Expedia (NASDAQ:EXPE) Beats On EPS But Misses Q1 Sales Targets

Kayode Omotosho /
2022/05/02 4:10 pm EDT

Online travel agency Expedia (NASDAQ: EXPE) missed analyst expectations in Q1 FY2022 quarter, with revenue up 80.4% year on year to $2.24 billion. Expedia made a GAAP loss of $123 million, improving on its loss of $581 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) Q1 FY2022 Highlights:

  • Revenue: $2.24 billion vs analyst estimates of $2.25 billion (small miss)
  • EPS (non-GAAP): -$0.47 vs analyst estimates of -$0.48 (2.51% beat)
  • Free cash flow of $2.83 billion, up from $142 million in previous quarter
  • Gross Margin (GAAP): 83.5%, up from 75% same quarter last year
  • Stayed Room Nights: 56.5 million, up 19.4 million year on year

“As we have seen many times during Covid, this quarter was a tale of two stories. There was early impact from Omicron leftover from late last year, which faded as the turnaround in demand reached new highs since the start of Covid. While the war in Ukraine did slow some of the recovery in Europe, there too we see travel at new highs since the start of the pandemic. All in, while we are keeping an eye on various macro indicators including inflation and ongoing geopolitical tensions, we continue to see positive indicators for a strong recovery in leisure travel this summer. We are also pleased to see city, business, and international travel coming back, three components key to the complete return of travel,” 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.

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. Covid lockdowns in 2020 halted global travel for months on end, and may have fundamentally reduced the market for business travel, a long term threat for the profitability of online travel platforms.

Sales Growth

Expedia's revenue growth over the last three years has been strong, averaging 29.8% annually. Expedia's revenue took a hit when the pandemic first hit, but it has since rebounded strongly, as you can see below.

Expedia Total Revenue

This quarter, Expedia reported a very impressive 80.4% year on year revenue growth, but this result fell short of what analysts were expecting.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 29.7% over the next twelve months.

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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 66.8% annually to 56.5 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 Q1 the company added 19.4 million nights booked, translating to a 52.2% growth year on year.

Key Takeaways from Expedia's Q1 Results

Sporting a market capitalization of $28.4 billion, more than $5.55 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. Zooming out, we think this impressive quarter should have shareholders feeling very positive. The company is up 4.68% on the results and currently trades at $183 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.

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