Note 15 – Segment Information

We have four reportable segments: Core Online Travel Companies (“Core OTA”), trivago, Egencia and HomeAway. In addition, eLong was a reportable segment through its disposal on May 22, 2015. Our Core OTA segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Venere, Wotif Group, CarRentals.com, and Classic Vacations. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites. Our Egencia segment, which also includes Orbitz for Business, provides managed travel services to corporate customers worldwide. Our HomeAway segment, created by our acquisition of HomeAway on December 15, 2015, operates an online marketplace for the vacation rental industry.

We determined our operating segments based on how our chief operating decision makers manage our business, make operating decisions and evaluate operating performance. Our primary operating metric is adjusted EBITDA. Adjusted EBITDA for our Core OTA and Egencia segments includes allocations of certain expenses, primarily cost of revenue and facilities, and our Core OTA segment includes the total costs of our global supply organizations as well as the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant hotel revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, information technology and legal to our reportable segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated and may change.

Our segment disclosure includes intersegment revenues, which primarily consist of advertising and media services provided by our trivago segment to our Core OTA segment. These intersegment transactions are recorded by each segment at amounts that approximate fair value as if the transactions were between third parties, and therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within Corporate and Eliminations in the table below.

Corporate and Eliminations also includes unallocated corporate functions and expenses. In addition, we record amortization of intangible assets and any related impairment, as well as stock-based compensation expense, restructuring and related reorganization charges, legal reserves, occupancy tax and other, and other items excluded from segment operating performance in Corporate and Eliminations. Such amounts are detailed in our segment reconciliation below.

The following tables present our segment information for the three and six months ended June 30, 2016 and June 30, 2015. As a significant portion of our property and equipment is not allocated to our operating segments and depreciation is not included in our segment measure, we do not report the assets by segment as it would not be meaningful. We do not regularly provide such information to our chief operating decision makers.


	Three months ended June 30, 2016
	Core OTA			trivago			Egencia			HomeAway⁽¹⁾			Corporate & Eliminations			Total
	(In thousands)
Third-party revenue	$	1,764,929		$	134,837		$	124,506		$	171,597		$	—		$	2,195,869
Intersegment revenue		—			65,686			—			—			(65,686	)		—

Revenue	$	1,764,929		$	200,523		$	124,506		$	171,597		$	(65,686	)	$	2,195,869

Adjusted EBITDA	$	428,219		$	7,035		$	26,470		$	38,270		$	(169,097	)	$	330,897
Depreciation		(62,239	)		(2,186	)		(8,078	)		(4,108	)		(39,412	)		(116,023	)
Amortization of intangible assets		—			—			—			—			(84,181	)		(84,181	)
Stock-based compensation		—			—			—			—			(100,431	)		(100,431	)
Legal reserves, occupancy tax and other		—			—			—			—			(4,344	)		(4,344	)
Restructuring and related reorganization charges		—			—			—			—			(9,363	)		(9,363	)
Realized (gain) loss on revenue hedges		9,107			—			—			—			—			9,107

Operating income (loss)	$	375,087		$	4,849		$	18,392		$	34,162		$	(406,828	)		25,662

Other expense, net																	(37,857	)

Loss before income taxes																	(12,195	)
Provision for income taxes																	18,202

Net income																	6,007
Net loss attributable to noncontrolling interests																	25,642

Net income attributable to Expedia, Inc.																$	31,649


	Three months ended June 30, 2015
	Core OTA			trivago			Egencia			eLong⁽²⁾			Corporate & Eliminations			Total
	(In thousands)
Third-party revenue	$	1,462,926		$	90,075		$	101,423		$	8,176		$	—		$	1,662,600
Intersegment revenue		—			52,470			—			—			(52,470	)		—

Revenue	$	1,462,926		$	142,545		$	101,423		$	8,176		$	(52,470	)	$	1,662,600

Adjusted EBITDA	$	384,497		$	(8,971	)	$	23,701		$	(28,915	)	$	(117,963	)	$	252,349
Depreciation		(45,647	)		(485	)		(6,146	)		(1,208	)		(25,791	)		(79,277	)
Amortization of intangible assets		—			—			—			—			(26,880	)		(26,880	)
Stock-based compensation		—			—			—			—			(41,494	)		(41,494	)
Legal reserves, occupancy tax and other		—			—			—			—			(5,510	)		(5,510	)
Restructuring and related reorganization charges		—			—			—			—			(5,646	)		(5,646	)
Realized (gain) loss on revenue hedges		(3,450	)		—			—			—			—			(3,450	)

Operating income (loss)	$	335,400		$	(9,456	)	$	17,555		$	(30,123	)	$	(223,284	)		90,092

Other income, net																	467,965

Income before income taxes																	558,057
Provision for income taxes																	(131,221	)

Net income																	426,836
Net loss attributable to noncontrolling interests																	22,808

Net income attributable to Expedia, Inc.																$	449,644


	Six months ended June 30, 2016
	Core OTA			trivago			Egencia			HomeAway⁽¹⁾			Corporate & Eliminations			Total
	(In thousands)
Third-party revenue	$	3,304,785		$	246,899		$	234,355		$	313,791		$	—		$	4,099,830
Intersegment revenue		—			129,794			—			—			(129,794	)		—

Revenue	$	3,304,785		$	376,693		$	234,355		$	313,791		$	(129,794	)	$	4,099,830

Adjusted EBITDA	$	720,575		$	14,741		$	41,831		$	55,584		$	(325,282	)	$	507,449
Depreciation		(121,057	)		(2,971	)		(14,925	)		(7,767	)		(74,558	)		(221,278	)
Amortization of intangible assets		—			—			—			—			(174,180	)		(174,180	)
Stock-based compensation		—			—			—			—			(149,339	)		(149,339	)
Legal reserves, occupancy tax and other		—			—			—			—			(6,318	)		(6,318	)
Restructuring and related reorganization charges		—			—			—			—			(27,993	)		(27,993	)
Realized (gain) loss on revenue hedges		23			—			—			—			—			23

Operating income (loss)	$	599,541		$	11,770		$	26,906		$	47,817		$	(757,670	)		(71,636	)

Other expense, net																	(106,445	)

Loss before income taxes																	(178,081	)
Provision for income taxes																	75,556

Net loss																	(102,525	)
Net loss attributable to noncontrolling interests																	25,585

Net loss attributable to Expedia, Inc.																$	(76,940	)


	Six months ended June 30, 2015
	Core OTA			trivago			Egencia			eLong⁽²⁾			Corporate & Eliminations			Total
	(In thousands)
Third-party revenue	$	2,632,861		$	162,125		$	199,268		$	41,743		$	—		$	3,035,997
Intersegment revenue		—			99,545			—			—			(99,545	)		—

Revenue	$	2,632,861		$	261,670		$	199,268		$	41,743		$	(99,545	)	$	3,035,997

Adjusted EBITDA	$	603,795		$	(3,925	)	$	43,497		$	(62,167	)	$	(227,088	)	$	354,112
Depreciation		(86,258	)		(887	)		(11,788	)		(3,263	)		(51,526	)		(153,722	)
Amortization of intangible assets		—			—			—			—			(51,922	)		(51,922	)
Stock-based compensation		—			—			—			—			(70,380	)		(70,380	)
Legal reserves, occupancy tax and other		—			—			—			—			(8,039	)		(8,039	)
Restructuring and related reorganization charges		—			—			—			—			(10,322	)		(10,322	)
Realized (gain) loss on revenue hedges		(20,636	)		—			—			—			—			(20,636	)

Operating income (loss)	$	496,901		$	(4,812	)	$	31,709		$	(65,430	)	$	(419,277	)		39,091

Other income, net																	550,617

Income before income taxes																	589,708
Provision for income taxes																	(130,311	)

Net income																	459,397
Net loss attributable to noncontrolling interests																	34,390

Net income attributable to Expedia, Inc.																$	493,787

(1)	Includes results since our acquisition of HomeAway on December 15, 2015.

(2)	Includes results of eLong through its disposal on May 22, 2015.