Revenue growth accelerated to 16% year over year driven by healthy unit growth in both hotel and air and another strong performance in our advertising and media business.

Advertising and media revenue grew 40% driven by TripAdvisor^® with third-party revenue growth of 59%.

Year to date, the company has returned over $440 million to shareholders through dividends and share repurchases.

Transactions (mm)

Gross bookings

Revenue

Revenue margin

Operating income before amortization* (“OIBA”)

Operating income

Adjusted net income *

Net income attributable to Expedia, Inc.

Adjusted EPS *

Diluted EPS

Free cash flow *

Gross bookings from the Expedia, Inc. international businesses totaled $2.5 billion in the third quarter, accounting for 36% of worldwide bookings, consistent with the prior year period. International revenues equaled $398 million, representing 40% of worldwide revenue, consistent with the prior year period.

Egencia^® expanded the Egencia Global Alliance through strategic partnerships with local travel management companies in Denmark, Finland, Greece, Norway, Philippines, Poland, South Africa, Sweden and Thailand, giving Egencia a presence in 39 countries worldwide.

TripAdvisor launched localized sites in Korea, Russia, Singapore and Thailand and is now available to travelers in 24 countries and 17 languages.

Smarter Travel^® Media, part of the TripAdvisor Media Network, launched private sale site SniqueAway™. This first-of-its-kind members-only site offers limited-time discounts exclusively on traveler-endorsed properties that have received a minimum four-star rating on TripAdvisor.com™.

Expedia^® Affiliate Network (EAN) introduced EAN Package Rates, giving Expedia affiliate travel agencies, tour operators and transport providers the ability to bundle their own inventory with specially negotiated Expedia hotel package rates.

Hotwire^® launched a mobile site giving consumers access to Hotwire’s full inventory of deeply-discounted hotel and car rates on their mobile devices.

Egencia introduced its Air Fare Benchmarking tool giving businesses in Europe a greater level of travel spend transparency by enabling users to actively monitor fare trends on frequently-used routes.

TripAdvisor became the first-ever travel brand to reach 40 million unique monthly visitors to its site in a single month for July, and has also seen a 60% increase in the number of unique monthly visitors to the site since the beginning of 2010 (according to comScore Media Metrix July worldwide data).

Expedia finalized agreements to power travel bookings on Yahoo! Travel sites in France, Germany, Ireland, Italy, Spain and the U.K, as well as for Japan’s second largest online travel agency Kinki Nihon Tourist (KNT).

Expedia Affiliate Network signed private-label and co-branded agreements to provide full travel booking solutions for a number of international affiliates, including leading Japanese online travel agency, Appleworld; Royal Air Morocco; and Falabella Viajes, a Chile-based online travel site that serves travelers throughout several South American countries.

Expedia Media Solutions introduced product enhancements to TravelAds™, its paid search advertising program for hotels and resorts, increasing inventory volume, and driving record participation and revenue for the group.

At quarter-end, Expedia global websites featured over 130,000 bookable properties, with over 55% operating under our merchant model and almost 25% representing agency properties where we have direct relationships. Expedia sites offer nearly 80,000 hotels between the EMEA and APAC countries.

Expedia Partner Services Group (PSG) signed global agreements with several notable hotel brands, including the world’s largest lodging franchisor, Wyndham Hotel Group; Magnuson Hotels, the world’s largest independent hotel group; and leading Japanese lodging chain JAL Hotels.

Expedia PSG signed partnership agreements with Moscow-based Transaero Airlines, Russia’s second-largest passenger airline company; and TAM Airlines, Brazil’s largest carrier.

Revenue

Costs and expenses:

Cost of revenue (1)

Selling and marketing (1)

Technology and content (1)

General and administrative (1)

Amortization of intangible assets

Occupancy tax assessments and legal reserves

Restructuring charges

Operating income

Other income (expense):

Interest income

Interest expense

Other, net

Total other expense, net

Income before income taxes

Provision for income taxes

Net income

Net income attributable to noncontrolling interests

Net income attributable to Expedia, Inc.

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

Basic

Diluted

Shares used in computing earnings per share:

Basic

Diluted

Dividends declared per common share

(1) Includes stock-based compensation as follows:

Cost of revenue

Selling and marketing

Technology and content

General and administrative

Total stock-based compensation

ASSETS

Current assets:

Cash and cash equivalents

Restricted cash and cash equivalents

Short-term investments

Accounts receivable, net of allowance of $14,686 and $14,562

Prepaid merchant bookings

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Long-term investments and other assets

Intangible assets, net

Goodwill

TOTAL ASSETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable, merchant

Accounts payable, other

Deferred merchant bookings

Deferred revenue

Accrued expenses and other current liabilities

Total current liabilities

Long-term debt

Deferred income taxes, net

Other long-term liabilities

Commitments and contingencies

Stockholders’ equity:

Preferred stock $.001 par value

Authorized shares: 100,000

Series A shares issued and outstanding: 1 and 1

Common stock $.001 par value

Authorized shares: 1,600,000

Shares issued: 347,356 and 342,812

Shares outstanding: 251,335 and 263,929

Class B common stock $.001 par value

Authorized shares: 400,000

Shares issued and outstanding: 25,600 and 25,600

Additional paid-in capital

Treasury stock - Common stock, at cost

Shares: 96,021 and 78,883

Retained earnings (deficit)

Accumulated other comprehensive income (loss)

Total Expedia, Inc. stockholders’ equity

Noncontrolling interest

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment, including internal-use software and website development

Amortization of stock-based compensation

Amortization of intangible assets

Deferred income taxes

Foreign exchange (gain) loss on cash and cash equivalents, net

Realized gain on foreign currency forwards

Other

Changes in operating assets and liabilities, net of effects from acquisitions:

Accounts receivable

Prepaid merchant bookings, prepaid expenses and other current assets

Accounts payable, merchant

Accounts payable, other, accrued expenses and other current liabilities

Deferred merchant bookings

Deferred revenue

Net cash provided by operating activities

Investing activities:

Capital expenditures, including internal-use software and website development

Purchases of investments

Sales and maturities of investments

Acquisitions, net of cash acquired

Distributions from Reserve Primary Fund

Net settlement of foreign currency forwards

Other, net

Net cash provided by (used in) investing activities

Financing activities:

Proceeds from issuance of long-term debt, net of issuance costs

Credit facility repayments

Payment of dividends to stockholders

Treasury stock activity

Proceeds from exercise of equity awards

Purchase of additional interests in controlled subsidiaries

Excess tax benefit on equity awards

Changes in restricted cash and cash equivalents

Other, net

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental cash flow information

Cash paid for interest

Income tax payments, net

Merchant transactions accounted for 43% of total gross bookings and 68% of revenue in the third quarter, compared with 44% and 70% in the prior year period.

The mix of merchant bookings declined primarily from a higher mix of agency air bookings due in part to an increase in air ticket prices. The mix of merchant revenues declined due to higher relative growth in our advertising and media businesses.

Cost of revenue

Selling and marketing

Technology and content

General and administrative

Total costs and expenses

Cost of revenue increased 12% primarily due to higher costs related to credit card processing, customer services, telesales and people costs to support the growth in our transaction volumes.

We expect cost of revenue to increase in absolute dollars but decrease as a percentage of revenue for full year 2010.

Indirect costs, including personnel in PSG, TripAdvisor, Egencia and our various leisure brands represented 25% of selling and marketing expense in the third quarter of 2010 and 24% in the third quarter of 2009.

The 21% increase in selling and marketing expense in the third quarter was primarily driven by an increase in search and affiliate marketing expenses, an increase in headcount for PSG and our global advertising & media businesses and expenses associated with the opening of a new global headquarters for our lodging supply group. The growth in our overall direct marketing spend in the third quarter was in support of our efforts to drive transaction growth.

We expect selling and marketing expense to increase in absolute dollars and as a percentage of revenue for full year 2010, in part due to approximately $20 million in relocation and other costs related to the opening of a new global headquarters for our lodging supply group.

The 20% increase in technology and content expense was due primarily to increased personnel costs to support TripAdvisor and our worldwide transaction-based businesses, as well as increased depreciation expense associated with an increase in our capital expenditures.

We expect technology and content expense to increase in absolute dollars and as a percentage of revenue for full year 2010.

The 6% increase in general and administrative expense was primarily driven by an increase in personnel costs.

We expect general and administrative expense to increase in absolute dollars but decrease as a percentage of revenue for full year 2010.

Stock-based compensation expense relates primarily to expenses from restricted stock units (“RSUs”) and stock options. In 2009, we began using stock options as our primary form of annual stock-based compensation.

Stock-based compensation expense was $13 million in the third quarter of 2010, consisting of $8 million related to RSUs and $5 million related to stock options.

Assuming, among other things, no meaningful modification of existing awards, incremental grants or adjustments to forfeiture estimates, we expect annual stock-based compensation expense will be approximately $60 million in 2010.

During the third quarter of 2009, in conjunction with the reorganization of our business around our global brands, we recognized restructuring charges of $14 million, primarily consisting of employee severance and benefits.

Interest income in the third quarter of 2010 was higher compared to the same quarter of the prior year on higher average balances and a higher rate of average interest earned.

Interest expense of $27 million in third quarter 2010 increased $6 million compared to the $21 million incurred in the third quarter 2009. The increase was due to $750 million of additional debt issued by the company in August 2010.

Other, net was a $14 million loss in the third quarter 2010 compared with a $5 million loss in the prior year period. Both losses were primarily comprised of foreign exchange losses.

These foreign exchange impacts arise from the accounting re-measurement of our foreign denominated liabilities into U.S. dollars. We attempt to offset this re-measurement by holding foreign-denominated assets roughly equal to the liabilities, using both natural hedges (primarily cash), as well as foreign currency forward contracts where economically advantageous. Any difference between the liability and asset positions gives rise to a gain or loss during the quarter, and was a loss of approximately $1 million in the third quarter of 2010.

We also utilize forward contracts to hedge a portion of our foreign-denominated revenues from the changes in exchange rates between the time of hotel bookings and the associated stays (the “book to stay” impact). See Foreign Exchange below for additional detail. In the third quarter of 2010 we recognized $4 million in realized losses arising from forward contracts intended to hedge this book to stay impact, which amount is included in “other, net”. In addition, we recognized $9 million of unrealized losses on these revenue hedges, which amounts are intended to hedge the book-to-stay impact of future periods.

The effective tax rate on GAAP pre-tax income was 25.4% for the third quarter compared with 40.6% in the prior year period. The lower rate was primarily due to a significant reversal of accruals for uncertain tax positions resulting from the conclusion of certain IRS audits, an increase in estimated earnings in jurisdictions outside the United States, as well as a decrease in accruals on continuing uncertain tax positions.

The effective tax rate on pre-tax adjusted net income (“ANI”) was 25.8% for the third quarter compared with 38.1% in the prior year period. The lower rate was primarily due to the same factors impacting the effective rate on GAAP pre-tax income.

The effective GAAP and ANI tax rates are lower than the 35% federal tax rate primarily due to a significant reversal of accruals for uncertain tax positions resulting from to the conclusion of certain IRS audits and an increase in estimated earnings in jurisdictions outside the United States, partially offset by state taxes.

Cash paid for income taxes in the first nine months of 2010 was $130 million, a decrease of $28 million from the prior year primarily due to the timing of estimated payments in the prior year period.

Foreign currency rate fluctuations negatively impacted our third quarter 2010 growth rates due primarily to year-over-year depreciation in the Euro and Pound.

Our revenue hedging program is designed to offset the book-to-stay impact on merchant hotel revenues. In the third quarter of 2010 we realized a loss from our hedging program of $4 million, which offset the book-to-stay gain. In the third quarter of 2009 we also realized a loss from our hedging program of $4 million, which offset approximately half of the book-to-stay gain in that quarter.

We include any realized gains or losses from our revenue hedging program in our calculation of OIBA.

The results for the third quarter of 2010 include Kuxun™, which was acquired in the fourth quarter of 2009, and Holiday Lettings which was acquired in the second quarter of 2010. The impact on third quarter 2010 was not meaningful.

Cash, cash equivalents, restricted cash and short-term investments totaled $1.57 billion at September 30, 2010. Of this amount, $157 million is held by several subsidiaries in which we have majority interests. We consolidate such amounts in our financial statements, but we do not consider this cash available for our working capital purposes.

The $867 million increase in cash, cash equivalents, restricted cash and short-term investments for the first nine months of 2010 primarily relates to the issuance of $750 million in senior notes in August 2010, as well as OIBA generation and our net working capital benefit driven by the typical seasonal increase in our merchant hotel business, partially offset by various financing and investing activities including share repurchases, purchase of marketable securities classified as long-term investments, cash taxes, capital expenditures and cash paid to acquire additional interests in controlled subsidiaries and for other acquisitions.

Short-term investments increased by $558 million from December 31, 2009, primarily due to investments in time deposits, corporate bonds and bearer deposit notes with maturities of less than one year.

The negative effect of foreign exchange on our cash balances was $21 million for the first nine months of 2010. This amount is included in “effect of exchange rate changes on cash and cash equivalents” on our statements of cash flows. This compares to a gain of $10 million in the prior period, reflecting higher foreign-denominated cash balances in the current year period as well as depreciation of foreign currencies in the first nine months of 2010. We hold foreign denominated cash balances to naturally hedge gains or losses on our foreign denominated liabilities. See Other, Net above for an explanation of our balance sheet hedging program.

Accounts receivable increased $100 million from December 31, 2009 due to a seasonal increase in our business operations, primarily receivables from TripAdvisor clients, credit card receivables from growth in our merchant hotel business, receivables related to agency transactions (principally from airlines and global distribution systems) and receivables related to our managed corporate travel businesses.

Prepaid merchant bookings increased $29 million from December 31, 2009, due primarily to a seasonal increase in our merchant air business.

As of September 30, 2010 long-term investments and other assets includes $164 million related to corporate bond investments with maturities between one and four years.

The $177 million increase in long-term investments and other assets from December 31, 2009 relates primarily to our corporate bond investments, and to a lesser extent to capitalized debt issuance costs.

Goodwill increased $30 million from December 31, 2009 due primarily to acquisitions.

$689 million of intangible assets, net relates to intangible assets with indefinite lives, which are not amortized, principally trade names and trademarks.

$115 million of intangible assets, net relates to intangible assets with definite lives, which are generally amortized over a period of two to twelve years. The majority of this amortization is not deductible for tax purposes.

Amortization expense for definite-lived intangibles was $8 million for the third quarter of 2010 compared to $10 million for the prior year period. Assuming no impairments or additional acquisitions, we expect amortization expense of approximately $33 million in 2010.

Changes in deferred merchant bookings and accounts payable, merchant were a net source of cash of $506 million in the first nine months of 2010, consistent with the prior year period.

Accounts payable, other primarily consists of payables related to our day-to-day business operations, and increased $52 million from December 31, 2009 primarily due to a seasonal increase in accrued marketing expenses.

Deferred revenue relates to cash received for certain travel and advertising services, and increased $14 million from December 31, 2009 primarily due to receipts for TripAdvisor’s new business listings product.

Accrued expenses and other current liabilities decreased $26 million from December 31, 2009 primarily due to our net balance decreases for accrued legal, severance, bonus and interest expense, partially offset by accruals for acquired companies.

In August, 2010, we amended our $750 million unsecured revolving credit facility, extending the maturity to August 2014, decreasing interest rate spreads and fees and modifying certain covenants and other terms. During the third quarter of 2010 there were no borrowings outstanding under this facility.

On August 2, 2010, we issued $750 million in senior unsecured notes bearing interest at 5.95% (“5.95% Notes”). The 5.95% Notes due 2020 are also included in long-term debt and pay interest semiannually in arrears on February 15 and August 15 of each year, commencing on February 15, 2011. The notes mature on August 15, 2020.

Long-term debt also includes $500 million in registered 7.456% Senior Notes due 2018, and $400 million in 8.5% Notes due 2016. Additional details related to long-term debt are included in our SEC filings.

Accrued interest related to these notes was $20 million at September 30, 2010 and is classified in “accrued expenses and other current liabilities” on our balance sheet.

Other long-term liabilities consist primarily of uncertain tax positions recorded according to income tax accounting standards. The balance decreased $135 million from December 31, 2009, primarily due to the resolution of certain IRS audits.

Noncontrolling interest relates to the minority ownership position in eLong, an entity in which we own a 65% interest (59% fully-diluted), and results for which are consolidated for all periods presented.

During the third quarter of 2010 we repurchased 8.2 million common shares for an aggregate purchase price of $194 million excluding transaction costs ($23.58 per share).

On October 25, 2010, the Executive Committee of Expedia’s Board of Directors authorized an additional share repurchase of up to 20 million shares. Including shares available under the August 2006 authorization, we currently have 23.4 million shares of repurchase capacity available.

On September 16, 2010 we paid a quarterly dividend of $20 million ($0.07 per common share).

The Executive Committee of Expedia’s Board of Directors declared a cash dividend of $0.07 per share of outstanding common stock to be paid to stockholders of record as of the close of business on November 18, 2010, with a payment date of December 9, 2010. Based on our current shares outstanding we estimate the total payment for this quarterly dividend will be approximately $19 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.

There are approximately 26 million shares of Expedia Class B common stock outstanding, owned by a subsidiary of Liberty Media Corporation (“Liberty”). Class B shares are entitled to ten votes per share when voting on matters with the holders of Expedia common and preferred stock.

Through the common stock our Chairman and Senior Executive, Barry Diller, owns directly, as well as the common stock and Class B stock for which he has been assigned an irrevocable proxy from Liberty, Mr. Diller had a controlling 61% voting interest in Expedia, Inc. as of October 15, 2010.

As of September 30, 2010 there were 32 million privately held warrants outstanding, which, if exercised in full, would entitle holders to acquire 16 million common shares of Expedia, Inc. for an aggregate purchase price of $411 million (an average of $25.56 per Expedia, Inc. common share). All of these warrants expire in May 2012.

At September 30, 2010 we had 24 million stock-based awards outstanding, consisting of stock options to purchase 19 million common shares with a $17.63 weighted average exercise price and weighted average remaining life of 5.2 years, and 4 million RSUs. In the first nine months of the year we have granted 5.7 million options.

The following metrics are intended as a supplement to the financial statements found in this press 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.

Number of Transactions

Gross Bookings by Segment

Leisure

Egencia

Total

Gross Bookings by Geography

Domestic

International

Total

Gross Bookings by Agency/Merchant

Agency

Merchant

Total

Revenue by Segment

Leisure

TripAdvisor *

Egencia

Corporate