Expedia 2Q profit dips

Expedia Inc.’s quarterly profit shrank as the company reported a profit of $40.9 million, compared with $96.1 million a year earlier.

Revenue decreased three percent to $769.8 million, but was up one percent excluding currency changes. Gross margin rose to 80.7 percent from 78.7 percent.  

Revenue fell six percent in the US but increased three percent internationally, or 14 percent minus foreign exchange fluctuations. 

“To deliver 26 percent worldwide room night and continued OIBA growth in this environment speaks volumes about the abilities and execution of the global Expedia team,” said Dara Khosrowshahi, Expedia Inc.’s CEO and president.

Khosrowshahi shared that on the marketing front, the company reduced its marketing spend per transaction by 23 percent in the second quarter driven by an improved customer value proposition, lower competitive spend, benefits from technology investments and strong execution across its marketing channels.

“Now, we are not counting on these levels of improvements in the coming quarters, but we are confident that we can continue to drive better efficiency on a per transaction basis,” he said.

Expedia’s stock jumped more than 12 percent, or $2.24, to $20.60 on Nasdaq, after touching a high of $21.27 early in the session.

Kaufman Brothers analyst Aaron Kessler that the earnings pop came more from promotional moves, such as cutting booking fees, which Expedia did June 27, than from major rebounds in travel.

“While we believe the travel environment is stabilising in the US and Europe, we don’t see any signs of a re-acceleration,” Kessler wrote.

“Results seem to have improved as gross bookings were only down 5 percent as opposed to 11 percent in the first quarter,” reportedly said Morningstar analyst Warren Miller. “But keep in mind pricing of both hotel rooms and airline tickets are down significantly,” he said, according to Reuters. 

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