Expedia Stock Jumps on Strong Earnings and Cost-Cutting Plan
Feb. 13, 2020
Expedia shares are trading sharply higher in late trading Thursday after the online travel services firm posted fourth-quarter profits that topped Street estimates.
For the quarter, Expedia (ticker: EXPE) reported revenue of $2.75 billion, up 8% from a year earlier, and just below the Wall Street analyst consensus of $2.76 billion. Gross bookings were $23.2 billion, up 6%. Adjusted Ebitda was $478 million, up 1%. Adjusted profits were $1.24 a share, ahead of the Street at $1.19.
In December, CEO Mark Okerstrom and CFO Alan Pickerill departed, leaving day-to-day management of the company in the hands of Chairman Barry Diller, with chief strategy officer Eric Hart serving as CFO.
In a statement at the time , Diller said that the management team and the company’s board disagreed on strategy. “Earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way,” he said. “This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third-quarter results and a lackluster near-term outlook. The Board disagreed with that outlook, as well as the departing leadership’s vision for growth.”
Today, Diller said that the company has refocused on core operations, which he says had “suffered” for most of 2019.
“We have rapidly moved to simplify how we operate and increase efficiency,” he said in a statement today. “These changes helped us exceed the high-end of our revised guidance range in 2019 and will contribute to accelerated profit growth in our underlying business in 2020.”
Diller said the company is targeting $300 million to $500 million of run-rate cost savings across the business. “We are not providing a specific guidance range given uncertainty on how much cost savings we’ll recognize this year and the full effect of coronavirus,” Diller said, but adds that the company expects double-digit growth in adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, for the year.
“More importantly, the actions we’re taking to simplify our business and drive cost efficiency will position Expedia Group for improved revenue growth and margin expansion for years to come,” he said.
Expedia is up 10.7% in late trading, to $122.42.