Expedia Shares Plunge After Fourth Quarter Earnings Miss Expectations As Costs Rise

8:21 AM, Feb 9, 2018 — Shares in travel operator Expedia (EXPE) were sharply lower in early trade on Friday, the morning after the company posted fiscal fourth-quarter earnings that missed the Street’s estimate as marketing expenses surged.

Expedia’s shares were trading 15.1% lower recently after an 11% revenue increase to $2.32 billion during the three months that ended December 31 from $2.09 billion a year ago, according to a statement published on Thursday. This was, nevertheless, below the $2.35 billion analyst estimate compiled by Capital IQ. Adjusted earnings per share slumped to $0.84 from $1.17, also missing a market consensus of $1.15.

The drop in earnings came as selling and marketing expenses surged 16% to $1.12 billion and the cost of revenue generation jumped by almost a fifth, the company said in its earnings statement. Expenses rose due to a $121 million increase in direct costs, with Trivago, Brand Expedia, EAN and HomeAway accounting for a major chunk of it. Indirect costs also climbed by $34 million.

The total cost of Expedia’s revenue climbed 18% as $39 million more was ploughed into its data center and cloud-related costs, as well as $19 million additionally spent on customer operations expenses.

“Over the past several months, we have made key organizational changes, aligned our company around common objectives and began executing on a new direction aimed at accelerating the geographic expansion of our global travel platform,” Expedia Chief Executive Officer Mark Okerstrom said in the statement.

The company is targeting full-year 2018 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 6%-to-11%.

Companies: Expedia, Inc.
Price: 103.00 Price Change: -20.03 Percent Change: -16.28

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