Expedia Misses Earnings Estimate on Higher Spending; Shares Fall

• February 08 2018
• Gerrit De Vynck

Expedia Inc. missed profit estimates for the sixth quarter in a row, as the online travel giant spends heavily on its short-term vacation rental unit to compete with nimbler startups. The shares tumbled in late trading.

Expedia Inc. missed profit estimates for the sixth quarter in a row, as the online travel giant spends heavily on its short-term vacation rental unit to compete with nimbler startups. The shares tumbled in late trading.

Earnings excluding certain costs were 84 cents a share, down almost 30 percent from a year earlier and significantly lower than the average analyst estimate of $1.15 a share. Revenue was $2.32 billion, compared with projections of $2.36 billion in the quarter, which includes much of the busy holiday season.

The shares fell as much as 14 percent following the release of the report, after the market close in New York. It was the second consecutive quarter of disappointing sales.

Expedia’s expenses are rising faster than revenue is growing, in part because it’s spending heavily to stake out a larger piece of the burgeoning short-term home rental market. Its HomeAway unit is increasingly running up against Airbnb Inc. in cities and traditional vacation areas. HomeAway was significantly less profitable in the fourth quarter than in the same period in 2016.

Upstarts challenging the dominance of Expedia and its rival Priceline Group Inc. with mobile-only travel booking apps say the older companies are struggling to adapt to the smartphone world.

Trivago NV, which is majority controlled by Expedia, was also a drag on earnings in the fourth quarter, reporting revenue growth of 7.3 percent, a slowdown from the previous period. Trivago expects a sales decline in the first half of this year, though that should be more than offset by growth in the second half.