Expedia revenue sinks 82% amid ‘worst quarter the travel industry has seen in modern history’

The pandemic crushed Expedia Group’s business during the second quarter as the travel giant saw revenue sink 82% year-over-year to $566 million.

Expedia missed expectations for Q2 revenue and earnings per share, which came in at -$4.09.

The Seattle company’s lodging revenue was down 78%; air tickets sold was down 85%; and advertising/media revenue dipped 91%.

Shares were down more than 3% in after-hours trading.

“The second quarter of 2020 represented likely the worst quarter the travel industry has seen in modern history and Expedia was of course not spared,” Expedia CEO Peter Kern said in a statement.

April was the “bottom of the trough,” Kern said, as cancellations exceeded new bookings.

Kern said gross bookings, which were down 90% in the second quarter, improved through May and June but are still down considerably year-over-year.

“It is clear though that it will be a bumpy and inconsistent recovery with virus numbers being volatile around the globe and country and region restrictions changing all the time,” Kern said in a statement.

This week RBC Capital said online travel is experiencing a “slightly faster recovery” than previously expected, though a resurgence in COVID-19 cases could slow that growth. The firm cited Expedia’s fast-growing international markets and has a 12-month stock price target of $105, up nearly 30% from today. Update: In a post-earnings report, RBC lowered its price target to $93. “Fundamental trends were very negative, but the worst is hopefully behind EXPE,” the firm noted.

(Vrbo website)

Earlier this month Expedia gave a business update, noting a surge in bookings on its vacation rental platform Vrbo. The company cited “drive-to destinations” as one of the first segments of travel to recover from the global health crisis that has restricted travel worldwide since March.

Expedia said today that Vrbo has a higher revenue per room night than the rest of its lodging business.

“People have a real interest in the whole-home model and being able to have their families alone and not in a shared space,” Kern said on an earnings call. “Vrbo really led the way for us.”

Expedia last month announced that it was retiring its HomeAway brand and bringing its entire vacation rental portfolio under the Vrbo name. Expedia paid $3.9 billion in 2015 to acquire HomeAway, which bought Vrbo in 2005.

Vrbo competes with Airbnb and is live in 15 countries. Interest in vacation rentals and camping-related accommodations is up as Americans look for low-risk travel alternatives.

Expedia is exploring additional cost-cutting measures and expects to exceed $500 million in annual run-rate savings this year. Expedia previously said in February — before the pandemic — that it was targeting $300-to-$500 million in annual cost savings in an effort to “streamline and focus” the business. The company laid off about 3,000 employees earlier this year.

Expedia responded to the economic and health crisis by raising $3.2 billion in debt and equity in April. It also made additional cutbacks including employee furloughs and executive salary reductions, and named longtime board member Kern as its new CEO. Kern had been overseeing the company’s operations with Chairman Barry Diller since the ouster of former CEO Mark Okerstrom and CFO Alan Pickerill in December.

In addition to the COVID-19 crisis, Expedia also continues to deal with from Google’s dual role as a rival in online travel, and a key source of customers through search traffic and paid advertising.

Since nose-diving in March, Expedia’s stock has risen steadily and has nearly doubled over the past four months.

The company last year moved to a new 40-acre waterfront campus in Seattle.

Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, and many others, in addition to the flagship Expedia.com.

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Expedia revenue sinks 82% amid ‘worst quarter the travel industry has seen in modern history’

The pandemic crushed Expedia Group’s business during the second quarter as the travel giant saw revenue sink 82% year-over-year to $566 million.

Expedia missed expectations for Q2 revenue and earnings per share, which came in at -$4.09.

The Seattle company’s lodging revenue was down 78%; air tickets sold was down 85%; and advertising/media revenue dipped 91%.

Shares were down more than 3% in after-hours trading.

“The second quarter of 2020 represented likely the worst quarter the travel industry has seen in modern history and Expedia was of course not spared,” Expedia CEO Peter Kern said in a statement.

April was the “bottom of the trough,” Kern said, as cancellations exceeded new bookings.

Kern said gross bookings, which were down 90% in the second quarter, improved through May and June but are still down considerably year-over-year.

“It is clear though that it will be a bumpy and inconsistent recovery with virus numbers being volatile around the globe and country and region restrictions changing all the time,” Kern said in a statement.

This week RBC Capital said online travel is experiencing a “slightly faster recovery” than previously expected, though a resurgence in COVID-19 cases could slow that growth. The firm cited Expedia’s fast-growing international markets and has a 12-month stock price target of $105, up nearly 30% from today. Update: In a post-earnings report, RBC lowered its price target to $93. “Fundamental trends were very negative, but the worst is hopefully behind EXPE,” the firm noted.

(Vrbo website)

Earlier this month Expedia gave a business update, noting a surge in bookings on its vacation rental platform Vrbo. The company cited “drive-to destinations” as one of the first segments of travel to recover from the global health crisis that has restricted travel worldwide since March.

Expedia said today that Vrbo has a higher revenue per room night than the rest of its lodging business.

“People have a real interest in the whole-home model and being able to have their families alone and not in a shared space,” Kern said on an earnings call. “Vrbo really led the way for us.”

Expedia last month announced that it was retiring its HomeAway brand and bringing its entire vacation rental portfolio under the Vrbo name. Expedia paid $3.9 billion in 2015 to acquire HomeAway, which bought Vrbo in 2005.

Vrbo competes with Airbnb and is live in 15 countries. Interest in vacation rentals and camping-related accommodations is up as Americans look for low-risk travel alternatives.

Expedia is exploring additional cost-cutting measures and expects to exceed $500 million in annual run-rate savings this year. Expedia previously said in February — before the pandemic — that it was targeting $300-to-$500 million in annual cost savings in an effort to “streamline and focus” the business. The company laid off about 3,000 employees earlier this year.

Expedia responded to the economic and health crisis by raising $3.2 billion in debt and equity in April. It also made additional cutbacks including employee furloughs and executive salary reductions, and named longtime board member Kern as its new CEO. Kern had been overseeing the company’s operations with Chairman Barry Diller since the ouster of former CEO Mark Okerstrom and CFO Alan Pickerill in December.

In addition to the COVID-19 crisis, Expedia also continues to deal with from Google’s dual role as a rival in online travel, and a key source of customers through search traffic and paid advertising.

Since nose-diving in March, Expedia’s stock has risen steadily and has nearly doubled over the past four months.

The company last year moved to a new 40-acre waterfront campus in Seattle.

Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, and many others, in addition to the flagship Expedia.com.

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Amazon doubles quarterly profits to $5.2B, crushes expectations in ‘highly unusual quarter’

Amazon CEO Jeff Bezos (GeekWire File Photo / Todd Bishop)

Amazon posted $5.2 billion in profits in the second quarter, doubling its bottom line from the same quarter a year ago, despite spending more than $4 billion on COVID-19 initiatives.

The company’s net sales of $88.9 billion eclipsed Wall Street’s expectations by $7.4 billion, and its earnings of $10.30/share were seven times the analyst consensus of $1.46/share.

The blockbuster result comes a day after Amazon CEO Jeff Bezos appeared along with leaders of other tech giants at a Congressional antitrust hearing probing their market power.

Analysts were so surprised by the result that one, Mark Mahaney of RBC Capital Markets, jokingly asked on Amazon’s earnings conference call if Bezos was aware of the size of the company’s profits. The Amazon founder is notorious for running the company on razor-thin profit margins, at best, preferring to plow profits back into strategic initiatives to drive long-term growth.

Coming into the second quarter, Amazon was uncertain if it would be able to keep its shipping capacity up while trying to keep employees safe from COVID-19, but the company was able to ship more than it had envisioned, said Brian Olsavsky, the company’s chief financial officer, on a conference call with reporters following the earnings release.

“Demand stayed strong, especially among Prime members who were shopping more often and with larger baskets,” he said.

Amazon’s net sales on a trailing twelve-month (TTM) basis, including divisional and geographic results. (Amazon Graphic)

However, the company declined to say if it will reinstate its previous hazard pay for its front-line logistics workers or issue additional bonuses. Amazon has also declined to disclose the total number of workers in its fulfillment network who have been diagnosed with COVID-19.

Compensation for front-line workers, including increased pay and bonuses, accounted for the largest portion of the $4 billion in increased spending for COVID-19, Olsavsky told analysts on the company’s earnings conference call.

[Related: Amazon’s online grocery sales triple in Q2 as more people get food delivered amid pandemic]

Amazon reported $9.4 billion in capital expenditures and finance leases for the quarter, up 65% year-over-year, focused primarily on building out its fulfillment and logistics network, Olsavsky said.

The company’s international division, which typically loses money, posted $345 million in operating income on $22 billion in sales, vs. a loss of $601 million on $17 billion in sales a year ago.

In its guidance for the third quarter, Amazon signaled that the growth in sales and profits could continue, even though it expects to spend another $2 billion on COVID-19 initiatives in the third quarter. The company said it expects net sales to grow 24% to 33% to between $87 billion and $93 billion for the third quarter, with operating profits between $2 billion and $5 billion, vs. $3.2 billion in the same quarter last year.

Amazon Web Services posted sales of $10.8 billion, up 29%, and operating profits of $3.4 billion, both new records for the company’s cloud division. However, the year-over-year quarterly sales growth rate dropped below 30% for the first time since the company began breaking out AWS results separately.

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Bezos said in Amazon’s earnings release for the second quarter.

Bezos continued, “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.”

Addressing one of the issues at the heart of the antitrust probe, Bezos said Amazon’s third-party sales “again grew faster this quarter than Amazon’s first-party sales.”

The company has created 175,000 new jobs since March and is in the process of converting 125,000 of those roles into regular, full-time positions, Bezos said. Amazon’s employee count, not including contractors and temporary workers, reached 876,800 as of the end of the second quarter.

Related: Amazon tops 1 million employees and seasonal workers for first time as demand and profits surge

Post updated at 3:20 p.m. Pacific with additional details. Amount by which Amazon’s net sales exceeded expectations has been corrected since original post.

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Amazon doubles quarterly profits to $5.2B, crushes expectations in ‘highly unusual quarter’

Amazon CEO Jeff Bezos (GeekWire File Photo / Todd Bishop)

Amazon posted $5.2 billion in profits in the second quarter, doubling its bottom line from the same quarter a year ago, despite spending more than $4 billion on COVID-19 initiatives.

The company’s net sales of $88.9 billion eclipsed Wall Street’s expectations by $7.4 billion, and its earnings of $10.30/share were seven times the analyst consensus of $1.46/share.

The blockbuster result comes a day after Amazon CEO Jeff Bezos appeared along with leaders of other tech giants at a Congressional antitrust hearing probing their market power.

Analysts were so surprised by the result that one, Mark Mahaney of RBC Capital Markets, jokingly asked on Amazon’s earnings conference call if Bezos was aware of the size of the company’s profits. The Amazon founder is notorious for running the company on razor-thin profit margins, at best, preferring to plow profits back into strategic initiatives to drive long-term growth.

Coming into the second quarter, Amazon was uncertain if it would be able to keep its shipping capacity up while trying to keep employees safe from COVID-19, but the company was able to ship more than it had envisioned, said Brian Olsavsky, the company’s chief financial officer, on a conference call with reporters following the earnings release.

“Demand stayed strong, especially among Prime members who were shopping more often and with larger baskets,” he said.

Amazon’s net sales on a trailing twelve-month (TTM) basis, including divisional and geographic results. (Amazon Graphic)

However, the company declined to say if it will reinstate its previous hazard pay for its front-line logistics workers or issue additional bonuses. Amazon has also declined to disclose the total number of workers in its fulfillment network who have been diagnosed with COVID-19.

Compensation for front-line workers, including increased pay and bonuses, accounted for the largest portion of the $4 billion in increased spending for COVID-19, Olsavsky told analysts on the company’s earnings conference call.

[Related: Amazon’s online grocery sales triple in Q2 as more people get food delivered amid pandemic]

Amazon reported $9.4 billion in capital expenditures and finance leases for the quarter, up 65% year-over-year, focused primarily on building out its fulfillment and logistics network, Olsavsky said.

The company’s international division, which typically loses money, posted $345 million in operating income on $22 billion in sales, vs. a loss of $601 million on $17 billion in sales a year ago.

In its guidance for the third quarter, Amazon signaled that the growth in sales and profits could continue, even though it expects to spend another $2 billion on COVID-19 initiatives in the third quarter. The company said it expects net sales to grow 24% to 33% to between $87 billion and $93 billion for the third quarter, with operating profits between $2 billion and $5 billion, vs. $3.2 billion in the same quarter last year.

Amazon Web Services posted sales of $10.8 billion, up 29%, and operating profits of $3.4 billion, both new records for the company’s cloud division. However, the year-over-year quarterly sales growth rate dropped below 30% for the first time since the company began breaking out AWS results separately.

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Bezos said in Amazon’s earnings release for the second quarter.

Bezos continued, “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.”

Addressing one of the issues at the heart of the antitrust probe, Bezos said Amazon’s third-party sales “again grew faster this quarter than Amazon’s first-party sales.”

The company has created 175,000 new jobs since March and is in the process of converting 125,000 of those roles into regular, full-time positions, Bezos said. Amazon’s employee count, not including contractors and temporary workers, reached 876,800 as of the end of the second quarter.

Related: Amazon tops 1 million employees and seasonal workers for first time as demand and profits surge

Post updated at 3:20 p.m. Pacific with additional details. Amount by which Amazon’s net sales exceeded expectations has been corrected since original post.

Support independent journalism at a time when trusted storytelling and community engagement is more important than ever.

Join today!

View the original article here

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