EXHIBIT 99.1
[LOGO OF EXPEDIA, INC.]
For Release 1:00 p.m. PDT
October 22, 2001
Expedia, Inc. Reports First Quarter Financial Results
. September quarter earnings of $15.1 million or 24 cents per diluted
share before non-cash items and expenses related to USA Networks
transaction
. Transaction volumes for first half of October at 80% to 85% of
pre-September 11 levels
. Merchant revenue for the quarter up 32% sequentially and 176%
year-over-year to $34.1 million
BELLEVUE, Washington - October 22, 2001 - Expedia, Inc. (NASDAQ: EXPE)
today announced financial results, including its third consecutive quarter of
profit before non-cash and non-recurring items, for the first quarter ended
September 30, 2001.
The Company reported first-quarter earnings before non-cash items and
certain USA Networks transaction-related expenses for the quarter were $15.1
million, or 24 cents per diluted share, on 62.6 million diluted shares. In the
year-ago quarter, the loss before non-cash items was $1.6 million, or 4 cents
per share. On a GAAP basis, the Company reported a net loss of $4.8 million, or
9 cents per share, compared with a year-ago loss on a GAAP basis of $30.8
million, or 69 cents per share.
Revenue, net of cancellations, rose 89% year-over-year and 1% sequentially
to $79.5 million for the September quarter. Gross profit rose 106%
year-over-year to $53.2 million, but declined 4% sequentially due in part to
increased call-center costs associated with the September 11 event and the
processing of subsequent cancellations of travel plans by customers. Cash
operating expenses declined by about 3% sequentially.
Gross travel bookings, net of cancellations, for the quarter rose 55%
year-over-year to $723 million. This was a sequential decline of 10% due to a
significant decline in bookings and a related rise in cancellations immediately
following the terrorist attacks of September 11.
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"The strengths of our product and of our business model, particularly the
expansion of our hotel and package-focused merchant business, have helped us
weather the storm experienced by the travel industry since the terrible events
of September 11," said Richard Barton, president and CEO of Expedia, Inc. "While
we expect these events to continue to affect our results, the steadily
recovering travel business and our strong balance sheet will allow us to
continue to build on our past successes."
Erik Blachford, senior vice president of marketing and programming, added
that the travel disruptions showed the essential role the Internet plays in
disseminating last-minute information in times of crisis. "Our focus on
informing our customers about airport closures, flight schedule changes, and
airline policies helped make Expedia(R) the only major travel site to actually
register an increase in unique visitors from August to September to 9.4
million," he said, citing Media Metrix data.
Revenue for the quarter increased over the previous quarter and the
year-earlier quarter due to increases in hotel, car, vacation package,
merchant-air and international product bookings. These revenue increases were
offset, in part, by declines in agency revenue from published air tickets and a
planned decrease in licensing activities.
For the September quarter, merchant revenue grew 176% year-over-year and
32% over the June quarter to $34.1 million due to increased sales of Expedia(R)
Bargain Fare airline tickets, Expedia(R) Vacation packages and Expedia(R)
Special Rate hotels. Agency revenue grew 81% year-over-year but declined 11%
sequentially to $39.3 million. The sequential decline can be attributed to a
decrease in numbers of published air tickets sold and cancellations principally
relating to the September 11 events.
Expedia ended the quarter with $198 million in cash, compared with $182
million as of June 30. Cash flow from operations in the quarter was $20.9
million before $6.3 million in expenses associated with the pending transaction
with USA Networks, Inc.
In commenting on the most recent quarter, Gregory S. Stanger, senior vice
president and CFO, said, "Our results reflect a combination of a very successful
partial quarter and a difficult final three weeks. While the environment for the
travel business took a dramatic turn for the worse on September 11, during the
first half of October our transaction volumes recovered to between 80 to 85% of
their pre-event levels and were up 50% from the same period a year earlier."
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Guidance
--------
In giving guidance for the December quarter, Stanger said Expedia expects
agency revenue to be about $35 million and merchant revenue to be about $25
million, with advertising and other revenue flat to slightly down. The Company
anticipates gross margins of about 65 percent and earnings before non-cash items
of approximately $4 to $5 million this quarter.
For Expedia's fiscal year, which ends in June 2002, the Company anticipates
revenue of about $310 million and earnings before non-cash items and
merger-related expenses of about $40 million. For calendar-year 2002, the
Company anticipates revenue in the range of $360 million and earnings before
non-cash items of about $55 million.
Additional terrorist activities, actions by U.S. military forces, capacity
adjustments by airlines, changes in commission rates or fares by airlines or
hotels, actions of existing and new competitors, changes in strategy resulting
from the USA Networks acquisition of a majority interest in Expedia, trends in
the overall economy, changes in the demand for online and offline travel, and
the inherent difficulty of making projections could cause results to vary
materially from these projections.
Key technology and operating highlights for the quarter:
. In September, Expedia, Inc. further expanded its international offering
with the launch of sites in the Netherlands and Italy via www.expedia.nl
and www.expedia.it, respectively, and a joint venture in France with SNCF
at www.voyages-sncf.com. The new sites give Expedia a presence in a total
of five European countries, adding to existing Expedia services in the UK
and Germany. In addition, Expedia has a site in Canada, Expedia.ca.
. After the close of the quarter, the company announced Expedia(R) Vacations
and Expedia(R) Ski Vacations - offering travelers greater convenience,
flexibility and savings. Expedia Vacations enable travelers to create their
own custom vacations by adding flights, rental cars or airport transfers,
sightseeing activities, and even ski lift tickets to their hotel or condo
accommodations.
. Late this summer, Expedia also launched the comprehensive Las Vegas Store
(http://www.expedia.com/lasvegas), a one-stop shop for all Las Vegas travel
needs. The new store on Expedia.com provides consumers with tremendous
savings such as travel package discounts and the guaranteed lowest rates at
popular hotels, plus planning resources including event listings and
restaurant descriptions.
Additional financial information:
. In July, 2001, the Company adopted FASB 142, which requires companies to
retain goodwill from acquisitions on their balance sheets rather than
amortizing it over a period of time,
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subject to periodic review for impairment. Adopting FASB 142 reduced
amortization charges for the acquisitions of Travelscape(R) and
VacationSpot to $9.9 million compared with amortization expense of $15.5
million in the September, 2000 quarter. The unamortized goodwill balance
related to the acquisitions of Travelscape and VacationSpot was $78.9
million as of September 30, 2001.
. In July, USA Networks Inc. and Expedia announced an agreement for USA
Networks to acquire up to 37.5 million shares of Expedia stock. Expedia
expects a shareholder vote on the deal to be held in the December quarter,
and expects the deal will close promptly after the vote.
About Expedia, Inc.
Expedia, Inc. (Nasdaq: EXPE) operates the Expedia.com(R) online travel
service in the United States with localized versions for travelers in Canada,
Germany, the United Kingdom, Italy and the Netherlands. Expedia also operates
the WWTE (Worldwide Travel Exchange), a private-label online travel business
that supplies car and hotel inventory to third parties. To help customers travel
right, Expedia provides the best combination of air, car, and hotel booking,
vacation package and cruise offers, destination information and point-to-point
mapping.
Notes on Attached Exhibits
. Exhibit 1 outlines the September 30, 2001, Statements of Operations
for Expedia, Inc. after consolidation of our subsidiaries as compared
with the prior-year numbers.
. Exhibit 2 outlines key operating metrics for Expedia, Inc. and its
subsidiaries.
. Exhibit 3 presents a condensed balance sheet.
####
This press release contains forward-looking statements relating to future events
or future financial performance that involve risks and uncertainties. Such
statements can be identified by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of such terms or comparable terms.
These statements are only predictions and actual results could differ materially
from those anticipated in these statements based upon a number of factors
including final adjustments made in closing the quarter and those identified in
the Company's filings with the SEC.
Expedia, Expedia.com, the Expedia logo, Travelscape.com, and VacationSpot.com
are either registered trademarks or trademarks of Expedia, Inc. in the U.S.,
Canada and/or other countries. The names of actual companies and products
mentioned herein may be trademarks of their respective owners.
For investor information about Expedia, Inc.:
Marj Charlier, Director of Investor Relations, (425) 564-7666 or call our
Investor Relations team at (425) 564-7233
For more information, press only:
Darcy Bretz, Edelman Public Relations, (312) 240-2619
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Exhibit 1
Statements of Operations
Expedia, Inc.
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
-----------------------
Sep. 30, Sep. 30
2000 2001
-------- --------
Revenues:
Agency $ 21,646 $ 39,279
Merchant (A) 12,335 34,102
Advertising and other 8,124 6,097
Total revenues 42,105 79,478
Cost of revenues:
Agency 11,882 15,977
Merchant (A) 3,745 9,509
Advertising and other 684 801
Total cost of revenues 16,311 26,287
Gross profit 25,794 53,191
Gross profit % 61.3% 66.9%
Operating expenses:
Product development 5,270 7,209
Sales and marketing 17,899 26,071
General and administrative 5,342 6,181
Amortization of goodwill and intangibles 15,532 9,904
Recognition of stock-based compensation 13,617 3,564
Total operating expenses 57,660 52,929
Loss from operations (31,866) 262
Net interest income and other 1,082 1,329
One time charge - USAI deal costs - (6,341)
Pretax loss (30,784) (4,750)
Provision for income taxes - -
Net loss $ (30,784) $ (4,750)
Amortization of goodwill and intangibles 15,532 9,904
Recognition of stock-based compensation 13,617 3,564
One time charge - USAI deal costs - 6,341
Net income (excluding non-cash and non-recurring charges) $ (1,635) $ 15,059
Net interest income (1,267) (1,967)
Depreciation 555 2,644
EBITDA (B) $ (2,347) $ 15,736
Per share amounts:
Net loss - basic share $ (0.69) $ (0.09)
Net income (loss) excluding non-cash and non-
recurring charges - basic share $ (0.04) $ 0.30
Net income (loss) excluding non-cash and non-
recurring charges - diluted share n/a $ 0.24
EBITDA - basic share $ (0.05) $ 0.31
EBITDA - diluted share n/a $ 0.25
Wtd. avg. # of shares outstanding - basic 44,849 50,319
Wtd. avg. # of shares outstanding - diluted n/a 62,592
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(A) Merchant amounts are reported on a net basis and all prior periods have
been adjusted.
(B) Earnings before interest, taxes, depreciation and amortization and
excluding non-recurring costs.
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Exhibit 2
Key Operating Metrics
(In Thousands)
(unaudited)
Three Months Ended:
----------------------------------------------------------------------------------------
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2000 2000 2000 2000 2001 2001 2001
---------- ---------- ---------- ---------- ---------- --------- ---------
Total gross bookings (A) $401,000 $450,000 $467,000 $475,000 $674,000 $802,000 $723,000
Total Transactions 1,022 1,186 1,306 1,318 1,780 2,241 2,222
Average monthly Media Metrix
reach (C) 5,933 6,819 6,389 5,417 6,969 7,502 9,410
Expedia.com conversion (D) 3.8% 4.1% 4.8% 6.0% 5.7% 7.0% 5.5%
Expedia new purchasing
customers (E) 355 447 463 504 671 904 918
Expedia cumulative purchasing
customers (F) 1,518 1,965 2,428 2,932 3,603 4,507 5,424
Expedia quarterly unique
purchasing customers (G) 540 670 741 790 1,007 1,336 1,393
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(A) Gross bookings represents the total value of travel booked through the
Expedia, Travelscape, VacationSpot, and WWTE sites.
(B) Transactions represents the number of reservations and purchases transacted
through the Expedia, Travelscape, VacationSpot, and WWTE sites
(C) Average monthly Media Metrix reach represents the unduplicated reach for
the Expedia, Travelscape, and VacationSpot sites
(D) Conversion represents the monthly average Expedia.com unique monthly
purchasers divided by the monthly average Media Metrix reach for the
Expedia.com site
(E) Expedia new purchasing customers represents the number of new customers
transacting through the Expedia sites in a quarter. It does not include
incremental Travelscape, VacationSpot, or WWTE customers
(F) Expedia cumulative purchasing customers represents the cumulative number of
customers that have ever transacted through the Expedia sites as of the end
of a quarter. It does not include incremental Travelscape, VacationSpot, or
WWTE customers
(G) Expedia quarterly unique purchasing customers represents the number of
unique customers transacting through the Expedia sites over the course of a
quarter. It does not include incremental Travelscape, VacationSpot, or WWTE
customers
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Exhibit 3
Condensed Balance Sheet
Expedia, Inc.
(in thousands)
(unaudited)
Jun. 30, Sep. 30,
2001 2001
--------- --------
Cash and cash equivalents $ 182,161 $197,801
Prepaid merchant bookings (A) 30,170 18,690
Other current assets 41,358 27,154
Total current assets 253,689 243,645
Property and equipment, net 16,778 16,120
Investments and restricted deposits 1,298 1,840
Goodwill and intangible assets, net 118,079 108,174
Total assets 389,844 369,779
Accounts payable and accrued expenses 74,825 69,940
Deferred merchant bookings (B) 80,326 62,457
Notes payable 1,348 -
Other current liabilities 2,346 2,630
Total liabilities 158,845 135,027
Stockholders' equity 230,999 234,752
Total liabilities and stockholders' equity 389,844 369,779
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(A) Represents prepayment of merchant ticket costs to the airlines.
(B) Represents receipt of hotel and flight payments from customers prior to the
travel date.
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