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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-37429
 
 
 
EXPEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
20-2705720
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
1111 Expedia Group Way W.
Seattle, WA 98119
(Address of principal executive office) (Zip Code)
(206) 481-7200
(Registrant’s telephone number, including area code)
__________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes         No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
  
Accelerated filer
 
Non-accelerated filer
 
  
Smaller reporting company
 
Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Common stock, $0.0001 par value
 
EXPE
 
The Nasdaq Global Select Market
Expedia Group, Inc. 2.500% Senior Notes due 2022
 
EXPE22
 
New York Stock Exchange
The number of shares outstanding of each of the registrant’s classes of common stock as of July 17, 2020 was:
 
Common stock, $0.0001 par value per share
 
135,703,255

shares
 
Class B common stock, $0.0001 par value per share
 
5,523,452

shares
 
 
 
 
 


Table of Contents

Expedia Group, Inc.
Form 10-Q
For the Quarter Ended June 30, 2020
Contents
 
 
 
 
Part I
 
 
 
 
Item 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2
 
 
 
Item 3
 
 
 
Item 4
 
 
 
Part II
 
 
 
 
Item 1
 
 
 
Item 1A
 
 
 
Item 2
 
 
 
Item 6



Table of Contents

Part I. Item 1. Consolidated Financial Statements
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
(Unaudited)
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
Revenue
$
566

 
$
3,153

 
$
2,775

 
$
5,762

Costs and expenses:
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)
389

 
500

 
1,018

 
990

Selling and marketing (1)
296

 
1,643

 
1,506

 
3,164

Technology and content (1)
255

 
304

 
563

 
601

General and administrative (1)
152

 
205

 
339

 
389

Depreciation and amortization
232

 
228

 
461

 
456

Impairment of goodwill
20

 

 
785

 

Impairment of intangible assets
10

 

 
131

 

Legal reserves, occupancy tax and other
8

 
4

 
(13
)
 
14

Restructuring and related reorganization charges
53

 
4

 
128

 
14

Operating income (loss)
(849
)
 
265

 
(2,143
)
 
134

Other income (expense):
 
 
 
 
 
 
 
Interest income
3

 
17

 
13

 
28

Interest expense
(95
)
 
(39
)
 
(145
)
 
(80
)
Other, net
(12
)
 
(8
)
 
(157
)
 
12

Total other expense, net
(104
)
 
(30
)
 
(289
)
 
(40
)
Income (loss) before income taxes
(953
)
 
235

 
(2,432
)
 
94

Provision for income taxes
213

 
(48
)
 
295

 
(7
)
Net income (loss)
(740
)
 
187

 
(2,137
)
 
87

Net (income) loss attributable to non-controlling interests
4

 
(4
)
 
100

 
(7
)
Net income (loss) attributable to Expedia Group, Inc.
(736
)
 
183

 
(2,037
)
 
80

Preferred stock dividend
(17
)
 

 
(17
)
 

Net income (loss) attributable to Expedia Group, Inc. common stockholders
$
(753
)
 
$
183

 
$
(2,054
)
 
$
80

 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders
 
 
 
 
 
 
 
Basic
$
(5.34
)
 
$
1.23

 
$
(14.57
)
 
$
0.54

Diluted
(5.34
)
 
1.21

 
(14.57
)
 
0.53

Shares used in computing earnings (loss) per share (000's):
 
 
 
 
 
 
 
Basic
141,072

 
149,049

 
140,947

 
148,468

Diluted
141,072

 
151,561

 
140,947

 
151,057

_______
(1) Includes stock-based compensation as follows:
 
 
 
 
 
 
 
Cost of revenue
$
3

 
$
3

 
$
6

 
$
6

Selling and marketing
13

 
12

 
25

 
23

Technology and content
18

 
19

 
38

 
38

General and administrative
20

 
25

 
40

 
48

See accompanying notes.

2

Table of Contents

EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2020
 
2019
 
2020
 
2019
Net income (loss)
$
(740
)
 
$
187

 
$
(2,137
)
 
$
87

Currency translation adjustments, net of tax(1)
34

 
7

 
(56
)
 
2

Comprehensive income (loss)
(706
)
 
194

 
(2,193
)
 
89

Less: Comprehensive income (loss) attributable to non-controlling interests
2

 
10

 
(100
)
 
5

Less: Preferred stock dividend
17

 

 
17

 

Comprehensive income (loss) attributable to Expedia Group, Inc. common stockholders
$
(725
)
 
$
184

 
$
(2,110
)
 
$
84

 
(1)
Currency translation adjustments include tax benefit of $3 million and $1 million associated with net investment hedges for the three and six months ended June 30, 2020 and tax benefit of $2 million and tax expense of $1 million for the three and six months ended June 30, 2019.


See accompanying notes.

3

Table of Contents

EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares, which are reflected in thousands, and par value)
 
June 30,
2020
 
December 31,
2019
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
5,053

 
$
3,315

Restricted cash and cash equivalents
1,311

 
779

Short-term investments
422

 
526

Accounts receivable, net of allowance of $115 and $41
1,002

 
2,524

Income taxes receivable
107

 
70

Prepaid expenses and other current assets
1,049

 
521

Total current assets
8,944

 
7,735

Property and equipment, net
2,305

 
2,198

Operating lease right-of-use assets
626

 
611

Long-term investments and other assets
618

 
796

Deferred income taxes
482

 
145

Intangible assets, net
1,600

 
1,804

Goodwill
7,330

 
8,127

TOTAL ASSETS
$
21,905

 
$
21,416

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable, merchant
$
531

 
$
1,921

Accounts payable, other
518

 
906

Deferred merchant bookings
4,632

 
5,679

Deferred revenue
197

 
321

Income taxes payable
78

 
88

Accrued expenses and other current liabilities
1,166

 
1,050

Current maturities of long-term debt
750

 
749

Total current liabilities
7,872

 
10,714

Long-term debt, excluding current maturities
6,903

 
4,189

Revolving credit facility
1,900

 

Deferred income taxes
74

 
56

Operating lease liabilities
543

 
532

Other long-term liabilities
388

 
389

Commitments and contingencies

 

Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 1,200 and 0
1,022

 

Stockholders’ equity:
 
 
 
Common stock: $.0001 par value; Authorized shares: 1,600,000

 

Shares issued: 259,085 and 256,692; Shares outstanding: 135,691 and 137,076
 
 
 
Class B common stock: $.0001 par value; Authorized shares: 400,000

 

Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523
 
 
 
Additional paid-in capital
13,300

 
12,978

Treasury stock - Common stock and Class B, at cost; Shares 130,670 and 126,893
(10,087
)
 
(9,673
)
Retained earnings (deficit)
(1,206
)
 
879

Accumulated other comprehensive income (loss)
(273
)
 
(217
)
Total Expedia Group, Inc. stockholders’ equity
1,734

 
3,967

Non-redeemable non-controlling interests
1,469

 
1,569

Total stockholders’ equity
3,203

 
5,536

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
21,905

 
$
21,416

See accompanying notes.

4

Table of Contents

EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions, except share and per share data)
(Unaudited)
Three months ended June 30, 2019
 
Common stock
 
Class B
common stock
 
Additional
paid-in
capital
 
Treasury stock
 
Retained
earnings
(deficit)
 
Accumulated
other
comprehensive
income (loss)
 
Non-redeemable
non-controlling
interest
 
Total
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance as of March 31, 2019
 
233,294,034

 
$

 
12,799,999

 
$

 
$
9,694

 
97,355,708

 
$
(5,767
)
 
$
373

 
$
(217
)
 
$
1,551

 
$
5,634

Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
183

 
 
 
4

 
187

Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1

 
6

 
7

Payment of dividends to common stockholders (declared at $0.32 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(48
)
 
 
 
 
 
(48
)
Proceeds from exercise of equity instruments and employee stock purchase plans
 
808,152

 

 
 
 
 
 
65

 
 
 
 
 
 
 
 
 
 
 
65

Withholding taxes for stock options
 
 
 
 
 
 
 
 
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
(2
)
Treasury stock activity related to vesting of equity instruments
 
 
 
 
 
 
 
 
 
 
 
28,504

 
(4
)
 
 
 
 
 
 
 
(4
)
Other changes in ownership of non-controlling interests
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
4

 
4

Stock-based compensation expense
 
 
 
 
 
 
 
 
 
63

 
 
 
 
 
 
 
 
 
 
 
63

Other
 
 
 
 
 
 
 
 
 
1

 
 
 


 


 
 
 
 
 
1

Balance as of June 30, 2019
 
234,102,186

 
$

 
12,799,999

 
$

 
$
9,821

 
97,384,212

 
$
(5,771
)
 
$
508

 
$
(216
)
 
$
1,565

 
$
5,907




Six months ended June 30, 2019
 
Common stock
 
Class B
common stock
 
Additional
paid-in
capital
 
Treasury stock
 
Retained
earnings
(deficit)
 
Accumulated
other
comprehensive
income (loss)
 
Non-redeemable
non-controlling
interest
 
Total
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance as of December 31, 2018
 
231,492,986

 
$

 
12,799,999

 
$

 
$
9,549

 
97,158,586

 
$
(5,742
)
 
$
517

 
$
(220
)
 
$
1,547

 
$
5,651

Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
80

 
 
 
7

 
87

Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4

 
(2
)
 
2

Payment of dividends to common stockholders (declared at $0.64 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(95
)
 
 
 
 
 
(95
)
Proceeds from exercise of equity instruments and employee stock purchase plans
 
2,609,200

 

 
 
 
 
 
156

 
 
 
 
 
 
 
 
 
 
 
156

Withholding taxes for stock options
 
 
 
 
 
 
 
 
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
(2
)
Treasury stock activity related to vesting of equity instruments
 
 
 
 
 
 
 
 
 
 
 
225,626

 
(29
)
 
 
 
 
 
 
 
(29
)
Other changes in ownership of non-controlling interests
 
 
 
 
 
 
 
 
 
(3
)
 
 
 
 
 
 
 
 
 
13

 
10

Impact of adoption of new accounting guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6

 
 
 
 
 
6

Stock-based compensation expense
 
 
 
 
 
 
 
 
 
119

 
 
 
 
 
 
 
 
 
 
 
119

Other
 
 
 
 
 
 
 
 
 
2

 
 
 
 
 
 
 
 
 
 
 
2

Balance as of June 30, 2019
 
234,102,186

 
$

 
12,799,999

 
$

 
$
9,821

 
97,384,212

 
$
(5,771
)
 
$
508

 
$
(216
)
 
$
1,565

 
$
5,907







5

Table of Contents


EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions, except share and per share data)
(Unaudited)
Three months ended June 30, 2020
 
Common stock
 
Class B
common stock
 
Additional
paid-in
capital
 
Treasury stock - Common and Class B
 
Retained
earnings
(deficit)
 
Accumulated
other
comprehensive
income (loss)
 
Non-redeemable
non-controlling
interest
 
Total
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance as of March 31, 2020
 
258,769,812

 
$

 
12,799,999

 
$

 
$
13,124

 
130,592,112

 
$
(10,083
)
 
$
(470
)
 
$
(301
)
 
$
1,471

 
$
3,741

Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(736
)
 
 
 
(4
)
 
(740
)
Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28

 
6

 
34

Payment of preferred dividends (declared at $14.02 per share)
 
 
 
 
 
 
 
 
 
(17
)
 
 
 
 
 
 
 
 
 
 
 
(17
)
Proceeds from exercise of equity instruments and employee stock purchase plans
 
315,120

 

 
 
 
 
 
10

 
 
 
 
 
 
 
 
 
 
 
10

Common stock warrants, net of issuance costs
 
 
 
 
 
 
 
 
 
110

 
 
 
 
 
 
 
 
 
 
 
110

Treasury stock activity related to vesting of equity instruments
 
 
 
 
 
 
 
 
 
 
 
57,631

 
(4
)
 
 
 
 
 
 
 
(4
)
Adjustment to the fair value of redeemable non-controlling interests
 
 
 
 
 
 
 
 
 
4

 
 
 
 
 
 
 
 
 
 
 
4

Other changes in ownership of non-controlling interests
 
 
 
 
 
 
 
 
 
9

 
 
 
 
 
 
 
 
 
(4
)
 
5

Stock-based compensation expense
 
 
 
 
 
 
 
 
 
59

 
 
 
 
 
 
 
 
 
 
 
59

Other
 
 
 
 
 
 
 
 
 
1

 
20,630

 

 
 
 
 
 
 
 
1

Balance as of June 30, 2020
 
259,084,932

 
$

 
12,799,999

 
$

 
$
13,300

 
130,670,373

 
$
(10,087
)
 
$
(1,206
)
 
$
(273
)
 
$
1,469

 
$
3,203

Six months ended June 30, 2020
 
Common stock
 
Class B
common stock
 
Additional
paid-in
capital
 
Treasury stock - Common and Class B
 
Retained
earnings
(deficit)
 
Accumulated
other
comprehensive
income (loss)
 
Non-redeemable
non-controlling
interest
 
Total
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance as of December 31, 2019
 
256,691,777

 
$

 
12,799,999

 
$

 
$
12,978

 
126,892,525

 
$
(9,673
)
 
$
879

 
$
(217
)
 
$
1,569

 
$
5,536

Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,037
)
 
 
 
(100
)
 
(2,137
)
Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(56
)
 

 
(56
)
Payment of dividends to common stockholders (declared at $0.34 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(48
)
 
 
 
 
 
(48
)
Payment of preferred dividends (declared at $14.02 per share)
 
 
 
 
 
 
 
 
 
(17
)
 
 
 
 
 
 
 
 
 
 
 
(17
)
Proceeds from exercise of equity instruments and employee stock purchase plans
 
2,393,155

 

 
 
 
 
 
96

 
 
 
 
 
 
 
 
 
 
 
96

Common stock warrants, net of issuance costs
 
 
 
 
 
 
 
 
 
110

 
 
 
 
 
 
 
 
 
 
 
110

Treasury stock activity related to vesting of equity instruments
 
 
 
 
 
 
 
 
 
 
 
393,099

 
$
(44
)
 
 
 
 
 
 
 
(44
)
Common stock repurchases
 
 
 
 
 
 
 
 
 
 
 
3,364,119

 
(370
)
 
 
 
 
 
 
 
(370
)
Adjustment to the fair value of redeemable non-controlling interests
 
 
 
 
 
 
 
 
 
4

 
 
 
 
 
 
 
 
 
 
 
4

Other changes in ownership of non-controlling interests
 
 
 
 
 
 
 
 
 
10

 
 
 
 
 
 
 
 
 

 
10

Stock-based compensation expense
 
 
 
 
 
 
 
 
 
118

 
 
 
 
 
 
 
 
 
 
 
118

Other
 
 
 
 
 
 
 
 
 
1

 
20,630

 

 
 
 
 
 
 
 
1

Balance as of June 30, 2020
 
259,084,932

 
$

 
12,799,999

 
$

 
$
13,300

 
130,670,373

 
$
(10,087
)
 
$
(1,206
)
 
$
(273
)
 
$
1,469

 
$
3,203

See accompanying notes.

6

Table of Contents

EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Six months ended
June 30,
 
2020
 
2019
Operating activities:
 
 
 
Net income (loss)
$
(2,137
)
 
$
87

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation of property and equipment, including internal-use software and website development
376

 
352

Amortization of intangible assets
85

 
104

Impairment of goodwill and intangible assets
916

 

Amortization of stock-based compensation
109

 
115

Deferred income taxes
(279
)
 
(15
)
Foreign exchange (gain) loss on cash, restricted cash and short-term investments, net
65

 
(13
)
Realized gain on foreign currency forwards
(79
)
 
(16
)
(Gain) loss on minority equity investments, net
195

 
(12
)
Provision for credit losses and other, net
119

 
(13
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
1,479

 
(742
)
Prepaid expenses and other assets
(585
)
 
(7
)
Accounts payable, merchant
(1,389
)
 
271

Accounts payable, other, accrued expenses and other liabilities
(244
)
 
436

Tax payable/receivable, net
(82
)
 
(143
)
Deferred merchant bookings
(1,058
)
 
2,726

Deferred revenue
(121
)
 
157

Net cash provided by (used in) operating activities
(2,630
)
 
3,287

Investing activities:
 
 
 
Capital expenditures, including internal-use software and website development
(493
)
 
(573
)
Purchases of investments
(685
)
 
(636
)
Sales and maturities of investments
761

 
27

Other, net
76

 
16

Net cash provided by (used in) investing activities
(341
)
 
(1,166
)
Financing activities:
 
 
 
Revolving credit facility borrowings
1,900

 

Proceeds from issuance of long-term debt, net of issuance costs
2,714

 

Net proceeds from issuance of preferred stock and warrants
1,132

 

Purchases of treasury stock
(414
)
 
(29
)
Payment of dividends to common stockholders
(48
)
 
(95
)
Payment of preferred stock dividends
(17
)
 

Proceeds from exercise of equity awards and employee stock purchase plan
96

 
156

Other, net
(30
)
 
2

Net cash provided by financing activities
5,333