Expedia (EXPE) 8-K Expedia, Inc. Reports Second Quarter 2010 Results

Q210 Company Overview

Q2 2010

Company Overview

Exhibit 99.2

2

Q210 Company Overview

Forward-Looking Statements

This

presentation

contains

"forward-looking

statements"

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995,

including

statements

about

the

future

financial

and

operational

performance

of

the

Company.

These

statements

are

not

guarantees

of

future

performance.

These

forward-looking

statements

are

based

on

management’s

expectations

as

of

July

29,

2010,

and

assumptions

which

are

inherently

subject

to

uncertainties,

risks

and

changes

in

circumstances

that

are

difficult

to

predict.

The

use

of

words

such

as

“forecast,”

“opportunity,”

"intends,”

“anticipates”

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,

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:

continued

or

prolonged

adverse

economic

conditions

leading

to

decreased

consumer

and

business

spending;

changes

in

our

relationships

and

contractual

agreements

with

travel

suppliers

or

global

distribution

system

partners;

adverse

changes

in

senior

management;

the

rate

of

growth

of

online

travel;

our

inability

to

recognize

the

benefits

of

our

investment

in

technologies;

changes

in

the

competitive

environment,

the

e-commerce

industry

and

broadband

access

and

our

ability

to

respond

to

such

changes;

declines

or

disruptions

in

the

travel

industry

(including

those

caused

by

adverse

weather,

bankruptcies,

health

risks,

war

and/or

terrorism);

the

rate

of

online

migration

in

the

various

geographies

and

markets

in

which

Expedia,

Inc.

operates,

including

Eastern

Europe

and

Asia;

fluctuations

in

foreign

exchange

rates;

risks

related

to

our

long

term

indebtedness,

including

the

ability

to

access

funds

as

and

when

needed;

changing

laws,

rules

and

regulations

and

legal

uncertainties

relating

to

our

business;

Expedia,

Inc.’s

ability

to

expand

successfully

in

international

markets;

possible

charges

resulting

from,

among

other

events,

platform

migration;

failure

to

realize

cost

efficiencies;

the

successful

completion

of

any

future

corporate

transactions

or

acquisitions;

the

integration

of

current

and

acquired

businesses;

and

other

risks

detailed

in

Expedia,

Inc.’s

public

filings

with

the

SEC,

including

Expedia,

Inc.’s

annual

report

on

Form

10-K

for

the

year

ended

December

31,

2009

and

subsequent

Forms

10-Q.

Except

as

required

by

law,

Expedia,

Inc.

undertakes

no

obligation

to

update

any

forward-looking

or

other

statements

in

this

presentation,

whether

as

a

result

of

new

information,

future

events

or

otherwise.

Reconciliations

of

non-GAAP

measures

included

in

this

presentation

to

the

most

comparable

GAAP

measures

are

included

in

Appendix

B.

3

Q210 Company Overview

Global Opportunity

Sizeable

markets

Higher growth

online

Penetration

tailwinds

OTA Share of

Online

Bookings

OTA share

stabilizing

CAGR

2006

2007

2008

2009 (E)

2010 (E)

‘06 –

‘10

Travel Market Size:

U.S.

251

264

271

241

236

-2%

Europe

320

337

334

300

299

-2%

APAC

238

244

215

202

212

-3%

3 Region Total 

809

845

820

743

747

-2%

Online Bookings:

U.S.

123

138

137

135

139

3%

Europe

68

84

95

95

103

11%

APAC

21

26

31

36

44

20%

3 Region Online

212

248

263

266

286

8%

Europe & APAC

89

110

126

131

147

13%

Online Penetration:

U.S.

49%

52%

51%

56%

59%

Europe

21%

25%

28%

32%

34%

APAC

9%

11%

14%

18%

21%

3 Region Online Pen.

26%

29%

32%

36%

38%

Figures in $billions

Sources: U.S. Online Travel Overview 8th Edition Update: 2009 – 2010 (April 2009); U.S. Corporate Travel Distribution

4th Edition (July 2009); European Online Travel Overview 5th Edition (October 2009); European figures assume

Euro/USD exchange rate in each period of $1.40; APAC data - PhoCusWright Asia Pacific Online Travel Overview – Third

Edition, August 2009 & EyeForTravel APAC Overview April 2007. APAC data excludes managed travel. 

4

Q210 Company Overview

World’s Largest and Most Intelligent Travel Marketplace

Suppliers

Customers

Hotels

Airlines

Car rental companies

Cruise lines

Global distribution

system (GDS) partners

Advertisers

Leisure travelers

Corporate travelers

Travel service providers

(“white label”)

Offline retail travel

agents

Secure superior quality supply & maintain price competitiveness

Intelligently match supply & demand

Empower and inspire travelers to find and build the right trip

Enable suppliers to reach travelers in a unique & value-additive way

Aggressively expand our global presence & demand footprint

Achieve excellence in technology, people and processes to make quality,

consistency & efficiency the foundation of our marketplace

Travel

products

Travel info

Technology

5

Q210 Company Overview

Expedia -

the Travel Sector Leader

1

Sources:

comScore

MediaMetrix,

November,

2009

&

company

data;

2

See

Appendix B for reconciliation of non-GAAP to GAAP numbers. Adjusted EBITDA

is calculated as operating income plus depreciation, restructuring charges,

intangibles amortization, stock-based compensation, any impairments, and

certain legal reserves and occupancy tax charges. Adj. EBITDA includes

gains/(losses) from revenue hedges.

Global presence & portfolio of category leading brands

Premier

Brand

Portfolio

#1

Online

Travel

Agency

(OTA)

globally,

with

presence

in

19

countries

Leading

hotel

specialist

globally,

with

over

70

localized

sites

Leading

value-based

travel

provider

#1

online

travel

community,

operating

in

North

America,

Europe

&

APAC

Key Statistics ¹

•

Traffic (June 2010 unique visitors):

75mm

•

TTM 6.30.10 number of transactions:

62mm

TTM 6.30.10

•Gross bookings:

$  24.3b

•Revenue:

$    3.1b

•OIBA

2

:

$781mm

•Adjusted EBITDA

2

$891mm

•

$6.2b market cap (July 23, 2010)

•

Member of S&P 500 & NASDAQ 100

stock indices

6

Q210 Company Overview

Largest Worldwide Audience

Source: comScore

MediaMetrix, June 2010

1

Denotes Expedia’s

percentage difference over next largest competitor

U.S.

Worldwide

0

100

200

300

400

500

600

700

Min Spent Online

Page Views

+190%¹

+188%¹

+101%¹

+149%¹

+152%¹

+122%¹

Orbitz

Yahoo Travel

Priceline

Travelocity

7

Q210 Company Overview

Expedia’s Virtuous Cycle

Growth /

Scale

More travelers

Compelling supplier &

advertising channel

Better

supplier economics

Cash flow to invest in

improved traveler

experience

User-generated content

Scale drives opportunity to enhance supplier, traveler & advertiser value

propositions, reward stakeholders

More ad

revenue

8

Q210 Company Overview

Revenue by Product  & Geography

Product Categories (TTM 6.30.10)

Geographic  Split (TTM 6.30.10)

Hotel

63%

Revenue

Air

12%

* Hotel & Advertising –

75% of revenue base and

key revenue / profitability drivers

* Europe & other international markets benefit

from earlier stage online penetration

* Significant international growth anticipated,

with a target of 50+% of total revenue from

international

Domestic

62%

Revenue

International

38%

Advertising 

& Media

12%

Car, Cruise & Other

13%

Business mix shifting to hotel & advertising, increasingly global

Source: Company financial reports; some numbers may not add due to rounding.

9

Q210 Company Overview

Product Category -

Hotel

Business Overview

Merchant Model / Illustrative Transaction

Hotels

(Supplier)

Travelers

Revenues to Expedia:

•Spread between the discounted rate provided

by suppliers and sales price paid by travelers

•Service fees from travelers

Other:

•Cash received on booking, revenue recognized

at stay

•Revenue margin higher than the agency model

Reduced E.com

service

fees beginning Apr-09

•Merchant hotel

-Expedia

merchant

of

record

with

no

inventory

risk

-Expedia

receives

cash

upfront

from

travelers,

pays

hoteliers

several

weeks

later

-Some

control

over

pricing,

higher

margins

&

ability

to

package

with

other

products

-1

-

3

year

contracts

with

major

chain

lodging

properties

-Consultative

account

management

brings

industry

leading

intelligence

to

hoteliers

•

Agency

hotel

small

but

growing

in

importance

with

acquisition

of

Venere

&

launch

of

Expedia

Easy

Manage

Sample Expedia Revenue:

$350 night stay at luxury hotel

Cost to Traveler

Cost to Expedia

$350

$280

Revenue to Expedia

1

$70

1

Includes service fee and spread

10

Q210 Company Overview

Trended Worldwide Hotel Growth Statistics (y/y)

Source: Company financial reports . 2005 – 2007 data is for merchant hotel only; 2008 – 2010 data is for both agency and merchant hotel.

11

Q210 Company Overview

25.0

30.0

35.0

0.2

0.7

2.9

5.0

10.0

20.0

15.0

0

10

20

30

40

Travel supplier advertising on Expedia’s ww sites

Reviews with social networking

Search tool for fares

Travel blogs

European holiday reviews

Destination services, hotels & vacation rentals

Editorial info and deals

Cruise reviews & community

UGC seat maps and airline info

Guides and bargains

Vacation rental 

Product Category -

Advertising & Media

Ad & Media Brand Portfolio

Business Overview

•Two primary businesses –

•TripAdvisor

Media Network

(leading global collection

of user-generated content sites)

•Expedia

Media

(monetizing

global

Expedia,

Hotels

&

Hotwire

sites

beyond

transactions)

•TTM revenue of $367mm, +24% y/y

TripAdvisor

Reviews and Opinions  -

Robust Growth

TripAdvisor

TripAdvisor

Reviews & Opinions (mm)

Reviews & Opinions (mm)

•Offer advertisers targeted audiences

•CPC, CPM & subscription based ad models

•TripAdvisor

leverages industry-leading SEM & SEO

capabilities

•Robust user-generated content and selection draws in users

Growth in TTM Net Advertising Revenues¹

1

Trailing twelve months; growth due in part to acquisitions

Revenue Drivers

Sources:

Company

financial

reports,

TripAdvisor

press

releases.

12

Q210 Company Overview

Product Category -

Air

Business Overview

•

Air

revenue

=

12%

of

Expedia’s

worldwide

annual

revenue

(TTM)

-

~95%

of

airplane

tickets

sold

over

Expedia’s

online

properties

are

agency

transactions,

in

which

Expedia

acts

as

an

agent

on

behalf

of

a

supplier

and

collects

a

commission

-

Customer

pays

supplier

directly,

Expedia

collects

its

remuneration

after

travel

-

Lower

revenue

margin

business

vs.

hotel

transactions

•

OTAs

in

U.S.

eliminated

most

consumer

booking

fees

for

air

tickets

in

spring

2009,

resulting

in

reduced

revenue

per

ticket

while

taking

share

from

offline

&

supplier

direct

Agency Model / Illustrative Transaction

Airlines

(Supplier)

GDS

Travelers

Revenue to Expedia:

•Largely unit / volume driven and includes:

•Portion of GDS fee

•Commissions & incentives from carriers

•Booking fees (some sites)

Other:

•Supplier is merchant of record

•Expedia bears no inventory risk

•Revenue recognized at booking, cash received

within weeks

•Agency model is used in other product categories,

including hotel

•Multi-GDS strategy

No online booking

fees on E.com

air tickets

13

Q210 Company Overview

Trended Worldwide Air Growth Statistics (y/y)

Source: Company financial reports

14

Q210 Company Overview

12.6%

12.5%

12.5%

12.5%

12.6%

12.6%

12.4%

12.1%

11.6%

11.3%

13.6%

13.6%

13.7%

13.8%

14.0%

14.1%

13.9%

13.6%

13.1%

12.8%

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

Stable Supplier Relationships & Economics

Trended Revenue Margin (TTM)

Stable supplier margins indicate healthy supplier relationships

Recent reductions driven by traveler fee cuts & rising air ticket prices

Supplier margins largely stable driven by:

Long-term agreements with airlines and GDS providers

Better hotel relationships through PSG investment

Growth in advertising business helping offset fee cut impact

Excluding ad & media revenue

Including ad & media revenue

Source: Company financial reports

15

Q210 Company Overview

Q210 Results

Figures in $mm unless otherwise noted

Unit Growth

•

Q210 worldwide room night growth of

12%

•

Q210 worldwide air ticket growth of

6%

* Excludes stock-based compensation. ** OIBA includes realized gain/(loss) from revenue hedges  ***

Adjusted EBITDA is calculated as operating income plus depreciation, restructuring charges, intangibles

amortization, stock-based compensation, any impairments and certain legal reserves and occupancy tax

charges.  Adj. EBITDA includes realized gains/(losses) from revenue hedges. ¹ See Appendix B for reconciliation

of non-GAAP to GAAP numbers.

Q210

Q209

y/y

Transactions (mm)

16.9

15.3

10%

Gross Bookings

$6,683

$5,623

19%

Revenue

834

770

8%

Cost of Revenue ¹

*

168

148

13%

Selling & Marketing ¹

*

294

269

9%

Tech & Content ¹

*

84

74

13%

General & Administrative ¹

*

71

61

18%

Total Costs and Expenses ¹

*

617

552

12%

OIBA ¹

**

219

212

3%

OIBA Margin ¹

26%

28%

(128bps)

Adjusted EBITDA ¹

***

250

237

5%

Adj. EBITDA Margin ¹

30%

31%

(86bps)

Free Cash Flow ¹

270

324

(17%)

Source: Company financial reports

16

Q210 Company Overview

Trended Free Cash Flow (TTM)

$millions

‘08 cash flows down due

to taxes, slowing

merchant hotel & one-

time cap ex

Over  $1.5B in free cash flow generated in past 3 years

‘09 cash flows improved

due to higher earnings,

merchant hotel recovery

& normalized cap ex

Source: Company financial reports

17

Q210 Company Overview

Efficiently Managing Dilution

11% reduction in share base since Q107

millions of adjusted diluted shares

Source: Company financial reports

Q2 / Q3 ‘06 repurchased 20mm

shares for $288mm

Q107 repurchased 30mm

shares for $660mm

Q307 repurchased 25mm

shares for $725mm

Q110 repurchased 8.4mm

shares for $188mm

18

Q210 Company Overview

Capitalization

Source: Company financial reports. Some numbers may not add due to rounding.

Modest leverage;

minimal net debt

2 debt issues with long-

term maturities

(2018 Notes have 2013

investor put)

1 Does not include restricted cash, short-term investments and corporate bond investments that are included in long-term assets. 

2 Total size of revolving credit facility closed in February 2010 is $750 million; available capacity reduced by $29mm in outstanding letters of credit  as of June 30, 2010.

3 Based on 284mm outstanding shares &  July 23rd, 2010 closing share price of $21.96.

4 Adjusted EBITDA is calculated as operating income plus depreciation, intangibles expense, restructuring charges, stock-based compensation, any impairments, certain legal

reserves and occupancy tax charges. Adjusted EBITDA includes any realized gains/(losses) from revenue hedges. See Appendix B for reconciliation of non-GAAP to GAAP numbers

6/30/10

Cash and Cash Equivalents

1

$796

Revolving Credit Facility

2

--

7.456% Notes

due 2018

500

8.500%

Notes

due 2016

395

Total Debt

$895

Net Debt

99

Market Value of Equity

3

$6,247

Total Capitalization

$6,346

Adjusted EBITDA

TTM

4

$891

Total Debt / Adj. EBITDA

4

1.0

Net Debt / Adj. EBITDA

4

0.1

19

Q210 Company Overview

12.31.05

12.31.06

12.31.07

12.31.08

12.31.09

TTM

6.30.10

Leverage Measures

Total Debt / TTM Adjusted EBITDA

1

0.3

0.8

1.5

2.0

1.0

1.0

Net Debt / TTM Adjusted EBITDA

1

N/A

N/A

0.6

1.1

0.3

0.1

Coverage Measures

TTM Adj. EBITDA / TTM Interest

Expense

1

N/A

37.5

13.8

10.8

10.3

10.7

TTM Free Cash Flow / TTM Int.

Expense

1

N/A

30.4

11.8

5.0

6.9

7.7

Trended Credit Metrics

Demonstrated strong credit metrics, consistent with investment grade rating

1

See Appendix B for reconciliation of non-GAAP to GAAP numbers

Source: Company financial reports

20

Q210 Company Overview

Rating Agency Snapshot

S&P (Analyst: Andy Liu)

Rating Raised To ‘BBB-’

From ‘BB’; Outlook Stable

Oct 14, 2009 Note:

“The

ratings

upgrade

is

based

on

Expedia's

revised

financial

policy,

solid

operating

performance,

and

strong

financial

measures.“

“BBB-

rating

reflects

the

company's

leading

market

share,

strong

brands,

good

discretionary

cash

flow,

and

solid

credit

measures.

These

positive

factors

offset

the

intense

competitiveness

of

the

online

travel

agency

market,

Expedia's

concentration

of

earnings

from

this

market,

varying

supplier

dynamics,

and

some

cyclicality.”

Moody’s (Analyst: Stephen Sohn)

Rating Raised from Ba2 to Ba1 / Stable / SGL-1

Oct 30, 2009 Credit Opinion:

“The

upgrade

is

based

on

Expedia’s

solid

operating

performance

amidst

the

global

recession

and

management’s

commitment

to

more

conservative

financial

policies.”

“Management

has

publicly

committed

to

financial

policies

commensurate

with

an

investment

grade

rated

company,

specifically

2

to

3

times

(gross

debt

to

EBITDA).”

“We

anticipate

that

modest

acquisition

and

share

buyback

activity

will

be

funded

through

the

company’s

free

cash

flow

generation

and

that

balance

sheet

liquidity

will

remain

robust

through

2010.

In

addition,

we

expect

leverage…to

remain

consistent

with

management

targets.”

Fitch Rates Expedia, Inc.'s 'BBB-'; Outlook Stable

Issuer Default Rating (IDR) 'BBB-‘; Senior unsecured notes 'BBB-'; Senior unsecured bank

credit facility 'BBB-’; Rating Outlook is Stable.

“Fitch

expects

Expedia

to

exhibit

modest

revenue

growth

and

stable

EBITDA

margins

in

2010.

Results

should

benefit

from

a

stabilization

of

industry

travel

trends

and

be

positively

impacted

by

continued

share

gains

at

Expedia

as

consumers

increasingly

utilize

online

travel

agents

(OTAs).

Additionally,

while

EBITDA

margin

pressure

continues

to

exist

in

the

core

hotel

and

airline

travel

booking

business,

Expedia's

advertising

revenue

stream,

the

growth

of

which

has

outpaced

overall

corporate

revenue

growth,

carries

substantially

higher

margins

and

should

add

stability

to

current

profitability

metrics.”

Solid execution & adequate liquidity in a challenging environment

21

Q210 Company Overview

Summary

•

Attractive macro tailwind as travel industry shifts online

•

World’s #1 online provider of travel-related services

Leading traffic, supply, scale, bookings, revenue & cash flows

Strong and complementary portfolio of brands and products

Critical partner to airlines, hotels and other travel suppliers

•

Countercyclical elements

Low exposure to airline industry (12% of revenue base -

TTM)

Promotional hotel supply improves in downturn

Diversified brands, business models and geographic reach

Roughly 60% variable  / 40% fixed cost base

•

Compelling platforms for travel suppliers, travelers & advertisers

•

Strong business model, execution & credit metrics

Substantial free cash flow

1

(FY09: $584mm; TTM $642)

Modest leverage (1.0x)

Strong interest coverage (10.7x)

High operating margins and modest ongoing cap-ex (~5% revenue)

•

Proven management

1

See

Appendix B for reconciliation of non-GAAP to GAAP numbers

22

Q210 Company Overview

Appendix A

23

Q210 Company Overview

Business Model –

Income Statement (FY 2009)

(Figures in $millions)

Gross bookings

$21,811

Revenue

2,955

Cost of revenue *

605

Selling and marketing *

1,015

General and administrative *

259

Technology and content *

304

“OIBA”

* (incl. $11mm hedge loss) 

762

OIBA margin*

26%

Stock-based compensation

62

Amortization of intangibles

38

Occ

tax, legal reserves &

restructuring 

102

Operating income (GAAP)

571

•

Customer operations

•

Credit card & fraud expense

•

Data center & other costs

Consists

of

direct

(74%)

advertising

expenses

(search

engine

marketing

&

other

online

advertising,

TV,

etc.)

and

indirect,

personnel-related

costs

(26%),

including

our

supplier

relationship

function (PSG).

Amortization of M&A activity

Annual employee awards granted each Q1 ;

company switched to options from

RSUs

in

2009.

(1) Personnel–related costs, including

executive leadership, finance, legal, tax and

HR functions. (2) Fees for professional

services typically related to legal, tax and

accounting engagements.

Customer books travel product or service;

total retail value (incl

taxes and fees)

constitutes “Gross Bookings.”

Expedia’s

portion of the gross booking gets

recorded as revenue (inc. commissions,

fees, etc.). Also includes advertising &

media revenue. Revenue = 13.5% of ‘09

bookings.

Principally relates to payroll and

related expenses, and depreciation

and amortization of technology assets,

including hardware and purchased

and internally developed software.

Source:

Company financial reports

* Excludes stock-based compensation. See Appendix B for reconciliation of non-GAAP with GAAP numbers.

(excl. $11mm hedge loss)

24

Q210 Company Overview

Growth

2005

2006

2007

2008

2009

2006

2007

2008

2009

Gross Bookings

$15,336

$16,882

$19,632

$21,269

$21,811

10%

16%

8%

3%

Revenue

2,119

2,238

2,665

2,937

2,955

6%

19%

10%

1%

Cost of Goods Sold

& Operating

Expenses *

1,492

1,639

1,996

2,239

2,183

10%

22%

12%

(3%)

OIBA***

627

599

670

698

762

(5%)

12%

4%

9%

OIBA Margin***

30%

27%

25%

24%

26%

(283bps)

(165bps)

(136bps)

201bps

Adj. EBITDA**

678

648

729

775

864

(4%)

13%

6%

12%

EBITDA Margin***

32%

29%

27%

26%

29%

(303bps)

(160bps)

(98bps)

287bps

Free Cash Flow

807

525

625

361

584

(35%)

19%

(42%)

62%

Trended Historical Results

•

Positive top-line growth

•

Despite difficult environment in 2009 were able to generate substantial OIBA

margins

•

$3.4B in cumulative OIBA & $2.9B in cumulative free cash flow

(Figures in $millions)

* Excludes stock-based compensation. See reconciliation of non-GAAP measure in appendix B. 

**Adjusted EBITDA is calculated as operating income plus depreciation, intangibles expense, restructuring charges, stock-based compensation, any impairments and certain legal

reserves and occupancy tax charges. Adjusted EBITDA includes any gains/(losses) from revenue hedges. See Appendix B for reconciliation of non-GAAP to GAAP numbers

*** See Appendix B for reconciliation of non-GAAP numbers.

25

Q210 Company Overview

Appendix B

26

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Operating Income Before Amortization

(74,211)

(74,211)                  

-

-

6,553

Occupancy tax assessments and legal reserves

(6,098)

(14,816)                   

-

-

(19,352)

Restructuring charges

(figures in $000s)

12 Months

Ended

6 Months

Ended

3 Months

Ended

6 Months

Ended

3 Months

Ended

June 30,  

2010

June 30,

2010

June 30,

2010

June 30,

2009

June 30,

2009

OIBA

$781,345

$362,016

$219,472

$342,203

$    212,416

Amortization of intangible assets

(36,682)

(17,372)

(8,344)

(18,371)

(9,302)

Stock-based compensation

(63,056)

(33,543)

(14,651)

(32,148)

(13,576)

Impairment of goodwill

-

-

-

-

-

Impairment of intangible and other long-lived

assets

-

-

-

-

-

Realized loss (gain) on revenue hedges

881            

(5,237)           

(2,787)

4,932  

5,413  

Operating income

669,689

305,864       

193,690

207,589

114,642

Operating income margin

22%

20%

23%

15%

15%

Interest income (expense), net

(79,261)

(39,596)

(18,988)

(38,362)

(19,388)

Other, net

(7,959)

1,385

817

(26,020)

(19,073)

Provision for income taxes

(184,491)          

(91,701)

(60,166)

(61,610)

(34,338)

Net income attributable to noncontrolling

interests

(5,081)

(2,295)

(1,091)

(1,311)

(941)

Net income attributable to Expedia, Inc.

$      392,897

$      173,657

$      114,262

$    80,286

$      40,902

27

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Operating Income Before Amortization

(figures in $000s)

Year Ended

Dec. 31,

2005

Year Ended

Dec. 31,

2006

Year Ended

Dec. 31,

2007

Year Ended

Dec. 31,

2008

Year Ended

Dec. 31,

2009

OIBA

$    627,441

$    599,018

$    669,487

$    697,774

$    761,532

OIBA margin

30%

27%

25%

24%

26%

Amortization of intangible assets

(126,067)

(110,766)

(77,569)

(69,436)

(37,681)

Amortization of non-cash distribution and

marketing

(12,597)

(9,638)

-

-

-

Stock-based compensation

(91,725)

(80,285)

(62,849)

(61,291)

(61,661)

Restructuring charges

-

-

-

-

(34,168)

Occupancy tax assessments and legal reserves

-

-

-

-

(67,658)

Impairment of goodwill

-

-

-

(2,762,100)

-

Impairment of intangible & other long-lived assets

-

(47,000)

-

(233,900)

-

Realized loss on revenue hedges

-

-

-

-

11,050

Operating income / (loss)

397,052

351,329

529,069

(2,428,953)

571,414

Operating income margin

19%

16%

20%

n/a

19%

Interest income (expense), net

48,673

14,799

(13,478)

(41,573)

(78,027)

Other, net

(8,428)

18,770

(18,607)

(44,178)

(35,364)

Write-off of long-term investment

(23,426)

Provision for income taxes

(185,977)

(139,451)

(203,114)

(5,966)

(154,400)        

Net (income) loss attributable to noncontrolling

interests

836

(513)

1,994

2,907

(4,097)          

Net income / (loss) attributable to Expedia, Inc.

$    228,730

$    244,934

$    295,864

$(2,517,763)

$    299,526

Source:

Company financial reports

28

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Costs & Expenses

(figures in $000s)

Year Ended

Dec. 31, 2005

Year Ended

Dec. 31, 2006

Year Ended

Dec. 31, 2007

Year Ended

Dec. 31, 2008

Year Ended

Dec. 31, 2009

Total costs and expenses*

$    1,583,739

$    1,718,853

$    2,058,694

$    2,300,530

$    2,244,505

Less: stock-based compensation

(91,725)

(80,285)

(62,849)

(61,291)

(61,661)

Costs and expenses excluding stock-based

compensation

1,492,014

1,638,568

1,995,845

2,239,239

2,182,844

* Includes cost of revenue, selling and marketing, general and administrative and technology and content expenses.

Source:

Company financial reports

(figures in $000s)

Quarter

Ended June

30, 2009

Quarter

Ended June

30, 2010

Total costs and expenses*

$    565,515

$    631,926

Less: stock-based compensation

(13,576)

(14,651)

Costs and expenses excluding stock-based

compensation

551,939

617,275

29

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization

(figures in $000s)

Year Ended

Dec. 31,

2005

Year Ended

Dec. 31,

2006

Year Ended

Dec. 31,

2007

Year Ended

Dec. 31,

2008

Year Ended

Dec. 31,

2009

Adjusted EBITDA

677,886

647,797

729,013

774,574

864,314

Adjusted EBITDA margin

32%

29%

27%

26%

29%

Depreciation

(50,445)

(48,779)

(59,526)

(76,800)

(102,782)

OIBA

627,441

599,018

669,487

697,774

761,532

Source:

Company financial reports

(figures in $000s)

Qtr Ended

June 30,

2010

Qtr Ended

June 30,

2009

TTM

June 30,

2010

Adjusted EBITDA

249,787

237,209

890,627

Adjusted EBITDA margin

30%

31%

29%

Depreciation

(30,315)

(24,793)

(109,282)

OIBA

219,472

212,416

781,345

30

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Costs & Expenses

12 Months

Ended

12 Months

Ended

3 Months

Ended

3 Months

Ended

(figures in $000s)

12.31.08

12.31.09

6.30.09

6.30.10

Cost of revenue

638,709

607,251

148,762

168,571

Less: stock-based compensation

(2,252)

(2,285)

(514)

(487)

Cost of revenue excluding stock-based

compensation

636,457

604,966

148,248

168,084

Selling and marketing

1,105,337

1,027,062

271,492

296,830

Less: stock-based compensation

(10,198)

(12,440)

(2,780)

(3,118)

Selling and marketing excluding stock-

based compensation

1,095,139

1,014,622

268,712

293,712

Technology and content

287,763

319,708

77,881

87,420

Less: stock-based compensation

(15,111)

(15,700)

(3,412)

(3,249)

Technology and content excluding

stock-based compensation

272,652

304,008

74,469

84,171

General and administrative

268,721

290,484

67,380

79,105

Less: stock-based compensation

(33,730)

(31,236)

(6,870)

(7,797)

General and administrative excluding

stock-based compensation

234,991

259,248

60,510

71,308

Source:

Company financial reports

31

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Free Cash Flow

(figures in $000s)

6 months

ended         

June 30, 2010

3 months

ended         

June 30, 2010

6 months

ended         

June 30, 2009

3 months

ended

June 30, 2009

Net cash provided by operating activities

933,333

313,806

844,550

342,546

Less: capital expenditures

(73,128)

(43,453)

(42,052)

(18,666)

Free cash flow

860,205

270,353

802,498

323,880

32

Q210 Company Overview

Tabular Reconciliations For Non-GAAP Data

Free Cash Flow

TTM = Trailing Twelve Month periods ended

(figures in $000s)

TTM 12.05

TTM 12.06

TTM 3.07

TTM 6.07

TTM 9.07

TTM 12.07

TTM 3.08

TTM 6.08

Net cash provided by operating

activities

859,187

617,440

703,569

831,140

859,228

712,069

737,792

660,510

Less: capital expenditures

(52,315)

(92,631)

(97,925)

(97,576)

(82,671)

(86,658)

(101,514)

(118,417)

Free cash flow

806,872

524,809

605,644

733,564

776,557

625,411

636,278

542,093

TTM 9.08

TTM 12.08

TTM 3.09

TTM 6.09

TTM 9.09

TTM 12.09

TTM 3.10

TTM 6.10

Net cash provided by operating

activities

514,242

520,688

458,913

494,184

573,491

676,004

793,527

764,786

Less: capital expenditures

(148,022)

(159,827)

(150,025)

(131,146)

(103,775)

(92,017)

(98,306)

(123,094)

Free cash flow

366,220

360,861

308,888

363,038

469,715

583,987

695,221

641,692

Source:

Company financial reports. Numbers may not add due to rounding.