Expedia Group, Inc. - FORM 8-K - EX-99.1 - EXPEDIA, INC. JUNE 2012 INVESTOR PRESENTATION

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8-K - FORM 8-K - Expedia Group, Inc.	d371592d8k.htm

INVESTOR

PRESENTATION

June 2012

Exhibit 99.1

Safe Harbor

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 June 25, 2012 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: competitive risks; declines or disruptions in the travel industry; changes in our

relationships and contractual agreements with travel suppliers or travel distribution partners; increases in the costs of maintaining and

enhancing our brand awareness; changes in search engine algorithms and dynamics; our inability to adapt to technological

developments or to maintain our existing technologies; our ability to expand successfully in international markets; changes in senior

management; volatility in our stock price; changing laws, rules and regulations and legal uncertainties relating to our business;

unfavorable new, or adverse application of or failure to comply with existing, laws, rules or regulations; adverse outcomes in legal

proceedings to which we are party; provisions in certain credit card processing agreements that could adversely impact our liquidity

and financial positions; fluctuations in our effective tax rate; liquidity constraints or our inability to access the capital markets when

necessary; risks related to our long term indebtedness; fluctuations in foreign exchange rates; risks related to the failure of

counterparties to perform on financial obligations; potential liabilities resulting from our processing, storage, use and disclosure of

personal data; the integration of current and acquired businesses; the risk that our intellectual property is not protected from copying

or use by others, including competitors; risks related to interruption or lack of redundancy in our information systems; and other risks

detailed in our public filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2011. Except as

required by law, we undertake no obligation to update any forward-looking or other statements in this presentation, whether as a

result of new information, future events or otherwise.

Appendices. These measures are intended to supplement, not substitute for, GAAP comparable measures. Investors are urged to

consider carefully the comparable GAAP measures and reconciliations.

sources as well as from research reports prepared for other purposes. We have not independently verified the data obtained from

these sources and cannot assure you of the data’s accuracy or completeness.

Forward-Looking

Statements.

This

presentation

contains

"forward-looking

statements"

within

the

meaning

the

Private

Securities

Non-GAAP

Measures.

Reconciliations

GAAP

measures

non-GAAP

measures

included

this

presentation

are

included

the

Industry

Market

Data.

Industry

and

market

data

used

this

presentation

have

been

obtained

from

industry

publications

and

Trademarks

Logos.

Trademarks

and

logos

are

the

property

their

respective

owners.

Investment Highlights

A Growth

Company

Global

Leader

~$1

Trillion Market

with

Strong Offline-to-Online Trends

Significant Growth Opportunities Across Geographies

Rapid Expansion in Highly Fragmented Hotel Industry

Technology Platform Investment and

Innovation Driving Higher Conversion

Success in New Distribution Channels, e.g. Mobile

Powerful Free Cash Flow Generation

The Largest Travel Company in the World

Mutually

Beneficial

Supply

Agreements

Value to

Travelers

Scale Enables

Virtuous Circle

Diverse Demand:

Geography AND Travel Type

Source: comScore Worldwide Average Monthly Unique Visitor data, Full year 2011

Massive

Depth and

Breadth of

~150,000

Hotels in

200+

Countries

300+

Airlines

2.6 Million

Packages

Unmatched

Volume and

Diversity of

Global Travel

60 Million

Unique Visitors

Travelers in

~70 Countries

Corporate and

Leisure Travel;

Online and

Offline

SUPPLY

DEMAND

A Leader in Global

Corporate Travel

Established Brands with Global Reach

Online Travel Agency

“Expedia Inside”

Private Label Solutions

Brand Strength in

EVERY

Solid Foothold in Emerging Markets

A Leading Hotel

Specialist Globally

76 Sites in

67 Countries

10,000 Affiliates in

33 Countries

Presence in

50+ Countries

30 Sites in

30 Countries

Trusted Brands

Established Market

Business Mix Transformation

Positions Us for Growth

Revenue

5 Years Ago

Revenue

TTM 3/31/12

Hotels

63%

Other

Hotels

73%

Other

Air

10%

Air

22%

International

24%

Domestic

International

42%

Domestic

Note: 5 Years Ago = 2005 Revenues

PRODUCT

GEOGRAPHY

Expedia

Other

Expedia

Other

Expedia

11%

Other

Expedia

Other

ONLINE

TRAVEL

SEGMENT

58%

21%

42%

24%

% of Total

Travel Market

Expedia Well-Positioned to Capture

Significant Global Growth Opportunity

Sources: PhoCusWright estimates and Expedia data

Note:

EXPE

travel

market

defined

TTM

gross

bookings

March

31,

2012.

APAC

data

includes

gross

bookings

from

AirAsia

joint

venture

Expedia Share:

Expedia

Other

Expedia

0.3%

Expedia

Other

$293B

$68B

$313B

$290B

UNITED

STATES

EUROPE

ASIA

PACIFIC

LATIN

AMERICA

Other

2012 TOTAL

TRAVEL

MARKET

Expedia

Has Scale in Hotels …

Number of Hotels3

Rapidly Expanding in

Fragmented Hotel Market

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

Sources: Smith Travel Research and Expedia data

Hotel data for TripAdvisor, Priceline, Orbitz and Ctrip.com obtained from respective company websites

…

And Significant Room for

Additional Growth

Hotels

73%

$3.5B

TTM 1Q 2012

Revenues

Air

Other¹

39,000

85,000

150,000

235,000

570,000

~150k Hotels in

200+ Countries

Single Largest

Booker of

Rooms in US

…

But Still Only

~5%

Number

Hotels

Global Team

Working to Sign

Up New Hotels

Technology Investment

Positions Us for Growth

CUSTOMIZED

Front-End

Technology

for

Rapid

Innovation

and Powerful Analytics …

Improving Conversion

10,000

Affiliates

UNIFIED

Customer Operations Technology

UNIFIED

Transactional Infrastructure:

Financials / Order Management / Inventory Management

Industry Leading Mobile, Social and Deal

Initiatives Drive Traffic and Revenue

50-70%

of Mobile Bookings

Completed within

One Day

of Travel / Stay

in App Development

Leading Travel

App Developer

in App Success

#1 Free iPhone

Travel Apps in

40+

Countries

PC-Connected

Users

24 x 7

Mobile Users

Unique Supply Deal and

Value Proposition to

Customers:

40-50% Off

Just for Mobile

The World Is

Changing …

Opening Up Significant

Opportunity in Travel

…

Expedia

Leads the Way

Source: AppAnnie

in Deals

Expedia’s Significant Competitive Moats

SCALE and BREADTH

Global Scale Across Multiple Travel Brands and Product Offerings

DIVERSE DEMAND

Multiple Sources

Leisure

Corporate

Call Centers

Traditional Travel Agency

Online

SUPPLY

Global Travel Supply Footprint and

Deeper Supplier Relationships

TECHNOLOGY PLATFORM

Investment in Technology to

Drive Conversion and Bookings

Large User Base With Multiple Growth Vectors

Key Financial Highlights

High Quality Diversified Revenue Streams

Consistent, Robust Cash Flow Generation and Strong EPS Growth

Strong Balance Sheet Allows Ample Value-Add Opportunities

Investing Now to Support Future Growth

Improving Financial Results

ADJUSTED EBITDA

ADJUSTED EPS

2,3

$ Millions

See Appendix B for Non-GAAP to GAAP Reconciliation

Adj. EPS is EPS for Expedia, Inc. considering TripAdvisor on a discontinued operations basis

$ Billions

See Appendix A for Non-GAAP to GAAP Reconciliation

GROSS BOOKINGS

$ Billions

World’s Largest Travel Company

’07-’10 CAGR: 3.9%

TTM

1Q12

Y-o-Y

Growth:

7.1%

’07-’10 CAGR: 6.7%

TTM

1Q12

Y-o-Y

Growth:

16.5%

$624

$621

$662

$700

$711

$731

2007

2008

2009

2010

2011

TTM 1Q12

$2.08

$1.97

$2.10

$2.53

$2.75

$2.83

2007

2008

2009

2010

2011

TTM 1Q12

$2.5

$2.7

$3.0

$3.4

$3.5

2007

2008

2009

2010

2011

TTM 1Q12

$20

$21

$22

$26

$29

$30

2007

2008

2009

2010

2011

TTM 1Q12

REVENUE

’07-’10 CAGR :

6.1%

TTM 1Q12 Y-o-Y Growth: 13.6%

The Three Stages of Expedia Growth

Represents 2007 –

2010 CAGR

See Appendix A for Non-GAAP to GAAP Reconciliation

Revenue Growth

Modest:

6.1% Growth

Accelerating

Continuing

Line Item Trajectory

(% of Revenues)

Cost of Revenue

22.5%

Flat as

% of Revenue

Declining

Revenue

Selling and Marketing

40.3%

Increasing as

% of Revenue

Flat to Slightly

Increasing as

% of Revenue

Technology

and Content

9.8%

Increasing as

% of Revenue

Flat or Declining

Revenue

G&A

7.6%

Declining

% of Revenue

Declining

of Revenue

STAGE 1

2010

STAGE 2

2011

2012

STAGE 3

2013

Adjusted

EBITDA Margin

23.1%

Slightly Decreasing as

% of Revenue

Increasing as

% of Revenue

Summary

Global Leader in ~$1 Trillion Market with

Strong Offline-to-Online Trends

Significant Growth Opportunities Across Geographies

Rapid Expansion in Highly Fragmented Hotel Industry

Technology Platform Investment and

Innovation Driving Higher Conversion

Success in New Distribution Channels, e.g. Mobile

Powerful Free Cash Flow Generation

A Growth

Company

APPENDICES

Definitions

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

and intangible asset impairment, and (ii) gains (losses) recognized on changes in the value of contingent consideration arrangements;

(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 hotel occupancy 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 occupancy 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 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.

Adjusted

from options and warrants 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.

Adjusted

EBITDA

defined

operating

income

plus:

(1)

stock-based

compensation

expense,

including

compensation

expense

EPS

defined

Adjusted

Net

Income

divided

adjusted

weighted

average

outstanding,

which

include

dilution

$ Millions

2007

2008

2009

2010

2011

TTM

3/31/2012

Adjusted EBITDA

$624

$621

$662

$700

$711

$731

Depreciation

(57)

(72)

(93)

(106)

(133)

(138)

Amortization of Intangible Assets

(68)

(58)

(24)

(23)

(22)

(20)

Impairment of Goodwill

(2,480)

Impairment of Intangible and Other Long-Lived Assets

(234)

Legal Reserves , Occupancy Tax and Other

(1)

(68)

(23)

(21)

(18)

Stock-Based Compensation

(60)

(56)

(53)

(64)

(66)

Restructuring Charges

(34)

Realized Loss on Revenue Hedges

Operating Income (Loss)

$437

$(2,281)

$398

$501

$480

$493

Total Other Expense, Net

(32)

(66)

(78)

(75)

(78)

(73)

Income (Loss) from Continuing Operations before Income Taxes

405

(2,347)

320

426

402

420

Provision for Income Taxes

(166)

(102)

(120)

(76)

(78)

Income (Loss) from Continuing Operations

239

(2,343)

218

306

326

342

Discontinued Operations, Net of Taxes

(177)

120

148

Net Income (Loss)

294

(2,521)

304

426

475

420

Net (Income) Loss Attributable to Noncontrolling Interests

(4)

(2)

(3)

Net Income (Loss) Attributable to Expedia, Inc.

$296

$(2,518)

$300

$422

$472

$417

Non-GAAP / GAAP Reconciliation

Appendix A: Adjusted EBITDA

Note: Numbers may not sum due to rounding

$ Thousands

2007

2008

2009

2010

2011

TTM

3/31/2012

Net Income / (Loss) attributable to Expedia, Inc.

$295,864

$(2,517,763)

$299,526

$421,500

$472,294

$416,974

Discontinued operations, net of taxes

(54,502)

177,366

(85,561)

(119,885)

(148,148)

(78,046)

Stock-Based Compensation

59,948

55,731

55,756

52,507

63,847

66,000

Amortization of Intangibles

68,367

58,275

23,875

22,514

21,925

19,513

Restructuring Charges

34,168

Noncontrolling Investment Basis Adjustment

5,158

Legal Reserves, Occupancy Tax and Other

1,276

1.051

67,999

22,692

20,855

18,221

Foreign Currency Loss on U.S. Dollar Cash Balances Held by eLong

8,642

8,586

128

2,711

2,690

2,207

Impairment of Goodwill

2,480,470

Impairment of Intangible and Other Long-Lived Assets

233,900

Federal Excise Tax Refunds

(12,058)

(Gain) / Loss on Derivative Instruments Assumed at Spin-Off

5,748

(4,600)

Amort. of Intangible Assets as Part of Equity Method Investments

2,324

2,593

458

Unrealized (Gain) / Loss on Revenue Hedges

(1,033)

4,898

(4,479)

(2,964)

Noncontrolling Interests

(4,515)

(3,837)

(1,343)

(2,877)

(3,135)

(2,932)

Provision for Income Taxes

(38,290)

(195,678)

(86,395)

(34,449)

(41,362)

(40,451)

Adjusted Net Income

$332,804

$296,094

$312,774

$369,611

$384,487

398,522

GAAP Diluted Weighted Average Shares Outstanding

157,117

143,084

146,071

144,014

138,702

139,306

Additional Restricted Stock Units

3,119

6,886

3,183

1,889

1,331

1,694

Adjusted Weighted Average Shares Outstanding

160,236

149,970

149,254

145,903

140,033

141,000

Adjusted Earnings from Continued Operations Per Share

$2.08

$1.97

$2.10

$2.53

$2.75

$2.83

Non-GAAP / GAAP Reconciliation

Appendix B: Adjusted EPS Reconciliation

Note: Numbers may not sum due to rounding

$ Thousands

2010

Cost of Revenue

$685

Stock-Based Compensation

(2)

Cost of Revenue (excludes Stock-Based Compensation)

$683

Selling and Marketing

$1,235

Stock-Based Compensation

(12)

Selling and Marketing (excludes Stock-Based Compensation)

$1,223

Technology and Content

$309

Stock-Based Compensation

(12)

Technology and Content (excludes Stock-Based Compensation)

$297

G&A

$259

Stock-Based Compensation

(27)

G&A (excludes Stock-Based Compensation)

$232

Non-GAAP / GAAP Reconciliation

Appendix C: Non-GAAP Expense Items

Non-GAAP Cost of Revenue, Selling and Marketing, Technology and Content and

General and Administrative Expenses Excluding Stock-Based Compensation

Note: Numbers may not sum due to rounding

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