Robust Gross Bookings From HomeAway And Egencia To Drive Expedia’s 3Q Results

Expedia (NASDAQ: EXPE) is expected to report its third quarter financial results on 25th October 2018. Similar to the last quarter, the market expects the company to deliver a strong performance backed by robust gross bookings from both HomeAway and Egencia. Further, the company’s efforts to reduce its operating expenses and favorable tax rate are likely to boost its adjusted earnings for the quarter. Expedia targets to double its gross bookings by the end of this year by leveraging its data-driven approach to marketing optimization, while continuing to aggressively drive its global expansion plans. We expect this to drive its value in the near term.

We have a price estimate of $144 per share for the company, which is higher than its market price. View our interactive dashboard – Expedia’s Outlook For 2018 – and modify the key drivers to visualize the impact on the company’s revenues and stock price.

Key Highlights of 3Q’18 Results

• Building on the growth momentum, Expedia’s gross bookings are likely to rise strongly in the third quarter, driving its top-line growth. In addition, solid growth in lodging revenue, and stayed room night revenue will further boost its revenue for the quarter.
• HomeAway is expected to continue to deliver solid results by consistent addition to the online bookable listings during the quarter. The shift to instant bookability is likely to contribute to customer conversion, thereby enhancing HomeAway’s value for Expedia.
• Similar to the last quarter, gross bookings at Egencia are estimated to rise, contributing to its top-line growth. Given the momentum in sales and a differentiated product offering, Egencia has a significant opportunity to continue to gain share in the managed corporate travel market, and drive Expedia’s value in the long term.

• Trivago is likely to continue to struggle in the third quarter, pulling down Expedia’s overall results. However, the company plans to take a more-balanced approach to trade-offs between top-line growth and profitability, with more inclination towards the latter. Consequently, Trivago expects its adjusted EBITDA to improve in the second half of the year.
• Expedia aims to optimize its direct marketing spend to improve its profitability in the coming quarters. Also, the company expects its general and administrative expenses to moderate in the second half of 2018, despite being in line with the revenue growth for the full year. As a result, the company has raised its full year adjusted EBITDA growth to 7%-12%, which is 300-400 basis points higher than its previous guidance.
• Moreover, the company will continue to deploy capital for expansion and strategic merger and acquisition (M&A), while returning value to its shareholders through its share repurchase program and consistent dividend payments. In line with the previous quarter, we expect Expedia to repurchase its shares during the quarter to deliver strong returns to its shareholders.

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