EXPE Q1 2021 Earnings

Call Details

• Call Title: Expedia Group, Inc. Q1 2021 Earnings Call
• Date: May 6, 2021 at 8:30 PM UTC
• Management Team:
  • Patrick Thompson (Senior Vice President and DFO of retail)
  • Peter Kern (Chief Executive Officer)
  • Eric Hart (Chief Financial Officer)

Call Summary

Financial Performance

• Total revenue was down 52% versus first quarter of 2019.
• Revenue was approximately $1.4B lower versus Q1 2019 on an absolute basis, as stated on the call.
• Adjusted EBITDA was negative $58M for the quarter and was down approximately $235M versus Q1 2019.
• Overhead expenses totaled approximately $500M in Q1, excluding stock-based compensation per the call convention.
• Reported free cash flow was $2.0B for Q1, and free cash flow excluding the change in restricted cash was approximately $800M.
• Unrestricted cash and short-term investments were $4.3B at quarter end, which was about $1.0B higher than Q4.
• Deferred merchant bookings totaled $6.0B at the end of Q1.
• The company noted modest timing benefits in Q1 that improved overhead relative to expectations.

Guidance

• The company expects to be towards the higher end of its $700M to $750M fixed cost savings target relative to 2019 exit rate and has achieved approximately $700M on a run rate basis.
• The company remains on track for over $200M in annual variable cost savings based on 2019 volume levels, driven by payments, conversations platform expansion, and lower cloud costs.
• Leadership expects to realize largely all targeted fixed and variable cost savings by the end of 2021, though volume-normalization will influence when variable savings are evident.
• The company expects overhead costs to increase by approximately $50M sequentially from Q1 to Q2 primarily related to bonus payments and timing items.
• Marketing investments will increase further in Q2 as the company 'spends into the recovery' to capture demand.
• The proposed Agencia transaction is expected to close in approximately 9 to 12 months.
• The company elected to pay down 50% of the preferred stock issued in 2020 later in May 2021, with the option to retire remaining balance when appropriate.