Expedia Group, Inc 10-Q for FY2020 Q1

About this 10-Q

Headline figures

Expedia Group, Inc. (EXPE)

10-Q 2020-05-21 For: 2020-03-31

Added on April 11, 2026

Expedia Group, Inc filed this 10-Q on May 21, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.21B; down 15.3% from $2.61B a year earlier
Net loss: $1.3B; compared with a net loss of $103M a year earlier
Diluted EPS: -$9.24; compared with -$0.69 a year earlier

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Delaware		20-2705720
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	EXPE	The Nasdaq Global Select Market
Expedia Group, Inc. 2.500% Senior Notes due 2022	EXPE22	New York Stock Exchange



Common stock, $0.0001 par value per share	135,459,390	shares
Class B common stock, $0.0001 par value per share	5,523,452	shares




Part I	Financial Information

Item 1	Consolidated Financial Statements

	Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited)	2

	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2020 and 2019 (unaudited)	3

	Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	6

	Consolidated Statements of Stockholders Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3	Quantitative and Qualitative Disclosures about Market Risk	42

Item 4	Controls and Procedures	43

Part II	Other Information

Item 1	Legal Proceedings	44

Item 1A	Risk Factors	48

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 6	Exhibits	50
Signature		51



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three months ended March 31,
	2020			2019

Revenue	$	2,209		$	2,609
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) ⁽¹⁾	629			490
Selling and marketing ⁽¹⁾	1,210			1,521
Technology and content⁽¹⁾	308			297
General and administrative ⁽¹⁾	187			184
Depreciation and amortization	229			228
Impairment of goodwill	765			—
Impairment of intangible assets	121			—
Legal reserves, occupancy tax and other	(21		)	10
Restructuring and related reorganization charges	75			10
Operating loss	(1,294		)	(131		)
Other income (expense):
Interest income	10			11
Interest expense	(50		)	(41		)
Other, net	(145		)	20
Total other expense, net	(185		)	(10		)
Loss before income taxes	(1,479		)	(141		)
Provision for income taxes	82			41
Net loss	(1,397		)	(100		)
Net (income) loss attributable to non-controlling interests	96			(3		)
Net loss attributable to Expedia Group, Inc.	$	(1,301	)	$	(103	)

Loss per share attributable to Expedia Group, Inc. available to common stockholders
Basic	$	(9.24	)	$	(0.69	)
Diluted	(9.24		)	(0.69		)
Shares used in computing earnings (loss) per share (000's):
Basic	140,823			147,882
Diluted	140,823			147,882



(1) Includes stock-based compensation as follows:
Cost of revenue	$	3	$	3
Selling and marketing	12		11
Technology and content	20		19
General and administrative	20		23


(1)	Currency translation adjustments include tax expense of $2 million associated with net investment hedges for the three months ended March 31, 2020 and tax expense of $3 million and for the three months ended March 31, 2019.



	March 31, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,905		$	3,315
Restricted cash and cash equivalents	813			779
Short-term investments	194			526
Accounts receivable, net of allowance of $95 and $41	1,423			2,524
Income taxes receivable	74			70
Prepaid expenses and other current assets	1,243			521
Total current assets	7,652			7,735
Property and equipment, net	2,297			2,198
Operating lease right-of-use assets	628			611
Long-term investments and other assets	610			796
Deferred income taxes	258			145
Intangible assets, net	1,642			1,804
Goodwill	7,330			8,127
TOTAL ASSETS	$	20,417		$	21,416
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, merchant	$	836		$	1,921
Accounts payable, other	859			906
Deferred merchant bookings	5,905			5,679
Deferred revenue	221			321
Income taxes payable	59			88
Accrued expenses and other current liabilities	978			1,050
Current maturities of long-term debt	750			749
Total current liabilities	9,608			10,714
Long-term debt, excluding current maturities	4,180			4,189
Revolving credit facility	1,900			—
Deferred income taxes	58			56
Operating lease liabilities	547			532
Other long-term liabilities	383			389
Commitments and contingencies
Stockholders’ equity:
Common stock $.0001 par value	—			—
Authorized shares: 1,600,000
Shares issued: 258,770 and 256,692; Shares outstanding: 135,454 and 137,076
Class B common stock $.0001 par value	—			—
Authorized shares: 400,000
Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523
Additional paid-in capital	13,124			12,978
Treasury stock - Common stock and Class B, at cost	(10,083		)	(9,673		)
Shares: 130,592 and 126,893
Retained earnings (deficit)	(470		)	879
Accumulated other comprehensive income (loss)	(301		)	(217		)
Total Expedia Group, Inc. stockholders’ equity	2,270			3,967
Non-redeemable non-controlling interests	1,471			1,569
Total stockholders’ equity	3,741			5,536
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	20,417		$	21,416



Three months ended March 31, 2019	Common stock			Class B common stock			Additional paid-in capital			Treasury stock				Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
	Shares	Amount		Shares	Amount		Additional paid-in capital			Shares	Amount			Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
Balance as of December 31, 2018	231,492,986	$	—	12,799,999	$	—	$	9,549		97,158,586	$	(5,742	)	$	517		$	(220	)	$	1,547		$	5,651
Net income (loss)														(103		)				3			(100		)
Other comprehensive income (loss), net of taxes																	3			(8		)	(5		)
Payment of dividends to stockholders (declared at $0.32 per share)														(47		)							(47		)
Proceeds from exercise of equity instruments and employee stock purchase plans	1,801,048	—					91																91
Treasury stock activity related to vesting of equity instruments										197,122	(25		)										(25		)
Other changes in ownership of non-controlling interests							(3		)											9			6
Impact of adoption of new accounting guidance														6									6
Stock-based compensation expense							56																56
Other							1																1
Balance as of March 31, 2019	233,294,034	$	—	12,799,999	$	—	$	9,694		97,355,708	$	(5,767	)	$	373		$	(217	)	$	1,551		$	5,634



Three months ended March 31, 2020	Common stock			Class B common stock			Additional paid-in capital		Treasury stock - Common and Class B				Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
	Shares	Amount		Shares	Amount		Additional paid-in capital		Shares	Amount			Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
Balance as of December, 2019	256,691,777	$	—	12,799,999	$	—	$	12,978	126,892,525	$	(9,673	)	$	879		$	(217	)	$	1,569		$	5,536
Net income (loss)													(1,301		)				(96		)	(1,397		)
Other comprehensive income (loss), net of taxes																(84		)	(6		)	(90		)
Payment of dividends to stockholders (declared at $0.34 per share)													(48		)							(48		)
Proceeds from exercise of equity instruments and employee stock purchase plans	2,078,035	—					86															86
Treasury stock activity related to vesting of equity instruments									335,468	(40		)										(40		)
Common stock repurchases									3,364,119	(370		)										(370		)
Other changes in ownership of non-controlling interests							1												4			5
Stock-based compensation expense							59															59
Balance as of March 31, 2020	258,769,812	$	—	12,799,999	$	—	$	13,124	130,592,112	$	(10,083	)	$	(470	)	$	(301	)	$	1,471		$	3,741



	Three months ended March 31, 2019
	As reported		As reclassified
	(In millions)
Cost of revenue	$	513	$	490
Selling and marketing	1,535		1,521
Technology and content	429		297
General and administrative	191		184
Depreciation and amortization	52		228



	Total		Level 1		Level 2
	(In millions)
Assets
Cash equivalents:
Money market funds	$	322	$	322	$	—
Term deposits	863		—		863
Derivatives:
Foreign currency forward contracts	79		—		79
Investments:
Term deposits	184		—		184
Marketable equity securities	54		54		—
U.S. treasury securities	10		10
Total assets	$	1,512	$	386	$	1,126



	March 31, 2020			December 31, 2019
	(In millions)
5.95% senior notes due 2020	$	750		$	749
2.5% (€650 million) senior notes due 2022	715			725
4.5% senior notes due 2024	497			497
5.0% senior notes due 2026	744			743
3.8% senior notes due 2028	992			992
3.25% senior notes due 2030	1,232			1,232
Long-term debt⁽¹⁾	4,930			4,938
Current maturities of long-term debt	(750		)	(749		)
Long-term debt, excluding current maturities	$	4,180		$	4,189

Revolving credit facility	$	1,900		$	—


(1)	Net of applicable discounts and debt issuance costs.



	March 31, 2020		December 31, 2019
	(In millions)
5.95% senior notes due 2020	$	747	$	767
2.5% (€650 million) senior notes due 2022 ⁽¹⁾	691		764
4.5% senior notes due 2024	457		536
5.0% senior notes due 2026	691		825
3.8% senior notes due 2028	875		1,021
3.25% senior notes due 2030	1,150		1,206



	Three months ended March 31,
	2020		2019
	(in millions)
Business Model:
Merchant	$	1,340	$	1,435
Agency	562		842
Advertising, media and other	307		332
Total revenue	$	2,209	$	2,609
Service Type:
Lodging	$	1,518	$	1,687
Air	109		248
Advertising and media	203		265
Other⁽¹⁾	379		409
Total revenue	$	2,209	$	2,609


(1)	Approximately 625 million Euro as of March 31, 2020 and 682 million Euro as of December 31, 2019.



Declaration Date	Dividend Per Share		Record Date	Total Amount (in millions)		Payment Date
Three Months Ended March 31, 2020
February 13, 2020	$	0.34	March 10, 2020	$	48	March 26, 2020
Three Months Ended March 31, 2019
February 6, 2019	0.32		March 7, 2019	47		March 27, 2019



	Employee Severance and Benefits			Other			Total
	(In millions)
Accrued liability as of January 1, 2020	$	11		$	6		$	17
Charges	69			6			75
Payments	(17		)	(5		)	(22		)
Accrued liability as of March 31, 2020	$	63		$	7		$	70



	Three months ended March 31, 2020
	Retail			B2B			trivago			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	1,582		$	485		$	103		$	39		$	2,209
Intersegment revenue	—			—			51			(51		)	—
Revenue	$	1,582		$	485		$	154		$	(12	)	$	2,209
Adjusted EBITDA	$	22		$	26		$	(1	)	$	(123	)	$	(76	)
Depreciation	(128		)	(32		)	(3		)	(22		)	(185		)
Amortization of intangible assets	—			—			—			(44		)	(44		)
Impairment of goodwill	—			—			—			(765		)	(765		)
Impairment of intangible assets	—			—			—			(121		)	(121		)
Stock-based compensation	—			—			—			(55		)	(55		)
Legal reserves, occupancy tax and other	—			—			—			21			21
Restructuring and related reorganization charges	—			—			—			(75		)	(75		)
Realized (gain) loss on revenue hedges	9			(3		)	—			—			6
Operating loss	$	(97	)	$	(9	)	$	(4	)	$	(1,184	)	(1,294		)
Other expense, net													(185		)
Loss before income taxes													(1,479		)
Provision for income taxes													82
Net loss													(1,397		)
Net loss attributable to non-controlling interests													96
Net loss attributable to Expedia Group, Inc.													$	(1,301	)


(1)	Other includes car rental, insurance, destination services, cruise and fee revenue related to our corporate travel business, among other revenue streams, none of which are individually material. Other also includes product revenue of $39 million during the three ended March 31, 2020 related to our acquisition of Bodybuilding.com.


•	It requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the time we were making the estimate; and


•	Changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations.


•	City of San Antonio, Texas Litigation. On May 11, 2020, the United States Fifth Circuit Court of Appeals affirmed the district court’s award of over $2 million in appeal bond costs against the city.


•	Palm Beach, Florida Litigation. On March 25, 2020, the Florida Fourth District Court of Appeals affirmed the trial court’s decision that defendants are not subject to tax.


•	Miami Dade County, Florida Litigation. The parties reached a settlement and on April 7, 2020, the county filed a notice of voluntary dismissal without prejudice, thereby ending the matter.


(1)	trivago, which is comprised of a hotel metasearch business that differs from our transaction-based websites, does not have associated gross bookings or revenue margin. However, third-party revenue from trivago is included in revenue used to calculate total revenue margin.


(1)	Includes third-party revenue from trivago as well as our transaction-based websites.


(1)	Includes immaterial operating results of Bodybuilding.com subsequent to our acquisition on July 26, 2019.


(2)	Adjusted EBITDA is a non-GAAP measure. See “Definition and Reconciliation of Adjusted EBITDA” below for more information.


•	Suspension of Share Repurchases. We have not repurchased any shares since our last earnings call on February 13, 2020, and have suspended future share repurchases.


•	Suspension of Quarterly Dividends. We do not expect to declare quarterly dividends on our common stock, at least until the current economic and operating environment improves.


•	Credit Facility Amendment. In connection with the issuance of the Notes and private placement transaction, on May 4, 2020, we executed a restatement agreement, which amends and restates our existing revolving credit facility (as amended and restated, the “Amended Credit Facility”) to, among other things, provide additional flexibility under pliable covenant provisions.



	December 31, 2019		March 31, 2020
	(In millions)
Combined Balance Sheets Information:
Current Assets⁽¹⁾	$	6,185	$	6,291
Non-Current Assets	10,320		9,783
Current Liabilities	9,486		8,366
Non-Current Liabilities	4,710		6,609

	Year Ended December 31, 2019		Three Months Ended March 31, 2020
Combined Statements of Operations Information:
Revenue	$	9,463	$	1,782
Operating income (loss) ⁽²⁾	420		(1,031		)
Net income (loss)	195		(1,044		)
Net income (loss) attributable to Obligors	198		(1,043		)


(1)	Current assets include intercompany receivables with non-guarantors of $1.0 billion as of December 31, 2019 and $640 million as of March 31, 2020.


(2)	Operating income (loss) includes intercompany expenses with non-guarantors of 1.2 billion for the year ended December 31, 2019 and $313 million for the three months ended March 31, 2020.