EXPE - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the Expedia Group Q1 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Michael Senno, Vice President of Investor Relations. Please go ahead.

Unverified Participant

Good afternoon and welcome to Expedia Group's Financial Results Conference Call for the first quarter ended March 31, 2018. joined and call our President; be Okerstrom, by CFO. to CEO Expedia's and pleased on today the Mark I'm Alan Pickerill, views The questions XX, responses including only. as management's XXXX, following April of to today, discussion reflects your update We information. revise obligation this or do any not undertake to

filings typically we refer some statements company's believe, from which information and or statements. Please forward-looking we today's for always, words earnings such the today's call forward-looking made these actual anticipate, the As by on as to about release cause of statements. could materially are results the SEC preceded with we expect, similar differ to factors, our

underlying exclude additional content in expense for this of Group financial trivago will the comparable quarter's increased our periodically earnings technology results including excluding results posted release content, find discussed Investor references Relations on transactional and and comparable you of we reconciliations XXXX. Expedia total performance in against expense expense I to and measures other IR website stated, on note, GAAP today's cost this at provide and and call will administrative earnings compensation our on ir.expediagroup.com presented marketing of today to the all for earnings be of period the measures all our item and our Unless revenue, most transparency selling otherwise stock-based is general the to You to website and in both important One for comparisons visit in to encourage businesses. company's expense, release. order non-GAAP depreciation and which release,

our non-GAAP measures You release. will earnings find excluding trivago for in reconciliations

is items to on adjusted because corresponding GAAP unreasonable restructuring reconciliation limited expenses. not and significant efforts. are investment ultimate items certain to outcome foreign EBITDA closest unable without are exchange, the but not spending, guidance to of acquisition-related the predict provided These include a of we Finally, measure returns

results our from Mark. with depend let are and period. that a various items factors have the non-GAAP the to excluded could me call on GAAP uncertain, And guidance such, over As for on guidance are the impact turn that, material

Mark D. Okerstrom

stayed XX% new property Thanks, to in told, adjusted core to properties making our bookings to first a XXXX increasing off for lodging another to our directly make bit revenue, the gross us All Easter a at grew initiatives XX,XXX now Helped even by at led in strategic XXX,XXX for healthy the on brands. available properties in by growth lodging with We the portfolio, to and to addition properties part in growth at core lodging growth additions posting Partner come. Expedia, quarter, sustained progress Egencia. key strong and delivered growth also aboard. factor pace room XX% XX% expectations. a Hotels.com, global nights our night OTA HomeAway positioning continuing EBITDA many of was global in over our Brand our excellent in each quarter Michael, better XX% portfolio. room and top good Expedia and aimed our healthy a also adding ahead years coming in total HomeAway welcome We're count we start brands, We're accelerated Solutions and year-over-year. XX,XXX timing, of bottom-line

more HomeAway's first bookings business. $XX lots continue the true to $XXX tremendous basis, a of milestone to benefiting billion track in online priority strides the improvements still with pushed for the opportunity in from our a quarter we've we do, remain Overall, alternative-accommodation have as customer our to HomeAway integrate up from gross continued begun another continue trailing-XX-month space. made days of while for to continue ramping continuing pay growth these It's pace but Egencia to additional $X growth XX%. in property efforts to HomeAway the strong our team the XX% up as increase still we to second we in to a XXX,XXX global further and up quarter the quarter markets over bookings, has gross posted the grew expect on see ongoing bookings billion property also first was a and we're properties ramp nice to in accelerate signings ahead gross well transitioning lodging in investments reported as conversion great continues quarter, bookings delivered quarter sales team than year-over-year supply as we We and year Egencia and markets full early move in to past XX%, initiatives through a optimize to in in as and pick our dividends. marketing, in year. While solid acquisitions the properties. over work billion performance growth add time, while make partner-facing directly the we on quarterly of revenue new-client first the an in That and portfolio new year, to in XX% experiences. e-commerce exceeding another

goals So have good well for Egencia. hitting progressing healthy we sales towards in and our momentum pipeline, a business, this we're ambitious

the identity and stand-alone with the a continue global basis. bottom-line increasingly launched modestly travel we've become. is expecting the As down month currency-neutral the year. corporate the in quarter to trends in platform first at our revenue top expected, powerful challenges back a on new into and improving second of pressure Last half focus reflecting with we trivago continued quarter global trivago

at a which next and late journey, more is our identity and last bought we've of the Group aimed On the built full in the ever, go-forward years. our platform across chapter new efforts over the assets are leveraging than squarely of operations year. began basis and we symbolic Expedia portfolio improving the scale Our of global

$X.X our many years ability there to deliver to trillion in the huge confidence to taken With do, While that, gains is share for lot come and over it increased we've give strong market already still I'll to turn growth in this Alan. steps us

Alan Pickerill

in first, revenue, HomeAway, added helped the by with timing including line XX%, Thanks, deliver growth XXX and room in pleased were grew lodging in and the Lodging timing part Mark. night top-line We basis Hotel both stayed estimated an currency. growth. shift room-night growth. Easter to in Easter to foreign The healthy points total

grew quarter. revenue room while gap last night per HomeAway, Excluding smaller was rates average daily flat, a than X% slightly year-over-year, approximately

growth and subscription declined our We revenue average line revenue revenue as rates HomeAway quarter, we continue through to to grew increased stayed-property-night per expectations. XX% XX%. the in HomeAway's revenue while the gap with room-night expect transactional strong XX%, move the daily XX% of in on narrow year. between

seasonality the with progress in obscure our can monetization. the of While business it, pleased we're continued

anticipate adjusted EBITDA future in with was strong That performance-based in we million year. business, and bookings As the the we marketing. in HomeAway's growth progress planned quarters. HomeAway's our in continue subscription base $XX to in first range revenue contributed further due our decrease a for our in gross very expect negative investments line expectations, declines the mid-XX% transition to to the and subscription revenue in quarter currently growth full transactional do in in drive to part to will

more media at and trivago. HomeAway's advertising We revenue for quarter, in XX% to offset a and local declines revenue the benefit supplier-facing migration to was than currency and invest continued cloud. as the foreign up consumer also products both exchange Total from

now One Our Air growth. air of grew of in increase XX% classified majority ticket. X% with drove effect Media tickets in relates the delivered distribution revenue contra previously that took Two and XX% classified revenue revenue revenue growth. sold air revenue. solid fees XX% Solutions growth cost a business per quarter changes in this to as

The Other an on first revenue of certain of increased quarter, other profitability. is All healthy insurance. in refunds rental reclassification to from Neither and air XX% in a insurance. changes these reflecting overall growth customer travel has car impact revenue the

expectations air supply selling and direct Indirect initiative added and XXX team than in marketing at and a revenue Solutions. impact. full costs XX%, year. marketing increased point our faster points trivago, revenue faster sales spending spend for basis HomeAway, XXX of faster count de-leverage to expenses, key due quarter, combination to growth for strategic revenue elevated to about slightly Cloud growth growth what Total were ongoing in currency a and expect the with Expedia selling contributed of the revenue to selling foreign and the with head the growing line headwind. acceleration and trivago related in Cost accounting the investments quarter, a similar we bit drivers category the at elevated, marketing each Turning with grew associated along our and at increased than to given Egencia. grew revenue. change at than the The was that primary in Partner and adjusted continued of a initiatives our basis marketing

XX% than marketing we've product expect We revenue HomeAway. to the year. and for the expenses over faster and across continue and full to count platform notably grew quarter, invest increased organization; Technology during the year the head at last selling most in as grow to content

inorganic of and migration cloud XXX impact each acquisitions growth. the from Our around points contributed basis

technology to of on basis in impact acquisitions also and than trivago and of we XXX added from administrative The General the half at grew Given growth. year, investments, about these expenses year. faster place for and of HomeAway. continue the increased to took that revenue mainly content staffing expect notably de-leverage points last rest the second inorganic also

on in growth expenses general become year. second to to in XXXX for quarter half further comps remain the on slow as expect and the solid track full leverage of in ahead, administrative administrative Looking and We second the we expenses slightly moderate see and general easier.

price In taking an million we remains same. terms million made repurchases, in of $XXX. average balanced in the our at $XXX of shares historic X.X capital allocation, Year-to-date, approach share

dividends. in million $XX paid also We

also We opportunities are organic the have given across returning significant front we shareholders, of capital us. to responsibly initiatives the while business, in in investing

look at will opportunistically. to M&A As always, we continue

XX% consolidated financial our X% to reiterating year, adjusted of to guidance we EBITDA Turning to our are or growth excluding for the XX%, cloud. expectations XX% for

now on an basis yesterday, approximate to the Our growth. adjusted expect EBITDA be our adjusted headwind consolidated XXX incorporates we XXX to trivago guidance EBITDA trivago outlook provided updated and point

in want few year. to items to keep I of for mind the closing, the highlight Before balance a

First, quarter few factors. slightly room growth slower second night we expecting are in to due the a

Easter year. this first quarter As shifted stays the I into earlier, largely mentioned

quarter saw to We last second are difficult comps facing the the from year. we night first the more also acceleration due room to

In could growth. increasingly to looking addition, which ways on impact for have better direct marketing negative optimize a we marginally are unit spend,

U.S. the our come few executing it's our shape year. tax also take to rate to that, full-year interpretation of we our Second, below turning want year, to as still half in analysis reform, second U.S. law. current With with rate below-the-line operator, in a financial of This could expect coupon note a the the approximately how we guidance we new than moving we're We tax deliver more of be early XX%. the to question. And plan be to to of first tax the to effective change to expect our and items. for In the are of bonds pleased we year, tax continue adjusted on closing, our taxes, of to I growth the our to expense interest based EBITDA additional XXX% continue the receive the year. the confident ability corporate remain though in net we're on as expectations August X.X% our and lastly flat bit ready expect that mature year. result, of and, redeem for a full impact to in

Operator

we with And Markets. from our will Thank first you. Capital Mahaney take Mark RBC question

Mark D. Okerstrom

you Mark, there?

Mark Mahaney

was apologize. on mute. I I Sorry,

I up in build seeing for talk for you if traditional – terms of you know accommodation traditional there's especially already revenue? any this don't can both conversion what impact about ADRs. on As rates inventory you're accommodations,

very have think But up that see you're why you're you. thoughtful you started off up trying trying reason well-known there's very I to increase inventory? – a to already reason in build to the why flywheels build a for Thank that that of inventory.

Mark D. Okerstrom

through Well, relation XX,XXX quarter, still the the built already moved quarter. properties started as that acquire early. first Sure. with to pretty in We it's did we've but the this year, stuff we

bit conversion improve you does I destination. a seen what early. more that add So have into is it mean, is a we historically, property as density

we to do So see expect that.

some push, property by We for victory again, one of us that on nice have countries. driven acquisition early to any seen wave acceleration means. We do is part in some this pockets this our it's but by the in too call believe of

Next question, please.

Operator

from question next Merrill Thank you. with take We'll Lynch. our Justin Post

Justin Post

I on you Great. know you. rate you. there's just the what Thank bookings Could HomeAway questions. going to organic that's is? half the A with the Any online you you dynamics of thoughts big help platform? that? thoughts advertisers, understand trivago, think on us as couple growth? Maybe helping work are a the clearly how XX% second whole is? Is spend Booking.com they in the Thank one are you. we Do is on benefit it it's then And think some nights with room your less pulling getting growing? finally platform the out to that transition

Mark D. Okerstrom

HomeAway, that years at On I both a existed company when the at just ago. mean, That that time there acquired of business was book occurring. Justin. $XX billion. So, two I say estimated is would was around we

they've marketing that that that stand the the history part the time of in You has the invest a transacting with belief and and that way, so for existing well company been to supply Google is know, that there gross growth. and grown examples first two we XX% of traffic and really on bookings and best bring our years is one what's company think customers partners company, is tailwind more is proper organically growing and acquired the that driving team that able But up the online. of is words the ad the as in performance-based in a more in associated I that existing of

very So if industry already a think was kind time. platform business would that of other say, what online growth in be that we the there be involved was room for pure long pure, should to the than organic and for of growing growth book of all the plenty of the rate is difficult it's business healthy for the

Alan Pickerill

Booking.com And be see think, number do to see we platform certainly trivago, well, growing. the I With a the traffic we appear increase We've is nicely. the we volume respect pretty what of in an as overall that over properties seen pulling interesting on certainly to growing the significant is period back. dynamic it's so does believe

well, auction it's volume and auction as overall spend and quickly clear their growing has isn't pretty an the so and that's adjusting adjusts. marketing in think said, as I is That the past. essentially trivago it as so

us really them So versus not it's situation.

past on to We a in channel the our overall react brands it little bit been least slower the or just, has continue to at do, is given than pull-back the marketing. big and auction the

Operator

you. Thank

Mark D. Okerstrom

Next question, please.

Operator

our take from We'll question from Mathivanan Barclay's. next Deepak

Deepak Mathivanan

Hey, taking question. guys. questions me. Two Thanks for for the

to So last first, quarter. the de-leverage better was in direct compared marketing

in in but on comment expect think a was You we pretty way is business? say? ramped question, add then can regions and trends second share properties markets on the to point do And And in discussed OTA have in are core the spend or to about too as So trivago XQ as that similar there? you helpful, you feel like beyond, it you gaining you can marketing the early at more you trends market we continue these this trends these already? in

Alan Pickerill

we looking What's and combination came and side of to as One on the we HomeAway. happening question, also optimize inefficient Yeah, business and, for quarter some a so globally. international before, established trivago of do Deepak, alluded for to making. businesses get some the we trade-offs that, probability the be has the better push going we on markets be circumstances, willing in room-night other or make is where of be we de-leverage in newer channel. is slower first for growth principally those businesses. when that are the in markets profitability may We're us your result those say marketing marketing continue to looking grow that, but – on that markets trade-offs the repeat opportunities you we that I in of than new those We eliminate said at are are and may from do to get those efficiencies are lower as would low we good think as Having factors. to said, better do the market to and spending, spend slightly profit said

in the brands. of So we big the saw couple on across good traction that quarter a

Mark D. Okerstrom

significantly, And the we're where we markets ramping adding with respect to spend. properties marketing generally, Deepak, are priority yes, more

little target more incrementally, we're in markets of stronger properties, that we are channels we positions. building simply secondly, auctions not being are exist First of new bit we marketing performance it, focused we offline but add and as then where dramatically, terms And brand our historically. global all, certainly focusing spend entering the or a new spend on in couldn't where

So our sure partners. growth on closely gaining almost very of properties definitionally, are share. make our and do impact monitor the We the we coming new into properties that existing market at expense isn't existing

Operator

you. Thank

Mark D. Okerstrom

please. question, Next

Operator

Jed We'll take with question Oppenheimer. our next from Kelly

Jed Kelly

taking for question. my Thanks Great.

then going that going sort is markets? to the anything replicate And it's replicate Do Just reduce the testing the potentially HomeAway you to with had versus is harder a there to removing shift be the I States you. Thank of, ever been on seen international guess, you've the United harder indicates sort of traveler? to in Airbnb's – traveler you fee success be host the foresee more of fees some you've where HomeAway, friction. that to to in

Mark D. Okerstrom

and and, first That think there VR U.S. and that growth the the we where was to nice product in up their efforts want or and choice they're when willing steps have some the do in we we HomeAway so and for starting are or on markets it one particularly a a around see Airbnb VRBO both of for said, is to to accommodations it, while. markets, great, there, brand on markets think exceptionally but players customers the a really versus because strong. generally respect opportunity that I little big receptive bit would very having customers the harder in testing is our outside we to traveler OTA the multi-language, the think there fee, international and that host that core Jed. for early lot alternative there's everything of being Thanks, supplier and certainly shopping it's a side, more want With great as being bit of monetization flexibility. them in U.S., of U.S. and the learned is say and side a is little listen, have the market it are challenging, multi-currency, the have is is the compete consumer been HomeAway I business than We a a and position other to of with there has of in this HomeAway the all models these removal a important more challenging. of number combination

all the alternative in out I are the near think that players there to of term. accommodations some have likely combination

in overlap that properties players I will will on and the an pays at expect a think over traveler more the other expectation. industries, shift to bit amongst this I supplier between that time, but we've and gets really little think seen I just that's now We larger that pays away don't as the point. right happen what based know from monetization

Next question, please.

Operator

take you. next Mike our question Jaffray. with Olson we'll from Thank Piper And

Mike J. Olson

Hey. Good afternoon.

growth place, much related on said say And elaborate for up just decelerate how just the optimizing to what don't by? changes expectation making room there? of maybe are maybe you you models slowing over could nights expect could the What in Regarding approximately you you Thanks. you so all QX, could room-night end marketing kinds spend?

Alan Pickerill

room don't we guide by there. going the I Well, on don't go mean I'm nights, we not guide second part, and to on quarters.

not going and repeat geared think year, other to spend shoppers try probably also is billions to the opportunity try but dollars specific trying we pockets but to and we've of bang traffic a happy channels, put channels, pin lot sure I for in I but the enough are always in for traffic. And and and towards of not related most to we'd we reasons mean that that is to fact optimize competitive here, buck finding on increasingly our efforts the on a again, doesn't that we mean rather every directional make super indicator, be getting selling spend drive of is hotel interested that marketing give to it. or bid, I'm Yeah. in the not had bookers. drive for the given efficient place in we're So

So, geos, about look specific that. we'll for I or to specific don't but channels be want

the definitely that – front trying if... want either. a growth, and there's biased little so I don't and overstate the channels. Now global issue it more I know of think towards in huge mean, the as is bit edges I and think of don't opportunity growth this I optimize to a us we're around to

Mark D. Okerstrom

it said you. Alan. you well, think I very Thank

question, Next please.

Operator

next UBS. the Sheridan take question We'll from with Eric

Eric J. Sheridan

to Thanks of the about if it the give it on that Is following remarks. you out should acquired properties. some anything Maybe for bookings that and didn't up aren't can prepared a And know be second a about tailwinds what the that little through regional global move global trying we of bit that of wanted year? QX? the to growth during Didn't you're I for from taking as for out it tease you within thinking in or attributing there be guys. your and frame just should headwinds up folks. QX tied sort the question. like brands the as to that, Easter in profit? numbers versus for any might call we're is way create we question, marketing? that of Is we percentage there contributed of run-off to then run function terms brands way XX% seeing of the aiming and of hear what thinking that narrative to being just or How us Thanks,

Mark D. Okerstrom

So over I'll turn then Easter the first the I'll to Eric, and question take Alan. one,

have of brands global a the growth online profit is world You in pushing portion be a U.S. which around larger know, those following increasing versus brand growth allocating generally as generators both are goal in more and are market with strategy broadly the the brands. the those brands and regional still have said, to we That brands towards same. them world most around them and great building line and markets. the remains to the they on with footprint a and brands strong offline are result, continue loyal of operate their are regional marketing the in the and significantly The global our positions our brands spend mature

than a So see growth more growth a global little modest in rates we modest brands. are bit the or more lot

the expectation So is brands strategy. and changed can we that's our grow that it's regional to we global It hasn't but we eye a bit we profitability. to basically think an And expect our the much is I see as through will well goal large in continue to to do as as to growth with do we growth going slower try year, be than the that, move always those brands.

Alan Pickerill

that sense bit impact, on XXX a fell lower. quite Eric, growth. impact on then, in of remarks the it as bit higher was tricky that estimate that, QX said prepared Xst basis point benefit room The businesses. Easter those mix traditional makes the – is I a two call And on to be the April was on, HomeAway It's to this we and because it Yeah. year about a side impact was that it, given The than a the OTA about core Easter you know. of what night

little after stays so that of numbers Easter, and stays And estimate. some a happened the the so, the to happened are But those some we of provided. trickier before

Mark D. Okerstrom

Next question, please.

Operator

Sachs. We'll with go Goldman next Heath Terry to

Heath Terry

that could getting of you new saw of in of basis up point cost guidance, did you was the at incremental you much and year-over-year how as we think we Wondering March don't quarterly back bit guidance points the gave. in maybe then quarter the the of the quarterly the beginning XXX than sales a were should that signed the actually hoping in that hotels a on be significantly you the of people you then, weeks of point? little that's that the significantly that in you driving for was made marketing bookings pretty this quarter? forward to better came has how I Alan, that specific EBITDA form momentum quarter. of but QX guys And disaggregate give cost basis guidance Thanks. significantly How And give the that was – or of carried QX? above quarter last platform much of few a better out into Mark, much for versus they Great. were the case, if expected than going the at EBITDA that

Mark D. Okerstrom

Sure.

second then Alan So turn so just the I'll marketing wasn't it clarify. take question. me, fact the that that. Alan to It did. question and for was The said we That to

Alan Pickerill

We thing. usually same say the

Mark D. Okerstrom

did things. more did, because in stays days a business, marketing as it also, did saw Alan you you appropriate. We break and spend more you – think and encouraging. practice better We we of core stronger couple Easter found was we help can felt revenue it the We our benefit legitimate of will that mentioned, We as performance from real shifts combination and well. – in in OTA a see efficient than pick up performance

goodness So it in healthy was a well. wasn't pure results goodness, there as organic just organic but all dose of the

some I on part Alan continue will full-year to our the the deceleration the overall strength to said, expecting comps take and a beginning guidance. just are broadly, about was tougher on so QX looks business far, confident as comps. little April feel of choppy about we Easter of Alan due But and think, good we bit the marketing.

Alan Pickerill

costs – in up and into the basis, of category advertising, ex-trivago, look lodging the take bid, marketing to marketing is the that's that then, it's and But I gross the at ex-trivago apart year-over-year indirect The trivago's was a you after. for was drive selling that partner again, way really and that the question a our what's XX% I Yes. That's would growth marketing, isolate marketing, team. for the would level impact line the if up people our specifically, XX%. de-leverage. the do dollar take selling the And get I do – on you're get look selling I you on marketing as numbers the solutions marketing and Heath, I count the business rates down to performance-based understood and think There's if which head then, once Egencia as at so that well. can going an I'm impacts think tear – And way categorize kind it relative not you of correctly, to you question and up then on cetera, would services et real you was direct all answer intended that has partner and the it selling indirect of think not to that all is bookings. of television that and, kind detail. of I probably can there, And

Mark D. Okerstrom

please. question, Next

Operator

Thank you. with Lloyd Deutsche We'll Walmsley Bank. go to

Lloyd Walmsley

if a I Thanks. can. have couple, I

then your away percent and us early one, a will certainty? when rate do – versus just search fees rise? can lifts, Are on adding of Can or total a for What innings just start much to you to fees? planned? they good more that as how, also across the host with how repeat in, plug they think sense gross continuing of and all perform that effort. you us that visibility those progressing add, give of can And you percent deal supply for hotels process conversion HomeAway and you And how have each how the more acquisition revenue, subscription? Is bookings, can more project guess, then, well-worn of percent it where the I from rates. book you how give traveler bookings? second from changing? And you First, path in you meta a carry employee when gross is an are And update many what on this a carry

Mark D. Okerstrom

one one Lloyd, second the then the over and first I'll take turn to Alan.

we and properties. efforts, adding booking having supply campaigns first end-to-end the to On having into to of to trying have great ultimately, visibility and, marketing propagated get process good the content delivering properties, build,

rates. it's historically. repeat very So conversion on Where the not We process. gave one done certainly to exists right We at simply frequency is properties, the into that impact don't direction impact gave say, these to that the great such this because And traveler good travel on on do diligently in But confidence we're cycle early, of the visibility that that what teams too pieces visibility of have and and have great also that rate market. that too we in we're go. the seeing – we yet like purchase do the yet that manufacturing the that's frequency properties that adding really cycle early have strategic on us I'd giving significant and given which true yet adding was have for capability or us a terms we're upfront. better tracking working really rates us that, but that

teams innings where in a you're really demonstrate on rates again, here, the good excellence, are referencing. the do but, So can we that point we say true we'll I'd see operational conversion in early repeat are we have to getting rates working results confidence and and that

Alan Pickerill

I things. the there's level HomeAway a detail to question, I of this. that won't mean, for the get of looking And, probably couple on you're Lloyd, on

I or think of big the big, online there's HomeAway, out-sized the but listings, happening bookable call is percentage of properties. disproportionate on – subscription the percentage it but that directionally, are I on just a the bookings a on listings, fact pay-per-booking still the

platform and number is the of coming over on all a innings kind to host the we're for moves so a that. there bookings and mid of to in evolve So pay-per-booking. that fee, are goes is more subscription Those will and would the still continue business bookings more for service business I good not through say on forward the as as still of traveler fee. a there but

the some there rate, see is my to mind blended the biggest in that headwind a will that think the continues regards – impact we take just I fact us. As for be subscription

can both start to normalize. I it then Now to from and volume we subscription business headwind headwind volume of rate the essentially a that a think the just once kind being of normalize and take fully shifted rate being side

down the to HomeAway XX.X% basis, we substantially. was trailing it of trend XXXX, ways that like in so try not can come in look of to I little see the get or revenue there the One a basis XXXX XX.X%, margin better is on that's XX-month to and/or a visibility you and for think on and going at kind full-year but

I think that it'll around be in and area.

Mark D. Okerstrom

please. question, Next

Operator

Securities. Peter Wells to Stabler Fargo go with We'll

Peter C. Stabler

Thanks much. very

VacationRentals. on one Another

channels multi-brand in dominant think have the wondering in brands, there Given against key much. the way is regions performance let's brand with And the strength single if disadvantage looking rival but when so and this is U.S. your pressure so you given country space, much Thanks a the say up HomeAway, extent in extent international for in any marketing and confusion? you to of what a there at the strategy is is I what power? you you're brand disadvantage. understand consumer when confusion? a property-host you're To VRBO in

Mark D. Okerstrom

think of I we business the you good expect a of in of our brands, deterrent I to of world. that a each of we and it's We of life, so so of could and back, not material treat just simplifier that degree terms these complexity U.S. to do We all brand and the certainly listen, we don't are in operationally. is But building do, think terms not I disadvantage an them. have and how for disregard do different we hold a were careful all a the across far marketing customer would customer in if a benefit. in I supplier-side have us growing us be be couple following any issue do brand, around – complexity. ultimately brands, think added able loyal does loyalty terms certainly it has do of them. exist But of however, to to have marketing it exceptionally well, in careful our for think be be dollars take it's we it this dividing if it'll for Yeah, example, concentrate our and a one but been spend

question, Next please.

Operator

to D. with go A. Tom Davidson. White next We'll

Tom White

taking my question. for Thanks Great.

growth the guidance. on EBITDA quickly Just

And trivago. looked OTA had guys like versus initiative revenue what margins, you feel supposed to clarify property you EBITDA, breakeven revenue guys it remind could affirmed supply on margins were you and the it's had just So, the Can trivago? be us before that. then despite was anticipated if maybe just business in the but I you up for bit. like core a it obviously impact for what weaker outlook

kind you kind As be kind Or guys which hotels, kind Thanks. of look eager Booking.com against are might any on do to your to of contract customers, there? margins big those have another in of expect some to order you channel get with revenue of sort in pressure competitor? of properties to distribution more of play

Alan Pickerill

to The I our call. for what Hey, But don't is QX the call. that but XXXX want Tom. the want and assumed did we call updated I specifics prior worse specifically they It's is in baked loss a they to mean, than that QX trivago QX, we, guide yesterday in don't we on what did of didn't that guidance for give Alan. question, the specifics, we had or we Yeah, on assumed. into have into gave – get full year nor first – I our your guidance

Sorry.

Mark D. Okerstrom

margins, generally when They of show eager as on terms Tom, just margins use channels. revenue we weapon are not we distribution to or any new of them and discounting have revenue impact initiative sort do our And, properties. supply competitive our our to up in

package demand us offering to for places include properties ability or which where properties want us least differentiated suppliers than Our to play new paths, suppliers to give the the for what a demand at country, by ability our footprint, us competitor are our has. in generally to target

see happy the that they are prices us we for happy they market-based are offer generally distribution. to pay and to So generally

Next question, please.

Operator

Douglas We'll next go JPMorgan. to Anmuth with

Douglas T. Anmuth

just to ask the for I wanted question. Thanks taking two.

heard trivago's you to of the the of And positioned and was in give thinking a you're I and in hoping there First, there's you're how about cart. shopping was recently. curious get about how how understanding Thanks. view been better us your you a the then, I space. better understanding thinking it's just packaging space performance – brands obviously of secondly, profitability you're little terms lot just terms of targets. it in how we a and from marketing activity could of movement

Mark D. Okerstrom

activities. our about good highlighted feel we're course where the a We current over the so position interested It months six in in stepping where of Doug. Thanks, place is last we've or in of business year-over-year up $X.X our or is have in things-to-do in We It billion XX% do transactions. north that bookings in a QX. north efforts. terms of total activities of grew

business. It's do we there's do. nicely, we but lot big can we've growing So think a more a got

of we cart out in or think shopping that as functionality to is roll looking something certainly shopping cart-type I inclusion we're product at a the product. continue

I opportunity. big standalone there's a think

connection some I think now the the customer. to downloads, app odd think, in fact that I XXX with our over gives the got have, offers us make destination. brands opportunity We've million already the

organic be looking here. those opportunities but think disciplined there We at good So and will M&A be we in we out opportunistic. world we'll our do there very there's opportunity positioning, about a of and always feel are

the little in strong, more more that able for an our places good, drive concentrate working can profitability sure feel rates be loyal of to we on thinking repeat that our margin. on making the it driven to are spend like is targets a bit terms looking and ability, acceptable. we huge customer are to view trivago's efficient, about for not incremental, are we places the performance sure. are the places and it's be efficiencies to a inch best be where But performance at how us; disciplined as Again we more feel really we we're in the In are and analytically margin spend to space for marketing we, and perhaps marketing mentioned, of our Alan brands, of looking C-change where

Next question, please.

Operator

next We'll Jefferies. with to Thill go Brent

Brent Thill

if of I expectation give the us just maybe us give an and lodging just wondering when with U.S. date your Thanks. Amazon over. stack update the on ported gets of sense was of you could transition a fully the

Mark D. Okerstrom

Sure.

well. transition So go to continues the

the all, operate are very about cloud we with what it's the very happy the are being in like to happy of deliberate First very it. are transition environment. with said, teams That and

make to we we're We're this continue We the stack in the sure moving right mindful and of year, great over. over way we towards the sure careful, do it to of that wild it the but it. costs the that We are right of making vast we progress do as cloud. not majority running in we into are and sort being it the expect do in have lodging we of do making way end

Next question, please.

Operator

with go SunTrust. next to Naved Khan We'll

Naved Khan

thank Yeah, you couple a questions. very I much. of had

potential from HomeAway So, maybe and the can you then also Core how about on of on we comment comment on you from over on should OTA? brought the expectations the think in impact performance rollout just And Europe you inventory it? GDPR can

Mark D. Okerstrom

Sure.

order, as for and It's that our things Brand situations, find properties are I search continuing points to over the XXX,XXX, grand cetera. look at home where of optimize business. will on optimize not right whole point where the to It's teams on and big on a a it's is of be ways groups driver in better. example, multi-products us. XXX,XXX a large yet scheme et So it's again, It's experimentation for for now. at well those sort happening obvious of quite points The sale, HomeAway, think sale: other not Expedia got as good. Predominantly, we've of Orbitz, Travelocity, the inventory the

I that for So we it's in stages, us. going would the nice say. are it's optimistic But to be early a still driver

meaningful no a In terms perspective, of GDPR impact financial in Europe, operationally. from

against certainly are sure do. we that well in aware make in diligently of to place. putting the We teams to working infrastructure And and we're the going are compliance, need and what are appropriate we safeguards hard

please. question, Next

Operator

We'll next Josey with Ron go Securities. JMP to

Ronald V. Josey

taking for Expedia. one around to quick you HomeAway the a on Thanks the Great. question. follow-up integration just answered Maybe

now faster? XXX,XXX out. So everything more put globally. properties I think figure you XXX,XXX put to I it that's order relative think in trying sort – the on not you're helpful at said you're total more to be if why you and and for optimizing Would

three here, Mark, as of know XX-plus-percent been you prior. call can't Thanks. thing international have be all past longer out business? And can term? one So bookings put just total but that's here question Might but one on bookings I this a international bigger how just see quarters investing then it, and how talk just hotels it, the you about like you're you mid-XXs versus, picture, follow-up. play

Mark D. Okerstrom

the largely Expedia can hosts faster, that of that to operational property Expedia on be gate. availability up testing interfaces, a to we through. they Brand customer prices to make that honestly, when done Sure. significant but on there's partners needs the charge more The Brand part on also of work it's a prices gate serve make putting properties and the Yes, in user lead piece manager an the sees quickly they is roll and sure sure that the that get continues

of not to of things used lot HomeAway, complications our alternative week, that some but got our OTA we've a lot a from of partners. translate only only in here not like has include the also And accommodations Core stuff And a at to there's happen just the are daily into and rate. charging by brands, to operational that

matter of just as lot get a So It's there. like a of we'll say. to we sausage-making,

bookings, In is exchange is this thing for particularly, one us. terms foreign international big a quarter to tailwind note, of

as to concentrate should where we're that at we're we more we acceleration. because growth our think here we in loyalty. markets I numbers, a deliver go for over in look the nights. we expect that for of able to subsequently time, and competitive to do international of as hope in now essentially build customers, internationally. over XXXX suppliers room able that, in work pressing do time, more overall efficiencies said, marketing That see we both out And we groups that product us you a would you just significant priority So garner if brand won't hugely delivers FX-neutral are it priority and also markets and much be better roll And better a way bookings, international rates, able to

please. question, Next

Operator

Stanley. to go next We'll Morgan Brian Nowak with

Brian Nowak

my taking questions. for Thanks I two. have

you step-up guess I and The of plan your you we the plan question go you or on through first Mark, you significant the kind year? we is, will time hit hiring an a that the see supply second of the free the Understanding this by to expect sort some should in are benefits you flow duplicative your the and one And look XXXX where cash of next for still efforts this rid cloud the free compressed we of team. now flow continue cash and about by as how temporarily scaled to XXXX the ongoing cloud – realize conversion into And Partner flow do to goals? Lodging as Should more get and properties think get cash free XXXX, in team one for think as have your process as XXXX overall of opportunity the bodies conversion. beyond? costs? year and and on headquarters the these one-time duplicative then more enough as building and year, half back start and the we in year, the that as hiring of in add you integration, of to the of potential and you get costs, Services into XXXX

Mark D. Okerstrom

push of and for big it a is us. of but our the So, million massive if so, scheme grand not it, those where efforts, call both a but that nearly of in And base, not I year. the markets overall investment, Brian, regard, people. be that'll folks, done. hundreds new is hiring here. completely is impact In on done think is operational that we're hiring And this $XX bodies supply a One we've up investment. work our ballpark said of this a significant folks, salespeople, supply we're in this the it's largely the are or significant two, investment there expense priority ramp-up In

a in the course other of two bucket just as one. as those that's Bucket I priority markets. some, in say, significant see at parts number we head So dramatic ordinary pace acquiring growth still it, number measured more, call Nothing in and is market are markets. would is the there or count properties we much

take this grand terms terms closely of In of XXXX, towards in what again, a call of we results do effort, terms are end the and XXXX we make very watching the overall, base of to we'll expense consistent the overall in our approach I and I think that, scheme in our of of the count reiterate scheme But incremental pretty grand again growth. of would head and invest we growth able to that our long-term. near-term comments how growth this and overall to necessarily we earnings I the we're that the growth that balance it. gearing of generally long-term deliver further and business investments short-term necessarily growth count in because supply going solid is we're around and might also be in wouldn't nice depress earnings to way the head make indicating

again, do So, we believe in this.

accept a on likely We going we are have to take earnings it want continue you but than path, to historically. do lower the... wouldn't we're this Alan, sign to I take that growth as

Alan Pickerill

Yeah, I'm on free flow to of I specific here going so relative cash numbers. mean, EBITDA, conversion to not get the terms in

about. opportunity here I the we this length to the to conversion a headquarters, got we've to a in rate I – that the think very consider. and we've business, have factors at guess have few mean healthy which talked there's I

be things grow. are those will other will XXXX, their is significant they HomeAway One all-in on free cash got and to gross we've so as going expenditures, generator a of have flow cash some XXXX impact flow. be that free happening. But For increasingly bookings an

so much Our to merchant grow with cash agency that flow. ratably business, pretty continues business the hotel significant generates hotel and free

side working-capital trends. benefit or the substantially. businesses got like bit our be we what as cycle come to and, after cloud, same all factors on have data and lead I like we're they're business, – has is that which mean, centers hotel opposed that negative over trivago, Egencia, our generate spend on we're those of term would the of call other little private-label we've of should we that ledger. need last that like where the as those I are the receivables to cloud, in we what business. would merchant help have we the capital having to talked in call which on the don't a mentioned CapEx tailwinds things that so will quarter, in data capital we've our do traditional got our one the businesses to more of center on consume There spend couple other The And a tax-rate things healthy some working growing have in last about relative down terms us needed long working

as well. So tailwind that's a

Mark D. Okerstrom

question, Next please.

Operator

Citi. with May Mark to go We'll

Mark A. May

you. Thank

to comes other would on more a you? that supply been, U.S. relatively possibly mostly spend, outside I would I there are that Or of to in a my is question has and commentary one the your growth, their driving pushing is, suggest pedal First, marketing on I I there plans to marketing. of slow priority direct terms Some of think, you. is HomeAway Certainly, that other And lot more that lot Thank guess focus. own traditional commentary the you're for assume been referring to including maybe seems Is of marketing brand Meta. optimizing recently. it like know then that? lodging the of a I channels, questions around growth, factors HomeAway the doing? listing guess data that your that it's the side. the When reallocate for be

Mark D. Okerstrom

big again, I'd thing. not direct Mark. spend, marketing say the this Thanks, is a

or just again, happy efficiencies not and better. to broader, with really a on trying we is in digging focus more opportunity not optimize the across do, the It just bit or figuring display traditional on there and It's intelligently. margin, an a is analytically are, sort it's just We retargeting out whether or board, – again, are little to of really on It's search. Meta. inch

discrete we to put We're assume decision, from at very spend take directly across time, brand the are marketing us brand and so wouldn't I reallocate the a there again, and brand big our into that marketing a think doing I marketing P&L. marketing teams been looking opportunity out and always teams and is brand long that always sophisticated a quite it, put as look best we've the at capital to the across for into we one but, that places an another. the for are at largely really portfolio

I HomeAway's of also think the terms platform that job It's side the said, for not really to I and do base monetize the fact host result, their been being brand a big both on they've Listing In focused have it, better. customers they're That hosts the despite and, as actively able looking is and just overall, properties just to things. in. better I them. of and been capabilities, partners for on the listings but One all marketing QX, marketing business actually to been and product flowing really XXX,XXX customer focused, on it also side, and building and taking doing you the improving performance think more are the the existing about compare has at if side. look count not online end keep the the of you QX a for listings mean growth that about listing they priority available that from and bookable. two there's

all listing both force. in a markets. point nice the increasingly does So this to again, a And over platform them acquisition become where not that some actively There U.S., has it. not But, here years priority could focus the for at They're been couple signs gravitational be but think trying point. a at it's in the I international do for a say of catalyst will next that HomeAway. be phase

Operator

That or concludes Mark remarks. today's back session. conference closing I'll question-and-answer time, to additional At for the this turn any Okerstrom

Mark D. Okerstrom

obviously, to us forward but big we're employees world, solid ahead there's awesome a thanks the you to going execution Expedia Group. Well, And looking your for our work much of Great. of lots hard to thanks in and a so interest all it. of around after and certainly start,

you. thank So

Operator

for participation. concludes your and conference, you today's thank That

Expedia (EXPE) 26 Apr 182018 Q1 Earnings call transcript