EXPE Q2 2020 Earnings

Call Details

• Call Title: Expedia Group, Inc. Q2 2020 Earnings Call
• Date: July 30, 2020 at 8:30 PM UTC
• Management Team:
  • Michael Ceno (Vice President, Investor Relations and Treasurer)
  • Peter Kern (Chief Executive Officer)
  • Eric Hart (Chief Financial Officer)

Call Summary

Financial Performance

• Net bookings were down on a net basis 90% for the quarter versus Q2 2019.
• By June net bookings improvement reduced the decline to less than down 70% versus prior year.
• Lodging performance was stronger than overall bookings and was down less than 60% for the quarter versus prior year.
• ADRs were up 1% in the quarter and revenue per room night increased 15% versus prior year.
• Revenue take rate was abnormally high at 21% in Q2, driven by cancellations and mix shifts.
• Air revenue was negative in the quarter due to excess cancellations, refunds, and reversals of previously recognized revenue.
• Free cash flow in the quarter was negative $2.1B and was heavily weighted to April, with improvement into June.
• Deferred merchant bookings ended the quarter at $4.6B in total, or $3.8B excluding deferred loyalty, with Vrbo accounting for most of the increase.
• Unrestricted cash and short-term investments ended the quarter at $5.5B, excluding the $1.25B debt raise closed in July.

Guidance

• The company expects to exceed $500M of run-rate cost savings versus prior targets after identifying additional opportunities.
• The recovery is expected to be non-linear and bumpy with geographic differences driven by virus control and travel restrictions.
• Cost of revenue is expected to remain a source of operating leverage as volumes normalize and virtual agents and payments improvements take effect.
• The company intends to remain disciplined in marketing and operate at higher ROIs both near term and going forward.
• The temporary cost reductions related to COVID-19 are expected to phase out while permanent cost-savings ramp over the next quarters.
• No explicit top-line or quarter-by-quarter revenue guidance was provided on the call.