EXPE Q3 2020 Earnings

Call Details

• Call Title: Expedia Group, Inc. Q3 2020 Earnings Call
• Date: November 4, 2020 at 9:30 PM UTC
• Management Team:
  • Michael Senno (Vice President, Investor Relations & Treasurer)
  • Peter Kern (Chief Executive Officer)
  • Eric Hart (Chief Financial Officer)

Call Summary

Financial Performance

• The company reported over $300M in adjusted EBITDA for Q3 2020 and reached essentially cash flow neutral in September for the first time since February.
• Reported free cash flow was nearly negative $1B in Q3 2020, driven by a roughly $670M working capital impact from Vrbo merchant bookings.
• Excluding Vrbo merchant working capital, pre-cash flow was approximately negative $325M in Q3 2020.
• Unrestricted cash and short-term investments totaled $4.4B at quarter end, and amounts held in restricted cash and other non-cash balance sheet assets covered nearly 60% of the deferred merchant booking balance (excluding deferred loyalty).
• Deferred merchant bookings declined by $1.4B in Q3 to $3.2B total, or $2.5B excluding deferred loyalty, with Vrbo the largest contributor to the decline due to seasonality and shorter booking windows.
• Overhead costs, comprising indirect selling and marketing, tech and content, and G&A, declined 29% year-over-year excluding Trivago and reflecting both structural and temporary savings.

Guidance

• The company currently expects Q4 adjusted EBITDA to be negative, with a wider-than-normal range of outcomes due to COVID-19 uncertainty and seasonality.
• Revenue decline in Q4 is expected to be in a similar range as Q3 given lodging recovery has plateaued relative to summer gains.
• Executives emphasized the recovery remains bumpy and unpredictable, and outlook is materially contingent on COVID trends and potential lockdowns in Europe and elsewhere.
• No numerical revenue guidance or specific forward booking targets were provided for Q4 beyond the qualitative expectation of negative adjusted EBITDA.
• Management highlighted that variable cost savings tied to volumes will not fully materialize until booking volumes return closer to normalized levels.
• No regional or product-level 2021 guidance was disclosed on the call.