What Does Expedia Raising Its Dividend Signify?

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EXPE: Expedia logo
EXPE
Expedia

Even after facing a challenging Q2 2016 mainly on account of integration problems with all its acquired entities on its platform, Expedia has raised its dividend by ~8% to $0.26 per share. This implies that the management has ample confidence in Expedia’s future growth prospects despite the company falling short of expectations in its recent performance. It is noteworthy to mention that both its rivals, Priceline and TripAdvisor, do not pay dividends to their shareholders.

Expedia acquired big players including Travelocity, Orbitz, and HomeAway in 2015, which aided it in the consolidation of the U.S. OTA market. Though Expedia’s Q2 2016 results beat analyst estimates in terms of profit, the company’s revenues fell short of expectations which was mostly a result of the room night decline to 20% (as against 35% in Q2 2015).  Expedia’s network infrastructure problems hurt room night conversions. Expedia’s host of acquisitions last year are now being integrated into the company’s platform, and though a lot of it is completed, these integration issues had led to network problems. However, once the integration is completed, we can expect the company to emerge as a stronger entity in the OTA market.

expedia revenue Q2

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Expedia

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