Expedia (NASDAQ:EXPE) Delivers Impressive Q2, Stock Soars

Jabin Bastian /
2022/08/04 4:11 pm EDT
Add to Watchlist

Online travel agency Expedia (NASDAQ: EXPE) reported Q2 FY2022 results topping analyst expectations, with revenue up 50.6% year on year to $3.18 billion. Expedia made a GAAP loss of $185 million, down on its loss of $177 million, in the same quarter last year.

Is now the time to buy Expedia? Access our full analysis of the earnings results here, it's free.

Expedia (EXPE) Q2 FY2022 Highlights:

  • Revenue: $3.18 billion vs analyst estimates of $2.98 billion (6.42% beat)
  • EPS (non-GAAP): $1.86 vs analyst estimates of $1.56 (19.1% beat)
  • Free cash flow of $1.46 billion, down 48.1% from previous quarter
  • Gross Margin (GAAP): 86.8%, up from 82.2% same quarter last year
  • Stayed Room Nights: 79.1 million, up 22.5 million year on year

“We are very pleased with our financial performance this quarter. Lodging bookings reached a record high, and we posted our highest ever second quarter revenue and adjusted EBITDA. These were even more noteworthy given the simplification efforts we undertook two years ago including the sale of our Egencia corporate travel business.” said Peter Kern, Vice Chairman and CEO, Expedia Group.

Originally founded as a part of Microsoft, Expedia (NASDAQ: EXPE) is one of the world’s leading online travel agencies.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition. Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. 

Sales Growth

Expedia's revenue growth over the last three years has been very strong, averaging 33.2% annually.

Expedia Total Revenue

This quarter, Expedia beat analyst estimates and reported a very impressive 50.6% year on year revenue growth.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 17.5% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Usage Growth

As an online travel company, Expedia generates revenue growth by a combination of increasing the number of stays (or experiences) booked, as well as the level of commission charged on those bookings.

Over the last two years the number of Expedia's nights booked, a key usage metric for the company, grew 62.3% annually to 79.1 million users. This is among the fastest growth of any consumer internet company, indicating that users are excited about the offering.

Expedia Stayed Room Nights

In Q2 the company added 22.5 million nights booked, translating to a 39.7% growth year on year.

Key Takeaways from Expedia's Q2 Results

Sporting a market capitalization of $16.5 billion, more than $5.59 billion in cash and with positive free cash flow over the last twelve months, we're confident that Expedia has the resources it needs to pursue a high growth business strategy.

We were impressed by the exceptional revenue growth Expedia delivered this quarter. And we were also glad to see the user growth and solid free cash flow. Zooming out, we think this impressive quarter should have shareholders feeling very positive. The company is up 7.85% on the results and currently trades at $110.4 per share.

Expedia may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.