Note 9 – Segment Information

We have four reportable segments: Core OTA, trivago, HomeAway and Egencia. 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, Expedia Partner Solutions, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, CarRentals.com, Classic Vacations and SilverRail Technologies, Inc. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites. Our HomeAway segment operates an online marketplace for the vacation rental industry. Our Egencia segment provides managed travel services to corporate customers worldwide.

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. During the first quarter of 2018, we updated our allocations methodology for certain technology costs. While the impact of the update was not significant, we recast the historical information presented to be on a comparable basis.

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. In addition, when HomeAway properties are booked through our Core OTA websites and vice versa, the segments split the third-party revenue for management and segment reporting purposes with the majority of the third-party revenue residing with the website marketing the property or room.

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, 2018 and 2017. 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, 2018
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	2,253		$	174		$	297		$	156		$	—		$	2,880
Intersegment revenue	—			106			—			—			(106		)	—
Revenue	$	2,253		$	280		$	297		$	156		$	(106	)	$	2,880
Adjusted EBITDA	$	561		$	(20	)	$	78		$	30		$	(186	)	$	463
Depreciation	(85		)	(4		)	(15		)	(12		)	(53		)	(169		)
Amortization of intangible assets	—			—			—			—			(72		)	(72		)
Impairment of goodwill	—			—			—			—			(61		)	(61		)
Stock-based compensation	—			—			—			—			(50		)	(50		)
Legal reserves, occupancy tax and other	—			—			—			—			(1		)	(1		)
Realized (gain) loss on revenue hedges	1			—			—			—			—			1
Operating income (loss)	$	477		$	(24	)	$	63		$	18		$	(423	)	111
Other expense, net																(125		)
Loss before income taxes																(14		)
Provision for income taxes																5
Net loss																(9		)
Net loss attributable to non-controlling interests																10
Net income attributable to Expedia Group, Inc.																$	1



	Three months ended June 30, 2017
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	2,009		$	218		$	224		$	135		$	—		$	2,586
Intersegment revenue	—			110			—			—			(110		)	—
Revenue	$	2,009		$	328		$	224		$	135		$	(110	)	$	2,586
Adjusted EBITDA	$	486		$	2		$	39		$	28		$	(162	)	$	393
Depreciation	(76		)	(2		)	(9		)	(10		)	(55		)	(152		)
Amortization of intangible assets	—			—			—			—			(66		)	(66		)
Stock-based compensation	—			—			—			—			(50		)	(50		)
Legal reserves, occupancy tax and other	—			—			—			—			(3		)	(3		)
Restructuring and related reorganization charges	—			—			—			—			(10		)	(10		)
Realized (gain) loss on revenue hedges	(9		)	—			—			—			—			(9		)
Operating income (loss)	$	401		$	—		$	30		$	18		$	(346	)	103
Other expense, net																(46		)
Income before income taxes																57
Provision for income taxes																(3		)
Net income																54
Net loss attributable to non-controlling interests																3
Net income attributable to Expedia Group, Inc.																$	57



	Six months ended June 30, 2018
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	4,179		$	371		$	531		$	307		$	—		$	5,388
Intersegment revenue	—			228			—			—			(228		)	—
Revenue	$	4,179		$	599		$	531		$	307		$	(228	)	$	5,388
Adjusted EBITDA	$	884		$	(48	)	$	57		$	57		$	(363	)	$	587
Depreciation	(168		)	(7		)	(29		)	(23		)	(109		)	(336		)
Amortization of intangible assets	—			—			—			—			(144		)	(144		)
Impairment of goodwill	—			—			—			—			(61		)	(61		)
Stock-based compensation	—			—			—			—			(100		)	(100		)
Legal reserves, occupancy tax and other	—			—			—			—			(4		)	(4		)
Realized (gain) loss on revenue hedges	4			—			—			—			—			4
Operating income (loss)	$	720		$	(55	)	$	28		$	34		$	(781	)	(54		)
Other expense, net																(129		)
Loss before income taxes																(183		)
Provision for income taxes																25
Net loss																(158		)
Net loss attributable to non-controlling interests																22
Net loss attributable to Expedia Group, Inc.																$	(136	)



	Six months ended June 30, 2017
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	3,710		$	399		$	409		$	257		$	—		$	4,775
Intersegment revenue	—			214			—			—			(214		)	—
Revenue	$	3,710		$	613		$	409		$	257		$	(214	)	$	4,775
Adjusted EBITDA	$	789		$	22		$	45		$	55		$	(310	)	$	601
Depreciation	(147		)	(4		)	(17		)	(19		)	(106		)	(293		)
Amortization of intangible assets	—			—			—			—			(133		)	(133		)
Stock-based compensation	—			—			—			—			(97		)	(97		)
Legal reserves, occupancy tax and other	—			—			—			—			(24		)	(24		)
Restructuring and related reorganization charges	—			—			—			—			(12		)	(12		)
Realized (gain) loss on revenue hedges	(12		)	—			—			—			—			(12		)
Operating income (loss)	$	630		$	18		$	28		$	36		$	(682	)	30
Other expense, net																(104		)
Loss before income taxes																(74		)
Provision for income taxes																44
Net loss																(30		)
Net loss attributable to non-controlling interests																1
Net loss attributable to Expedia Group, Inc.																$	(29	)