2017
 
2016
 
Δ%
 
 
2017
 
2016
 
Δ%
Core OTA
$
537

 
$
532

 
1%
 
 
$
2,069

 
$
1,966

 
5%
trivago(1)
(9
)
 
14

 
NM
 
 
5

 
35

 
(84)%
HomeAway
31

 
42

 
(28)%
 
 
202

 
175

 
15%
Egencia
19

 
21

 
(7)%
 
 
94

 
81

 
17%
Unallocated overhead costs
(176
)
 
(168
)
 
(5)%
 
 
(657
)
 
(641
)
 
(3)%
Total
$
402

 
$
442

 
(9)%
 
 
$
1,713

 
$
1,616

 
6%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Expedia, Inc.(2)
55

 
$
79

 
(31)%
 
 
$
378

 
$
282

 
34%
(1) Upon completion of its initial public offering on December 16, 2016, trivago became a separately listed company on the Nasdaq Global Select Market and, therefore, is subject to its own reporting and filing requirements which could result in possible differences that are not expected to be material to Expedia, Inc.(2) Expedia does not calculate or report net income by segment.
* Adjusted EBITDA is a non-GAAP measure. See pages 16-20 herein for a description and reconciliation to the corresponding GAAP measure.
Note: Some numbers may not add due to rounding.
GAAP net income attributable to Expedia was $55 million in the fourth quarter of 2017, compared to GAAP net income of $79 million in the fourth quarter of 2016. GAAP net income attributable to Expedia was $378 million in 2017, an increase of 34% compared to GAAP net income of $282 million in 2016.

Page 7 of 22



Adjusted EBITDA was $402 million in the fourth quarter of 2017, a decrease of 9% compared to Adjusted EBITDA of $442 million in the fourth quarter of 2016. Adjusted EBITDA was $1.7 billion in 2017, an increase of 6% compared to Adjusted EBITDA of $1.6 billion in 2016.
Amortization of Intangible Assets
Consolidated amortization of intangible assets increased $3 million to $71 million in the fourth quarter of 2017, primarily due to new business acquisitions in the current year. Consolidated amortization of intangible assets decreased $42 million to $275 million in 2017, due to the completion of amortization related to certain intangible assets, partially offset by $11 million of amortization related to new business acquisitions in the current year. In addition, in 2016 we recorded a $35 million impairment loss related to indefinite-lived trade names.
Restructuring and Related Reorganization Charges
In connection with activities to centralize and optimize certain operations as well as migrate technology platforms in the prior year, primarily related to the previously disclosed acquisitions, we recognized $17 million and $56 million in restructuring and related reorganization charges during 2017 and 2016. Based on current plans, which are subject to change, and excluding any possible future acquisition integrations, we do not expect to incur material restructuring charges in 2018.
Interest and Other
Consolidated interest income increased $4 million in the fourth quarter of 2017 and increased $14 million in 2017, compared to the prior year periods, primarily due to higher invested balances in both periods, and to a lesser extent higher rates of return during 2017. Consolidated interest expense increased $9 million in the fourth quarter of 2017 and $9 million in 2017, compared to the prior year periods, primarily due to the issuance of the $1 billion of senior unsecured notes in September 2017.
Consolidated other, net was a gain of $5 million in the fourth quarter of 2017, consistent with a gain of $5 million in the fourth quarter of 2016. Consolidated other, net was a loss of $61 million in 2017, compared to a loss of $32 million in 2016. The losses in 2017 and 2016 were primarily related to foreign exchange. Expedia’s revenue hedging program is designed primarily to offset the book-to-stay impact on merchant hotel revenue. Expedia includes that portion of any realized gains or losses from the revenue hedging program that are included in other, net that relate to revenue recognized in the period in the calculation of Adjusted EBITDA.
Income Taxes
The effective tax rate on GAAP pretax income was 30% and 11% for the fourth quarter and full year 2017, respectively, compared to 26% and 6% in the prior year periods. The increase in the quarterly effective tax rate for 2017 compared to 2016 is due to a number of factors, including an increase in losses in foreign jurisdictions, offset by the estimated effect of the Tax Cuts and Jobs Act (the "Tax Act").  The increase in the annual effective tax rate for 2017 compared to 2016 was primarily due to the same factors, as well as one-time benefits in the prior year period.  In addition, the effective tax rate for 2017 and 2016 was lower than the 35% U.S. federal statutory rate due to earnings in foreign jurisdictions, predominantly Switzerland, where the statutory income tax rate is lower, as well as excess tax benefits related to share-based payments.

The effective tax rate on pretax adjusted net income ("ANI") was 31% and 25% for the fourth quarter and full year 2017, respectively, compared to 28% and 26% in the prior year periods. The year-over-year change in the ANI effective tax rate for the fourth quarter of 2017 was primarily driven by the timing of recognition for certain discrete items recorded during the fourth quarter of 2017 tied to the filing of various tax returns.  The year-over-year change in the ANI effective tax rate for the full year 2017 was relatively consistent with the prior year. 
United States Tax Reform Impacts
As of December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Tax Act. We have recognized a net tax benefit of $14 million for the provisional tax impacts of the Tax Act related to the transition tax and revaluation of our net deferred tax liability and included these estimates in our consolidated financial statements for the year ended December 31, 2017. The ultimate impact may materially differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions we

Page 8 of 22



have made, additional regulatory guidance that may be issued and actions we may take as a result of the Tax Act. These provisional tax effects were excluded from our computation of ANI.

Balance Sheet, Cash Flows and Capitalization
Cash, cash equivalents, restricted cash and short-term investments totaled $3.4 billion at December 31, 2017. For the year ended December 31, 2017, consolidated net cash provided by operating activities was $1.8 billion and consolidated free cash flow totaled $1.1 billion. Both measures include $593 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, 2017, consolidated free cash flow was $(308) million, a decrease of $146 million, compared to the prior year period, primarily due to the decrease in net cash provided by operating activities. For the year ended December 31, 2017, consolidated free cash flow was $1.1 billion, an increase of $274 million, compared to the prior year period, primarily due to the increase in net cash provided by operating activities related to changes in working capital and higher Adjusted EBITDA.
Long-term investments and other assets includes an investment in Despegar.com, Corp. ("Despegar"), which is recorded at a fair value of $264 million as of December 31, 2017, and $338 million of a $350 million investment made in Traveloka Holding Limited in July 2017, accounted for as a cost method investment (with a small portion allocated to intangible assets). Despegar completed its initial public offering in September 2017.
Current maturities of long-term debt includes $500 million in 7.456% senior notes due in August 2018. Long-term debt, net of applicable discounts, debt issuance costs and current maturities, totaled $3.7 billion at December 31, 2017 consisting of $990 million in 3.8% senior notes due 2028; $741 million in 5.0% senior notes due 2026; $495 million in 4.5% senior notes due 2024; $775 million (€650 million) in 2.5% senior notes due 2022; and $748 million in 5.95% senior notes due 2020. The 3.8% senior notes due 2028 were issued during the third quarter of 2017. In addition, as of December 31, 2017, Expedia had a $1.5 billion unsecured revolving credit facility, which was essentially untapped.
At December 31, 2017, Expedia, Inc. had stock-based awards outstanding representing approximately 18 million shares of Expedia common stock, consisting of options to purchase approximately 16 million common shares with a $95.23 weighted average exercise price and weighted average remaining life of 4.4 years, and approximately 2 million restricted stock units (“RSUs”).
During 2017, Expedia, Inc. repurchased 2.3 million shares of Expedia, Inc. common stock for an aggregate purchase price of $294 million excluding transaction costs (an average of $127.04 per share). As of December 31, 2017, there were approximately 4.9 million shares remaining under a February 2015 repurchase authorization.
On December 7, 2017, Expedia, Inc. paid a quarterly dividend of $46 million ($0.30 per common share). In addition, on February 7, 2018, the Executive Committee of Expedia’s Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock to be paid to stockholders of record as of the close of business on March 8, 2018, with a payment date of March 28, 2018. Based on current shares outstanding, the total payment for this quarterly dividend is estimated to be approximately $46 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 9 of 22



Recent Highlights
Expedia, Inc.
As of December 31, 2017, Expedia's global lodging portfolio consisted of more than 590,000 properties available, including more than 150,000 HomeAway listings.
Expedia renewed its supply marketing agreements with Air Serbia and Air Tahiti Nui.
G6 Hospitality became the latest hotel chain to implement Expedia’s Partner Loyalty Enrollment program which enables them to enlist and sign up users from Brand Expedia and Hotels.com sites for their brand loyalty programs.
Bahia Principe and Omni Hotels & Resorts each entered into agreements for Expedia to power package bookings on their US sites. Additionally, Minor Hotels became the first hotel chain in APAC to integrate Expedia’s white-label MICE (meetings, incentives, conferences, exhibitions) solution into its website.
Core OTA
Brand Expedia launched Deutsche Bahn rail tickets as well as tickets for international rail routes to travelers in Germany, with plans to extend to an international audience in early 2018.
Brand Expedia launched flights and packages on its Korean site, which are now available in addition to hotels.
Hotels.com collaborated with Capital One, giving Capital One Venture cardholders ten times the miles on bookings while still earning Hotels.com Rewards points when they book at hotels.com/venture. Additionally, Hotels.com gift cards are now available through Vector Gift Cards & Marketing Agency, with National Gift Card as new agency of record for business-to-business sales.
EAN and Amadeus announced that travel sellers worldwide will be able to book EAN’s rates and inventory at more than 400,000 hotels worldwide through Amadeus, including full-service hotel brands, boutique hotels, and serviced apartments.
In November, Hotwire launched its Million Dollar Sale featuring $50 5-star hotels in Las Vegas. This fixed price sale, which was the brand’s first, garnered outsized media and social buzz, more than doubled Hotwire's demand for Las Vegas during the sale period and netted four times more new customers versus typical expectations.
Expedia CruiseShipCenters achieved over $675 million in gross bookings in 2017, exhibiting 20% year-over-year growth.
trivago
trivago’s emerging markets showed a strong performance, increasing the share of the Rest of World (ROW) region in the fourth quarter to 23%, up from 15% in the same period in 2016.
In November, trivago launched the integration of HomeAway vacation rental inventory on its platform to amplify its catalog and diversify its advertiser base, with over 70,000 properties listed as of December 31, 2017.
HomeAway
HomeAway launched its Premier Partner program, highlighting property owners and managers who meet marketplace requirements designed to provide great traveler experiences. HomeAway continued to launch new tools for property owners and managers, such as the Marketplace Feed that alerts owners to booking opportunities, as well as win/loss notifications that highlight bookings won or lost by the property owner and allowing them to compare their property with others in the market.
HomeAway launched a new daytime television series in the United States called “Vacation Rental Potential” on the A&E Network that highlights the purchasing and managing of vacation rental properties.
Egencia
Egencia surpassed one million cumulative app downloads as of the end of 2017, with downloads during the year increasing 65% over 2016. Travelers are increasingly using the app during their trips; in-trip views grew 29% year-over-year in 2017.
Corporate Travel Awards named Egencia the #1 TMC in the UK, Travel News named Egencia the #1 TMC in Sweden, while Tour Hedbo named Egencia the #2 TMC in France.
Egencia entered into agreement renewals with Netflix, the world’s leading internet entertainment service, and BlackBerry, a global software solutions provider delivering ‘smart in everyThing.’


Page 10 of 22



EXPEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)
(Unaudited)
 
Three months ended December 31,
 
Year ended December 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Revenue
$
2,319,208

 
$
2,092,829

 
$
10,059,844

 
$
8,773,564

Costs and expenses:
 
 
 
 
 
 
 
Cost of revenue (1) (2)
437,278

 
370,841

 
1,756,531

 
1,596,698

Selling and marketing (1) (2)
1,123,658

 
968,555

 
5,297,832

 
4,367,417

Technology and content (1) (2)
372,156

 
324,098

 
1,386,787

 
1,235,019

General and administrative (1) (2)
197,558

 
173,897

 
675,961

 
678,292

Amortization of intangible assets
71,479

 
68,022

 
275,445

 
317,141

Impairment of intangible assets

 
32,749

 

 
34,890

Legal reserves, occupancy tax and other
2,456

 
(2,152
)
 
25,412

 
26,498

Restructuring and related reorganization charges (1)
1,148

 
9,633

 
16,738

 
55,907

Operating income
113,475

 
147,186

 
625,138

 
461,702

Other income (expense):
 
 
 
 
 
 
 
Interest income
9,287

 
5,377

 
34,137

 
19,726

Interest expense
(52,073
)
 
(42,875
)
 
(181,712
)
 
(173,148
)
Other, net
5,217

 
5,438

 
(60,799
)
 
(31,680
)
Total other expense, net
(37,569
)
 
(32,060
)
 
(208,374
)
 
(185,102
)
Income before income taxes
75,906

 
115,126

 
416,764

 
276,600

Provision for income taxes
(23,031
)
 
(30,244
)
 
(45,405
)
 
(15,315
)
Net income
52,875

 
84,882

 
371,359

 
261,285

Net (income) loss attributable to non-controlling interests
2,284

 
(5,425
)
 
6,605

 
20,563

Net income attributable to Expedia, Inc.
$
55,159

 
$
79,457

 
$
377,964

 
$
281,848

 
 
 
 
 
 
 
 
Earnings per share attributable to Expedia, Inc. available to common stockholders:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
0.53

 
$
2.49

 
$
1.87

Diluted
0.35

 
0.51

 
2.42

 
1.82

Shares used in computing earnings per share:
 
 
 
 
 
 
 
Basic
152,252

 
150,624

 
151,619

 
150,367

Diluted
155,974

 
155,071

 
156,385

 
154,517

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.30

 
$
0.26

 
$
1.16

 
$
1.00

_________
 
 
 
 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
 
 
 
 
Cost of revenue
$
2,318

 
$
2,620

 
$
10,173

 
$
11,388

Selling and marketing
9,218

 
9,282

 
39,855

 
46,654

Technology and content
13,052

 
12,539

 
54,633

 
63,536

General and administrative
21,170

 
20,374

 
44,689

 
108,149

Restructuring and related reorganization charges

 

 

 
12,690

 
 
 
 
 
 
 
 
(2) Includes depreciation as follows:
 
 
 
 
 
 
 
Cost of revenue
$
26,077

 
$
16,567

 
$
99,489

 
$
62,420

Selling and marketing
10,680

 
8,055

 
37,552

 
28,747

Technology and content
120,003

 
101,266

 
445,083

 
361,434

General and administrative
8,595

 
6,340

 
31,975

 
24,460



Page 11 of 22




EXPEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
 
December 31,
 
2017
 
2016
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,846,729

 
$
1,796,811

Restricted cash and cash equivalents
69,055

 
18,733

Short-term investments
468,508

 
72,313

Accounts receivable, net of allowance of $30,696 and $25,278
1,865,995

 
1,343,247

Income taxes receivable
20,633

 
19,402

Prepaid expenses and other current assets
268,669

 
199,745

Total current assets
5,539,589

 
3,450,251

Property and equipment, net
1,575,258

 
1,394,904

Long-term investments and other assets
845,450

 
520,058

Deferred income taxes
17,930

 
23,658

Intangible assets, net
2,308,536

 
2,446,652

Goodwill
8,228,865

 
7,942,023

TOTAL ASSETS
$
18,515,628

 
$
15,777,546

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Accounts payable, merchant
$
1,837,936

 
$
1,509,313

Accounts payable, other
697,560

 
577,012

Deferred merchant bookings
3,219,279

 
2,617,791

Deferred revenue
325,722

 
282,517

Income taxes payable
33,374

 
49,739

Accrued expenses and other current liabilities
1,264,819

 
1,090,826

Current maturities of long-term debt
500,000

 

Total current liabilities
7,878,690

 
6,127,198

Long-term debt, excluding current maturities
3,749,054

 
3,159,336

Deferred income taxes
328,602

 
484,970

Other long-term liabilities
408,380

 
312,939

Commitments and contingencies
 
 
 
Redeemable non-controlling interests
22,334

 

Stockholders’ equity:
 
 
 
Common stock $.0001 par value
23

 
22

Authorized shares: 1,600,000
 
 
 
Shares issued: 228,467 and 224,310
 
 
 
Shares outstanding: 138,939 and 137,232
 
 
 
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
9,162,909

 
8,794,298

Treasury stock — Common stock, at cost
(4,822,743
)
 
(4,510,655
)
Shares: 89,528 and 87,077
 
 
 
Retained earnings
331,078

 
129,034

Accumulated other comprehensive income (loss)
(148,933
)
 
(280,399
)
Total Expedia, Inc. stockholders’ equity
4,522,335

 
4,132,301

Non-redeemable non-controlling interests
1,606,233

 
1,560,802

Total stockholders’ equity
6,128,568

 
5,693,103

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
18,515,628

 
$
15,777,546


Page 12 of 22



EXPEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Year ended December 31,
 
2017
 
2016
Operating activities:
 
 
 
Net income
$
371,359

 
$
261,285

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation of property and equipment, including internal-use software and website development
614,099

 
477,061

Amortization of stock-based compensation
149,350

 
242,417

Amortization of intangible assets
275,445

 
317,141

Impairment of intangible assets

 
34,890

Deferred income taxes
(103,308
)
 
(14,088
)
Foreign exchange (gain) loss on cash, cash equivalents and short-term investments, net
(78,819
)
 
16,253

Realized (gain) loss on foreign currency forwards
(6,335
)
 
53,089

Non-controlling interest basis adjustment
(1,678
)
 

Other
(13,660
)
 
7,555

Changes in operating assets and liabilities, net of effects from acquisitions and disposals:
 
 
 
Accounts receivable
(455,668
)
 
(276,154
)
Prepaid expenses and other assets
(116,768
)
 
(30,198
)
Accounts payable, merchant
315,989

 
184,398

Accounts payable, other, accrued expenses and other current liabilities
256,728

 
79,202

Tax payable/receivable, net
(30,577
)
 
(100,525
)
Deferred merchant bookings
592,912

 
261,402

Deferred revenue
30,085

 
50,606

Net cash provided by operating activities
1,799,154

 
1,564,334

Investing activities:
 
 
 
Capital expenditures, including internal-use software and website development
(710,330
)
 
(749,348
)
Purchases of investments
(1,811,355
)
 
(45,352
)
Sales and maturities of investments
1,096,404

 
60,935

Acquisitions, net of cash acquired
(170,639
)
 
(777
)
Proceeds from sale of business, net of cash divested and disposal costs

 
67,088

Net settlement on foreign currency forwards
6,335

 
(53,089
)
Other, net
7,195

 
2,222

Net cash used in investing activities
(1,582,390
)
 
(718,321
)
Financing activities:
 
 
 
Proceeds from issuance of long-term debt, net of issuance costs
989,600

 
(2,093
)
Payment of HomeAway Convertible Notes

 
(401,424
)
Purchases of treasury stock
(312,089
)
 
(455,746
)
Payment of dividends to stockholders
(175,775
)
 
(150,159
)
Proceeds from exercise of equity awards and employee stock purchase plan
229,081

 
141,043

Changes in controlled subsidiaries, net
(18,137
)
 
208,016

Withholding taxes for stock option exercises
(9,063
)
 
(1,282
)
Other, net
(16,103
)
 
(28,974
)
Net cash provided by (used in) financing activities
687,514

 
(690,619
)
Effect of exchange rate changes on cash and cash equivalents
145,640

 
(34,882
)
Net increase in cash and cash equivalents
1,049,918

 
120,512

Cash and cash equivalents at beginning of year
1,796,811

 
1,676,299

Cash and cash equivalents at end of year
$
2,846,729

 
$
1,796,811

Supplemental cash flow information
 
 
 
Cash paid for interest
$
162,932

 
$
153,755

Income tax payments, net
174,180

 
124,291


Page 13 of 22



Expedia, Inc.
Trended Metrics
(All figures in millions)

The supplemental metrics below are intended to supplement the financial statements in this release and in our filings with the SEC, and do not include adjustments for one-time items, acquisitions, foreign exchange or other adjustments. The definition, methodology and appropriateness of any of our supplemental metrics are subject to removal and/or change, and such changes could be material. In the event of any discrepancy between any supplemental metric and our historical financial statements, you should rely on the information filed with the SEC and the financial statements in our most recent earnings release.

 
 
 
2016
 
 
 
2017
 
 
 
Full Year
 
 
 
Y/Y Growth
 
 
 
 
 
Q1
Q2
Q3
Q4
 
 
 
Q1
Q2
Q3
Q4
 
 
 
2016
2017
 
 
 
Q417
2017
 
 
Gross bookings by segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core OTA
 
 
$
17,226

$
17,182

$
17,007

$
14,650

 
 
 
$
19,110

$
18,954

$
18,456

$
16,182

 
 
 
$
66,064

$
72,701

 
 
 
10%
10%
 
 
HomeAway
 
 
1,818

1,460

1,403

1,299

 
 
 
2,697

2,123

2,013

1,913

 
 
 
5,979

8,746

 
 
 
47%
46%
 
 
Egencia
 
 
1,656

1,679

1,579

1,454

 
 
 
1,804

1,761

1,728

1,670

 
 
 
6,368

6,963

 
 
 
15%
9%
 
 
Total
 
 
$
20,699

$
20,321

$
19,988

$
17,403

 
 
 
$
23,610

$
22,838

$
22,197

$
19,766

 
 
 
$
78,411

$
88,410

 
 
 
14%
13%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross bookings by geography
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
 
$
13,744

$
13,320

$
12,915

$
11,074

 
 
 
$
15,128

$
14,730

$
13,540

$
11,800

 
 
 
$
51,053

$
55,197

 
 
 
7%
8%
 
 
International
 
 
6,955

7,001

7,073

6,329

 
 
 
8,483

8,108

8,657

7,966

 
 
 
27,358

33,213

 
 
 
26%
21%
 
 
Total
 
 
$
20,699

$
20,321

$
19,988

$
17,403

 
 
 
$
23,610

$
22,838

$
22,197

$
19,766

 
 
 
$
78,411

$
88,410

 
 
 
14%
13%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross bookings by business model
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
 
$
10,640

$
10,611

$
10,023

$
8,869

 
 
 
$
11,342

$
11,168

$
10,392

$
9,493

 
 
 
$
40,143

$
42,395

 
 
 
7%
6%
 
 
Merchant
 
 
8,242

8,250

8,563

7,235

 
 
 
9,572

9,546

9,792

8,360

 
 
 
32,289

37,269

 
 
 
16%
15%
 
 
HomeAway
 
 
1,818

1,460

1,403

1,299

 
 
 
2,697

2,123

2,013

1,913

 
 
 
5,979

8,746

 
 
 
47%
46%
 
 
Total
 
 
$
20,699

$
20,321

$
19,988

$
17,403

 
 
 
$
23,610

$
22,838

$
22,197

$
19,766

 
 
 
$
78,411

$
88,410

 
 
 
14%
13%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core OTA
 
 
$
1,540

$
1,765

$
2,083

$
1,695

 
 
 
$
1,700

$
2,009

$
2,314

$
1,857

 
 
 
$
7,084

$
7,881

 
 
 
10%
11%
 
 
trivago
 
 
176

201

276

183

 
 
 
286

328

338

215

 
 
 
836

1,166

 
 
 
18%
40%
 
 
HomeAway
 
 
142

172

210

166

 
 
 
185

224

305

193

 
 
 
689

906

 
 
 
16%
32%
 
 
Egencia
 
 
110

125

112

116

 
 
 
123

135

126

137

 
 
 
462

521

 
 
 
18%
13%
 
 
Intercompany eliminations
 
 
(64
)
(66
)
(101
)
(67
)
 
 
 
(104
)
(110
)
(117
)
(83
)
 
 
 
(297
)
(414
)
 
 
 
(24)%
(39)%
 
 
Total
 
 
$
1,904

$
2,196

$
2,581

$
2,093

 
 
 
$
2,189

$
2,586

$
2,966

$
2,319

 
 
 
$
8,774

$
10,060

 
 
 
11%
15%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by geography
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
 
$
1,115

$
1,271

$
1,451

$
1,199

 
 
 
$
1,249

$
1,457

$
1,576

$
1,252

 
 
 
$
5,037

$
5,535

 
 
 
4%
10%
 
 
International
 
 
789

924

1,130

893

 
 
 
940

1,129

1,390

1,067

 
 
 
3,737

4,525

 
 
 
19%
21%
 
 
Total
 
 
$
1,904

$
2,196

$
2,581

$
2,093

 
 
 
$
2,189

$
2,586

$
2,966

$
2,319

 
 
 
$
8,774

$
10,060

 
 
 
11%
15%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by business model
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
 
$
523

$
612

$
723

$
567

 
 
 
$
571

$
684

$
803

$
629

 
 
 
$
2,425

$
2,687

 
 
 
11%
11%
 
 
Merchant
 
 
1,065

1,210

1,407

1,170

 
 
 
1,176

1,376

1,559

1,283

 
 
 
4,852

5,394

 
 
 
10%
11%
 
 
Advertising & media
 
 
174

202

241

190

 
 
 
257

302

299

214

 
 
 
807

1,073

 
 
 
13%
33%
 
 
HomeAway
 
 
142

172

210

166

 
 
 
185

224

305

193

 
 
 
689

906

 
 
 
16%
32%
 
 
Total
 
 
$
1,904

$
2,196

$
2,581

$
2,093

 
 
 
$
2,189

$
2,586

$
2,966

$
2,319

 
 
 
$
8,774

$
10,060

 
 
 
11%
15%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core OTA
 
 
$
292

$
428

$
714

$
532

 
 
 
$
306

$
488

$
737

$
537

 
 
 
$
1,966

$
2,069

 
 
 
1%
5%
 
 
trivago
 
 
8

7

6

14

 
 
 
21

2

(8
)
(9
)
 
 
 
35

5

 
 
 
NM
(86)%
 
 
HomeAway
 
 
17

38

77

42

 
 
 
6

39

126

31

 
 
 
175

202

 
 
 
(28)%
15%
 
 
Egencia
 
 
15

26

18

21

 
 
 
27

28

20

19

 
 
 
81

94

 
 
 
(7)%
17%
 
 
Unallocated overhead costs
 
 
(156
)
(169
)
(148
)
(168
)
 
 
 
(151
)
(164
)
(166
)
(176
)
 
 
 
(641
)
(657
)
 
 
 
(5)%
(3)%
 
 
Total
 
 
$
177

$
331

$
667

$
442

 
 
 
$
208

$
393

$
709

$
402

 
 
 
$
1,616

$
1,713

 
 
 
(9)%
6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Expedia, Inc.
 
 
$
(109
)
$
32

$
279

$
79

 
 
 
$
(86
)
$
57

$
352

$
55

 
 
 
$
282

$
378

 
 
 
(31)%
34%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 14 of 22



Expedia, Inc. (excluding eLong)
Trended Metrics
(All figures in millions)

 
 
 
2016
 
 
 
2017
 
 
 
Full Year
 
 
 
 
 
Q1
Q2
Q3
Q4
 
 
 
Q1
Q2
Q3
Q4