Attached files
| file | filename |
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| EX-99.1 - EX-99.1 - Expedia Group, Inc. | d917158dex991.htm |
| 8-K - FORM 8-K - Expedia Group, Inc. | d917158d8k.htm |
 INVESTOR
PRESENTATION
April 30, 2015
Exhibit 99.2 |
 2
Safe Harbor
July 2014
Forward-Looking Statements. This presentation contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements are not guarantees of future performance. These
forward-looking statements are based on management’s
expectations as of April 30, 2015 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 identifies forward-looking statements. However, these words
are not the exclusive means of identifying such statements. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements and may include statements relating to future revenues,
expenses, margins, profitability, net income / (loss), earnings per share and other
measures of results of operations and the prospects for future growth of
Expedia, Inc.’s business. Actual results and the timing and outcome of events may differ materially from those expressed or implied in the
forward-looking statements for a variety of reasons, including, among others: an
increasingly competitive global environment; modifications to our
current business models and practices or our adoption of new business models or
practices in order to compete; changes in search engine algorithms and
dynamics or other traffic-generating arrangements; declines or disruptions in the travel industry; our failure to maintain and expand
our relationships and contractual agreements with travel suppliers or travel
distribution partners; our failure to maintain and expand our brand
awareness or increased costs to do so; our failure to adapt to technological
developments or industry trends; risks relating to our operations in
international markets, including China; adverse application of existing tax or
unclaimed property laws, rules or regulations or implementation of new
unfavorable laws, rules or regulations; adverse outcomes in legal proceedings to
which we are a party; our failure to comply with current laws, rules and
regulations, or changes to such laws, rules and regulations; determinations by U.S. and foreign tax authorities regarding our worldwide tax
provision for income taxes; payments related risks, including credit card fraud;
volatility in our stock price; liquidity constraints or our inability to access
the capital markets when necessary; interruption or lack of redundancy in our
information systems; failure to retain or motivate key personnel or hire,
retain and motivate qualified personnel, including senior management; changes in
control of the Company; management and director conflicts of interest;
risks related to actions taken by our business partners and third party service providers, including failure to comply with our requirements or
standards or the requirements or standards of governmental authorities, or any
cessation of their operations; risks related to the failure of
counterparties to perform on financial obligations; fluctuations in foreign exchange
rates; our failure to comply with governmental regulation and other
legal obligations related to our processing, storage, use and disclosure of personal data, and liabilities related to security breaches; risks related
to our acquisitions, investments or significant commercial arrangements; risks
related to our long-term indebtedness; our failure to effectively operate
our businesses due to restrictive covenants in the agreements governing our
indebtedness; our failure to protect our intellectual property from
copying or use by others, including competitors; and other risks detailed in Expedia,
Inc.’s public filings with the SEC, including our quarterly report on
Form 10-Q for the quarter ended March 31, 2015. 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. Non-GAAP Measures. Reconciliations to GAAP measures of non-GAAP
measures included in this presentation are included in the Appendix. These
measures are intended to supplement, not substitute for, GAAP comparable
measures. Investors are urged to consider carefully the comparable
GAAP measures and reconciliations.
Industry / Market Data. Industry and market data used in this presentation have
been obtained from industry publications and 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.
Trademarks & Logos. Trademarks and logos are the property of their
respective owners. © 2015 Expedia, Inc. All rights reserved. CST: 2029030-50
|
 3
Investment Highlights
Global
Leader
in
~$1.3
Trillion
Market
with
Strong Offline-to-Online Trends
Significant Growth Opportunities Across Geographies
Consistently Strong Financial Execution
Technology Platform Innovation Driving Higher
Conversion
Success in Growing Mobile Channels
A Growth
Company
High Growth Advertising & Media Business
Rapid Expansion in Highly Fragmented Hotel Industry
Supported by Multi-Product Offering
Solid Track Record of Disciplined Capital Allocation |
 4
One of the Largest Travel
Companies in the World
Mutually
Beneficial
Supply
Agreements
Value to
Travelers
Scale Enables
Virtuous Circle
Diverse Demand:
Geography AND Travel Type
1
Includes eLong properties
SUPPLY
Depth and
Breadth of
~510,000
Hotels
1
in
200+
Countries
400+
Airlines
5.5 Million
Packages
Volume and
Diversity of
Global Travel
DEMAND
5 Billion
Flight Searches
Travelers in
~70 Countries
Corporate and
Leisure Travel;
Online and Offline |
 5
Established Brands With
Global Reach
Brand Strength in
EVERY
Established
Market
Solid Foothold in Emerging Markets
89 Sites in
68 Countries
A Leading Hotel
Specialist Globally
31 Sites in
31 Countries
1
#1 Full-Service
Online Travel Agency
Sites
in
50 Countries
A Leading Hotel
Metasearch Company
Presence in
65 Countries
A Leader in Global
Corporate Travel
1
Includes AirAsia JV
Trusted Brands |
 6
Diversifying Revenue Mix Reduces Risk
and Positions the Business for Growth
2005
Revenue
Revenue
TTM
1
3/31/15
PRODUCT
Hotels
63%
Hotels
70%
Car, Cruise &
Other
14%
Air
8%
Air
22%
GEOGRAPHY
International
22%
Domestic
78%
International
47%
Domestic
53%
Ad & Media
8%
Ad & Media
2%
Car, Cruise &
Other
13%
1
Trailing Twelve Months
GEOGRAPHY
PRODUCT |
 7
Expedia
5%
Other
Expedia
6%
Other
Expedia
16%
Other
Expedia
4%
Other
ONLINE
TRAVEL
SEGMENT
56%
23%
44%
29%
42% of Total
Travel Market
Global Leader and Significant
Headroom for Further Growth
Sources:
PhoCusWright
estimates
and
Expedia
data;
travel
market
size
estimates
based
on
PhoCusWright
data
for
full
year
2015.
Note: Expedia’s share of travel market defined by TTM gross bookings as of March
31, 2015. Beginning in Q4 2014, total travel market definition was expanded to include Canada, Eastern Europe and
Middle East.
Expedia Share:
UNITED
STATES
+ .
CANADA
LATIN
AMERICA
EMEA
Expedia
9%
Other
2015 TOTAL
TRAVEL
MARKET
Expedia
1%
Expedia
3%
Expedia
2%
Other
Other
$375B
$92B
$460B
$365B
Total Travel
Market ~$1.3T
ASIA
PACIFIC
Other |
 8
Expedia, Inc. Has Scale in Hotels …
Rapidly Expanding in Fragmented
Hotel Segment of the Travel Industry
1
Other includes Car, Advertising, Destination Services, Insurance, Cruise, Agency
Packages, and Other 2
Includes eLong bookable properties
3
Sources: Smith Travel Research and Expedia data
4
Hotel
data
for
TripAdvisor,
Booking.com
and
Orbitz
obtained
from
respective
company
websites.
Booking.com
number
includes
~262,000
vacation
rental
properties.
…
And Significant Room for
Additional Growth
Hotels
70%
$5.9B
TTM 3/31/15
Revenues
~510k Hotels
2
in
200+ Countries
Single Largest
Booker of
Rooms in US
…
But Still Only
~7% Share
3
Number of Hotels
4
Global Team
Accelerating Pace
of Hotel Acquisition
100,000
510,000
625,000
722,000
915,000
Air
Other¹
Number of Hotels
4 |
 9
CENTRALIZED
Customer
Operations
Technology
CENTRALIZED
Transactional
Infrastructure:
Financials
/
Order
Management
/
Inventory
Management
Have Completed Significant Technology
Investments That Fortify the Business
CUSTOMIZED
Front-End
Technology
for
Rapid
Innovation
and
Powerful
Analytics
…
Improving
Conversion |
 Opening Up Significant Opportunities in Travel
Industry Leading Mobile Initiatives Drive
Traffic and Revenue
Expedia,
Inc.
Brands
for
Apple
TM
Watch
Expedia, Inc. Leads the Way in Mobile Innovation
The World Is
Changing …
PC-Connected
Users
24 x 7
Mobile Users
Egencia TripNavigator for iPad
More than 50%
Of
Mobile
Bookings
(1)
Completed Within
Two Days
Of Travel / Stay
More than
One in Four
Room Nights
Booked on a
Mobile Device
Egencia’s TripNavigator
for iPad gives corporate
travelers access to shop
and book 200,000
hotels, 400 airline
partners and offers
exclusive mobile-only
deals.
Brand Expedia,
Hotels.com
and Hotwire
have each
introduced
new apps for
Apple Watch
1
Based on Brand Expedia global bookings on a mobile phone and Hotels.com global
bookings on a mobile device. 10 |
 11
Significant Acceleration in the
Advertising and Media Business
ADVERTISING & MEDIA REVENUE
$ Millions
Note: Reported numbers are net of any intercompany revenue
1
Controlling interest in trivago GmbH (”trivago”) acquired in March
2013 #1 hotel metasearch in Europe
$99
$109
$113
$131
$319
1
$479
$502
2009
2010
2011
2012
2013
2014
TTM
1Q15
’09-’11 CAGR :
6.8%
’11-’14 CAGR : 61.8% |
 12
Expedia Has Multiple
Competitive Moats
SCALE and BREADTH
SCALE and BREADTH
Global Scale Across Multiple Travel Brands and Product Offerings
Global Scale Across Multiple Travel Brands and Product Offerings
DIVERSE DEMAND
DIVERSE DEMAND
Multiple Sources
Multiple Sources
Leisure
Leisure
Corporate
Corporate
Call Centers
Call Centers
Traditional Travel Agency
Traditional Travel Agency
Online
Online
SUPPLY
SUPPLY
Global Travel Supply Footprint and
Global Travel Supply Footprint and
Deep Supplier Relationships
Deep Supplier Relationships
TECHNOLOGY PLATFORM
TECHNOLOGY PLATFORM
Investment in Technology to
Investment in Technology to
Drive Conversion and Bookings
Drive Conversion and Bookings |
 13
Consistent Financial Execution
ADJUSTED
EBITDA
1
ADJUSTED EPS
2,3
$ Millions
2
Non-GAAP measure. See Appendix B for Non-GAAP to GAAP Reconciliation
3
Adj. EPS is EPS for Expedia, Inc. considering TripAdvisor on a discontinued
operations basis REVENUE
$ Billions
1
Non-GAAP measure. See Appendix A for Non-GAAP to GAAP Reconciliation
GROSS BOOKINGS
$ Billions
5-Year CAGR: 16%
5-Year CAGR: 9%
5-Year CAGR: 14%
$662
$700
$711
$803
$879
$1,025
$1,020
2009
2010
2011
2012
2013
2014
TTM
1Q15
$2.10
$2.53
$2.75
$3.10
$3.22
$3.96
$3.79
2009
2010
2011
2012
2013
2014
TTM
1Q15
$2.7
$3.0
$3.4
$4.0
$4.8
$5.8
$5.9
2009
2010
2011
2012
2013
2014
TTM
1Q15
$22
$26
$29
$34
$39
$50
$53
2009
2010
2011
2012
2013
2014
TTM
1Q15
5-Year CAGR: 18% |
 Solid
Track Record of Disciplined
Capital Allocation
FREE
CASH
FLOW
1
Non-GAAP
measure.
See
Appendix
for
Non-GAAP
to
GAAP
Reconciliation.
Orbitz
acquisition
was
announced
in
February
2015
and
is
pending
regulatory
and
shareholder
approvals.
3
Expedia
acquired
an
additional
25%
equity
interest
in
the
former
joint
venture
in
March
2015.
$ Millions
5-Year CAGR: 16%
SHARE
REPURCHASES AND
DIVIDENDS
KEY TRANSACTIONS
2
2011 |
2012
|
2013 |
2014
| 2015
3
$ in Millions
$495
$469
$618
$1,001
$455
$1,039
$1,090
2009
2010
2011
2012
2013
2014
TTM 1Q15
$489
$283
$397
$515
$537
$460
$79
$77
$130
$76
$85
$88
$0
$100
$200
$300
$400
$500
$600
2010
2011
2012
2013
2014
TTM 1Q15
Share Repurchases
Dividends
14
1
2 |
 Investment Highlights
Global
Leader
in
~$1.3
Trillion
Market
with
Strong Offline-to-Online Trends
Significant Growth Opportunities Across Geographies
Consistently Strong Financial Execution
Technology Platform Innovation Driving Higher
Conversion
Success in Growing Mobile Channels
A Growth
Company
High Growth Advertising & Media Business
Rapid Expansion in Highly Fragmented Hotel Industry
Supported by Multi-Product Offering
Solid Track Record of Disciplined Capital Allocation
15 |
 APPENDICES
16 |
 Non-GAAP Definitions
17
Adjusted EBITDA
is defined as operating income plus: (1) stock-based compensation expense,
including compensation expense related
to
certain
subsidiary
equity
plans;
(2)
acquisition-related
impacts,
including
(i)
amortization
of
intangible
assets
and
goodwill
and intangible asset impairment, (ii) gains (losses) recognized on changes in the
value of contingent consideration arrangements; and (iii) upfront
consideration paid to settle employee compensation plans of the acquiree; (3) certain infrequently occurring items,
including restructuring; (4) items included in Legal reserves, occupancy tax and
other, which includes reserves for potential settlement of issues related to
transactional taxes (e.g. hotel and excise taxes), related to court decisions and final settlements, and
charges incurred, if any, for monies that may be required to be paid in advance of
litigation in certain transactional tax proceedings; (5) gains (losses)
realized on revenue hedging activities that are included in other, net; and (6) depreciation.
The above items are excluded from our Adjusted EBITDA measure because these items are
noncash in nature, or because the amount
and
timing
of
these
items
is
unpredictable,
not
driven
by
core
operating
results
and
renders
comparisons
with
prior
periods
and
competitors
less
meaningful.
We
believe
Adjusted
EBITDA
is
a
useful
measure
for
analysts
and
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 EPS
is defined as Adjusted Net Income divided by adjusted weighted average shares
outstanding, which include dilution 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. |
 $
Millions 2009
2010
2011
2012
2013
2014
TTM 1Q15
Adjusted EBITDA
$662
$700
$711
$803
$879
$1,025
$1,020
Depreciation
(93)
(106)
(133)
(164)
(212)
(266)
(278)
Amortization of Intangible Assets
(24)
(23)
(22)
(32)
(72)
(80)
(86)
Legal Reserves , Occupancy Tax and Other
(68)
(23)
(21)
(117)
(78)
(41)
(41)
Stock-Based Compensation
(56)
(53)
(64)
(65)
(130)
(85)
(89)
Acquisition-related and other
-
-
-
-
(10)
-
-
Restructuring Charges
(34)
-
-
-
-
(26)
(30)
Realized Loss (Gain) on Revenue Hedges
11
4
8
6
(11)
(9)
(26)
Operating Income (Loss)
$398
$501
$480
$432
$366
$518
$470
Total Other Expense, Net
(78)
(75)
(78)
(82)
(65)
(53)
46
Income (Loss) from Continuing Operations before Income
Taxes
320
426
402
350
301
465
516
Provision for Income Taxes
(102)
(120)
(76)
(47)
(84)
(92)
(91)
Income (Loss) from Continuing Operations
218
306
326
303
216
373
425
Discontinued Operations, Net of Taxes
85
120
148
(23)
-
-
-
Net Income (Loss)
304
426
475
280
216
373
425
Net (Income) Loss Attributable to Noncontrolling Interests
(4)
(4)
(2)
-
16
25
31
Net Income (Loss) Attributable to Expedia, Inc.
$300
$422
$473
$280
$233
$398
$456
Non-GAAP / GAAP Reconciliation:
Adjusted EBITDA
Note: Numbers may not sum due to rounding
18 |
 $
Thousands 2009
2010
2011
2012
2013
2014
TTM 1Q15
Net Income / (Loss) attributable to Expedia, Inc.
$299,526
$421,500
$472,294
$280,171
$232,850
$398,097
$456,544
Discontinued operations, net of taxes
(85,349)
(119,885)
(148,148)
22,539
-
-
-
Stock-Based Compensation
55,756
52,507
63,847
64,596
130,173
85,011
89,076
Amortization of Intangibles
23,875
22,514
21,925
31,705
71,731
79,615
86,165
Restructuring Charges
34,168
-
-
-
-
25,630
30,306
Noncontrolling Investment Basis Adjustment
5,158
-
-
-
-
(2,783)
(82,259)
Legal Reserves, Occupancy Tax and Other
67,999
22,692
20,855
117,025
77,919
41,539
40,529
Acquisition-related and other
-
-
-
-
9,829
-
-
Foreign Currency (Gain) Loss on U.S. Dollar Cash Balances Held by
eLong
128
2,711
2,690
16
(165)
(249)
(276)
Impairment of Goodwill / Other-than-temporary investment
impairment
-
-
-
-
-
5,666
5,666
(Gain) Loss on sale of asset
-
-
-
-
-
-
(11,501)
Stock-based compensation as part of equity method investments
-
-
-
-
-
730
656
(Gain) / Loss on Derivative Instruments Assumed at Spin-Off
38
-
-
-
-
-
-
Amort. of Intangible Assets as Part of Equity Method Investments
458
-
-
-
-
-
Unrealized (Gain) / Loss on Revenue Hedges
(1,033)
4,898
(4,479)
3,199
(1,072)
(10,680)
(16,993)
Noncontrolling Interests
(1,343)
(2,877)
(3,135)
(2,263)
(15,278)
(17,092)
(17,281)
Provision for Income Taxes
(86,395)
(34,449)
(41,362)
(78,485)
(58,493)
(77,388)
(78,167)
Adjusted Net Income
$312,774
$369,611
$384,487
$438,503
$451,973
$528,096
$502,465
GAAP Diluted Weighted Average Shares Outstanding
146,071
144,014
138,702
139,929
139,593
133,168
131,949
Additional Restricted Stock Units
3,183
1,889
1,331
1,323
565
245
627
Adjusted Weighted Average Shares Outstanding
149,254
145,903
140,033
141,252
140,158
133,413
132,577
Adjusted Earnings from Continued Operations Per Share
$2.10
$2.53
$2.75
$3.10
$3.22
$3.96
$3.79
Note: Numbers may not sum due to rounding
Non-GAAP / GAAP Reconciliation:
Adjusted EPS
19 |
 Non-GAAP / GAAP Reconciliation:
Free Cash Flow
Note: Numbers may not sum due to rounding
$ Millions
2009
2010
2011
2012
2013
2014
TTM 3/31/15
Cash provided by operations
$574
$605
$826
$1,237
$763
$1,367
$1,446
Capital expenditures
(79)
(136)
(208)
(236)
(309)
(328)
(356)
Free cash flow
$495
$469
$618
$1,001
$455
$1,039
$1,090
20 |