EXPE - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Expedia Group Q4 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Senno, Vice President of Investor Relations. Please go ahead, sir.

Michael Senno

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

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

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

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

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

Mark Okerstrom

execution only Not year. laid for we results mode the excellent our out that did pleased expectations, on financial overall were the into XXXX. We beginning financial that with Michael. strategy exceeded moved of we transformational Thanks, but performance the our deliver at also we

ever As three the financial operational truly an innovation excited global organization potential of key relevant platform. and centric; as articulated momentum the enter being the a and and locally pace platform. on power basis; our strategy, have focused up We before. harnessing across solid customer opportunities about execution part of themes: speeding XXXX than our more only that just we aligned of and Being and we begun, ahead true I'm and with

grew XX%. room bookings gross $XXX billion. full-year revenue XXXX, For We XX%, was and XX% up stayed reaching nearly nights increased

results execution Our even XX% X properties faster increasing cloud supply roughly acquisition. strategic in million note, at in We over these time marketing our total up platform year the XXX,XXX on added core lodging core pace listings ended making solid now XX%. approximately amount adjusted share while led team including On We HomeAway EBITDA growth XXXX. added migration delivered to new integrated per same key with XXXX, double our our platform. XXX,XXX properties and earnings the in investments and our several to including of profit optimization adjusted initiatives accelerated over into with the that

our We make markets. continue to progress in solid priority

to moved do in we as to saw positive these While supply be customers on we locally work have the both year. markets, side more for we still relevant the truly and through product signs

in remain XXXX. drive as momentum our confident And top expansion We awareness, period. results we HomeAway year now financial over standard posted the the growth This focused approach both increased normal in with healthy a accelerate brand and product as and full continue of business. we strategy, we can robust up investing line and and for the deliver market adjusted a other course that plan multiyear EBITDA we locally revenue expect million, instantly markets bookable a deeper bookable build we is in to nice including marketing increasing relevant XXXX listings into over coverage, bottom to in XX% international XX%. think layer head increase million supply time. on to efforts provide more to that these Total in X X.X over to over we will boost conversion XX% listings, online a which and

and trivago we're investing we ground prospects, a the take delivering the the on managed includes with performance the execution operating lot call in international to to is Egencia’s deliver progress strategic as this and XXXX And while to is urban in market we and and second Overall, the delivered of in executing ever, Egencia pace, growth growing have Group level long-term attractive in growth our posting exhibited as The as team in keep well create opportunity at shift yesterday, services we we to the team exceptional opportunities The share the XXXX, into pursue impressed outlined attractive XX% execute dynamic as can plan Alan. transformation achieved significant in value combination competitive to as VRBO our Given across profit XXXX. better can travel Company, to of adjusted runway And significant carry solid delivering corporate momentum we service Expedia differentiate products positioning a on in by leg line business. the capitalize and that XXXX, its high excellent on that XX%. its in and believe long confident that bottom as And is healthy turn progress business business healthy revenues and making XX%, the the for bookings returns I'm continue and customer additional I'm remain to we're opportunity product further XXXX. to and the to our carry profit for can the solid is over for on in results. large. HomeAway work while marketing a investing growth EBITDA optimistic The adjusting revenue making but and over time that, significantly long sales on strong of travel growth. we to shareholders believe healthy beyond. That focus, we gross brand profits space laying we and a continues next growth and consecutive term. optimistic offering. to the alternative strategy, new growth to space. the nice balance results our gains, and ahead. HomeAway expect and in it trivago our well sign quarter. top partners, to can We're attractive We on I'll share resulting long we come. for unlock focused for the our customers continuing team for With

Alan Pickerill

international and on in with destinations. tertiary night involves finished We revenue growth, we in growth essentially QX in on profitability. with strong Across focused gross markets strategy depth room Mark. bookings were XX%, as by keep nights of growth our Total quality, building adjusted year the revenue and that healthy, night grew Thanks, room our top-line Core with continued analyzing another appropriately to stayed supply growing XX% XX% into lodging and both revenue OTA XX%. growth execute balancing XX%. secondary stayed room key quarter, lodging EBITDA segment, mind When in line pushing

we're As a are historically accommodations portion overall we and property smaller result, adding of than have alternative properties our growing mix.

continuing over and gross deceleration At room increased we've be growth nights to that forward repeat trends, the therefore increased our leading breadth to to to less due the SEO correlated we to XX%. and right seen, increasing bookings Total expect X% in room revenue improved of and continue on and to higher time. the ADR slower rates, drive efficiency HomeAway, normalize. HomeAway's We growth better and revenue marketing quarter. advertising what than depth media supply each moderated for in headwinds Based was will believe going stayed XX%. pattern conversion with property primarily expect international growth and The customer past. growth

continued XX% well, solid new revenue ticket in revenue also and declines Expedia air as up from Solutions well partially by from contra-revenue revenue. the Air Expedia contributions saw Chase benefit XX% We as some quarters, the from reclassification fees a revenue benefit from Solutions’ X%. with Media QX, Ultimate grew partnership growing modest perform Rewards. and Partner Egencia, included few Our Similar at trivago. to Brand per with increasing of sold prior to distribution business XX% of offset cost to tickets

this the QX and profitability, results. it is quarter As reminder, a impacts neutral last to our change is

revenue cloud EBITDA points grew margin in includes change We overall the continued continued the XXX migration year-over-year combined, quarter, cost air efforts and expenses slower accounting the from the to of QX. P&L, our revenue. leverage which of trivago. largely than of cost direct in and marketing In impact expansion XXX distribution adjusted That marketing driven and basis selling each delivering slightly drive revenue selling basis and Total the at related X%. to expenses fees, was by contributed increased points on reclassification marketing of over direct Leverage ongoing growth. rationalization to over

XX%. across selling initiative. expenses HomeAway to and due in Excluding some the marketing to QX quarters brand our hiring to than marketing was Indirect deleverage. brands. started spending growth grew of our OTA supply direct costs past Core ramp against Technology increased investments and That content few and marketing decelerated support selling higher to continued faster at trivago, and as comp the we

further a Although XX%. lower administrative at growth increasing the expense from growth quarters, came in few General past than X%. expected bit and decelerated

along XX%. below with lower in down leverage our strong expense and only QX led interest to line continued earnings factors share at expense tax per growth also to X% count, a came adjusted while Those adjusted rate of We net up the XX%. share in year-over-year, with depreciation

We the continue EBITDA on faster in EPS leverage item. grow below as again XXXX, than line see adjusted our to expect adjusted to we

grew excluding Excluding XXXX. and payments growth impacted timing of in a X% headquarters timing in have years the headquarters, our would benefitted couple new faster negatively for and adjusted two CapEx more growth year. in growth free of flow that in been significant flow, XXXX. XX% of shift, each across cash for That to EBITDA came cash The Normalized billion. $X.X top balanced free than XXXX on XXXX investments shift

opportunity an conversion generate flow see and to to free the improve flow, continues business Our we coming in cash free years. our cash attractive

of our we in capital our with we along since bought terms share amount of highest in shares capital $XXX returned dividend. for total, In through quarterly XXXX, million, repurchases, our million deployment, primarily billion year nearly XXXX. to any shareholders X.X $X.X In back

deployed strategic acquisitions million In addition, and we investments. $XXX on

returning continue balancing intend shareholders. to to Going forward, we prudently capital M&A opportunistic with

for financial expectations our to Turning XXXX.

growth total expect We EBITDA adjusted XX%. to of XX%

the with XXXX in to seasonality adjusted a our growth large a of growth keep the this in room of expect We and balance stayed to QX of creating Easter pattern on majority consolidated the first that into adjusted mind drag on coming year. in shifts quarter to One pressure EBITDA EBITDA revenue follow similar is profit. nights’ the and QX factor fully year,

we to This trend result pronounced the selling compared in to windows, lodging this In in more revenue HomeAway at and at year, months. season addition, for expect to stay, an even travel that to HomeAway reminder, to QX peaks will invest a in increase longer and time marketing we losses with the ahead due busy of bookings in its summer of the as continue drive be last. booking which in recognized

to HomeAway,. at the long-term HomeAway full-year performance intend on back to significant position alternative see continue marketing For as opportunity in to including Mark and business, the investing accommodations. mentioned, we brand capitalize the into we

in coming levels slower XXXX result We investment in for expect with returns over to HomeAway EBITDA adjusted the increased the time. growth

to XXXX. Turning expense expectations our for

deleverage Expedia expect at The new shift sales cloud, customer transactions. increased Partner and merchant to compared operations investment in more the We costs on of drivers significant HomeAway Solutions cost more XXXX. to to of become related are in its key record of details

currently to also tech in around initiatives cost and increase expect million Company. in deleverage we cloud product due million in In the $XXX investments well platform to We forecast and XXXX as enhancements as cloud expenses continued to across content XXXX. to higher $XXX expenses from total,

and will Excluding growth mainly EBITDA the rationalization a marketing year. leverage efforts selling total in again cloud at on would XXXX, first trivago, points basis expenses, the the approximately expense which be cost XXX higher. have bigger of reflecting to adjusted impact half We project

we look as in XXXX Excluding administrative the to while trivago, where returns costs spend. benefits optimization opportunities marketing expect the drive general to to we brand a and Meanwhile, see in will optimize continuing we solid leverage good lap we for and recognized the marketing over year. maintain line. we intend through to areas time on both approach, performance move we strategically balanced Overall, investing

and receive related line, reform, to I'm we rate to continue Looking with the our be tax the additional adjusted to we range. while Overall, currently low our tax below performance the XX% U.S. in pleased question. guidance expect believe in deliver us and solid entering operator, leaving first With XXXX to to years to for come. we're ready well-positioned growth with XXXX our good this momentum, that, take year we're

Operator

Instructions] take you. first from We'll our Thank question Mahaney. Mark [Operator

Mark Mahaney

Latin your about can opportunity bookings Mark, Hey, is about how are out. Pacific huge And factors Asia you increase broad Thanks. other been little that to little Could in interesting I Asia a big again -- market, was talk detail? one Is picture what it's like shares? bit is you. North EMEA, things from of driving in and about those you able you that's increase and go in three, slides bit it’s in three that question. takeaways shows you a you of put in or that One strategy one the Could use that the Thank talked that maybe the just more those a Latin glaring how deceleration. small lower then, a share this but were you that the gross I three of these the America there the one trends. Alan, America. you've do and that always And factors international driving those through can know share Pacific one in slides. EMEA, to those question, different America? versus

Mark Okerstrom

Thanks, second Mark. I'll I’ll have take part. one; Alan answer the first the

Alan Pickerill

Yes.

I was the bookings. And essentially I business, business years. with what's would the So, on just bought think of XXX% just when of as three far that as first about HomeAway's the offline gross over talk thing is gross level happened business concerned, just booking are kind trends remember last setting we that their

And so, transformation pulling travel turning we've HomeAway, at gone true gross a into through online. and it e-commerce player this bookings

would as that some business, gross I One point there. few And pull did mentioned the as international did online. deceleration that about XXXX you now far last has when to We QX's that transformation results booked are out online shown we is billion online. I gross bookings previously year for the been XXXX of that, that just urban. to obviously, and concerned. do of healthy tailwind we're things focus factors for a we up will that period. strong time, we offline through the going did with so, us extreme had as being be associated that pretty gotten quite over for see comping book having not of And in booked been same of you're leg did, bookings those have And next a while business more team. be a at over that that's and a International HomeAway with along the things some $XX.X international us growth growth and in went quarters, successful,

that's bit did bookings. much a contributing that overall a of something to gross something that gone tailwind not to that's from And now create growth so, HomeAway's

I and I that last the other of travel a to This coming because ones that coming still creating at had their there. in is and some some the gross well were The past we've what all the some period over of is do we anything was it business, we them. And is so we're tailwind coming ADRs quite of were time, think pressure of urban, trends. And just team there a have would driving really say just same properties long we've growth very through market it happy periods stood date have and three a HomeAway We're a the second a on larger are last things We have the high HomeAway had healthy But proper the years. first had but international. on they've healthy transition would for at through headwinds. kind than of will even a years. for time. is bookings endure. search through big we online I is ADR a say we SEO headwind. say we But, And in factor of nice very thing are say in later in that's something is those businesses at The next growth headwind quite that those transition growth. we've That's would bookings. in because the significant driving and a that and done not large growth gross the historically done as of bigger for up be seeing think been engine is is the growth business period overall, creating where in in not a and We with marketing They big looking the And but contribution, grower got SEO going a contributor that would is their HomeAway ADRs not where to moderated that phase it's anything HomeAway. good done significant I the contributor. ADRs growing. provide to

Mark Okerstrom

are in terms international, build crews, alternative we basis. locally places terms the to car, where being concept all the strong been have to year, first Canada this up in Hotels.com, it's of of which laid largely incredibly the in the an activities, markets global the our we've service, where choices, And U.S. knows beginning lodging approach where strategy of really on of incredible encapsulated in flights. the the inventory increasingly accommodations Expedia, of We've pillar Mark, out service they an then, three-part case of around of relevant is Travelocity other in few a the and they come, at because able and can delivered a in transformational Orbitz, world, Expedia, everyone position

them content. can You language. find It's all place. is at great There in your one local

your can payment You types. use

pay wrong, an help you we'll later. now And you You then, goes pay And customer us it us or just if something experience. incredible can sort out. that's

we the on more relevant. up really U.S. those we going truly where you're much and customer, long depending Outside been, to ago, And it looking though brand a a We’ve would concentrated time. got a others, us around XX time, what land-grab we're there months in few So, simultaneously would haven't products. at. over were of the even taken expanding XX again countries world, locally customer, for building on until of incredible the for XX we countries period have have a with period Canadian long of strategy of

But, descriptions really things now prioritize this focused results the XXXX, pursue success. way One encouraging these Wave strategy, we a far travel the all addressable. talked have leisure, got payment local markets. sites. seen, have based websites cetera, go upon based channels. the easy-to-use our just that optimistic messages, that on very the So, led progress And And upon other and by across a with seen great marketing into $X.X results it's We've travel photos, We’ve in where We've sure One business segment now incredibly we data U.S. to so of we're focused go of voice, marketing this do offers promotional And about got all looks now, And on for incredibly that It's offline talk that that approach that markets. trillion can lodging very we powering that journey us, making relevant our very we've in types. we performance And all both and et as the corporate, locally in strategy, agencies, on relevant with that is are geographically, to based good the have the we're historic us when brand and the a airlines, locally and is that available that where inventory again, that's can we multiyear this we push. tone opportunity, local usual. comfortable we translated in similar that it recipe Wave layer strategy. about then, in

Operator

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

Eric Sheridan

if I Maybe can. two,

Following there. up on

of the talk the on and to for experiences the marketing continue leaning definitely marketing had sort different you you what of branded that As out the you've negotiation the put some the of or some side, investments see, you then, so number That's to ramp allocation? proposed one. more behind of in two, broader background does on about in capital opportunity number channels and behind for about maybe that's guys. that context platform direct, can going just to and rationale shifting ROI wanted on the maybe Liberty of yourselves understand can long-term? between in of or the And medium Thanks, we Media,

Mark Okerstrom

Sure.

of where we television video. but and in our we want we say mobile what of versus marketing our aggressive U.S. marketing type I just digital that that essentially has we incredibly to get smarter also performance applications the in to are customers performance in just able much and the in where we've less done get like also markets in truly upto than is incremental our that, find marketing another, by bit spoken I granular to observed ability like to in just our us get only channels, not cases way we rationalization have strong channels, terms certain understand of bookings That is channels. in marketing, much think to we've an would where what trying were have essentially fair from in have channel one we terms in excellent, products, done many marketing to marketing where shifting dollars. -- more are us, a So, put marketing other about we that and our been enabled what more investment, I'd as sophisticated approach And understanding in XXXX. say

a XXXX. app, we Expedia, got XX% our you'll or in just there. about was if talks And our either by in app some of downloading already us find and on disclosure the deck, booking year-over-year put which app which those growth see, customers they've placements, Hotels.com transaction Brand our investor Our on through up

that places with we've our our And truly spend. So, be customers where we much where relevant and product to allowing -- is locally us marketing found our find again, excellent efficient us. in are that more it's

then, again strategy a the support going focus when build of to right. to with in we've got forward prudent a Liberty, a at the time. the truly All product markets, would can great best-in-class follow-up spend. guess product, layering is file respect the that. So, X-K, growth. we strategy. There's I I With same an on refer all to these did that to lot strategy, Performance exactly then support more that in just to levels you say brand and marketing, this And not we more

please? Next question,

Operator

next Kevin take from question with Cowen Company. our Kopelman We'll and

Kevin Kopelman

Easter you accelerate? us update expecting also see an year, trends, ad environment? to are room how second then, rationalization the and the nights spend Can last nights comp as ad first you on the the against Thanks. give And And will ROI quarter? on impact nights you in room lastly,

Mark Okerstrom

Sure.

couple and Alan you I’ll to the talk I'll So, have take then about Easter. first

of terms been I for again is does optimization. to say that nothing have drive focused what on we And I'd quite ROIs. in better you essentially allows remarkable mean, us. So, ROI,

some those night That of a in market. fourth away, room where on some has our they were on room a nights been well headwind headwind. were we averages. quarter broader it as our growth, go nights growth XXXX. room headwind dispersed those are there a Trivago some cases been we quarter was third night and room driving that because cases has And mentioned, certainly the in to unprofitable, get situations you dealing in we're and As with itself

about a that's of to deliver result that guide time to we room we've you want very growth got to to terms it's focus, going strategy whether hope over acceleration, you the room have dynamic do Alan, us know nights, We line very-healthy for bottom market. just night because hard in really and In Easter? to obviously clear we and and top-line talk and come. to long on

Alan Pickerill

thing last -- about partially the range saw year, about XXX benefit it of we Yes, we expect estimated see we to XXX moving and of be the about be it impact That is But, we quarter, smaller I'll quarter a a to say, bit of a The QX, because the usually the on about. that's quarter. range said just because larger to of in impact the briefly, talked and to slightly first it's impact think room Kevin, what had QX, it's a a only QX. we this into Easter smaller it's nuance. But, larger a was total basis-point would would nights still year. impact to terms

Operator

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

Justin Post

you. Thank

Going conservative back to you last that. year, guidance it seemed and pretty like EBITDA exceeded

that. congrats on So,

potential I actions your is then, the new traction a year's and Thank in It there progress accelerate? this Google about or wondering back the Just secondly, seeing by cushion update could with any added us if some if there on change just you for on markets, competitors people the did year? last you. after and more And potential just the seems guide. aggressive changes really you're that think give lot marketing there, year pull leverage. And of international wondering if exited XX%. bookings, of Maybe some international you've

Alan Pickerill

Thanks.

Justin. This is Alan.

So, of add our as year things good minutes were spoke the have our anticipated. solid the expectations regards Mark say than beginning control from as some to that I that out to business, make as execution a turned across cost to also far guidance, I'd fixed just of marketing good color. And too We and we much just did of some XXXX relative saw that some so undertook developed, benefit want favor how control. don't have optimization tailwind. helped. just turned that quite performance had sure Core overhead they compared we to Cloud’s out thought the their be the to we at we we the originally this about bit ago little provided lower a were OTA the year certainly trivago, is improved. where coming into full year in few

we we So, those of the how our the difference year of where explain expectations all and and and helped delivered. between kind started

guidance the going say, forward, feel I we of XX% XX% the terms In to range. would with comfortable

trivago's in Some of of trivago, course on the there guided performance. are own. They main factors their

really main are So, those associated in like take can't channels get the a But, in for spend. whether across contribution But, And some provide. factors to or solid look have factored business. I like specific the there things contribution to cloud of core increased We the anything in they're we're expecting expecting were investment good you into marketing with about. can the do headwind a at there think that.

Mark Okerstrom

terms In Listen, that we one a Whether see new properties from growth. we it’s is acceleration we our the because those were to lodging up that's tell. markets, contribution I hard enough year. thing to of in essentially drive ramping through the in them through larger to added to XXXX see think, that expect XXXX should we do actually revenue, international

number have trivago, metasearch players as a these in some performance you’ve channels in where have markets, have reminder, I those think trivago, down of international -- more like like a been in been much seen other position marketing year-over-year. referrals cases And qualified As with we’re players. reliance on a

those of disproportionately terms those better absent in markets XXXX. their is a the did we they in So, And deliver a those hitting XXXX so But, that fundamentals that is expect and again, strong. significantly underlying look growth. contribution than to in headwind markets impacts, would

Operator

from DiClemente question with Anthony take our Evercore. next We'll

Anthony DiClemente

some international, question the is slides, million just know calling spend and Thomas CapEx? CapEx others traditional I ‘XX talk about tougher talked in in that Europe. of $XXX ‘XX. are for the to versus you a XXX about the operators, a Can what the degree really about the to headquarters incremental asked then, had growth about question And just a have tour about macro example outlook for in like Cook but had I outlook. you

You haven’t macro for mentioned and the in expectations conditions Europe ‘XX.

any environment Thank helpful So, the color be on you. more there. would

Mark Okerstrom

the latter can Great. talk and about I'll headquarters. take Alan

Alan Pickerill

had was points the additional of So, the data you I’ll just end through XXXX. and million, give for We XXXX. million that the the on build just about retrofit $XXX some of additional said under $XXX in Cumulatively headquarters.

you of to in mentioned, $XXX and million minus. neighborhood total as or million a XXX to of in XXXX; million a projects to, plus up go will that of $XXX range in So ‘XX; the $XXX range then XXX

Mark Okerstrom

results And taken in Certainly, their watched terms and macro of Thomas similar of outlook the there. Cook's environment a Germany has down; think in say, I’d concerns. some heard there's Bank and then, expressed we I Europe. England commentary, growth has of uncertainty of ton their

We a flight as well seen as have outbound both inbound. in off bookings, drop UK

in and around We uncertainty expected just uncertainty Brexit overall Europe.

So.

we're The with business. our though very think, on we global of that thing is first I cautious great all, are Europe. business

across has their strongest so, do budgets. great diversified often that those at how to based travel had one XXXX, of see profit home, if broadly still core still of at we you over XXXX, people look the they our they their travel in continue history Generally, trips. growth get more channels, world's take We often these ultimately, all got consumers of And do movements. economic in maybe global unused trips, and trim what into deals. largest look but essentially stay closer our for they ever. out change we're actually across to they years. And you ultimately take played And shorter we’ve just downturns. financial They their capacity But,. discounting particularly, crises our us patterns with if suppliers, is, our some actually

and I ADRs still record in somewhat So, we're But, exited and market think, occupancy, near going growing, tickets XXXX again, state, highs, the countercyclical. up. healthy very air a travel stable

sit we here a look air. as right is more we particularly bit Europe, in the as think uncertainty at little I now, there

Operator

take Lloyd Walmsley from next Bank. Deutsche our question We'll with you. Thank

Lloyd Walmsley

Thanks. I if can. Two

update just versus of is First, direct business thirds it your think, guys acquired? what two an XXXX. you was about percent at held direct perhaps us in I Day give on guys Analyst can the you

more give then, So, you like guess, international? wondering as and if It ski to update marketing those core beach, may and but starting And versus HomeAway you balancing sounds about of kind it us an you're business home competition the look seems investment, how can think urban there like do I and and about you whole there. think there. just be markets, to investment more

into the as do markets? look how you expand you to competitive those about think Company's advantage So,

Alan Pickerill

we as business direct like programs, things channels, were haven't those roughly type-in an first On that that right. We just two-thirds from is Alan. deck, two-thirds investor an roughly did branded essentially including gave of question, the loyalty update don't it, you're today. that And presentation, have seen maybe Lloyd, comes in indicating that we for SEM, direct/proprietary Yes. this your email, investor examples. We you for presentation. were essentially, on

growing so metasearch same brand and the as providing new And look great traffic. channels, services, so good about search good Google customers mix that marketing, at having we that products balance will We earlier, acquisition some continue such for spoken customer while can drive players, of time we’ve in those a paid through of direct as and then, other to the repeat.

update the look specific on today, we but both. no for So, growth numbers in for

Mark Okerstrom

our that expect, would have we we going And as as I is just might too essentially factors offsetting marketing Yes. that add two on optimize to you here, spend.

proprietary more We are shifting in our over many our channels. of traffic cases to

performance with we But the gas that some time, stepping international You in aggressive markets same cases, into marketing more we're skews can the really the that other as channels, apps see we certainly those get in known, on of we that disclosed. less things and these going in way. the are where at

international volume. trends look as seeing we're the I cetera. the repeat And direct to existing, In feel customers would U.S. is acquisition, So, customer et strong bookings very, them versus the terms is proprietary closely overall that playbook like relevant, an in And our of locally all cost very new make where And usage, and about channel always formula of less improving. it the we customer core but markets essentially we're so think markets, of metrics U.S. there. good generally, those we about track very very

of think terms I the word balance. HomeAway, In use you

going We balance. are to absolutely

approach. very is team the there. we markets strong And ability markets But HomeAway to very-disciplined have well. think, important Listen that those performing invest and their HomeAway beach and in quite that support the be and also, to highly are I continue has are to are where that shown core resort just in. -- overall the markets those are

up and take things the in And new property, the have and urban have business Expedia, And from have international already market and to increasingly more quite demand appropriately. international is and urban only and to strong HomeAway’s or to world. as balanced to reinvest also of capability would stronger in brands presence, it platform. say them them profits and reinvest of international international of so, HomeAway part that both part customers, strong marketing signed that I VRBO providing it and on but that urban the Hotels.com, also we the getting essentially presence expand expansion we not around strategy

got doing of of part They've that's them. behind Expedia it the this as alone. Group So, the not power They're well.

Operator

next SunTrust. We'll take our question Naved from with Khan

Naved Khan

with that growth we that if the I markets? per night basis there me. about international think drove think just What then, we versus past couple disparity XXX focus in in I to should a reconcile A about how at in is for room should points. the and growth, the maybe the talked you’ve there. How growth ADR market those and revenue the of night? And XXX look deceleration

Mark Okerstrom

Yes.

we we did this you basis-point there the There's room for revenue as So, have expected story XXX That quite in no the quarter, rate the We in were XXX growth a a rate of see night while. that said as as narrow of of ADRs. particular in spoken, has one. far kind to Naved, component. been to relative per which difference of on growth happy major with. the case first

things just our to before, couponing margins of As our in we geographic we discussed the that quarter, But, story. that FX the no happy impact that refunds the loyalty play as obviously this any can and of some are of mix. impacts overall into on well. more to major see the impact our be change it there, we've end kind that program, were of do, narrow and but

as some as point I bookings, done We to of factors. that move the bookings as is, year. growth. room we international year some would far a start kind two night I to online. well HomeAway And international did deceleration, that room had migrations last see the as through did we And comping growth that mentioned HomeAway. over. decelerating out And just you for night bookings of we're see things we an impact lot As One impacting move had platform the the

referrals a the an to is down, has their and qualified trivago channel volumes with as became that XXXX our that is well. are in us bit of do headwind that headwind are year-over-year, the a bit room and QX It important us in other half And continue a reset down fact for well. The internationally a created their they're was and that first in growth. We for headwind of night QX. as more expect continued, in essentially

is that us. thing important of but a net is pick that negative -- channels, that to having that up some been The we've able through for is other

Operator

take Thank our Morgan with We'll from Brian question next Stanley. you. Nowak

Brian Nowak

force sales step reaccelerate of us of markets? the do it And second talk just you to in next Thanks or sort dollar think HomeAway? really investments there? more in XXXX the think offerings supply in headcount competitive How for and drive about about overall for wave been I consumer How philosophically at to faster investment one, Understanding growth could One you increasing the just sort the new the reducing growth. thoughts incremental of as force essentially in rates about HomeAway to for more take about you've consumers have we a compelling the the to investing sort up taking go on markets, two. the capitalize into of we my questions, Wave of sort sales making ways

Alan Pickerill

Mark take Yes. can I'll Hey the the question. HomeAway and first Alan. handle Brian, it's question

last ‘XX talked those in push. about in It was Wave the million had supply. was for about talk add significant that being the did the markets range One and lot we gap to We our it investment. and So, investment meaningful supply first required needed the that in a year we $XX -- a for

And so, to we that was time, like at the show appropriate felt it details.

additional required have gave. wave said, usual think, of mode. as we're XXXX. within of that the some kind kind in that into to focus at earlier We envelop fallen that going as guidance for business of of consider more we've do the We've on we of point, to I able investments markets the been a this kind into Mark

to what not this detail that specific investment inclined we're is And out so, year.

Mark Okerstrom

on working to on importantly And of into on is and out. those addition optimizing reaccelerating they're honing for is an new, untapped international. about playbook the we've largely business that front-end got really it bulk tools. International got that big then, They the the planning we they've call user capabilities marketing it's new opportunity And and developing in of terms talked segments, platform, their new really now which But, quarter. and last much just them. or product a very categories the customer entering the Urban laid in now They’ve growth, international HomeAway in urban are focused performance just markets. replatform international innovation, better experiences opportunity.

reach making got through that incredible they they've I that and And roll sure working strength build some in think, they're marketing pace the of XXXX. the they're of are the you'll brands of type see move that that here innovation in increased on of portfolio. investments we really as investments out making customers that also that

So, that that and you'll to bit a XXXX. more more little see on in of think come I

Operator

Thank with from you. Raymond We'll our take next question Justin Patterson James.

Justin Patterson

One Great. HomeAway. Thanks on so much.

and considering properties now, measured the very right you on then, million pace open philosophically, Expedia. a the how that still X for taken you've business stepping are consumer HomeAway on thinking business With to Thanks. or up avenues? integration about bookable listing the toward over fee that you instantly optimizing the And are With is other inventory site conversion. approach

Mark Okerstrom

Thanks, Yes. Justin.

the instantly properties, integration. for with million to us larger do getting X bookable a is So, opportunity

teams lot. working solve XXXX. search pick The alternative available goal sounds That's been that customers the through you'll small we the the HomeAway, pick millions between the a of process. in are have really scheme XXX,XXX lot, are here on navigation plan. help really really like and number. a the to pace move then, see think, And on is it’s up that accommodations certainly and kind and as I grand properties, of millions But accommodations, it that us and traditional the a the

we're you about So, lots of we've well got to from lodging. on merchandise need learning testing; to lots, how type content enough do the really that's different whole and homes we're there learning

We have the focus are see OTA us, Expedia, you're on for be businesses Brand we going an increased move thing more it so right on When to through XXXX. But, we're full inventory, happy with the far. absolutely also do. that as is going both to -- but Hotels.com to line like absolutely this a see is we what we conversion grower, selection

got find way just You it. to to the merchandise right

essentially are the position method monetization and in of the we Again, method. in where in on plan the got manual terms In our we've every options. monetization

for exact shopping are those and of what menu is to both suspect evolve we providing very have We've for We which a needs point. got suppliers we for this that the find answer to with commission. managed, customers. owner. pay is works are it's we're We of works, customers, is continue experimenting market methods what time. by can to options And that fee. that we that And low for or which have really suspect the is right to now, We've supplier that supplier those approach whether whole plus closer at consumer us with pure that of it's really, tailor works right whether urban, all to got subscription see supply the property accommodation credit which But suit for types, the over whether home, don't fee different which consumer you're fee out to it going card the monetization the I approach side. customers given have it's that

Operator

We'll from Mathivanan Deepak question next take with Barclays. our

Deepak Mathivanan

we on growth maybe migrated the the cadence of iteration? benefit When in going leverage the expansion be XXXX. the ahead, more own optimization do achieved some is can of of the to expect be point or revenue last it we what with second have then, should Obviously, and looking to year? guys in year be What growth? similar going marketing most You future, step-up question spend. and good through is in performance line your that in continuous efforts. moderate this cloud expect to And we at But, assets fully

Alan Pickerill

Yes, Deepak.

the say this that -- we marketing leverage on we business, is leverage, Alan. trivago will see lap optimization on So, significant in We expecting would XXXX. I core the are those did be we from the as comps. to difficult

see we of And ‘XX. same leverage that don't so, think we'll level in

opportunities to is to optimize, or continue continue inefficient looking So, to for highly business to find spend. the core looking opportunities non-incremental for

saw same expect of opportunities, level we tailwind So, it we that don't but in there are ‘XX. in ‘XX the provide to some

of somewhat of in up the want the to path. quarterly booking would as traffic stack cadence. a have scaling I I lodging a routine the -- for you continue a don't shopping ‘XX, far give cloud. As the we in on We're just cloud kind say, bit spend of and fair we

the have of according we'll move up. to in put got continue continue to business of XXXX. components good through end move scale as we year. will We more It We've of compute If lines grow XXXX, just but a go other that the there share across into of the additional be the to of to air in as and we the cloud. will kind plan, then to the cloud

annualize too, cloud. to to things we closer. I and we'll out and the imagine normalized will the to that we're business. is step-up too growing roll sure lot would XXXX, say not rate the carefully, when And being by a and about be yet are just to seamless being customer will without so, be that very and And experience back We the a rollout very and should won't be we a to just -- test normalized getting disciplined XXXX trying then, prudent into them just quite be XXXX, rates, disrupted. though, but I that with get we in closer scale specific, things make

time from the deploying as get instances that you're have pulling that as sure better then to how smarter making And that we're And and efforts We in you XXXX other and cloud in that the also be a it undertook just you into being ground lot it like that some the compute up cloud. for about efficient things spinning duplicate that ways good back sure of only need to I efficient regard. we at making spun and off don't includes we think can. your made pretty

got place now start the we've a think, of did in I that at year. overall better we the process

Operator

We'll you. with our Ju Credit question from Stephen Suisse. take Thank next

Stephen Ju

you. Thank Okay.

bit, So, Mark. stepping back a little

You properties or XXX,XXX it just have X that you million site hotels a so. announced with call on

two selection times were a the are from seems perspective, So, nights probably of think competitor years that amount And, you're was that room through-putting where now. point, you your about two ago. what I at they like

like dollar much be So, booking your should seems higher. it

So, all can Thanks. cloud tie other the the for and you you of marketing users among talk will velocity that purchase you products about now? kind have together how raise to

Mark Okerstrom

It that reaching customers. time, as part you. -- And with I properties of But we take the European absolutely effectiveness some highly seasonal the agree is relevant, are locally penetration of add be particularly, you I much, Yes. Listen, and is supply basis, just penetration the if that that our penetration that into the them seeing happy something We're bit a is it this goal. little level playbook. new should the ramp hotel just with we is the that with we absolutely we're have larger. experience destinations, level very is existing product overall the these And watching And closely the much about of properties. also are as into It's is playbook. the base. of it. up. We're on global takes of happy new we increased a that again, mean, that destinations.

up may customer see a year until So, you again your repeat later. as build you base, them loyal not

But take that playbook so, and bit we at to this works. think It's going it with goes what there's cycle. ton a the went we And opportunity Mark's We question very the of time. little a to beginning call, see. again, and travel really of the like of

Operator

at gentlemen, our last from we'll this take Kelly Jed Oppenheimer. and time, question from Ladies

Jed Kelly

cushion to factor much indicators and macro or international guide with on HomeAway build natural factors? the guide, get more And your destinations. do much relationships inventory? then, the exclusive urban Do more for your how about managers scaling just in you think into you a EBITDA into their up property signing ever How

Alan Pickerill

a for industry, looked XXXX trade in Brexit say But we're to It's posting through those that. being And wouldn't to handicap. first Alan, impacts, from airline potential. ultimate the balance, don't I be Boy, room. -- to we not if put that try rails, the predict take range the it's course us lots on come about give of be as trade through The that listen, of But, discussion really hotel rhetoric industry, as outcomes. well. do of numbers look Jed. are us there. I war There's pretty some pretty I'll things think the difficult tough XX% earlier, them able there's period attention and And -- the Hey, the macro to hand, specific impact We a would one. about they're close We things to pay we've position ourselves one certainly, the all to spoke super XX% Brexit to macro Brexit. went of we prognosticators all good. really you on there's good. and Mark where as on weather off give

Mark Okerstrom

do cost add structure. variable a I would that just highly though have we

items commentary XXXX-XXXX. and resilient just to we’re lever. to very discretionary is I This that so, got of And we've spend able certainly again, top-lines a back adapt. go would around if pull business the the weaken, able lot to,

terms great exclusivity, In question. of

a prevent building terms we is for been I our ours or the will that the the think, got platform best our we partners it essentially fans are to unbiased And unbiased of essentially we of from and like exclusivity that up big is, right way way economic product property level have ends utilization hard reason outcome the all have level assets up seldom the in level. factors, that a always the want you've or and can being the at -- it being serve at of when customers. manager treat never property in

a drive and useful sense. have be very So, it has specific of we’re that where huge can amount absolute something exclusivity and situations huge in demand platforms a can situations never It makes fan been we of.

-- strategy. rates amenities not things like hotels our it's really generally to things or that core unique try is special really get it's but is, what certain like a but selectively, offers, not been or to it similar do to are actually unique. at good bit a at that path get be at is get is not generally this the that really a the or strategy. upgrades without to with part -- look offering in the And exclusivity some neutral. special it, like really a try level or level, we core desire type we again, But And compromising little more we'll property feel you of we packages to at benefits like So, look never our things of speaking, things might

Operator

closing back this for the Mr. to and to would Mark I Ladies like remarks. over turn you. Thank gentlemen, floor Okerstrom at time,

Mark Okerstrom

for employees tons just XXXX. want but listening I progress thank excited world, XXXX to and about and the what know in all you the are thanks beyond. can everyone hard of I'm super Expedia great today. I Great. do as Thank Thank a in big Group you. you. to work around Well, And well, we of together

Operator

and concludes today's Ladies teleconference. you. gentlemen, this Thank

You may now disconnect.

Expedia (EXPE) 7 Feb 192018 Q4 Earnings call transcript