Expedia Profit Down 32% On Costs, Shares Tumble

(RTTNews) - Expedia Inc. (EXPE) Thursday said its second-quarter profit plunged 32 percent, notwithstanding a double-digit revenue growth, hurt largely by a surge in selling and marketing costs. Shares of the online travel company plunged 25 percent in the after-hours, with its second-quarter profit and revenue falling short of Wall Street expectations.

Total costs and expenses for the quarter increased 25 percent. Selling and marketing costs for the quarter jumped 33 percent to $590.5 million, general and administrative costs increased 14 percent, and technology and content expense increased 21 percent.

Second-quarter revenues quarter rose 16 percent to $1.21 billion from $1.04 billion a year ago. Analysts polled by Thomson Reuters had a consensus revenue estimate of $1.26 billion for the quarter.

Expedia attributed the revenue increase to growth in hotel room nights and advertising and media revenue generated by its acquisition of a majority stake in metasearch company trivago GmbH.

Gross bookings for the quarter increased 13 percent from last year, aided mainly by a 19 percent growth in hotel room nights and 7 percent increase in air tickets. Average daily room rates and average airfares were essentially flat year-over-year. Domestic bookings increased 7 percent while international bookings rose 23 percent.

Bellevue, Washington-based Expedia's second-quarter profit dropped to $71.5 million or $0.51 per share from $105.2 million or $0.76 per share last year.

Excluding items, adjusted profit for the quarter dropped to $0.64 per share from $0.89 per share last year. On average, 27 analysts had a consensus earnings estimate of $0.79 per share for the quarter. Analysts' estimates typically exclude special items.

"We knew we were facing second quarter headwinds and those which we expected, as well as some we didn't, materialized. Despite this, we remain confident about our long-term strategy," said Dara Khosrowshahi, Chief Executive Officer of Expedia.

EXPE closed Thursday's trading at $65.00, up $1.22 or 1.91%, on the Nasdaq. The stock, however, dropped $15.45 or 23.77% in after hours trade.