EXPE - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the Expedia Group Q3 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Senno, Vice President of Investor Relations. Please go ahead, sir.

Michael Senno

Good afternoon, and welcome to Expedia Group's financial results conference call for the third quarter ended September 30, 2018. be Group's the Alan CEO CFO. to Mark today Pickerill, pleased Expedia Okerstrom, and am joined call on by our I President, and following reflects your today, The XX, responses as October views of questions, only. XXXX including discussion, management's to any do or revise to this We obligation update information. undertake not

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

discussed the otherwise other today posted including to our which reconciliations is investor encourage and IR release, company's website in will XXXX. to Unless content all references administrative compensation comparable for our important the exclude measures and You find measures call results of technology earnings be all on on will website non-GAAP revenue, visit our you general of expense, for this and cost I content and stock-based GAAP at relations comparisons stated, period selling expense periodically expense. ir.expediagroup.com, earnings to most and marketing against today's comparable And expense release. and depreciation the of

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

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

Mark D. Okerstrom

Thanks, Michael.

locally organization initiatives a is the and to innovation. our this focused quarter, themes basis; and up top several key in more results. three financial line being At being our I on the relevant and continued executing that momentum ago: same of speeding year the We global shared bottom third execution on operational pace build time, and underpin strategic strong posting the time a on customer-centered;

early with still progress the to this unlocking journey, the I'm our and we is across global While platform. days aligned more at We're around collaborating squarely are objectives, of than in our clear the pleased the date. company organization aimed potential full travel of ever,

to these increased sustained a the optimistic to priorities, this As push result massive in we gross bookings year-over-year. XX% on in travel gains Adjusted growth EBITDA and strategic revenue market share XX% grew quarter, forward a we come. we're continue strong they for third and In will very XX%. that time long

topline evident optimizing are XX% in profitability. was growth approach both quality spend, making EBITDA That total brands our nice room balancing in stayed marketing Our and strong solid increase nights. lodging adjusted direct strides, with growth

to through directly to last the on remain new year. properties acquire count supply in property our We see XXX,XXX, added quarter, on a at increase properties XXX,XXX XXX,XXX the lodging continued year. platform for compared to execution over to HomeAway, We we very properties XX,XXX excluding third our and approximately bringing Year-to-date, our QX acquisition core acquired now the pace to quarter, XX% least efforts. good global total have third full

platform count quarter core now lodging XXX,XXX our global lodging and over integrated in the listings HomeAway for XXX,XXX portfolio. our total properties also We additional onto

promise. continued markets are push to have with Our lot pleased work concerted priority into efforts show our of a we still progress. to do, We to but the

in takes to through these work locally be and properties add to continue markets. it relevant We everything

sure and localized we adding refining provide product like at making our on teams by market. in every experience language all to enhancing In areas great properties, each laser focused a for translation customers addition aimed our and are content,

a calling reminder, model As focused the new much our global year's this of operating beginning just a approach more to for expansion.

the tremendous results, in years other has improve we initial product geographies posting more this than to year. the strong all supply business in these our HomeAway and it XXXX tribute We adjusted EBITDA expect did in in team our to new extend the better in years a this approach in since markets quarter made performance third key the last transforming beyond. delivered and position That's the acquisition. strategy as drive and HomeAway coming to the of few progress in

welcome market We are In we see Expedia results software executed urban to the growth we in and its help leading of come. new progress at the HomeAway teams foundation in the prepare trivago will it next trivago in expansion shift and and HomeAway, that Group's our in quarter to how for offering, performance easier closing, improvements key XXXX. impressed extremely operational the corporate its team focus of significant accomplished to has date, with step comps. ahead platforms quarter. more and the Pillow very slightly Overall, these to to a in believe profitability we're see to on a addition years. and continued and to as in space. on EBITDA we third phase Egencia in adjusting model for is adjusted optimistic can alternative pipeline as at coming making I'm good want we team continue growing and share many take HomeAway years and began Expedia in a ApartmentJet can the The top-line going with the deliver reflect establishing the our far dynamics, As the family. the with embolden delivered Group on efforts increasing product revenue With track so Egencia XXXX, is trajectory continue the and travel well to pleased XX% managed its the a XX% industry strong runway sales business much up to execution gross we see improvements forward. is team the strong executing great in bookings accommodation long for and unique

are of combined While we that turn still new with growth have into many to confident our we translate rigorous years for it I'll that, a strategy over will ahead, With attractive execution Alan. work come. to lot

Alan Pickerill

balancing top XX% We strong delivered growth with room Total line trends increased night Mark. in another stayed solid quarter, XX%. on revenue healthy Thanks, adjusted growth EBITDA. of lodging

a last to solid growth in the while in months quarterly have of XX% $XXX drive transaction revenue Combined that gap the on room booking in to up XX%. daily revenue windows HomeAway HomeAway, discussed, range gross revenue million the average HomeAway the year-over-year. Total posted headwinds. we from concentration as the XX% in bookings, expenses, expected. nearly we a XXX-basis-point rate room longer will foreign P&L. and increased in nights over subscription XX% was operating part Excluding XX% revenue of complete, end the adjusted With and night increased EBITDA, business and per by transition higher XXX-basis-point seasonality a stayed combination leverage record high declined HomeAway of HomeAway's to ecommerce with due growth in quarter driven summer an growth posted currency during deceleration

each focused for bottom revenue driving on for and we for on is headed pressure QX Overall, advertising general generation a the profit and to and thumb, profit growth year Total of line second top in Given we long EBITDA come. with see rule HomeAway revenue time that, XXXX, adjusted QX in in solid of third strong are quarter. healthy and increased very and HomeAway a expect media as and X% growth to quarters. the

grew business XX% Media contra-revenue to air tickets Our from XX%, revenue the offset Solutions of decline was fees per X% mostly cost Air on in growth growth benefit reclassification year-over-year by sold. distribution revenue a ticket increase and trivago. up the revenue of Air X% revenue. from to over at continues in

to again QX it to basis the higher faster expansion expenses, this neutral As of to category, on of of impacts results. overall growth points adjusted quarters, points growth. XXX resulting last due and the XXX distribution adjusted than line across revenue. change and grew Similar which air is with with quarter. cost cloud basis be deleverage quarter leverage our expense to profitability, In EBITDA nearly each accounting a the reminder, We to our aforementioned is few over year-over-year expectations, in added each related slightly costs will fees change in the decelerating saw revenue margin last the

cloud Our benefits. continue operational along nicely moving and to we migration the of is see early some

lodging we As cost on we and current last a around $XXX now million improved seamless ensure in be to costs optimization on total our to are discussed stack scaling our quarter, capabilities customer XXXX. cloud Based judiciously cloud-based experience. our trajectory, expect we traffic have

expenses to focus XXXX in the marketing QX, expense selling X%. and expenses efforts marketing exceed complete roughly continue the We our in rationalization Total shift migration million expect cloud lodging flat were to air increased to by Direct trivago. as and at stack we stack. largely driven $XXX

Excluding grew direct marketing benefit selling marketing we trivago, continue and efficiency. to as improved X% from expenses

expect lap due of remains Indirect benefits and increased further timing fourth optimization our to marketing expenses. count the we and initial our selling head forward, and we supply elevated due seasonal selling less initiative. leverage Looking as marketing to growth in quarter direct HomeAway with efforts the from associated the marketing

platform driven XX% and For marketing quarter total revenue. selling in second by than the year-over-year, administrative slower the grew Technology quarter. full expenses and and expense now continued product in grow third innovation. expect our and increased from to investments deceleration expenses further year, primarily ecommerce XX% we adjusted content General the

continue the expenses G&A administrative expect the we fourth slow to but quarter, increase, We grow slightly year-to-date revenue cost growth full general year. in faster the now expect and to than given for to

expect interest up tax solid share specific growth our combined over decreased can a X.X% to the part part income reform. led of very rate as to we G&A operational lower performance August of matured in slow lower initiatives that Depreciation the coupon to share declined tax redemption leverage while adjusted the drive XX%. a Net our and U.S. expense from told, per long-term. year-over-year in due higher, XX% due to growth to expense from it our leverage count deliver QX the to in of benefit in adjusted was in data benefits related robust occasionally CapEx. All to continued bonds earnings nice center continued statement While with XX% continue down

of full million over over a in over year-to-date, repurchases, includes amount a for Turning $XXX That $XXX we've allocation, shareholders. total in decade. to already highest to our million share returned year capital any

approach dividends in our repurchases Mark organic with of shareholders capital In opportunistic growth we share through invest our capital opportunistically M&A addition, continue acquisitions the mentioned, ApartmentJet. with This with to strategy. deployment, to complements returns and that as and to consistent is strategic attractive M&A balancing Pillow

expect consolidated financial XX% the Turning EBITDA low-end expectations to our our growth range we now of adjusted XXXX. year, increasing in are for and XX% of guidance to the

this We operator, that pleased term. quarter With investments XXX a our points be long would will higher Overall, we healthy basis growth take year. in we're and As building by first excluding in strong balanced the continued with reminder, believe ready performance had are operational to growth XXX point cloud. to basis third a the drive key sustained question. initiatives the strategic over our momentum that, we're to points

Operator

time, will at first for Thank comes Markets. questions. RBC the this we question you. with And Mahaney our from floor Capital open Mark And

Mark Mahaney

there? just the the growth that Could you about the sustainability sustainability please, just Thanks business. revenue I a to and Yeah. want of of you've there achieved the the HomeAway down, the lot. drill on levels growth, bookings profit talk

Alan Pickerill

Yeah. Alan. is This thanks. Mark, Yeah.

On the much viewed that full HomeAway not trailing margins, year important should think, quarterly on really the all, be on a out to first margin or but I EBITDA more a for XX-month basis. of it's basis, point

was would you seasonality, encourage quarter through look full it you period. so XXXX, been a to over through I the quarter, just there's – at been bit For transition, to of margin. look XX-month if the about a year There's instance, XX% the variability really

same has not prefer balanced are optimizing markets. percentages, that sure delivering make our making the to should able rest for for a particular We a in global grow to both in we're want it's to investments right see as We profits to profit we the approach. in healthy of time, and We and We opportunity. we're be for business. international as At U.S. margin do HomeAway, HomeAway that not growth. the business not there gain while the here the we're opportunities philosophy margin take the as the the share big well that for globally.

really I a we the number put are wouldn't So, moment, that's looking forward. in a our pin taking particular balanced at but a philosophy approach. margin

Mark Mahaney

Alan. Okay. Thanks,

Mark D. Okerstrom

Thanks.

question, Next please?

Operator

Kevin Company. from with next comes Kopelman Thank question you. Cowen And and our

Kevin Kopelman

give you process things any the there? out Could planning any first ahead call and thinking want you Thanks. us so EBITDA Thanks XX (sic) you're thoughts about to key Great. much. about of how [XXXX]

Mark D. Okerstrom

Sure.

Alan Pickerill

Kevin, you said XX.

meant I maybe? think XX, you

Mark D. Okerstrom

XXXX.

Kevin Kopelman

XXXX. Yeah, thanks.

Mark D. Okerstrom

We've not long-range finished yet. planning our long,

Alan Pickerill

Yeah, No. is Alan this again.

of don't XXXX. the as remarks, I process. We of business are looking top today which where would a middle regards provide we to is lot healthy what We the planning and can prepared are re-emphasize to we in just in the have growth. color sustained I a bottom-line have build said

for approach, a at period profits and time, way I here. do investments building kind on see the investments in that. think and think to business those making And that I continue We make and to can HomeAway profit as global you And we up at success we as growth. time, a so we're move balanced are have healthy we forward. we where we've in a we what opportunity, are of that out We think to we over the answer, think while do we business to would to looking order the I same can build would a setting long we this But can, need in very it same seek far delivering mentioned in a appropriate delivered and say of appropriate XXXX, globally.

Kevin Kopelman

Thanks, Alan. great. That's

Alan Pickerill

Sure.

Mark D. Okerstrom

Thanks.

please? question, Next

Operator

with you. And question Deepak next from Barclays. comes Thank Mathivanan our

Deepak Mathivanan

Hey, guys. taking Thanks the for question.

are get Even it around of performance seasonality the moderating the associated going would assume if being about? that's think and for year be high on of with anything guidance, that those And than to some also that's the efficiency we wanted like Just Other EBITDA moderate. and XXXX of else gains end growth clarity piece rates the XQ you implies guidance. of the full should factors? some some HomeAway, what sort

Alan Pickerill

Deepak. Yeah,

of a think I there. got them you few

you're there QX. we that out, the right implied guide guidance quarterly, is think though even point I to for don't

of terms expecting point and QX. would year-to-date performance a out. subdued A EBITDA things in growth more We are adjusted couple in to relative of QX I

The QX think you mention the profitability script. them, seasonality drive the and seasonal as the is quarters, but I is they nights rest did and HomeAway mentioned our in business. that in fact revenue tremendous and in factor. less of other and They QX important I room to just emphasize, are in more QX than an my so

as impact an fact of we've is scaled supply you we in is investments, the the a impact on as do outsized have that quarter. EBITDA being has XXXX. other QX, we given scaling and QX tech in bit the up, The seasonably an way, adjusted just other full it's move fully could think been through up that of lower lodging That QX of kind and that it investment, impact, a things

are the those think I things point to So, out.

Deepak Mathivanan

have that expect XQ? like announced the that marketing largely XXXX? helpful. programs That's should UEFA League. going Okay. in to Related Or you to Is some be Champions that, that partnership we is new in with something

Mark D. Okerstrom

question first the my I'll call. Mark. answer it's of Deepak,

the So, thank you opportunity. for giving me

will a see spread XXXX, think that and bit three-year throughout deal. little It really I in of QX. it's be a you'd

beyond. it continue on will So,

Deepak Mathivanan

Got it. Thanks, Mark.

Mark D. Okerstrom

Thank question. you the for

Deepak Mathivanan

Thanks. Okay.

Operator

you. comes question SunTrust. our Khan Naved Thank And from next with

Naved Khan

a Thanks lot. Yeah.

growth nights the in a sort international markets and growth, Just terms growth quarter. a out maybe a slower in continue the clarification in third of it geos. good guess of you room room quarter bit there throw sequentially on see night maybe the you the grew versus in little to Can second other down focus parse I did and

Mark D. Okerstrom

Sure, Naved.

metasearch non-meaningful. anything growth say the would would I channels balance think that the it. from from on wouldn't I QX night in actually domestic. certainly and So, our variation QX night room can disproportionate draw declining to a that be which year-on-year, running saw with room our slower international places, to I you trivago on growth have compared impact in yesterday some are

headwind would consistent I as So, to from it's a call that quarter. pretty though out even quarter

bit those are we markets, terms number numbers markets, very in our where decent from benefit room have mean you particularly are where other thing little the going. night lower slower happy is these we're to average. markets all we recognition focus looking get starting growth those told, do with Overall in a I seeing. in you, see But would multi-year brand journey. starting And In were are strong And what night I happy a remind a domestic growth picked markets it's nights and up room ahead properties we first the progress to We just the a product of growth new of continue that producing product markets nice, from a for with we better very of of time. the better you're showing over is very you where things are really entering base, but better nicely produces allows there. traffic largely because here rates. are having customer do, efficiencies terms to be growing position marketing more overall the room auctions a customer really

to So, goal our and respect that's type benefit think of and markets, to wave we I of of one see really the years. more would the expect this, third with that second in

Naved Khan

very a That's quick And then it. maybe follow-up. helpful. Got

continue are be process? in the thinking going of honing I the you to for on call, to that where to still on analytics along organically. of we sort to How guys traffic now necessarily that? far because that you're about margin how through you sort don't how able need figure of and think sort if the it use Or last you're you hurt bid ability come can about it out you does should to talked just

Mark D. Okerstrom

it's a Well, that say I'd journey.

to continue make progress. solid We

are started really identify that in of is benefit in to cheaper originally non-incremental ongoing it, I There up type see it's to see in show of work of that doing the QX, here. think think would spend in level days as and an marketing but we're those in year mobile meaning trying I last we One direct the two started didn't spend QX really or show that channels early this sophistication. we such QX, if bookings is up truly applications. we things some

In sales you in So really line It's do the more (XX:XX) respect, if that to impact that's number really top line. item. an goal your one. don't efficiency just see well, you between it

out those ad it The returns much and at it's this, are though, efficiencies getting but an you actually be forward. efficiencies or some and your our efficient room buys you can going impact night the again, second And of capability in that can if of spend? is numbers you in incremental, what looking find really delivering an think bids on see pull you spend, of an a be more could I there here. certain pull can just ad in piece your we've and actually think granular I down, to some when new what cases that see expect developed growth. efficient, on And But

over that think continue to going something be I on build we'll to it's time. and refine

Naved Khan

you. Thank

Mark D. Okerstrom

You're welcome.

Next question, please?

Operator

and you, Oppenheimer. Kelly comes with our Thank Jed next from question

Jed Kelly

my Thanks taking question. for Great.

exclusive growth that should as with more HomeAway, for the do year? XX And the get or how players marketing from the in acquisition, extended expect to intend HomeAway's morning's competition space? make that Just inventory is that and bookings, longer in more on you over to other a of days to into self-inflicted factor on we you next stay deceleration Then Expedia? such this

Alan Pickerill

bookings for was I their remarks gross the mean, my Yeah. line said growth. in as what we deceleration with I largely expected in

late performance they by. think there of as year last further they along that factors their the some to difficult over ramping come up few the lapping more a they fruit are curve, at being hanging just did of play, are low that and get marketing that I is one

the returns trying generally is marketing they continue do think and just right optimize spend got bit growth. on other I between make they've and to to marketing the area the sure that in balance unit

over back year One kind the couple team they're platform kind of of of international some see some that that. gross current migrated international, bookings the product have, nuanced optimize common platform, and there last also bunch that comping implemented They until what they the the on in a typically is In are onto are the trends a when that had couple past, can those of of a was international factors. So, online, and new you distant business too key and status to get bit things factors. of disruption not quo. enhancements markets drove a in of happens in

runway. of and some the are for HomeAway quite it's big, is the factors. those long So But opportunity a

continue to to quite we while. grow at rates So, them a for expect healthy

Mark D. Okerstrom

area. And, what about that new on little these the excited we've so two the significant certainly years. HomeAway super acquisitions, essentially for a significant platform we new suites be hospitality are way give on Jed, solid term driver of it to we owners and color, easy to in the just be sometimes And that's in in more acquisitions made, be these stay really that capabilities built. have just teams great volume. really a that activity rent some way these or or can managers also in booking technologies managers of central that do in in rental buildings, length owners alternative of all whatever accommodations, that near is them quite manage with expect way XXXX impact a and is any allow building, a I essentially or out windows it multifamily apartment the to happening type the the or tracked and that's booking to wouldn't compliant just regulation over allow place to And put a and fast-moving all communities exist makes have and a

take some are then not, yet. terms or we of exclusive are it foundational we haven't platform going time, really can to to that start build to time. commented investments that a urban is in build an And but which business I going on over these think

Generally, been in we look I over what markets is that have at though, we'll exclusivity not has think seen, it's something time. a thing. these often that good

very that carefully. we'll So, at I think look

Jed Kelly

you. Thank

Mark D. Okerstrom

You're welcome.

question, Next please?

Operator

Deutsche comes our Bank. And you. Thank Lloyd from question Walmsley with next

Lloyd Walmsley

if can. I guys. have Thanks, I two,

that you better a line, even leverage lot of saw seeing another at HomeAway, from least of marketing you're quarter leverage. upside direct lot coming is lot Obviously, EBITDA the HomeAway, of or trivago. at of a on a just First, at

terms a kind I how back going think sense said can the last supply marketing markets you in the and acceleration us of to acquisition you then comfort saw those then OTA Core secondly, in still for business? bookings Are can stayed share give can in guess repeat else nights in us that So, room are for And you trends focus there quarter around efficiency on is localization, And give markets? track? you those anything behavior markets you that there. I moving and seeing the strategy of is

Alan Pickerill

On Alan. majority I color would as there It's by marketing of driven provide Lloyd. said in prepared a the there in Hey, that the of was lot leverage is Yeah. And I line selling marketing and and your obviously, QX. my the selling on question, trivago. saw you was think remarks, at I what

marketing relative So, selling and single direct thinking if revenue largest to you're growth. that's about impact the

the contributors I'm there from then going HomeAway the OTA healthy size were and and OTA biggest contributions that specifically, Core them two And but help with other order, to Core The in not HomeAway business. third. coming were then the second the business in up

the were components. those three So,

Mark D. Okerstrom

the markets. sustain markets, saw QX, step the growth from essentially focus in then, we to mix between rate the and what was a And markets the up saw, we we after Lloyd, healthy growth that was saw on rates the essentially there QX

and compelling or of some we And channel a bit have that reminder, others, dependent market to items. did we and cycle a this history a certainly, will repeats we're always particularly numbers is property rate. early than have question little no domestic of were very repeat were things very long in relationship particular and we them But markets nicely, too coverage this any high a challenged understanding just more the us certainly have of a customers as we're question correlation in on the But that metasearch for the serving. these and accelerate right that we doing this we give I in rates actually travel result mentioned, no markets. of have you many the in this. happening It's as other see of the of direction. of cases that because Some specific market, cycle actual seen evidence stronger the repeat between because It's

Lloyd Walmsley

All right. you. Thank it. Got

Mark D. Okerstrom

right. Thanks, All Lloyd.

please? question, Next

Operator

Thank Justin you. from Bank Post America. with And our next of question comes

Akshay Bhatia

investments, for move to Hi. is Justin. focus next of And supply the expense and to these that when When hotel timeline countries Bhatia to about set talk that? be countries will This should we be what the then on we focus to happy is you the get Akshay on up with? scale Thanks. around expect additional you'd there

Mark D. Okerstrom

Sure.

the that not So, sort marketing thing or we from are big year, over next I we're a going next wave be product do. these depends translation wouldn't some to in launch We or as and year, pretty biggest next markets, the really of It of a have and to XXXX. did market-to-market. is so required may effort of it lapping this and of another effort number some markets. of expect up supply step enhancement In big sort an investment

to expect going large as saw I XXXX. wouldn't to we as but investment do of are continue this, again, we So, in

I it mean, In it upon there generally, is depends. inventory of depends to terms how timeline, much acquire.

in take smaller get could supply very In is it in markets done focus, markets, to three we of a So, years. two less large it where could one.

all in. really this focused on is becoming we're of locally dependent market is it on stuff that as relevant specific the So,

Akshay Bhatia

Thanks. Great.

Mark D. Okerstrom

welcome. You're

please? question, Next

Operator

Michael Piper question our Olson And you. with comes from Jaffray. Thank next

Michael J. Olson

afternoon. good Hey,

but that you a accommodation about how and there fry of and are thinking growth, experiences inventory fish growth may be QX, You in you're missed area and to XXXX? but of about And about you it but in could and now G&A or sales content? Thanks. talked leverage have increased with just then deleverage trends alternative then lot for international what the have Alan, an and marketing and potential tech I talking And investment second, about.

Mark D. Okerstrom

is all the of frying pan other activities fish. the in So, absolutely with

last numbers new about It's activities. business. pretty excited We're quarter. I opportunity it. in the not are some you to We a big gave

big has obviously think lot mobile those of a has capital. a opportunity. lot it one more attention happens more this suddenly a as I attracted industry been It spaces up in or and where opens acquired

So, the XXX of But there mobile about competition players is more there's exciting have, in for is lot which than And advantages a has that there's certainly of installed across interesting that much really portfolio. doing an base we nearly been things. harnessing incredible applications, of this one us, we our there space focus have out pretty are the big historically. million

time. multiproduct generally where a of activities know the to tell our deliver are going building and where we'll the years, perfect about working perfect that will that so the customer the and strategy follow course set And customers next they at working on inventory on and so activity offering, we be putting the are possibilities several we the the execution can there. out of right over – have be excited having we and goal, essentially We we're that's can pretty

Alan Pickerill

plus And that increase forecasting Mike, your One of and question the pace that meaningful QX and to tech we an is year say growth and I year-to-date just tech content just revenue in a given things. would then, in relative fact, and with in you obviously tech this deleverage end impact growth. content bit on content, couple a are would in on of up of the

perspective. over a of is which some That's the of is Some we're forecasting year, we've of the pure due to what course talked the that investments that from about expecting.

Michael J. Olson

you. Thank

Mark D. Okerstrom

please? question, Next

Operator

with And Davidson. Tom comes White our D.A. question next from

Thomas White

one. for Thanks my High-level question. taking Great.

of EBITDA had Core should in nice long term? in quarter over guys OTA, for kind expansion of, and those we But think of there. I Are in puts the years over further the of, can of or another, of segment. about we're Core You Or so? we, in OTA lower? kind ton direction from ballpark kind margins five here a margin takes How margins there's time? expand year-over-year Or at realize of, now? the

Alan Pickerill

Yeah.

just Sorry. Excuse me, cold. a over Tom. I'm getting

for is been changed – And said that which has nothing We've are some would time. as there. optimizing the over stuff As far I clear we repeat about earlier, of I margin. pretty not

opportunity meaningful this And we that OTA. highly to spend for incremental what's think that's a is eliminate the inefficient. just EBITDA are in that's to marketing on I that not Core impact unique the having is that and margins finding and/or XXXX we're period

at to the are But something to need I our just see just closer the for I good it's we're as we're historical think in front sure on goodness looking to we the there's through global and of selling at is, share allow averages we're that, spending that and which We the get – us. we're leverage as long exists, on continue our and/or that to that in fixed And gains kind and particular then specific growth. near-term, point, this overhead to marketing, for of to little leverage to depend should just period cost. selling relationship to going and line, in we returns the opportunities would the returns. We a of expect because there at we think marketing it's if kind normalize make and revenue business, be of business will be or should hard period, on cost. get able happy general to want eventually, running Selling that marketing model of, fixed optimizing on in forward, that in we're effective there. still the

Mark D. Okerstrom

Next question, please?

Operator

Thank you.

from with next Our comes Ron JMP Josey question Securities.

Mark D. Okerstrom

Ron? there, you Are

Ronald V. Josey

Great. Oh, yeah.

Can Sorry okay? me you about that. hear

Mark D. Okerstrom

Yeah.

Alan Pickerill

Yeah.

Ronald V. Josey

Oh, perfect. Great. Thanks.

questions. to So I ask just two wanted

it bit you sort as of repeat with translation, I that this just Mark, and new you you in HomeAway, on on talked see where can is also wanted that. where this in the ask language to but around of like the maybe two getting Expedia little product? a to about step then, into year are out about the properties on HomeAway properties, impacting you how Thanks. there, more maybe in big results start the to right rates hotels up relates think, more Expedia head I and you number these lodging XXX,XXX, pretty just And as core and highlighting

Mark D. Okerstrom

And But right. use some of it. perfectly Well, so things many tone piece colloquial is to of where the not many it's that local, Sure. many just one just into you've starting really in And again, but cases, language just nuance. translation language, cases it's to more of that's, the get voice. translating is about in got

marketing. have You've great got to

and it pages really and of right have content, And have homepage have your payment types You've great making systems got geography to translation got got localized each and we're in that of and to format, so through you've you've right. landing or to just the these it's And experience. feels sure like local format a markets case. going wave a that course, is

on, now. HomeAway OTA HomeAway think properties we yeah, brands to I right of the Core really, are terms properties, In XXX,XXX up

I being inventory use we're this It's many type where is think highly are in getting identifying of a smarter, it's a although muscle valuable. around building highlighted cases cases. lot really they those

HomeAway accommodation terms X.X it's think properties, about, overall it's or talk We XXX,XXX you here. obvious in ones heard the availability them categories, or has units our the compared much large units, period high groups. of stages very house, just if competitor alternative of million numbers opportunity, compression any early a early, HomeAway's about sort you to for the are and for example. number in still and competitors if you But of Some where gross the low that significant. it lodging again, present traditional the in larger a compare that to can of we're to the large there's compare opportunity, But we've relatively booking some that with

Ronald V. Josey

you. wave you And, That right to things that about, event? language where makes you are. it phase Mark, talked of I'm on this quick lot two of Is a translation to follow-up Thank for a two, curious more needed all as sense. just a the get work. those just you Or

Mark D. Okerstrom

mean, I No. yeah.

it as go. the doing we are waves in We

countries we'll part one doing right now, in – the And and countries. completely two the and just it's in it's a of So, on do wave move it wave we're it formula.

Ronald V. Josey

Thanks, guys. it. Got

Mark D. Okerstrom

welcome. You're

please. question, Next

Operator

our And you. Eric Thank next question comes with UBS. from Sheridan

Eric J. Sheridan

Thanks have step a question. and question. picture the for bigger taking Maybe back to

shared way funnel, the think next from sort industry When you of to your think we is the partners from out your investors issue growth the of Google, And is you're accommodation, some Mark, multiple should investors hotel now about product some out, I traffic, more how of the investments from what desire over to investor the number think share travel the the travel think the the and direct are get get evolving. sort that's innovation and big years? seeing right the get of intent one more I couple debate making? years of output direct you're as group. looking of you're Because traffic, on the

Mark D. Okerstrom

significant. think first remains we all, we think, I Well, moving were opportunity Yeah. the overall into very that of

industry. continue You massive a have to

talk where is as on And don't travel corporate a high experience our got reality human. we Because people fully in the not yes, offline has if penetration industry in, trends. look to or where we device, has It good, really even down the move online away to as oh, anywhere that mean you further compare online online You've with at it, the steps long it, to the answer from to where XX% I hear, everyone in are And call it's, want business is you the is XXs. access, penetrated? broadband you Manhattan. The Egencia you're high XXs, environments is this there close. from, that everyone XXs a penetration. client, U.S., if there call depending is,

significant, places we all heard of that we is that us that people is to So, online the place where the to about. opportunity continue and be sure you've go we investing where talk think travel the in make offline to to are for

We again, that opportunity huge just, if the a our the way, already accommodations. the go new look We add of just a compare you got significant sense and number you of from by competitors opportunities. to online. already a It's standpoint. continue platform. to alternative geographic just have expansion have accommodations hotel are And give to huge of have to at of put In any that, room alternative And got they got bookings. And accommodations we've to numbers that to the we've the just getting ton space that's we on them. alternative those also properties mentioned,

significant on-the-fly, one. incredible to are that full expansion certainly we've real-time, sit of personalized is been however they bookings with Google, essentially, provide a allow to launched been making on geographic make in making that of lot customers getting or learning AI want interact, are the work that more much advantage, much applications. new and questions our on and amount to Google sure of us our working been just volume other the technology chatbot machine more and part actually we So results, a wherever we We've We've application all Assistant, data, a We we're to particularly been and hard chatbots answer are sure currently that. and using – countries able data in through in very in voice, of doing some through Asia we've in and to on the an investing space. investing online doing

a time that growth to very, very to a staying formula at we think ensure and ahead. be are we that think for make We doing we in are are industry. watch the to what come. going can us long significant. that's others this trying we step for closely the opportunity We forefront one So And sure us the of is industry, we're sustain very very that

Eric J. Sheridan

Mark. Thanks, Great.

Mark D. Okerstrom

welcome. You're

Operator

Mark Thank from with our you. And Citi. next question May comes

Mark A. May

you're get been more on marketing the of competitive about top but some how Thanks. terms already, there of markets, focusing marketing there's are for it forward, the thinking Apologize of a competitive in going in the if and beginning plus, has seems potential out dynamics this and asked you little on market to guys now intensity lean potentially bit international there. to that, dynamics, strategically

Just intensity be maybe more looking a marketing should forward? bit front the going on we expecting at it whole, as a

Mark D. Okerstrom

Yeah. It's hard this at to point. say

for understanding major our it feels specifically we more competitor in have our getting done same. and dollars, certainly sophisticated gotten much marketing what I like has think other the we're

come. think context to there I I that a long think a time could So in shift for been here has continue

can are around essentially of irrational or get as I market this but think disciplined of overall meta-search international markets. the over comments channels. the channels keep returning in same produce markets made important deleverage over well. first I is international other days markets But time, efficient in exuberant core more early less marketing they time that to because auctions new in expansion That mind, not those with international us efficient performance exist or our some or marketing markets is into Alan applying This than poorly marketing spend. that the are approach think into

I may see item, on just you underneath mix shift push perform a continue very cohorts some that it's but as think, pressure optically So to for the internationally, we really and us, line well. issue

where advertising be a on So world just responsible just sophistication international produces listen, expansion have there very in that solid new allows that a to I'm spend. the in level normal, our returns that on we're for a hopeful we're we of way and focused

Mark A. May

Okay. Thanks.

Mark D. Okerstrom

welcome. You're

Next question, please?

Operator

our Jefferies. Thank you. with Brian question next from Fitzgerald comes And

Brian P. Fitzgerald

Thanks, guys.

in into Is seeing of to limitation of change that hires? terms Thanks. as new can address that you in there supply the as head give you onboard yielding count out on added you've that add the dynamics some have the expansion gains heads new any of you're further In effort, there productivity us terms and hotel you supply you're the color on next will geographies? new year to that effort productivity

Mark D. Okerstrom

Sure.

heads. significant hire new we a up of amounts So did

of range pleased million formula got with and so. while We're talked far. does getting individuals It productive. up, but $XX of or think a the I to good up, investment once take about ramp a the levels so they them ramp productivity we up pretty in we've

either team also or a manage of to property we a human where though, of investing to more activity actually to board the ways help also and the amount Alan this to lot actually a in reduce with amongst drive at systems mentioned to going forward. intervention and that technical that we've trying happen automation been productivity much something significantly of has property is Importantly, the looking our can on really

we made investments, it so those investments artificial as because in that count, head can low we in QX well. something as have we're automation pressure Alan technology the the as are pressure QX. have that with capitalization very it's So profitability can on. a investments simply didn't they along seasonally to QX rate And said, Those be relates focused on

help things us in around two wave productivity going to as and a new that heads the So I But we world as on better you learned and automation highlight we've and focused more are to to roll as is that for much lot we've really added things we out very this well. and we've wanted invested are just the in better efficiency of propel beyond.

Brian P. Fitzgerald

Thanks, Great. Mark.

Mark D. Okerstrom

welcome. You're

Next question, please.

Operator

you. Thank

Our next with question Fargo Securities. comes Wells from Robert Coolbrith

Robert James Coolbrith

and for thanks our afternoon, questions. Good taking

that little guide than for air, more you a the a migration. anything come little there. is approach also on revised about you the guidance slowdown a wondering It like stack cost On savings than bit what's on that check revenue if relative And talk migration more bit guide XXXX? as cloud that could to Is probably in the about looked for helped little makes there of you conservative hotel less hotel, on hotel the cost Egencia. XXXX, about computationally bit you just under in the in migration then to intensive, performance migration? initial seasonal more just a a I wanted

if Just you update, Thank there. an to can call wondering anything us out you. give

Alan Pickerill

This Yeah. is Great, Alan. Rob.

And at is moment. main is that control. on in cloud cloud. there So two the spend, that the of we just the One into move our there's compute amount largely the factors

in compute have we either to than customers been than initially a trying to lead So part of sure that our this we make offer situations you We're experience in way. all do moved obviously process less the are expected measured or test more trying that's that that a we given that can of a and along, period. and seamless where to learn, over amount than and you

question customer I on have estimates move the air how ultimately products. into versus compute for you how cloud, our cloud. hotel the all of the of the that as and that that do savings cloud, to undertaken you you're as then compute sure and, do not which key there be longer benefits like, can The But kind basis. need into majority don't that imagine you're being details just cost into much efficient compute compute the you to that the needed, that not them code go and you're move that in this we'll into but And the compute processes back has have vast stack based information make to we gave numbers you you're I trying really they're nitty-gritty long for the well, will of, good in be. make are can the look a next of externally, think stack. efforts place. I terms year cloud And plan we wouldn't this the compute to up of, to mean, as that won't lot has there all-in to no I I and instances have is that component as as about again doing things and here, you And for you're about you product-by-product. necessary, we we're taking across in them have in spinning at it both leaving moving expect or the current on when that of you will been just of in cloud just an that well. much XXXX share year sure the component a second operational the year We'll But the can down the extent, the that's in sure the be to as the cloud? if been make are

and that in their you expect see remind implementing for what at. industry we of travel even would into wallet share those they're with rates impact nothing excess to As the of the growth the of quarter posted be that likely of their because they're it's growth little there customers. business rate a I It that point – of choppy growth a terms can in from far this all as wasn't the they're depends combination top-line quarter. I there Egencia QX, quarter-to-quarter. a that story. then is selling, the play out growth And just some there's depends last no, bit There's you would the topline getting that concerned, the well growing that's that, business FX big would it on

So, there. no big story

and think time-to-time. that you'll I flow see from ebb just

Robert James Coolbrith

Thank you. Great.

Mark D. Okerstrom

please? Next question,

Operator

comes question And with our Michael Associates. next you. Thank Research from Millman Millman

Michael Millman

and it marketing? And Thank leaders sales you. leaders? tenor is are obvious the volume of same cost out Touching the marketing of and of in – place? on technology, some break the the Or industry on to this possible the and the at on discussion, disruptive the in impact there I guess, and course secondly, names well, are some sales all

Mark D. Okerstrom

And, Mike, sorry.

are and channels volume terms you of about of the various On marketing, cost thinking there? it in the out marketing

Michael Millman

No. I and... sales of was thinking total and in terms marketing, your

Mark D. Okerstrom

channel by marketing out And Right. or...? breaking it

Michael Millman

better Well, the detail No. total of better. in it over of, do become disruptive in could time becomes your terms XX,XXX if more technology this what looking I was the at as and wasn't. more and marketing from more I But sales you feet might that, place.

Mark D. Okerstrom

and massive, remains marketing Got $X.X industry think, a all, part trillion got of Right. big it. we're it. sales be is going always first I to our of it, The single-digits Well, of think I business. and

really an opportunity customers being we So significant amazing tell And about of to we like do a having have to service expand. is it. do part able all

that allow think increased over I sales our that do will marketing us efficiently sophistication Now, and time. to more in do

and focus customers efficiency our on tell about that and to their over think to time. and building that marketing will centricity come love I improve to customer really products productivity friends love our help back

will app mobile making we're as in well. and the help think mobile I investments app

to So but the more we on certainly sales And and into big get I we margin long us opportunity a for future, for I that's to is spend think as efficient marketing the a of able think there lot do focus should us. be grow.

Michael Millman

Thanks.

Mark D. Okerstrom

Thanks, please? Next question, Michael.

Operator

questioners for Mark this to now like turn Thank President queue over in and further Okerstrom, have the conference time. you. we And remarks. no to CEO, closing I would the at

Mark D. Okerstrom

entire obviously Great. Well, today, quarter team again for I progress. want Group to to Expedia for you another thank solid of and thank everyone a the listening big

Let's I'll back end the strong. year turn to operator. it that, With the

Operator

conference. this concludes gentlemen, and today's Ladies

You may disconnect. now

Expedia (EXPE) 25 Oct 182018 Q3 Earnings call transcript