Document
false0001324424 0001324424 2020-07-30 2020-07-30 0001324424 exch:XNGS 2020-07-30 2020-07-30


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 30, 2020
 
EXPEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-37429
 
20-2705720
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
1111 Expedia Group Way W.
Seattle, Washington 98119
(Address of principal executive offices) (Zip code)
(206) 481-7200
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $0.0001 par value
EXPE
The Nasdaq Global Select Market
Expedia Group, Inc. 2.500% Senior Notes due 2022
EXPE22
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 






Item 2.02.    Results of Operations and Financial Condition.
On July 30, 2020, Expedia Group, Inc. (“Expedia Group”) issued an earnings release and will hold a conference call regarding its financial results for the quarter ended June 30, 2020. A copy of the earnings release is furnished as Exhibit 99.1 hereto.
Expedia Group is making reference to non-GAAP financial measures in both the earnings release and the conference call. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures is contained in the attached Exhibit 99.1 earnings release.
Pursuant to General Instruction B.2. to Form 8-K, the information set forth in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
EXPEDIA GROUP, INC.
 
 
 
 
By:
/s/ Eric Hart
 
 
Eric Hart
 
 
Chief Financial Officer
Dated: July 30, 2020
 



Exhibit
Exhibit 99.1

        https://cdn.kscope.io/d49a5fb9e07a3a6e9c466b7585172348-eghorizontalwhiteonbluea08.jpg

Expedia Group Reports Second Quarter 2020 Results
SEATTLE, WA – July 30, 2020 – Expedia Group, Inc. (NASDAQ: EXPE) announced financial results today for the second quarter ended June 30, 2020.

“The second quarter of 2020 represented likely the worst quarter the travel industry has seen in modern history and Expedia was of course not spared. However, after the bottom of the trough in April, we saw consistent improvement in gross bookings through May and June with cancellations moderating. It is clear though that it will be a bumpy and inconsistent recovery with virus numbers being volatile around the globe and country and region restrictions changing all the time.” said Vice Chairman and CEO, Peter Kern. “We cannot control these short term changes in demand, so we are instead focused on our needed long term strategic work. By reshaping and simplifying our organization we have put ourselves in position to optimize our brands, our data, and our platform technologies. These changes have also allowed us to streamline our business as we look to drive significant efficiency across the company. Thanks to the tremendous efforts of our team, I am confident we are on track to come out of the pandemic in a much better place.”


Financial Summary & Operating Metrics ($ millions except per share amounts)(1) 
 
Expedia Group, Inc.
Metric
Q2 2020
Q2 2019
Δ Y/Y
Room night growth
(81)%
12%
NM
Gross bookings
$2,713
$28,292
(90)%
Revenue
566
3,153
(82)%
Operating income (loss)
(849)
265
NM
Net income (loss) attributable to Expedia Group common stockholders
(753)
183
NM
Diluted earnings (loss) per share
$(5.34)
$1.21
NM
Adjusted EBITDA(2)
(436)
568
NM
Adjusted net income (loss)(2)
(577)
276
NM
Adjusted EPS(2)
$(4.09)
$1.77
NM
Free cash flow(2)
(2,052)
839
NM

(1)All comparisons are against comparable period of 2019 unless otherwise noted.
(2)"Adjusted EBITDA" (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization), "Adjusted net income (loss)," "Adjusted EPS" and "Free cash flow" are non-GAAP measures as defined by the Securities and Exchange Commission (the "SEC"). See "Definitions of Non-GAAP Measures" and "Tabular Reconciliations for Non-GAAP Measures" on pages 12-18 herein for an explanation and reconciliations of non-GAAP measures used throughout this release. Expedia Group does not calculate or report net income by segment.

Please refer to the "Glossary of Business Terms," located in the Quarterly Results section on Expedia Group’s investor relations website, for business and financial statement definitions used throughout this release.

Discussion of Results
The results for Expedia Group, Inc. ("Expedia Group" or "the Company") include Brand Expedia®, Hotels.com®, Expedia® Partner Solutions, Vrbo®, Egencia®, trivago®, HomeAway®, Orbitz®, Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media Solutions, Expedia Local Expert®, CarRentals.com™, Expedia® CruiseShipCenters®, Classic Vacations®, Traveldoo®, VacationRentals.com and SilverRail™. Results include the related international points of sale for all brands and the immaterial impact of

Page 1 of 19


Bodybuilding.com since the Liberty Expedia Holdings, Inc. transaction on July 26, 2019. In May 2020, Expedia Group completed the sale of Bodybuilding.com. All amounts shown are in U.S. dollars.

Page 2 of 19



Gross Bookings & Revenue
Revenue by Segment ($ millions)
 
Revenue
 
Second Quarter
 
2020
 
2019
 
Δ%
Retail
$463
 
$2,333
 
(80)%
B2B
68
 
657
 
(90)%
Corporate (Bodybuilding.com)
20
 
 
NM
Expedia Group (excluding trivago)
$551
 
$2,990
 
(82)%
trivago
18
 
251
 
(93)%
Intercompany eliminations
(3)
 
(88)
 
(97)%
Total
$566
 
$3,153
 
(82)%

For the second quarter of 2020, total gross bookings decreased 90%. In April, as COVID-19 spread globally, cancellations exceeded new bookings, and as a result, total gross bookings were negative for the month. Subsequently, as the virus was contained to varying degrees in certain countries and certain travel restrictions were lifted, the decline in new bookings slowed and cancellation rates moderated. Total gross bookings turned positive in May and the year over year decline moderated further in June, led by growth at Vrbo, Expedia Group's alternative accommodation business.
For the second quarter of 2020, total revenue decreased 82%. In the second quarter, revenue declined significantly year over year in both April and May, and the decline moderated in June due to the improved trends in the lodging business.

Product & Services Detail - Second Quarter 2020
As a percentage of total worldwide revenue in the second quarter of 2020, lodging accounted for 86%, advertising and media accounted for 4% and all other revenues accounted for 22%, while air was a 12% detriment to revenue.
Lodging revenue decreased 78% in the second quarter of 2020 on an 81% decrease in room nights stayed, partly offset by a 15% increase in revenue per room night. Revenue per room night benefited from an increase in the percentage of room nights contributed by Vrbo, which has a higher revenue per room night than the rest of our lodging business, and recognition of certain revenue related to stays in prior periods.
Air revenue, which is recognized when booked net of an estimate of cancellations, was negative in the second quarter of 2020 due to several revenue offsets that exceeded new booked revenue in the quarter. The negative impacts to revenue included significantly elevated cancellations, which were higher than estimated cancellations of previous period bookings, higher than previously anticipated cash refunds to customers for certain cancellations, as well as a reduction to previously estimated and recognized volume-based revenues due to lower ticket volumes. Air tickets sold declined 85% in the second quarter, reflecting the adverse impact of COVID-19 on demand for air travel.
Advertising and media revenue decreased 91% in the second quarter of 2020 due to declines at trivago and Expedia Group Media Solutions. Other revenue decreased 72% in the second quarter of 2020. The decline in Other revenue was more modest than the decrease in total revenue mainly due to inorganic impact related to an acquisition.



Page 3 of 19



Costs and Expenses ($ millions)
 
Costs and Expenses
 
 
As a % of Revenue
 
Second Quarter
 
 
Second Quarter
 
2020
 
2019
 
Δ%
 
 
2020
 
2019
 
Δ (bps)
Generally Accepted Accounting Principles (GAAP) Expenses - Expedia Group
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
$
389

 
$
500

 
(22
)%
 
 
68.8
%
 
15.9
%
 
5,289

Selling and marketing
296

 
1,643

 
(82
)%
 
 
52.2
%
 
52.1
%
 
9

Technology and content
255

 
304

 
(16
)%
 
 
45.2
%
 
9.6
%
 
3,555

General and administrative
152

 
205

 
(26
)%
 
 
26.8
%
 
6.5
%
 
2,032

Total GAAP costs and expenses
$
1,092

 
$
2,652

 
(59
)%
 
 
193.0
%
 
84.1
%
 
10,885

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Expenses - Expedia Group
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue*
$
386

 
$
497

 
(22
)%
 
 
68.2
%
 
15.8
%
 
5,244

Selling and marketing*
283

 
1,631

 
(83
)%
 
 
50.0
%
 
51.7
%
 
(179
)
Technology and content*
237

 
285

 
(16
)%
 
 
42.0
%
 
9.0
%
 
3,305

General and administrative*
132

 
180

 
(27
)%
 
 
23.2
%
 
5.7
%
 
1,749

Total adjusted costs and expenses
$
1,038

 
$
2,593

 
(60
)%
 
 
183.4
%
 
82.2
%
 
10,119

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Expenses - Expedia Group (excluding trivago)**
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue*
$
386

 
$
495

 
(22
)%
 
 
70.0
%
 
16.5
%
 
5,344

Selling and marketing*
275

 
1,517

 
(82
)%
 
 
49.7
%
 
50.7
%
 
(102
)
Technology and content*
224

 
269

 
(16
)%
 
 
40.8
%
 
8.9
%
 
3,183

General and administrative*
124

 
170

 
(27
)%
 
 
22.4
%
 
5.7
%
 
1,670

Total adjusted costs and expenses excluding trivago
$
1,009

 
$
2,451

 
(59
)%
 
 
182.9
%
 
81.9
%
 
10,094

*Adjusted expenses are non-GAAP measures. See pages 12-18 herein for a description and reconciliation to the corresponding GAAP measures.
**Expedia Group (excluding trivago) figures exclude both trivago costs and expenses and trivago revenue when calculating 'As a % of Revenue.'
Note: Some numbers may not add due to rounding.
Cost of Revenue
For the second quarter of 2020, both total GAAP and adjusted cost of revenue decreased 22% compared to the second quarter of 2019, primarily due to a decline in merchant fees resulting from lower transaction volumes and a decrease in personnel costs, partly offset by inorganic impact related to an acquisition and an increase in bad debt reserves related to future collection risk from the impact of COVID-19.
Selling and Marketing
For the second quarter of 2020, GAAP and adjusted total selling and marketing expense decreased 82% and 83%, respectively, compared to the second quarter of 2019, primarily due to a $1.29 billion decrease in direct costs, driven by a significant reduction in marketing spend related to the impact on travel demand from COVID-19. Indirect costs, which represented 68% of total GAAP selling and marketing costs and 67% of total adjusted selling and marketing expense in the second quarter of 2020 compared to 16% and 15%, respectively, in the second quarter of 2019, declined 23% and 24%, respectively, on a GAAP and adjusted basis in the second quarter of 2020 due to lower personnel costs.
Technology and Content
For the second quarter of 2020, both total GAAP and adjusted technology and content expense decreased 16%, compared to the second quarter of 2019, primarily reflecting lower personnel costs.
General and Administrative

Page 4 of 19



For the second quarter of 2020, total GAAP and adjusted general and administrative expense decreased 26% and 27%, respectively, compared to the prior year, mainly due to a decrease in personnel costs and professional fees.

Net Loss Attributable to Expedia Group and Adjusted EBITDA*
Adjusted EBITDA by Segment ($ millions)
 
 
Second Quarter
 
2020
 
2019
 
Δ%
Retail
$
(203
)
 
$
548

 
NM
B2B
(128
)
 
130

 
NM
Unallocated overhead costs
(89
)
 
(130
)
 
(31)%
Expedia Group (excluding trivago)
$
(420
)
 
$
548

 
NM
trivago(1)
(16
)
 
20

 
NM
Total Adjusted EBITDA
$
(436
)
 
$
568

 
NM
 
 
 
 
 
 
Net income (loss) attributable to Expedia Group common stockholders(2)
$
(753
)
 
$
183

 
NM
(1) trivago is a separately listed company on the Nasdaq Global Select Market and, therefore, is subject to its own reporting and filing requirements which could result in possible differences that are not expected to be material to Expedia Group. (2) Expedia Group does not calculate or report net income (loss) by segment.
* Adjusted EBITDA is a non-GAAP measure. See pages 12-18 herein for a description and reconciliation to the corresponding GAAP measure.
Note: Some numbers may not add due to rounding.
Depreciation and Amortization
Depreciation and amortization increased 2% in the second quarter of 2020. Depreciation related to our new headquarters and higher capitalized software and website development depreciation was mostly offset by lower datacenter depreciation and a decrease in amortization, which related to the completion of amortization related to certain intangible assets.
Impairment of Goodwill & Intangible Assets
Impairment charges of goodwill and intangible assets totaled $30 million in the second quarter of 2020 due to business simplification efforts in our Retail segment.

Restructuring and Related Reorganization Charges
In connection with the restructuring actions announced in late February 2020 to simplify our businesses and improve operational efficiencies, we recognized $53 million in restructuring and related reorganization charges in the second quarter of 2020. Restructuring and related reorganization charges were $4 million in the second quarter of 2019, primarily related to severance and benefits.
Interest and Other
Consolidated interest income decreased $14 million in the second quarter of 2020, compared to the second quarter of 2019. Consolidated interest expense increased $56 million in the second quarter of 2020, compared to the second quarter of 2019, due to the issuance of the $1.25 billion senior unsecured notes in September 2019, the $1.9 billion borrowed under the revolving credit facility, as well as the issuance of the $2 billion and $750 million senior unsecured notes in May 2020.
Consolidated other, net was a loss of $12 million in the second quarter of 2020, compared to a loss of $8 million in the second quarter of 2019. In the second quarter of 2020, consolidated other, net included an impairment charge on a minority equity investment, partly offset by mark-to-market gains on minority equity investments. The loss in the second quarter of 2019 was primarily due to mark-to-market losses on minority equity investments.


Page 5 of 19



Income Taxes
The GAAP effective tax rate was 22% in the second quarter of 2020, compared to 20% in the second quarter of 2019. The change in the effective tax rate was primarily due to discrete tax benefits in the prior year period.

The effective tax rate on pretax adjusted net loss was 23% in the second quarter of 2020, largely in-line with 22% on pretax adjusted net income in the second quarter of 2019.

Preferred Stock Dividend
The preferred stock dividend was $17 million in the second quarter of 2020 for a partial quarter of dividends related to the preferred equity issued in May of 2020.

Balance Sheet, Cash Flows and Capitalization
For the three months ended June 30, 2020, consolidated net cash used in operating activities was $1.8 billion and consolidated free cash flow totaled negative $2.1 billion. Consolidated free cash flow decreased $2.9 billion in the second quarter of 2020 compared to the prior year period primarily due to a significant use of cash for working capital compared to a cash benefit from working capital in the prior year period, as well as a decline in adjusted EBITDA. The primary driver of the swing in working capital relates to the use of cash for deferred merchant bookings as refunds for cancelled bookings exceeded new bookings compared to an increase from deferred merchant bookings in the prior year period.

Cash, cash equivalents and short-term investments totaled $5.5 billion at June 30, 2020 compared to $4.1 billion at March 31, 2020. The increase was due to proceeds from the issuance of preferred equity and senior unsecured notes in May 2020, in part offset by the negative free cash flow. Restricted cash and cash equivalents, which primarily relates to traveler deposits for bookings made through Vrbo, increased to $1.3 billion at June 30, 2020 from $813 million at March 31, 2020 reflecting growth in bookings at Vrbo. Accounts receivable, net of reserves, totaled $1.0 billion at June 30, 2020. Prepaid expenses and other current assets, which include prepaid merchant bookings related to Vrbo and deposits with credit card acquirers to fund customer refunds not yet processed, was $1.0 billion at June 30, 2020. Deferred merchant bookings totaled $4.6 billion at June 30, 2020, which includes $790 million in deferred loyalty rewards, compared to $5.9 billion at March 31, 2020, which included a similar amount in deferred loyalty rewards.
Current maturities of long-term debt includes $750 million in 5.95% senior notes due in August 2020. As of June 30, 2020, long-term debt, net of applicable discounts, debt issuance costs and current maturities, totaled $6.9 billion, excluding the $1.9 billion borrowed under the revolving credit facility. In May 2020, Expedia Group issued $2.0 billion of 2025 senior notes that bear interest at 6.25% and issued $750 million of 2025 senior notes that bear interest at 7.00%. The 7.00% notes have certain redemption provisions starting with the second anniversary of the issuance. Subsequently, in July 2020, Expedia Group issued $500 million of 2023 senior notes that bear interest at 3.60% and issued $750 million of 2027 senior notes that bear interest at 4.625%.

Expedia Group Recent Highlights
In July 2020, Expedia Group raised $500 million in 3-year unsecured senior notes and $750 million in 7-year unsecured senior notes, with the proceeds expected to redeem the Series A preferred stock after May 5, 2021 when the redemption premium declines. This transaction optimizes Expedia's capital structure by reducing its cost of capital and is expected to deliver attractive cost savings over time.
In June, Expedia announced the retirement of the HomeAway brand in the U.S., the most recent step in Expedia Group's strategy to streamline its portfolio of vacation rental brands globally, and focus its resources behind Vrbo as its primary global alternative accommodation brand.
In May, Expedia Group announced a $275 million commitment to aid hotel and destination marketing partners during the recovery from the unprecedented impact of COVID-19. The program includes $250 million in marketing credits and financial relief for participating hotel properties and a $25 million fund for destination partners, as well as access to proprietary data to help partners manage the dynamic demand environment. The program has been rolled out to partners in 80 countries thus far.

Page 6 of 19



Egencia launched Expedia Group’s virtual agent in the U.S. and France to drive increased efficiency in customer service. Several functions typically handled by customer services agents such as accessing itineraries and confirmations and making cancellations can now be handled by the virtual agent.




Page 7 of 19



EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
(Unaudited)
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
Revenue
$
566

 
$
3,153

 
$
2,775

 
$
5,762

Costs and expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)
389

 
500

 
1,018

 
990

Selling and marketing (1)
296

 
1,643

 
1,506

 
3,164

Technology and content (1)
255

 
304

 
563

 
601

General and administrative (1)
152

 
205

 
339

 
389

Depreciation and amortization
232

 
228

 
461

 
456

Impairment of goodwill
20

 

 
785

 

Impairment of intangible assets
10

 

 
131

 

Legal reserves, occupancy tax and other
8

 
4

 
(13
)
 
14

Restructuring and related reorganization charges
53

 
4

 
128

 
14

Operating income (loss)
(849
)
 
265

 
(2,143
)
 
134

Other income (expense):
 
 
 
 
 
 
 
Interest income
3

 
17

 
13

 
28

Interest expense
(95
)
 
(39
)
 
(145
)
 
(80
)
Other, net
(12
)
 
(8
)
 
(157
)
 
12

Total other expense, net
(104
)
 
(30
)
 
(289
)
 
(40
)
Income (loss) before income taxes
(953
)
 
235

 
(2,432
)
 
94

Provision for income taxes
213

 
(48
)
 
295

 
(7
)
Net income (loss)
(740
)
 
187

 
(2,137
)
 
87

Net (income) loss attributable to non-controlling interests
4

 
(4
)
 
100

 
(7
)
Net income (loss) attributable to Expedia Group, Inc.
(736
)
 
183

 
(2,037
)
 
80

Preferred stock dividend
(17
)
 

 
(17
)
 

Net income (loss) attributable to Expedia Group, Inc. common stockholders
$
(753
)
 
$
183

 
$
(2,054
)
 
$
80

 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders:
 
 
 
 
 
 
 
Basic
$
(5.34
)
 
$
1.23

 
$
(14.57
)
 
$
0.54

Diluted
(5.34
)
 
1.21

 
(14.57
)
 
0.53

Shares used in computing earnings (loss) per share (000's):
 
 
 
 
 
 
 
Basic
141,072

 
149,049

 
140,947

 
148,468

Diluted
141,072

 
151,561

 
140,947

 
151,057

 
 
 
 
 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
 
 
 
 
Cost of revenue
$
3

 
$
3

 
$
6

 
$
6

Selling and marketing
13

 
12

 
25

 
23

Technology and content
18

 
19

 
38

 
38

General and administrative
20

 
25

 
40

 
48



Page 8 of 19





EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in thousands and par value)
 
June 30, 2020
 
December 31, 2019
 
(unaudited)
 
 
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
5,053

 
$
3,315

Restricted cash and cash equivalents
1,311

 
779

Short-term investments
422

 
526

Accounts receivable, net of allowance of $115 and $41
1,002

 
2,524

Income taxes receivable
107

 
70

Prepaid expenses and other current assets
1,049

 
521

Total current assets
8,944

 
7,735

Property and equipment, net
2,305

 
2,198

Operating lease right-of-use assets
626

 
611

Long-term investments and other assets
618

 
796

Deferred income taxes
482

 
145

Intangible assets, net
1,600

 
1,804

Goodwill
7,330

 
8,127

TOTAL ASSETS
$
21,905

 
$
21,416

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Accounts payable, merchant
$
531

 
$
1,921

Accounts payable, other
518

 
906

Deferred merchant bookings
4,632

 
5,679

Deferred revenue
197

 
321

Income taxes payable
78

 
88

Accrued expenses and other current liabilities
1,166

 
1,050

Current maturities of long-term debt
750

 
749

Total current liabilities
7,872

 
10,714

Long-term debt, excluding current maturities
6,903

 
4,189

Revolving credit facility
1,900

 

Deferred income taxes
74

 
56

Operating lease liabilities
543

 
532

Other long-term liabilities
388

 
389

Commitments and contingencies
 
 
 
Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 1,200 and 0
1,022

 

Stockholders’ equity:
 
 
 
Common stock: $.0001 par value; Authorized shares: 1,600,000

 

Shares issued: 259,085 and 256,692; Shares outstanding: 135,691 and 137,076
 
 
 
Class B common stock: $.0001 par value; Authorized shares: 400,000

 

Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523
 
 
 
Additional paid-in capital
13,300

 
12,978

Treasury stock - Common stock and Class B, at cost; Shares 130,670 and 126,893
(10,087
)
 
(9,673
)
Retained earnings (deficit)
(1,206
)
 
879

Accumulated other comprehensive income (loss)
(273
)
 
(217
)
Total Expedia Group, Inc. stockholders’ equity
1,734

 
3,967

Non-redeemable non-controlling interests
1,469

 
1,569

Total stockholders’ equity
3,203

 
5,536

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
21,905

 
$
21,416


Page 9 of 19



EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Six months ended June 30,
 
2020
 
2019
Operating activities:
 
 
 
Net income (loss)
$
(2,137
)
 
$
87

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation of property and equipment, including internal-use software and website development
376

 
352

Amortization of intangible assets
85

 
104

Impairment of goodwill and intangible assets
916

 

Amortization of stock-based compensation
109

 
115

Deferred income taxes
(279
)
 
(15
)
Foreign exchange (gain) loss on cash, restricted cash and short-term investments, net
65

 
(13
)
Realized gain on foreign currency forwards
(79
)
 
(16
)
(Gain) loss on minority equity investments, net
195

 
(12
)
Provision for credit losses and other, net
119

 
(13
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
1,479

 
(742
)
Prepaid expenses and other assets
(585
)
 
(7
)
Accounts payable, merchant
(1,389
)
 
271

Accounts payable, other, accrued expenses and other liabilities
(244
)
 
436

Tax payable/receivable, net
(82
)
 
(143
)
Deferred merchant bookings
(1,058
)
 
2,726

Deferred revenue
(121
)
 
157

Net cash provided by (used in) operating activities
(2,630
)
 
3,287

Investing activities:
 
 
 
Capital expenditures, including internal-use software and website development
(493
)
 
(573
)
Purchases of investments
(685
)
 
(636
)
Sales and maturities of investments
761

 
27

Other, net
76

 
16

Net cash provided by (used in) investing activities
(341
)
 
(1,166
)
Financing activities:
 
 
 
Revolving credit facility borrowings
1,900

 

Proceeds from issuance of long-term debt, net of issuance costs
2,714

 

Net proceeds from issuance of preferred stock and warrants
1,132

 

Purchases of treasury stock
(414
)
 
(29
)
Payment of dividends to common stockholders
(48
)
 
(95
)
Payment of preferred stock dividends
(17
)
 

Proceeds from exercise of equity awards and employee stock purchase plan
96

 
156

Other, net
(30
)
 
2

Net cash provided by financing activities
5,333

 
34

Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents
(93
)
 
20

Net increase in cash, cash equivalents and restricted cash and cash equivalents
2,269

 
2,175

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period
4,097

 
2,705

Cash, cash equivalents and restricted cash and cash equivalents at end of period
$
6,366

 
$
4,880

Supplemental cash flow information
 
 
 
Cash paid for interest
$
118

 
$
87

Income tax payments, net
63

 
157


Page 10 of 19



Expedia Group, Inc.
Trended Metrics
(All figures in millions)

The supplemental metrics below are intended to supplement the financial statements in this release and in our filings with the SEC, and do not include adjustments for one-time items, acquisitions, foreign exchange or other adjustments. The definition, methodology and appropriateness of any of our supplemental metrics are subject to removal and/or change, and such changes could be material. In the event of any discrepancy between any supplemental metric and our historical financial statements, you should rely on the information filed with the SEC and the financial statements in our most recent earnings release.

 
 
 
2018
 
 
 
2019
 
 
 
2020
 
 
 
Y/Y
 
 
 
 
 
Q3
Q4
 
 
 
Q1
Q2
Q3
Q4
 
 
 
Q1
Q2
 
 
 
Growth
 
 
Gross bookings by business model
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
 
$
13,663

$
12,602

 
 
 
$
17,352

$
16,112

$
14,585

$
11,956

 
 
 
$
9,823

$
1,363

 
 
 
(92)%
 
 
Merchant
 
 
11,013

9,355

 
 
 
12,057

12,180

12,342

11,289

 
 
 
8,062

1,350

 
 
 
(89)%
 
 
Total
 
 
$
24,676

$
21,957

 
 
 
$
29,409

$
28,292

$
26,927

$
23,245

 
 
 
$
17,885

$
2,713

 
 
 
(90)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
$
2,481

$
1,892

 
 
 
$
1,901

$
2,333

$
2,613

$
1,961

 
 
 
$
1,582

$
463

 
 
 
(80)%
 
 
B2B
 
 
595

547

 
 
 
556

657

731

635

 
 
 
485

68

 
 
 
(90)%
 
 
Corporate (Bodybuilding.com)
 
 


 
 
 


24

34

 
 
 
39

20

 
 
 
NM
 
 
Expedia Group (excluding trivago)
 
 
$
3,076

$
2,439

 
 
 
$
2,457

$
2,990

$
3,368

$
2,630

 
 
 
$
2,106

$
551

 
 
 
(82)%
 
 
trivago
 
 
295

190

 
 
 
237

251

279

171

 
 
 
154

18

 
 
 
(93)%
 
 
Intercompany eliminations
 
 
(95
)
(70
)
 
 
 
(85
)
(88
)
(89
)
(54
)
 
 
 
(51
)
(3
)
 
 
 
(97)%
 
 
Total
 
 
$
3,276

$
2,559

 
 
 
$
2,609

$
3,153

$
3,558

$
2,747

 
 
 
$
2,209

$
566

 
 
 
(82)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by geography
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
 
$
1,792

$
1,426

 
 
 
$
1,476

$
1,838

$
1,982

$
1,573

 
 
 
$
1,317

$
463

 
 
 
(75)%
 
 
International
 
 
1,484

1,133

 
 
 
1,133

1,315

1,576

1,174

 
 
 
892

103

 
 
 
(92)%
 
 
Total
 
 
$
3,276

$
2,559

 
 
 
$
2,609

$
3,153

$
3,558

$
2,747

 
 
 
$
2,209

$
566

 
 
 
(82)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue by business model
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
 
$
1,128

$
825

 
 
 
$
842

$
1,047

$
1,177

$
816

 
 
 
$
562

$
105

 
 
 
(90)%
 
 
Merchant
 
 
1,770

1,429

 
 
 
1,435

1,758

1,980

1,590

 
 
 
1,340

368

 
 
 
(79)%
 
 
Advertising & media and other
 
 
378

305

 
 
 
332

348

401

341

 
 
 
307

93

 
 
 
(73)%
 
 
Total
 
 
$
3,276

$
2,559

 
 
 
$
2,609

$
3,153

$
3,558

$
2,747

 
 
 
$
2,209

$
566

 
 
 
(82)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
$
874

$
485

 
 
 
$
195

$
548

$
876

$
502

 
 
 
$
22

$
(203
)
 
 
 
NM
 
 
B2B
 
 
123

82

 
 
 
72

130

149

96

 
 
 
26

(128
)
 
 
 
NM
 
 
Unallocated overhead costs
 
 
(116
)
(129
)
 
 
 
(115
)
(130
)
(125
)
(149
)
 
 
 
(123
)
(89
)
 
 
 
(31)%
 
 
Expedia Group (excluding trivago)
 
 
$
881

$
438

 
 
 
$
152

$
548

$
900

$
449

 
 
 
$
(75
)
$
(420
)
 
 
 
NM
 
 
trivago
 
 
31

33

 
 
 
24

20

12

29

 
 
 
(1
)
(16
)
 
 
 
NM
 
 
Total
 
 
$
912

$
471

 
 
 
$
176

$
568

$
912

$
478

 
 
 
$
(76
)
$
(436
)
 
 
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Net income (loss) attributable to Expedia Group common stockholders
 
 
$
525

$
17

 
 
 
$
(103
)
$
183

$
409

$
76

 
 
 
$
(1,301
)
(753
)
 
 
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide lodging (merchant & agency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Room nights
 
 
105.3

82.8

 
 
 
80.8

100.1

116.5

91.6

 
 
 
69.4

19.2
 
 
 
 
 
 
Room night growth
 
 
13
 %
11
 %
 
 
 
9
 %
12
 %
11
 %
11
 %
 
 
 
(14
)%
(81
)%
 
 
 
 
 
 
ADR growth
 
 
4
 %
2
 %
 
 
 
(1
)%
 %
(1
)%
 %
 
 
 
2
 %
1
 %
 
 
 
 
 
 
Revenue per night growth
 
 
(1
)%
(1
)%
 
 
 
(2
)%
1
 %
 %
(1
)%
 
 
 
6
 %
15
 %
 
 
 
 
 
 
Lodging revenue growth
 
 
12
 %
10
 %
 
 
 
7
 %
12
 %
11
 %
9
 %
 
 
 
(9
)%
(78
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide air (merchant & agency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tickets sold growth
 
 
4
 %
10
 %
 
 
 
11
 %
10
 %
8
 %
 %
 
 
 
(26
)%
(85
)%
 
 
 
 
 
 
Airfare growth
 
 
4
 %
2
 %
 
 
 
(1
)%
1
 %
 %
1
 %
 
 
 
(5
)%
(35
)%
 
 
 
 
 
 
Revenue per ticket growth
 
 
6
 %
7
 %
 
 
 
(7
)%
(7
)%
(10
)%
(9
)%
 
 
 
(41
)%
NM

 
 
 
 
 
 
Air revenue growth
 
 
11
 %
18
 %
 
 
 
3
 %
2
 %
(3
)%
(8
)%
 
 
 
(56
)%
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Notes:
Advertising & Media Revenue includes 3rd party revenue from trivago. All trivago revenue is classified as international.
Corporate includes product revenue subsequent to our acquisition of Bodybuilding.com on July 26, 2019 through its sale in May 2020.
Some numbers may not add due to rounding. All percentages above and throughout this release are calculated on precise, unrounded numbers

Page 11 of 19



Notes & Definitions:
Gross Bookings: Gross bookings generally represent the total retail value of transactions booked, recorded at the time of booking reflecting the total price due for travel by travelers, including taxes, fees and other charges, adjusted for cancellations and refunds.
Retail: The Retail segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, CarRentals.com, CruiseShipCenters, Classic Vacations and SilverRail Technologies, Inc.
B2B: The B2B segment is comprised of our Expedia Business Services organization including Expedia Partner Solutions, which operates private label and co-branded programs to make travel services available to leisure travelers though third-party company branded websites, and Egencia, a full-service travel management company that provides travel services to businesses and their corporate customers.
trivago: The trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its localized hotel metasearch websites.
Corporate: Includes unallocated corporate expenses as well as Bodybuilding.com subsequent to our acquisition on July 26, 2019.
Lodging metrics: Reported on a stayed basis and includes both merchant and agency model hotel and alternative accommodation stays.
Room Nights: Room nights represent stayed hotel room nights and property nights for our Retail reportable segment and stayed hotel room nights for our B2B reportable segment. Hotel room nights are reported on a stayed basis and include both merchant and agency hotel stays. Property nights, which are related to our alternative accommodation business, are reported upon the first day of stay and check-in to a property and represent the total number of nights for which a property is rented.
Worldwide Air metrics: Reported on a booked basis and includes both merchant and agency air bookings.

Definitions of Non-GAAP Measures
Expedia Group reports Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, Free Cash Flow and Adjusted Expenses (non-GAAP cost of revenue, non-GAAP selling and marketing, non-GAAP technology and content and non-GAAP general and administrative), all of which are supplemental measures to GAAP and are defined by the SEC as non-GAAP financial measures. These measures are among the primary metrics by which management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the same set of tools that management uses to analyze our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS have certain limitations in that they do not take into account the impact of certain expenses to our consolidated statements of operations. We endeavor to compensate for the limitation of the non-GAAP measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP measures. Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS also exclude certain items related to transactional tax matters, which may ultimately be settled in cash. We urge investors to review the detailed disclosure regarding these matters in the Management Discussion and Analysis and Legal Proceedings sections, as well as the notes to the financial statements, included in the Company's annual and quarterly reports filed with the Securities and Exchange Commission. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The definition of Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization was revised in the fourth quarter of 2012 and in the first quarter of 2016 and the definition for Adjusted Net Income (Loss) was revised in the fourth quarters of 2010, 2011, 2012 and 2017. The definition of Adjusted Expenses was revised in the first quarter of 2014 and in the second quarter 2015.

Adjusted EBITDA is defined as net income (loss) attributable to Expedia Group adjusted for:
(1) net income (loss) attributable to non-controlling interests;
(2) provision for income taxes;
(3) total other expenses, net;

Page 12 of 19



(4) stock-based compensation expense, including compensation expense related to certain subsidiary equity plans;
(5) 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;
(6) certain other items, including restructuring;
(7) 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;
(8) that portion of gains (losses) on revenue hedging activities that are included in other, net that relate to revenue recognized in the period; and
(9) depreciation.
The above items are excluded from our Adjusted EBITDA measure because these items are non-cash 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 Net Income (Loss) generally captures all items on the statements of operations that occur in normal course operations and have been, or ultimately will be, settled in cash and is defined as net income (loss) attributable to Expedia Group plus the following items, net of tax (which excludes the impact of significant changes resulting from tax legislation such as the Tax Cuts and Jobs Act):
(1) stock-based compensation expense, including compensation expense related to equity plans of certain subsidiaries and equity-method investments;
(2) acquisition-related impacts, including;
(i) amortization of intangible assets, including as part of equity-method investments, and goodwill and intangible asset impairment;
(ii) gains (losses) recognized on changes in the value of contingent consideration arrangements;
(iii) upfront consideration paid to settle employee compensation plans of the acquiree; and
(iv) gains (losses) recognized on non-controlling investment basis adjustments when we acquire or lose controlling interests;
(3) currency gains or losses on U.S. dollar denominated cash;
(4) Since adoption of new accounting guidance in the first quarter of 2018, the changes in fair value of equity investments (other than those accounted for under the equity method and those that are consolidated);
(5) certain other items, including restructuring charges;
(6) items included in Legal reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g., hotel occupancy and excise 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 transactional tax proceedings, including as part of equity method investments;
(7) discontinued operations;
(8) the non-controlling interest impact of the aforementioned adjustment items; and
(9) unrealized gains (losses) on revenue hedging activities that are included in other, net.
Adjusted Net Income (Loss) includes preferred share dividends. We believe Adjusted Net Income (Loss) is useful to investors because it represents Expedia Group's combined results, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of certain expenses and items not directly tied to the core operations of our businesses.

Page 13 of 19





In the third quarter of 2019, we modified the presentation of our adjusted net income reconciliation to provide additional clarity regarding its tax-related components. Our presentation now includes a calculation of "adjusted income before income taxes" and then separately identifies and deducts the GAAP provision for income taxes and the non-GAAP provision for income taxes for adjustments, to arrive at a "total adjusted provision for income taxes." The adjusted income tax rate is the percentage of "adjusted income before income taxes" represented by this "total adjusted provision for income taxes." We believe separately presenting the total adjusted income tax rate allows our investors to better assess the differences between the GAAP and non-GAAP measures and the drivers of our adjusted results.

Adjusted EPS is defined as Adjusted Net Income (Loss) divided by GAAP dilutive shares. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, Expedia Group'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 (Loss) and Adjusted EPS have similar limitations as Adjusted EBITDA. In addition, Adjusted Net Income (Loss) 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. Beginning with the second quarter of 2020, we prospectively began calculating Adjusted EPS using GAAP dilutive shares determined under the treasury stock method instead of our prior non-GAAP adjusted shares basis. This change does not have a material impact on period over period comparability.

Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures. Management believes Free Cash Flow is useful to investors because it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash movements that are not directly tied to the core operations of our businesses, such as financing activities, foreign exchange or certain investing activities. We added additional detail for the capital expenditures associated with building our new headquarters facility in Seattle, Washington. We believe separating out capital expenditures for this discrete project is important to provide additional transparency to investors related to operating versus project-related capital expenditures. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate Free Cash Flow along with the consolidated statements of cash flows.

Adjusted Expenses (cost of revenue, selling and marketing, technology and content and general and administrative expenses) exclude stock-based compensation related to expenses for stock options, restricted stock units and other equity compensation under applicable stock-based compensation accounting standards. Expedia Group excludes stock-based compensation from these measures primarily because they are non-cash expenses that we do not believe are necessarily reflective of our ongoing cash operating expenses and cash operating income. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting applicable stock-based compensation accounting standards, management believes that providing non-GAAP financial measures that exclude stock-based compensation allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies, as well as providing management with an important tool for financial operational decision making and for evaluating our own recurring core business operating results over different periods of time. There are certain limitations in using financial measures that do not take into account stock-based compensation, including the fact that stock-based compensation is a recurring expense and a valued part of employees' compensation. Therefore, it is important to evaluate both our GAAP and non-GAAP measures. See the Notes to the Consolidated Statements of Operations for stock-based compensation by line item.

Expedia Group, Inc. (excluding trivago) In order to provide increased transparency on the transaction-based component of the business, Expedia Group is reporting results both in total and excluding trivago.


Page 14 of 19



In addition, we evaluate certain operating and financial measures, including revenue growth, on both an as-reported and excluding the impact of foreign exchange, FX neutral, basis. FX neutral results are among the primary metrics by which management evaluates the performance of the business and management believes that investors should have access to the same set of tools that management uses to analyze our results. We estimate FX neutral revenue growth by (i) excluding the FX impacts resulting from the time period between a transaction's booking date and revenue recognition date for both the current and prior year periods, and (ii) converting our current-year period results for transactions recorded in currencies other than U.S. Dollars using the corresponding prior-year period exchange rates rather than the current-year period exchange rates.

Tabular Reconciliations for Non-GAAP Measures
Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization) by Segment(1) 
 
Three months ended June 30, 2020
 
Retail
 
B2B
 
trivago
 
Corporate &
Eliminations
 
Total
 
(In millions)
Operating loss
$
(375
)
 
$
(162
)
 
$
(19
)
 
$
(293
)
 
$
(849
)
Realized gain (loss) on revenue hedges
36

 

 

 

 
36

Restructuring and related reorganization charges

 

 

 
53

 
53

Legal reserves, occupancy tax and other

 

 

 
8

 
8

Stock-based compensation

 

 

 
54

 
54

Impairment of goodwill

 

 

 
20

 
20

Impairment of intangible assets

 

 

 
10

 
10

Amortization of intangible assets

 

 

 
41

 
41

Depreciation
136

 
34

 
3

 
18

 
191

Adjusted EBITDA(1)
$
(203
)
 
$
(128
)
 
$
(16
)
 
$
(89
)
 
$
(436
)
 
Three months ended June 30, 2019
 
Retail
 
B2B
 
trivago
 
Corporate &
Eliminations
 
Total
 
(In millions)
Operating income (loss)
$
417

 
$
99

 
$
17

 
$
(268
)
 
$
265

Realized gain (loss) on revenue hedges
4

 
4

 

 

 
8

Restructuring and related reorganization charges

 

 

 
4

 
4

Legal reserves, occupancy tax and other

 

 

 
4

 
4

Stock-based compensation

 

 

 
59

 
59

Amortization of intangible assets

 

 

 
52

 
52

Depreciation
127

 
27

 
3

 
19

 
176

Adjusted EBITDA(1)
$
548

 
$
130

 
$
20

 
$
(130
)
 
$
568

(1) Adjusted EBITDA for our Retail and B2B segments includes allocations of certain expenses, primarily cost of revenue and facilities, the total costs of our global travel supply organizations, the majority of platform and marketplace technology costs, and the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant lodging revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, certain information technology and legal to our reportable segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated and may change.



Page 15 of 19



Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization)
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(In millions)
Net income (loss) attributable to Expedia Group, Inc.
 
$
(736
)
 
$
183

 
$
(2,037
)
 
$
80

Net income (loss) attributable to non-controlling interests
 
(4
)
 
4

 
(100
)
 
7

Provision for income taxes
 
(213
)
 
48

 
(295
)
 
7

Total other expense, net
 
104

 
30

 
289

 
40

Operating income (loss)
 
(849
)
 
265

 
(2,143
)
 
134

Gain (loss) on revenue hedges related to revenue recognized
 
36

 
8

 
30

 
11

Restructuring and related reorganization charges
 
53

 
4

 
128

 
14

Legal reserves, occupancy tax and other
 
8

 
4

 
(13
)
 
14

Stock-based compensation
 
54

 
59

 
109

 
115

Depreciation and amortization
 
232

 
228

 
461

 
456

Impairment of goodwill
 
20

 

 
785

 

Impairment of intangible assets
 
10

 

 
131

 

Adjusted EBITDA
 
$
(436
)
 
$
568

 
$
(512
)
 
$
744




















Page 16 of 19



Adjusted Net Income (Loss) & Adjusted EPS
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(In millions, except share and per share data)
Net income (loss) attributable to Expedia Group, Inc.
 
$
(736
)
 
$
183

 
$
(2,037
)
 
$
80

Less: Net (income) loss attributable to non-controlling interests
 
4

 
(4
)
 
100

 
(7
)
Less: Provision for income taxes
 
213

 
(48
)
 
295

 
(7
)
Income (loss) before income taxes
 
(953
)
 
235

 
(2,432
)
 
94

Amortization of intangible assets
 
41

 
52

 
85

 
104

Stock-based compensation
 
54

 
59

 
109

 
115

Legal reserves, occupancy tax and other
 
8

 
4

 
(13
)
 
14

Restructuring and related reorganization charges
 
53

 
4

 
128

 
14

Impairment of goodwill
 
20

 

 
785

 

Impairment of intangible assets
 
10

 

 
131

 

Unrealized (gain) loss on revenue hedges
 
35

 
(1
)
 
(23
)
 
9

(Gain) loss on minority equity investments, net
 
7

 
10

 
195

 
(12
)
Loss on sale of business
 
1

 

 
1

 

Release of a non-operating liability
 

 

 

 
(12
)
Adjusted income (loss) before income taxes
 
(724
)
 
363

 
(1,034
)
 
326

 
 
 
 
 
 
 
 
 
GAAP Provision for income taxes
 
213

 
(48
)
 
295

 
(7
)
Provision for income taxes for adjustments
 
(48
)
 
(33
)
 
(80
)
 
(72
)
Total Adjusted provision for income taxes
 
165

 
(81
)
 
215

 
(79
)
Total Adjusted income tax rate
 
22.8
%
 
22.3
%
 
20.8
%
 
24.0
%
 
 
 
 
 
 
 
 
 
Non-controlling interests
 
(1
)
 
(6
)
 
1

 
(11
)
Preferred stock dividend
 
(17
)
 

 
(17
)
 

Adjusted net income (loss) attributable to Expedia Group, Inc.
 
$
(577
)
 
$
276

 
$
(835
)
 
$
236

 
 
 
 
 
 
 
 
 
GAAP diluted weighted average shares outstanding (000's)
 
141,072

 
151,561

 
140,947

 
151,057

Additional dilutive securities (000's)
 

 
3,856

 

 
3,244

Adjusted weighted average shares outstanding (000's)
 
141,072

 
155,417

 
140,947

 
154,301

 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share
 
$
(5.34
)
 
$
1.21

 
$
(14.57
)
 
$
0.53

Adjusted earnings (loss) per share attributable to Expedia Group, Inc.
 
$
(4.09
)
 
$
1.77

 
$
(5.92
)
 
$
1.53

 
 
 
 
 
 
 
 
 
Ex-trivago Adjusted Net Income (Loss) and Adjusted EPS
 
 
 
 
 
 
 
 
Adjusted net income (loss) attributable to Expedia Group, Inc.
 
$
(577
)
 
$
276

 
$
(835
)
 
$
236

Less: Adjusted net income (loss) attributable to trivago
 
(13
)
 
2

 
(20
)
 
14

Adjusted net income (loss) excluding trivago
 
$
(564
)
 
$
274

 
$
(815
)
 
$
222

 
 
 
 
 
 
 
 
 
Adjusted earnings (loss) per share attributable to Expedia Group, Inc.
 
$