EXPE - Earnings call transcript Q3 2019

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Operator

Welcome to the Expedia Group Inc. Q3 2019 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Michael Senno, Vice President of Investor Relations. Please go ahead.

Michael Senno

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

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

the ir.expediagroup.com. reconciliations GAAP our periodically encourage which earnings is visit find of comparable content, including today our Investor to release.. company's And for IR at the today's website measures non-GAAP Relations earnings most in will website I posted release, other discussed important measures to You you on

are call And our marketing comparisons all stock-based Unless for unreasonable we and revenue, compensation without selling the expense expense general unable depreciation and adjusted and cost administrative and expense. of of items stated, to references closest outcome results and the the this certain excludes against to not on XXXX. technology otherwise will expense, to significant because period predict be of content EBITDA corresponding all is guidance comparable A reconciliation provided GAAP of efforts. measure ultimate

restructuring investment are expenses. to, spending or acquisition-related returns but exchange, limited on These include, not items and foreign

on uncertain, guidance a could on have results material factors from our the As such, the and that items non-GAAP various for guidance GAAP impact are period. excluded depend are

And call let to turn the me Mark. over with that,

Mark Okerstrom

Michael. Thanks,

a in due saw wasn't volumes, QX, key and softer saw lower We Vrbo. than we was than a marketing growth adjusted night weighed to SEO We Trivago high-cost lodging incremental expected, expected, in healthy to which weakness primarily range our shift lower expected EBITDA channels. on room we few our Although was rates and average related a than profit at daily and results factors.

of also anticipated, light was due and impact in America, in than ADRs to ADR while majority in geopolitical which slowed came we negative Asia more The the events. macro North

We expect high makeshift least few ADR have an to marketing over to local softer the at currency environment to and continue cost quarters. the impact channels next

As year-over-year revenue discussed contributed they their on advertiser decline their related significant features market that call to and QX in introduced, a in adjusted volatility expected than lower Trivago new yesterday, EBITDA. saw place to

room and booking Gross night also to trends payment migration. our incurred remain muted, costs related we processing Vrbo at and additional

Vrbo. we result, a profit our both Trivago XXXX As expectations for have reduced and

third in are quarter to X%. the our guidance year and we results, adjusted XXXX for for impact full Given QX, we continued from the our experienced growth factors expectation EBITDA lowering to X%

Over we've been process past our and improve we months, expect overtime changes teams efficiency operational to several across of the the and realigning effectiveness. organization, these in the

and anticipate, focused to many saw impact the to dynamics during with react quarter. on that did it our people likely said, effort, That the ability we

the of expansion several closer brought collaborate and scale effectively us we've changes terms In to our together made, customer help facing efforts. functions more we've international

increased the tech changes us together and closer our supplier to These teams position scale. innovation We of many product our and brought collaboration, facing teams partners drive serve travel realigned and better to of bottom this top the the effort, full and line to teams to benefits and to long will draw better begin driving term, eager are time take improvements. over they realize growth

segments. in growth we room the QX total XX% the by night nights, Core XX% quarter. were solved Volume In we as results, stayed healthy several led OTA increase saw room in spite of an disappointing delivered trends positives in in our

night room OTA, share accelerated we in growth Core to and the continue in U.S. gain Domestic

platform solid supply to execution we over again added lodging our core XX,XXX properties Our as acquisition QX. in on remained

with the on we core Vrbo X.X increased quarter total, also million than number We of integrated more our XXX,XXX and lodging listings platform. over listings the ended to in

seeing We our to on and direct relevancy, and centricity loyalty building aimed customer local at are progress increasing are initiatives increase our business. customer which

room In deliver total, app. recent optimized by distributor we continues of the our overall faster platform growing is of going long and technological A and our solution solid become the way our the partners and are business, nights Solutions a results, channels of OTA capabilities, mobile seeing example direct agreement at a at business brands the also business. forward. to wholesale Partner but exclusive and growth is power overall Expedia than are run growing to ahead great Marriott's of opportunity strong

had rates. as and healthy Egencia quarter new client from growth hotel double-digit attach And delivered night increasing of signings, benefits room

are disappointed Although to were term actively we and the quarter, them. with we in near navigate our challenges third understand working the results

our encouraged themes, with progress many strategic and and unlocking basis of global centric, are build a we can our relevant customer that as trends on time are execute locally same our platform. being we power the At on key optimistic those in further we areas global the on full being

opportunity strategy over significant near attractive on healthy to capitalize confident Group of position Despite the returns leading we Expedia term. will pressures, this long term ahead remain and us, the growth that to

over Alan. turn that, to With it I’ll

Alan Pickerill

adjusted Mark. XX% and discussed, factors quarter, in growth, the Thanks, previously was increased state QX. QX, In night given to flat lodging with revenue both addition room X%. for in revenue we the line Mark the but was we our growth in EBITDA bookings headwinds Total mentioned gross

solid increased driven of gross growth XX% more first up transactional XX% quarter, approximately for revenue XX% revenue in than a the the which revenue, was represented in At by Vrbo's bookings X% time. Vrbo,

by payment shift Vrbo partly brand and Vrbo cost higher payment was growth and Group to platform. support marketing to Revenue as the investments accelerated performance offset both brand in processing continued the Expedia's

just increased for in the X% adjusted Vrbo result, As quarter. EBITDA a

into season. And with expect investments we similar in additional We head peak to booking related cost adjusted on pressure QX processing, dynamic putting the as payment the higher marketing EBITDA.

the advertising to were year-over-year XX% grew strong revenue by than of Total X% currency. at revenue the more offset Trivago up impact quarters, foreign excluding our past was at declines growth few business. media media Similar and X% solutions and

per a runway lower solid growth platform. see ahead, solutions That we continued new reach declined to for was a offset enterprise X% media ticket ticket X% global per Looking increasingly partnerships was FX from growth fees as revenue by addition of in sold. nice other to our down product with volume of Expedia growth benefit Air as we in offset Solutions. at leverage partly we XX% largely in the reflecting QX and of in Revenue headwinds. partly to reclassification certain mix Partner revenue, ticket shift by revenue ticket

which Turning not inorganic the Liberty QX. XX%. compute bodybuilding.com, to growth, addition expenses of revenue have basis cloud. basis XXX transaction acquired over contributed as to grew in cost of on to Cloud points a the impact meaningful The to although added expenses, it migrate more did we we growth in adjusted points XXX EBITDA

to of for services tax revenue of tax of than addition the In growth the contributed addition, the was we year-to-date to grow recognize revenue digital digital the full the since revenue full we year. French the cost retroactive as the nearly of cost beginning XXX bodybuilding.com and basis to faster Because amount tax, the year. now services of points expect

developments. global countries is these we tax level to adding too evolving, monitor that are know continuing closely to noting considering It's worth taxes. but the environment still currently and specific the are transaction rapidly several It's other early implications,

selling Total marketing marketing of in growth in in brand and partner and we up selling marketing and expense part, commissions was marketing mentioned shift increase XX% to higher due both performance direct with that in and Partner at related Expedia direct channels marketing selling grew high and in business, cost Solutions the because the XX%. The investments to earlier.

technology a reflecting lower X%, XXX content, line for essentially contributed revenue at of and declined along reclassification cost cost basis the and expenses content to points quarter. marketing in and in with was approximately selling Trivago. growth. declines to certain related with Technology Cloud people growth expenses Indirect

expenses and for to the expect year. technology to full continue We deleverage content

In continue as terms migration, cloud of we progress to planned. our

lodging to products We positioned the are as on to migration year further next the expect this largely and systems. complete year, push and air to stack back-end other our the be on as by of complete well track end

expect We million. XXXX $XXX cloud than costs in come slightly lower to

the expenses completing cloud still neighborhood $XXX at know based are for to be XXXX, anticipate planning next on million we We the year. what point we but of in this

approximately due largely higher expenses to and impact fees inorganic basis professional administrative from increased points XXX bodybuilding.com. of X% and General year-over-year

tax adjusted EPS depreciation interest QX, increased years. over year-over-year. the muted, line, growth we which the expense declining the lower expense as to X% from in few Looking X% continue adjusted increasing net just XX% to Adjusted remains year-over-year resulted data decreased center or CapEx benefit past in below rate

flow free to shift XX%. excluding Year-to-date and through to usual last the CapEx cash third decreased quarter, in increase headquarters, due payments QX, our comparison a settlement investments solid timing In received than the for year. cash certain a payables more flow free of the new

the QX normal half payments supplier given in our balance merchant seasonality for change business. The the of first year the of to of bookings related the from

we see time. over drive an conversion ahead, cashflow in Looking to opportunity improvement further

$X.XX of coupon. to balance advantage a Turning note a XX-year to conditions the sheet, with billion market issue took we favorable X.XX%

to operate and within the balance managing approach rating. an we investment to Our unchanged, credit sheet grade continue is

million $XXX that redeemed convertible Expedia the we deal. held notes we Liberty quarter, the during addition, In following

transaction On brought deal, since million Liberty Together share Expedia million a the capital completion following pleased year. allocation in to far we with total in this Liberty have the repurchasing Expedia QX of so we were X.X earnings. $XXX resumed shares repurchases stocks the front,

for our to XXXX. expectations financial Moving

high updated few ADRs, growth to over than mix the reflects play As to of EBITDA Mark earlier, which cost a both we the lower adjusted X% role channels next our of expect expected shift and X% guidance continue into noted to quarters. the

results we We market confident term. and our coming share Overall, over the year XXXX these are contributions addition, that with changes long and Expedia the executing do and now remain position satisfied in strategy lower In however healthy gains Trivago. lead our not to full continue quarters. the over Group's Vrbo and will growth navigate to strengthen we from will expect

first Operator, we are ready to take our question.

Operator

you. Bank. Thank go ahead. Please Lloyd Deutsche our first Walmsley And Instructions] from with take [Operator question we'll

Lloyd Walmsley

Thanks. can. I Couple if

goes causing or helpful? brands a products us which what First, SEO challenges, give there most maybe give Google of just you color are can on can which disruption? would the you the Any us or maybe be sense

Google guess wondering kind the and vacation of mimic their And looking in did organic of follow-up, rental, hotel removing their unit, of offset at rental a your in vacation does the as I links strong presence category the page? unit further some moving to new with kind metasearch challenges specifically they SEO what down

Google for of timeline Google And that we to what of starting expect in -- terms the expect what when you impact kind Thanks. that? kind and charge do could for of product from

Mark Okerstrom

Thanks, Lloyd.

across cases, challenges SEO things I were They categories. that in say, across saw we the we multiple were saw regions. multiple would So that product some things

So than we broadly brands the multi felt it we a was did the brands. was really something across line little our bit specific business more of impact lodging

we metasearch ultimately from a shift essentially And by overtime. freed saw further metasearch products generally, flight over the of page, continued was channel were it's other or shift modules of the whether traffic hotel the SEO of and a down the that to what some other links inserted

on lodging Now more volume sales of and able to up have. product, the marketing hotel the we that than to related pick that are had we of and ultimately course in resulted some otherwise as would spending product

it, as SEO We we good ultimately, would returns the channel returns see are on we but happy as the saw that from with not

over term right and actively we pretty the looking going to in is With good right it's and But small, product respect not. terms now at are it's something to long be we for and something thing still us small. that category, looking of a that it's evaluating at pretty whether now, that think VR the

Lloyd Walmsley

Thanks Okay. guys.

Mark Okerstrom

are welcome. You

please. Next question

Operator

Mark Our ahead. RBC next Mahaney, question comes Capital from Markets. go Please

Mark Mahaney

social any but ability possible and just And there trends -- Facebook is are into lower Thanks a that -- more turbulence commercial the lot seeing color A tap Hong that whether diversify then the marketing the political little behind color, the into Asia. to ADR like, of Is far ability intent? away? in any more channels, lot. improvements that Or other and there? to around there's a on there? you any still is Are update just Kong, please,

Alan Pickerill

this is Mark, Yes. Alan.

ADRs. the dissect on say So on just those you first few your a question as I numbers. would things

negative impact are in foreign First the the of currency the we're of year. key on reported was back is the a the that year. and through basis, half ADRs there much is pretty more reporting negative first much a less The consistent in a half

terms kind we're that of currency. seeing actual of decline kind of And in local masks the so

in Relative to reducing period. just that we we did this analysts can industry, America our the industry also their up economics degree slowdown forecast the through you are that expectations, ADRs on And room of not night ended North in move expectations we and companies kind seeing. in ultimately of as systematically hotel see

So that's the largest area.

In out the to exactly right protest point Hong APAC, you're I think in Kong.

other is business, tensions on as countries we're on seeing that in Some some between ADRs, travel having impact and well. our and certainly

Mark Okerstrom

traditional around performance of channels, media social seen Instagram, It's example have for marketing campaigns. in some to Facebook, social channels. some interesting And we progress media influencer-type the then, Mark harder channels, some marketing in much extent, than to largely terms measure of

of the the around and read softer the in some interesting things metrics in that terms social some channels other to ROI. other tough just a to But look take at, on we're metrics performance small. it's but real pretty seeing of grand of relative you still can get they of the scheme So a are awareness

continue see this progress but social toolkit of We to good long period of video. We something that's progress been on which like has nothing point. around been time, part that's of continue marketing digital we overall sort very at brand significantly good see our a needle moving for again to and

Mark Mahaney

you. Thank

Mark Okerstrom

please. question Next

Operator

from next with go America, Bank Our ahead. Please Merrill question Justin Post comes of Lynch.

Justin Post

be update when big-picture start basis? you better you Anything do year. and expenses near we you Vrbo up secondly, should results a year? Thank XXXX bottom? on Could seeing our rebranding do can next an million Thank mentioned a you we you. think And then you. thinking XXX Are the give us models cloud the a about else on next we

Mark Okerstrom

Vrbo some healthy. pulling continue is over be quarters to across of more swamped if see some of brand those in spend rollout next impacts seeing They listen re-platforming and and continue the spend and SEO the the the double the of course there then Vrbo rates trends sort continues of of further against and away be does from couple will in Unfortunately we on with growth that at digits, brands. some plan rollouts markets the XXXX. plan the is put The we're to marketing Vrbo to Justin, be happy regional Vrbo. rollouts the to of some to by work

results think the In going we're see I terms several next better of to quarters.

over We that continued expect able in there rates spot growth we're to with. to satisfied get be we were first muted the that changes once acute rates that and optimistic lapping year then of should growth where this more a that more we past these half return the be of some became to we're in

Alan Pickerill

in are share. question middle clear the XXXX, time about And at about Yes. nothing be your on to head Justin things into to then we for XXXX, right this specific usual say we so think us planning for would and to as just as I of

that the SEO lower into prepared we headwinds, and is that are in impact for our continue think cloud will next things the mixed remarks one factor. quarters. These we impact on You that laid ADRs factors to cost higher mentioned us out the few channels

certainly and As be want Vrbo going Mark little back we take profit perspective. it to we to a way contributing going while will get a the for mentioned, think it from

that would headwinds. I So be those some the of category are the things of in guess

growth. you On We're on from our supply efforts hand sustained good expansion from can room seeing see we acquisition are the other forward international night results pushing our as efforts.

is as good doing We results and the Expedia there Partner and well. mentioned, continue business seeing driving we've focus on to Solutions direct

also tightly obviously to and costs We manage as have overhead that our continue we'll we to very do year XXXX. work through as this move will we

think would of I that those are I So some the factors consider.

Mark Okerstrom

focus around marketing of relevant I loyal example I centricity areas are that performance to mean us a us that really aimed these the to here would deliver I add locally globally think better the intact. customer are we're does customer on are the very was helping relationships focused term have playbook our for decreasing skill remain on squarely Yes. lot reliance much channels effort. much opportunity executing some actually we seem angst at just long in causing

to to I mentioned, be to think out markets the continue supply with Alan international on we as progress and we're the continue move going into efforts. happy we're making

more to and And listen on the just leverage we've about facing are the up remarks recent going much spoke my at got teams in well execute technical data facing set prepared assets customer got we've to we've our full got organizational organization, the changes that lot across to I a of the time in effectively partner the strategy align place. same assets the us better

some confident long now very headwinds got to we've certainly right opportunity we'll navigating that get we're able and intact much So remains term we're this. through near-term but be

Justin Post

you. Thank

Operator

Thank you.

from Sheridan go Our next Please question with ahead. comes UBS. Eric

Eric Sheridan

Maybe Vrbo, own out two to growth, competitive really there I about and change trying their shared to discern is of comments. highlight how Obviously growth just of can. versus I that is go trying your trying some guess some are just of and much competitors up landscape rebranding following accommodations? on if One this after to a some the

shared landscape execution for the understand the of control versus to is you one. level inventory this branding your within much be number how on broader accommodations? might book likely trying are Just those that That's on what the for level, competitive seeing to

give and with Thanks the on able you're so little to it color the nuance sort plays quarter. bring out agreement. by think that love interesting two, the underlying via the highlighted number your much. bit on your the how company would of agreement a I bit Marriott? I thought what at was Maybe market to and you partnership an get And of then little the a Marriott us in behind premise color

Mark Okerstrom

Sure.

of Vrbo, with in to platform of can brands be got, our it's and we got listen reducing So that But done I the said, trends. competitive well That's to it's think terms are certainly ignore particularly Vrbo proposition the working we're family pleased consolidation, spend that that U.S. against terms that and an and certainly facing respect point continued the great things to press exist hard environment have on whole on that great excellent a direct continues growth large have impact to certain of topline flanker to really competitive. We're lot we groups seeing rates to point homes fact here a on innovation overall that has in that brand for with brand. customer and They in got the advantage. on partner value that these facing they're

expansion think things core course both, combination rollout on a point seen to of but certainly to from I core things a is I more bolster a internal of think development, optimistic it's on that business again, then inventory are Vrbo quarters. the getting we help future international brand, we've demand. ultimately OTA to an question over to remain through All So the the is or the great Vrbo the of that the than couple execution Vrbo that continued these brighter with of product competitive international last

pleased a their network them way and just what of are with and how a distribution an bear think displayed the think think we're achieve to bring it's of want Marriott in reach great deal, ultimately what of because a customers and sure helps we're got to Expedia platform them established it's Group With we're it's they an think connectivity intend respect great be to do and they Marriott, to of it's and we across power kind very we've inventory the can unique example optimistic many and that will think really relationship. partners. be what first our incredible basically that that it I this we make for type we for of able they is leverage of their that our in and help having its displayed that We've I arrangement to I first a listen relationship rates

Eric Sheridan

Thanks so much.

Mark Okerstrom

You're welcome.

please. Next question

Operator

from Kevin comes Cowen Company. and go Please ahead. question next Kopelman, Our

Kevin Kopelman

a questions in of Hi, couple thanks the the a just lot. change I had EBITDA follow-up on trajectory.

First and increased those or are you those Thanks. were and the one-time processing cost talk more what nature? payment about in could ongoing

Alan Pickerill

we move has merchant using we Vrbo made to we're will moving that which payments Yes. Group third-party Thanks. for accelerated there referring seamless Yes, that what and of transition Expedia decision the to. over. stack on and make place so based processing payments to so the the processor the we party in those. become third were will well, went In the a and that for that's the Those a if payment incentive at been order the record to some were volumes you it on this, for had sure we pace put

XXXX. expenses, maybe So not from pulled them have were there we only forward would of some what in but been

So we're what those of well. nature seeing. an as that's of QX impact in the There will be

Mark Okerstrom

think has rationale all getting excellent And merchant payments exposure, very again, that detection, world-class good fraud methods, got for that the stack, arrangements we've platform international array of providers. with onto Expedia broad of I payments the a our an payment

going need will growth we're confident transition So unlock period. just Vrbo forward through to get and we for this this more

Kevin Kopelman

chain SEO, you that on traffic more details saw can a that and Naved’s led search us some earlier SEO Thanks. changes a more about pay follow-up you in traffic? question kind just of Great the give on just up ending that to then specific on all of

Mark Okerstrom

the in pleased flights was around module as links coming of had in were queries that were not was prominently Google traffic. just doing introducing putting product just it hotel then and the place been steering down the in pretty from. the the we shift over good were results of course more ads of we different lot and channel recipient traffic that either than the or historically as which hotel as traffic Sure. see page some a a that into to they that ultimately ads were were we they Again cases in modules to resulted featured the they the SEO search in module Again with Google traditional but that returns

Kevin Kopelman

very Thanks, helpful.

Mark Okerstrom

Yes, you are welcome.

Next question please.

Operator

Barclays. question Deepak Please ahead. Our with comes next Mathivanan go from

Deepak Mathivanan

Great, expect of now. for thanks an is Can few been the quantify to branding marketing help highly some the sustain right theme Mark, exposure you or questions horse other issue long-term traffic standpoint? of quarters? for issue, you But any are noted traffic dead what broader from have offset on very kind time the volatile Thank for programs to obviously strategy a taking and at you recurring more from now SEO the I Do to much. is the this? steadily for this impacts the mitigate years mean this the it has and then exposure guys. to the be sorry think several of can you there SEO you that you you scare kind that

Mark Okerstrom

that back have to that example, it for for less that and sources of loyal us app better differentiated what brands we've so directly. important customers Yes. big offers it talking and come for is you worse. many the how more the means to is in us or been better on very Thanks Deepak. Listen, of into shrinking lead about are working Well, is ultimately our directly. relationships I to gotten of across centric really being time is the for differentiated that come haven't the mitigate the functionality time. is, many features apps us to to It focused customers we one we is been in will strategy us but tell building We've customer all becoming in provide for exposure specifics SEO back much great out the our us to developing feature customer over ultimately and apps

great half got digital get as been Obviously and the in or more again mentioned both not is into but well We money year channels huge nights the ultimately across of free a really around channels. feature to have one course branded it brand what's just we in then, whether app of hotels.com, we doing again then part or back ultimately rewards different the Expedia the optimizing rewards spend board performance another part also great strategy and over last us of some directly. of marketing the product brand the at been and well. having of just in reason can the stay and as the television programs we've And as for been it's so XX come yet, things of build channels of our these of the more putting to and program about terms we've some elsewhere the brand ultimately the really but and prominently where that's influencers formula which more advertising scream the has part people

Deepak Mathivanan

Got it, thanks Mark.

Mark Okerstrom

welcome. you're Yes,

Operator

from with comes Jed Our next ahead. question Please Oppenheimer. Kelly go

Jed Kelly

Great and thanks for taking my questions.

the more than impact? seeing do then, ADR on comments are Just finally more brand? do about unifying on think have or that's alternative having your with brand Expedia your the driven And the think you U.S., we rentals the the outside vacation macro through success of providers more you're rolling out of accommodation core ever you an OTA hotels.com some

Mark Okerstrom

unifying of of a strategy. through VR the a hybrid bit taking Listen Jed. terms we're in [Indiscernible] Thanks

that realignment strategy things consistent one. organizational so is having places go go-to-market a and our team got They've more it alignment with done main the and to a more the don't relates view the of multiple a brought to. we or they have really to one of our as have So Vrbo at team partners minimum that recent closer part host the partner as together facing facing OTA teams between

I part equation. the think that's of

to and onto internationally over volume inventory side up. to we other provide of as sign opportunity brand more Expedia The the us with it the hotels.com from time is as we it Vrbo more get properties incremental of will new them drive

alternative Vrbo we plan and quickly be to we put that and rollout really product brand thoughtful how is but of that do portfolio it the here still in money accommodation. how where brands having Our against we is number we it, pretty end has we've at the broad do we'll do much least markets that, how brand the brand got end state multi up of a about Expedia

like single of dedicated of can course which brands again, Vrbo then got part where many we through of and as partner But lodging also You've providing is goal providers distribute well. hotels.com got it as some side to them the our we harmonize as to can. on the you've is

Alan Pickerill

And say not this trends see factor is I you the the mix. be because Alan. would industry. then the do I match that and that's our your industry think big exactly and with ADR kind On say would of macro Jed, I exact can to throughout question, the of do that trends going is ADR there

think there's think You well vacation and the I an have this alternative Vrbo's lodging edges a referenced that bit our of I point. core team impact rentals around adding at we're little meaningful as integrating extent but impact, accommodations from it if that to the could is don't vacation an would rental, be

other ours we're plays some just countries is, story macro weaker overall and it that have where well big factor strong that there different versus really ADR where there so as different the ADRs The the countries geo so is do slowing. certain in into is mix but other we're here

Jed Kelly

Thank you.

Operator

with Khan Naved comes Please go Our next ahead. question SunTrust. from

Naved Khan

price meaning lower it's SunTrust. Maybe how point of lot. sort lowering guess Yes, that It's travelers Naved much trading in but the the decline the really down when thanks the hotels ADR, on from I point by related, booking board? across price of much the the of a Khan is hotels versus on clarification macro how

think products talked changes across maybe you the how non-lodging impact different the versus about fair and of should SEO of impacting lodging. more sort then, a about characterization Is that kind geos? of that we And

Mark Okerstrom

booking much we the how that point slowing would the is broader travelers first seeing. really is that the price overall slowing we're the hard from not dramatically Naved, we're I lower hotels say say versus different So across to seeing industry. it's on one saw that what

a So or It's rightly impact there point. down may that out it call channel. to behavior this our specifically be consumer mix trade hard it's Alan that some called at in

you got the multi-lines car in impact, provider, you pretty impact versus that business channel a when of broad. only air activities, see only it just terms is SEO of if the think the like etcetera. one have In the It's lodging I

it lines of feel can other business. in You

lines business in in And of can terms of drive business attach. cases other lodging well those is some

even a a it's not So, of it other in as big bit products difference. business though and the larger can that on overall between have lodging of the total, impact a

Naved Khan

Got thank you. it,

Mark Okerstrom

You're welcome.

Operator

comes Our Patterson Raymond Justin go ahead. question next James. Please with from

Justin Patterson

in. much. very seem the about seem how technical you thank the of headwinds Great, it through OTA are kicking Can and this It differs you does is lodging last like more incremental counters talk cycle? of some doesn't like there today sensitivity elements time some OTAs versus

of in And how Thanks. realignments. then, is realignment Could efficiencies? the past ones seeing toward organizational should the how a you different the about highlight timelines secondly operational function we think this on and

Mark Okerstrom

during cycle OTA in of saw think what that the I slowdown. last we be a is in Listen, Justin. Thanks, in terms will

we continue to good spot. I think be in a

think than I importance larger our are a therefore more we as have is channel And much we significant. historically. been

essentially as starts essentially we've to belt. What get corporate seen tightening meetings shrunk is the that corporate start past and business cycles in

market offer up as either in undermine through many our ends way ultimately a incredible able they more that our channel and pricing in in hotwire deals a can doesn't cases are more spot our discount so discount or product customers our opaquely our the where that partners And creating through that to structure. product overall to of packages in

be were yet. us. at that I think don’t a they think for continues opportunity cycle necessarily big the to point in that I

You industry. healthy be continue to pretty for occupancy for us to healthy see overall rates and continue the

it's see to going a introduced new more were that beyond terms have earlier. traditional products lodging we goes in say target of position I customers discounting for or downturn, if we bit effectively unit partners bunch our our think our way help just that in that also ads a pretty I in a would of travel example. So, product as

in Is the our year. product get today partners sponsored prior allows to liftings that's sophisticated really a is they was a And a product more demand than way targeted more when significantly it? lodging that it need of which in just

think an it represents opportunity. I So,

years we the number really In Bringing that. but a organizational not over way teams terms facing our in of that the a overall teams done the significant strategy. realignment in does is organizational align this ton together. It bring partner well with one listen together of alignment, have of does a

much lodging to really have our approach benefits For It market that to going across that's a platform bear can example, the traditional team. think and over and I partners. I about lodging deliver we'll allows the That the us of more way team our to and whole talked time. go-to unified Vrbo between lot a unleash that benefits our we

opportunities more we closely, another might data tech of to customers redeploy of are others effective our against that what allows these like United leverage with are more collaborating other example, and where teams bringing finding one they together technology, leveraging Marriott, with code in and partners aligning Airlines see. more them and really have and terms and and differentiated our them can with more things have for be we Like resources

functions brand collaborate in we our and find international we other terms one then and more to Vrbo ways like team be And with between for have opportunities customer to the some of Expedia brought expansion in effective to facing across done example. of more in

Where on on with book you're to brand credentials. to Expedia able brand hotels in Expedia log and Vrbo, you're able cars your login

So, these opportunities new our are that changes strategy. that at unlocking with aligned are squarely aimed all are

to how it's going scale to things. terms take In these long of

full realize Listen, to to and we do it going those we're effective as what over take efficient make benefit benefits that but the more of some able here much us to confident time to going is time. we're is realize

Justin Patterson

Great, thank you.

Operator

Goldman comes next question from with ahead. Terry Our go Sachs. Please Heath

Unidentified Analyst

Heath. on This is for Daniel Powell

ones a of quick couple from Just us.

pretty major feel expansion. are getting love to you we'd across feel markets. where ads see you on Should to coverage or international supply competitive they're point growths supply update a to we to continue like in do those you where First, have expect get an pretty elevated about you from

And also your of side side then and secondly, or you're things on branded of Hotels.com platform. perspective just reward the through us and injecting hotel the side from you run curious seeing on both your what Thanks. could on update the things but an onto if you give what rewards rate

Mark Okerstrom

Sure.

traditional what continue include add also terms at core in we're conventional rate a lodging expansion, with we international to pleased include and on we of accommodations. alternative These properties to So, healthy platform. the supply see,

progress we're room saw work more with pleased pleased in making the markets our priority growth make we're we product relevant doing with front it's enhance the with actually the for last we're on the consistent and what it Easter, our quarter. think of again with broadly night that locally international the seen to to adjusting I lot as you've

we're both to we to it's new we seen seeing. said, benefits marketing demand. properties, on testament the various of channels. mindful and a we have making we be of mixed depending results in That what's sure that some in And balance think And these supply have that in of I some markets happening add as

effectively locally So, help to more more assortment I capability continue I move other to we've news to add those ultimately is that relevant. to international, to fantastic. more we think which us the is putting going expand good the resources efforts our the we got be think And add we're blend might properties, needle continue to as efforts against with

business. we P&L that the that we're and remain program, in think see In in very rates program. higher and to it terms is strong to We happy the very rewards overall rewards repeat customer a the of do we loyalty, that programs. program have with nice accretive that Hotels.com is results happy Again,

lot platform. success other within, we In again with move out rates the have with of loyalty and that our of forward. ways putting terms to We've work loyalty had eager good our hotel way in continue rates, we're partners to on a as partners we rolled that other partner's

Operator

Morgan ahead. comes Stanley. question next our And Brian Nowak go Please from with

Brian Nowak

I taking have two. for question; Thanks my

Can guess, what you guys the just SEO know the partial of us spend sort let your guidance go on issues about we ad to updated sort around for period last start SEO the saw of think can back of you Just just quarter to on you issues. think bookings. so I sizing our I July XXth. impact

most do largest and impact help And or you the on about are us in what XXXX. optimistic dollars moving and comment the you're Google. think bigger channels, bookings of quarter you longer two sort one marketing help what maybe overall about term higher paid you just sort toward to cost XQ away are diversify channel full understand mix that about marketing So of channels can then, from picture, then what marketing you

Alan Pickerill

Brian, is Yes this Alan.

the at first the start terrific you we We the moment. of of referenced were was in our We pretty last earnings we just up year. half on the to terms about expectations Just of call, talked ahead factors year. the were were how developed. a our of that kind that call That finishing

the things second the business saw in like felt into carry half the first would And the we half. that in out

in third SEO we through the moved to we see us. these quarter, start ADRs also impact working As against the started from could challenges to and we see trends

the with to very And as particular strength to we quarter. got the tail-end

how I about the the it challenges of would think timing. So, that's in terms and

them headwind As and to XXXX. for I we expect into us continue QX be do a in to said,

the traffic On where going. just in last the is of that terms of the question SEO part

I the maybe you're lower about platform mean, the that and if are have SEO people extent moving I links the don’t is say just links. through on than would to for those have to page transacted paid thinking a answer to normally pushed Google you other specific who

at SEM You're hotel ads. looking and Google

see SEO as us. returns said, it's on good for fact we to good essentially except are the through free that volumes those And Mark volumes

And so, for free anything from the paid to create a can going headwind other Google especially sizeable placements us.

terms in of and spending type Instagram mean or on things Brian, digital then the And spending channels. influence video, in I channels, social some television. experimenting we're more we're in other other mentioned I of traditional actively more with

which with we've League sponsorship for As we've I think know Europe Champions in so been a happy you far. pretty got

quarter. continue So, direct to the actually channels accelerating more start direct in over business help with differentiate build our direct to our product to the And goal and business in the basically were is here is time. we our strategy the growth and happy overall,

to continue So, help you'll to find us are I direct branded channels in more our that business. see new think build nature

Brian Nowak

Alright, thanks guys.

Alan Pickerill

welcome. You're

Operator

Our next Brian question ahead. Wells Please from with go Fargo. Fitzgerald comes

Brian Fitzgerald

Thanks. of couple A quick ones.

original how plans. end match up the with would that mentioned the recover of the You the stack year. does lodging by Does

get a or tools. then, switch or practices stack best apply your a scaled related you lighter as trends optimized shift. for And does make accelerating see You

So, question. first that's

on you you removing then Vrbo. just to and Expedia payment or point data those sales Mark And off is unified one friction two. better mentioned of do you predicated on sign Vrbo, provider? around, Second and the a at unify fresher imagine get with just we'd that the simply the move of incremental Is across third as

the targeting amongst see better do And Thanks. party means better in whole data, tailwinds levered that platform, you targeting. into so first

Mark Okerstrom

is moving nicely. Thanks, the cloud going to always done. get Brian. you're along It's say I'd migration estimate broadly it exactly to impossible when

with So, we the and of at we be think are. versus pleased where end where we're the thought we'd the year I progress

line with think broadly where to be. it in we're want we I

stack, the air I think They're of of the the great that is biggest lot lodging get for a obviously or terms the ourselves to In work teams us business one cloud-ready. done lists. actually

And so, a done air teams the business and great the job.

into And towards the year well. I the following in moving this think that's something we'll be that and of year end as

more really collect tag users a friction, is profile. user login towards yes Vrbo able their more on of talking their removing are that them intent what and about From we're In to terms particular on, to enabling information of we point Expedia credentials. using

we and interested can the we sure experiences deliver are in making relevant tailored that to our most customers. And

better. that think do of the It I to represents payment that thing an type to of side things. not for related us is opportunity

deferred. completely it's So,

Brian Fitzgerald

Thanks.

Mark Okerstrom

welcome. you're Okay,

Operator

next Please go with question ahead. Credit from comes our And Jew Steven Suisse.

Steven Jew

you. thank So,

well you've conversion share that So of any as the you Vrbo is headwinds. are Mark, integrated. can the you the consumer about year-over-year or as quarter-on-quarter in awareness properties transact now anything to XXX,XXX sort And improving rate seeing willingness

our another Vrbo because if think choice see when if one the company, property headwinds and they Google more Because with a present should will the positively. from also when should publicly de-rate that it that conceptually was for of about versus And and could same treated seems it SEO on people some trying recollection was both. like to respond inventory you

are you brand Expedia? be terms Vrbo can to So, of integrated that from Thanks. properties where now in integrating what

Mark Okerstrom

very the the quickly Core to present of side and the of to so properties. it's on growing continued the on still the Yes It's time test performance OTA when small, the Vrbo Steven, the right thing, the things. and basically properties relatively right teams have

each of then essentially as these traditional call XX it units. think reminder, I to unit one maybe opposed as until properties a represents a different

certainly smaller customer So, than just traditional the a these you the to is definitely improve but present potential right these right they time, at of property, when the total conversion. volume

are you to present about some very You in to definitely a and because them do when have relevant be just smart way it want to that got customers also results curetted them. targeted just

is work. In platform end that consolidation really terms in the putting our those the into key we headwinds and before I XXXX think result Really of up of we I Vrbo year defining but out step of pretty against proposition, which SEO the of we see on SEO why saw internet like brand the the advertising everyone. value and and is call headwind it's the bunch I Vrbo, Vrbo think saw a more real has weight lapping, we're this here spend smart us is exploring headwinds that from things are a the start listen and In focused for brand of really as think done growing that's behind of double we're differentiated We it their beginning digital think the a about the a I for at being video SEO type digits. itself been brand there. progress you is seeing types Vrbo

Unidentified Analyst

Thank you.

Mark Okerstrom

welcome. You're

Operator

JMP comes Please go Our with Ron from Josey next ahead. Securities. question

Unidentified Analyst

rolled and out you strategy Hi or on are you more on with the if Are just And guys priority few properties markets now markets? Andrew for strategy ago Thank today about year, there? just go you adding a BERT talk then you SEO, that this had ago? year versus million going any Are a you. supply on first a half deeper markets? impact like priority weeks with more all your guys the Google secondly, Ron. platform. a Can there to to priority with your X.X is talk Boone I'd

Mark Okerstrom

Sure.

from not the completely that first wave So did. expand are priority in number we going markets did essentially of we terms of we the And priority broad. markets

numbers, but are go that and not secondary is selection product a markets customers We locally sure and expanded sure but primary will can back ultimately make relevant broad the we that ultimately to only the to trying to in which that the develop deep go important again you again markets again. tertiary have have we and and

with with I experiment to continues think to BERT new So respect listen Google products.

ultimately free the those channel. from products biggest impact take we think was real that when away what traditionally see I where estate is

the trend impact where it's the visitor it's particular that more for funnel. and of reality does push I call top think is an revenue to at on Google So to I of internet and per Google world is importance generally, of in just the think product. the continue the too the the that But early

Unidentified Analyst

you. Thank

Operator

question with Thill Please Our Jefferies. comes go ahead. next from Brent

Brent Thill

QX Mark on for how Europe, your that relative your Alan the I’m you Thank fared to curious plan are directionally just and how outlook thinking about region? you.

Alan Pickerill

Yes.

saw of the similar of type saw ADR we U.S. I think across that Europe regions. and some the softening

that things pushing and either were was to with way we've was we've broadly doing factor for We it But have UK speaking Europe. of the there, of we performance so think country from been was our mixed happening the us. been Europe think been those or of out. country that played macro league again with maybe some number efforts because marketing we I it and broadly there of of champions because with and weaker a were in mean a I Again, comfortable think mixed. the markets tell. isolated that I the little by Brexit environment volumes saw for I hard but whether supply in acquisition we that it in channels concerns on were that sponsorship bit were happy us some results may was a things our

Operator

question comes Please from Doug Anmuth go with ahead. next JPMorgan. Our

Doug Anmuth

market the in like in global the on Can you in have you more to players APAC and talk then of second, local I could the other aggressive with you're if about feels there just talk your Thanks. do shifting able really what dynamic are just more some And of to just first kind players just two, platforms? a and to Thanks there getting continue from in questions. it for the holistic direction. perspective? taking about competition the differentiate travel particular they're products

Mark Okerstrom

Asia to Listen continues be the Yes. in fierce. competition

players significant the players global You've shouldn't and got a and be are PAN many couple do that that online. leveraging putting that number discounting of maybe In cases of continue actually rates regional really and same. online regional doing to them a

So for it fierce does and continue to in the be a pretty think environment region. everyone us I

APAC in markets more We it Expedia business number Asia-Pacific that of then does are number challenging. a into a however Partner in in our and markets in Asia, having players Solutions the our to both but bit do We up as ability with we have little in end with are inventory the market tap success the other well. powering region world a and being of around

it for but there, what's consumer us. for our happening So brands pretty able we be are to benefit environment continue to does a competitive from

I'm ultimately even being offer ways future to being car information sorry our listen innovate can just but flight only finding of rental we also to in etcetera to actually terms where leverage on continue advantage discounts, on delays, not able in on for holistic just bookers. travel, hotel and the flights able provide hotel and more we

plans beyond a all so place of to bundle being what customers. connected in the is which in is way actually savings have great able traditional your more got our competitive in to of for team's things ultimately that core one advantage the bunch the build deliver a way itinerary trips together, So experience our can and do

Doug Anmuth

Great, thanks Mark.

Mark Okerstrom

You are welcome.

Operator

you. Thank

Please with comes Davidson. from go Our White next question ahead. Tom D.A.

Tom White

Great, question. thanks for taking my

event vertical channels. own the clarify and to of higher channels some Was guys question taking prioritizing search just was priced that that you you of Just impacting mix in to it to of there of was your platforms the or higher bids pressures that talked more specific lean any mix to search try proactive of cost shift the resulting maybe or and face the on sort of from into a passive experiences a sort their Alan marketing mentioned growth unit kind preserve kind that CPC also, were about? steps you

or on I'm you just more maybe secondly, potential flow free hoping that could just a little timetable share? cash on And color provide then can bit Alan, magnitude conversion there, thoughts comment you you the any

Alan Pickerill

Yes Tom.

former a what here, I mean you it's would SEO the the the Google on first is natural outcome do about night team pushing of a with think there's described say page looking more latter. than the and that. So, question constantly just at I good we of is of growth very if trying down balancing our overall room the opportunities and Obviously, job profitability. and it's principally dynamic to

So it's there just that of elements the think are part SEO come most the to more for gets tougher but by. natural shift as I

Seattle where is clear so moving flow. our that and we long that cash on and which through all our be I healthy do to completing free here factor is will deliver think solid free and that bit, will the a the continue next we've adjusted provide main starts. flow On to over been cash it EBITDA term we expect facility The tailwind

grow. capital our good merchant We expect our to as on working tailwind continues flows to to a business continue see

So situation free going all of to healthy a flow cash that and cash where together, flow forward. we can conversion drive we think adds up good

Thomas White

Thanks.

Alan Pickerill

bet. You

Operator

conclude Okerstrom remarks. Q&A closing will Mark call. it I over will for session today's now turn for our This to

Mark Okerstrom

huge all for a Well to... today you and thank listening thanks

Expedia (EXPE) 6 Nov 192019 Q3 Earnings call transcript