EX-99.1 2 d248499dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

   LOGO

HomeAway, Inc. Reports Third Quarter 2011 Financial Results

– Total revenue of $61.1 million, up 36.9% year-over-year

– Adjusted EBITDA of $21.6 million, up 36.5% year-over-year

– TTM Free Cash Flow generation of $61.5 million, up 40.0% year-over-year

Austin, Texas – October 27, 2011 – HomeAway, Inc. (NASDAQ: AWAY), the world’s largest online marketplace for vacation rentals, today reported its financial results for the third quarter ended September 30, 2011.

Management Commentary

“HomeAway’s impressive third quarter results continue to confirm and support our market leading position in the highly fragmented and underpenetrated global vacation rentals marketplace,” says Brian Sharples, Chief Executive Officer of HomeAway®. “We’ve continued to make meaningful strides in delivering against our financial, operational and strategic growth initiatives through ongoing investment in our core business and strong execution. During the third quarter, we attracted over 129 million visits to our network of sites and have delivered on our promise to further improve the monetization of the marketplace through the launch of tiered pricing and other ancillary services. Throughout the remainder of fiscal 2011 and beyond, we expect to continue to reap the benefits of our strong network effect by attracting new travelers to our platform and driving continued growth in paid listings.”

Third Quarter 2011 Financial Highlights

 

   

Total revenue increased 36.9% to $61.1 million from $44.6 million in the third quarter of 2010. Growth in total revenue was driven by continued strength in renewal rates and increased revenue per listing from the prior year.

 

   

Listing revenue increased 29.2% to $52.5 million from $40.6 million in the third quarter of 2010.

 

   

Adjusted EBITDA increased 36.5% to $21.6 million from $15.9 million in the third quarter of 2010. For the third quarter of 2011, Adjusted EBITDA, as a percentage of revenue, was 35.4%, consistent with that of the third quarter of 2010.

 

   

Free cash flow increased 64.0% to $13.9 million from $8.5 million in the third quarter of 2010. On a trailing twelve month basis, free cash flow increased 40.0% to $61.5 million from $44.0 million in the comparable trailing twelve month period for the prior year.

 

   

Net loss attributable to common stockholders was $4.1 million, or ($0.05) per diluted share compared to a net loss of ($0.11) per diluted share in the third quarter of 2010. This measure per diluted share includes the impact of cumulative preferred stock dividends and discount accretion of $6.8 million, or ($0.09) per share, in 2011 and $8.9 million, or ($0.23) per share, in 2010. As of September 30, 2011, the Company no longer has any preferred stock outstanding.

 

   

Cash, cash equivalents and short-term investments as of September 30, 2011 were $172.1 million.


Third Quarter 2011 Business Highlights

 

   

Launch of pay-for-performance pricing on HomeAway.com, enabling users to pay more to rank higher in search results. The tiered pricing model has already shown positive initial results and is anticipated to further increase average revenue per listing over time.

 

   

Migration of HomeAway’s French website, Abritel.fr, to the HomeAway network platform as part of the ongoing network consolidation efforts towards achieving a single technology platform.

 

   

Initiation of bundled pricing in the United Kingdom, allowing property owners and managers to purchase listings simultaneously on HomeAway.co.uk, the home of Holiday-Rentals®, and OwnersDirect.co.uk for one bundled price.

 

   

Completion of the first full quarter with the Reservation Manager product on two of HomeAway’s leading websites, HomeAway.com and VRBO.com. Reservation Manager helps property owners and managers to streamline the inquiry and payments processes and to accept credit cards and eChecks through a secure and automated process, as well as permits travelers to pay online through a trusted site.

 

   

Completion of the full rollout of the owner dashboard on VRBO.com, providing property owners and managers with improved efficiency and marketing opportunities.

Key Business Metrics

 

   

Paid listings were 626,528, compared to 511,667 at the end of the third quarter of 2010 and 626,661 at the end of the second quarter of 2011. Paid listings increased 22.4% year-over-year and were consistent with the second quarter of 2011, reflecting the expected seasonality.

 

   

Average revenue per listing was $335, compared to $314 during the third quarter of 2010 and $339 during the second quarter of 2011. The Australian business, which was acquired in the second quarter of 2011, generates a lower average revenue per listing.

 

   

Renewal rate was 76.4%, compared to 75.4% at the end of the third quarter of 2010 and 76.2% at the end of the second quarter of 2011.

 

   

Visits were 129.1 million, according to the Company’s internal metrics, an increase of 23.2% year-over-year. According to ComScore, visits were 56.9 million, a decrease of 1.3% year-over-year.

Historical Quarterly Business Metrics

 

For the Three Months Ended:

 
     March
31, 2010
     June
30, 2010
     September
30, 2010
     December
30, 2010
     March
31, 2011
     June
30, 2011
     September
30, 2011
 

Average Revenue Per Listing

   $ 290       $ 298       $ 314       $ 311       $ 328       $ 339       $ 335   

Paid Listings, end of period

     498,895         525,187         511,667         527,535         575,166         626,661         626,528   

Business Outlook

HomeAway management currently expects to achieve the following results for its fourth quarter ended December 31, 2011 and the year ended December 31, 2011, as follows:


Fourth Quarter 2011

 

   

Total revenue is expected to be in the range of $57.2 to $57.7 million.

 

   

Adjusted EBITDA is expected to be in the range of $15.2 to $15.7 million.

Full Year 2011

 

   

Total revenue is expected to be in the range of $229.0 to $229.5 million.

 

   

Adjusted EBITDA is expected to be in the range of $65.2 to $65.7 million.

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Information about HomeAway’s use of non-GAAP financial measures and key business metrics is provided below under the captions “Use of Non-GAAP Financial Measures” and “Use of Key Business Metrics”.

Conference Call & Webcast Information

HomeAway will host a conference call to review and discuss its third quarter results today at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. To participate in the conference call, investors should join ten minutes prior to the scheduled start time. Callers in the United States and Canada should join by dialing (877) 941-2068, passcode 4476717. Callers outside the United States and Canada should join by dialing (480) 629-9712, passcode 4476717. In addition, a live webcast of the call will be accessible through the Investor Relations section of HomeAway’s® website at http://investors.homeaway.com and will be archived online for 60 days upon completion of the conference call. For those unable to participate during the live broadcast, a telephonic replay of the call will also be available from 7:30 p.m. Eastern Time / 6:30 p.m. Central Time on October 27, 2011 until 11:59 p.m. Eastern Time / 10:59 p.m. Central Time on November 10, 2011 by dialing (877) 870-5176, passcode 4476717, in the United States and Canada or (858) 384-5517 outside the United States and Canada, passcode 4476717.

About HomeAway

Located in Austin, Texas, HomeAway, Inc. operates the world’s largest online marketplace for the vacation rental industry. The HomeAway marketplace brings together millions of travelers seeking vacation rentals online with hundreds of thousands of owners and managers of vacation rental properties located in over 145 countries around the world. HomeAway’s websites include HomeAway.com, VRBO.com and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es in Spain; AlugueTemporada.com.br in Brazil and HomeAway.com.au in Australia. In addition, HomeAway operates BedandBreakfast.com, a comprehensive global site for finding bed-and-breakfast properties, providing travelers with another source for unique lodging alternatives to chain hotels.

Cautionary Statement Regarding Forward-looking Statements

This press release contains “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which are based on HomeAway management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning HomeAway’s expected, possible or assumed future results of operations, business outlook, potential business strategies, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.

Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “continues,” “plans,” “believes,” “expects,” “anticipates,”“could,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause HomeAway’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to the following: (a) HomeAway’s inability to attract and maintain a critical mass of property listings and travelers, (b) a decrease in renewal of listings, (c) HomeAway’s inability to effectively manage its growth, (d) HomeAway’s inability to increase sales to existing property owners and managers


and attract new ones, (e) changes in HomeAway’s pricing policies or those of its competitors, (f) HomeAway’s inability to effectively integrate acquired businesses successfully, (g) the impact of general economic conditions, and (h) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), including HomeAway’s Prospectus previously filed with the SEC pursuant to Rule 424(b)(4) on June 28, 2011 and HomeAway’s most recent 10-Q, filed on August 15, 2011. All information provided in this press release is as of the date hereof and, except as required by law, HomeAway assumes no obligation to update this information, even if new information becomes available in the future.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures: Adjusted EBITDA and free cash flow. Adjusted EBITDA, and free cash flow are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. HomeAway defines Adjusted EBITDA as its net income (loss) plus depreciation; amortization of intangible assets; interest expense, net; income tax expense (benefit); stock-based compensation expense, all net of any foreign exchange income or expense. HomeAway defines free cash flow as its cash provided by operating activities, adjusted for cash interest expense and income, and subtracting capital expenditures. For the purpose of calculating free cash flow, HomeAway considers purchases of property, equipment, tenant improvements for its offices, and software licenses (including costs associated with internally developed software) as capital expenditures.

HomeAway management believes that the use of Adjusted EBITDA and free cash flow are useful to investors in evaluating its operating performance for the following reasons:

 

   

HomeAway management uses Adjusted EBITDA and free cash flow in conjunction with GAAP financial measures as part of its assessment of its business and in communications with its board of directors concerning its financial performance;

 

   

Adjusted EBITDA and free cash flow provide consistency and comparability with HomeAway’s past financial performance, facilitate period-to-period comparisons of operations, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results;

 

   

Securities analysts use Adjusted EBITDA and free cash flow as supplemental measures to evaluate the overall operating performance of companies, and HomeAway management anticipates that its investor and analyst presentations will include Adjusted EBITDA and free cash flow; and

 

   

Adjusted EBITDA excludes non-cash charges, such as depreciation, amortization and stock-based compensation, because such non-cash expenses in any specific period may not directly correlate to the underlying performance of HomeAway’s business operations and can vary significantly between periods.

Adjusted EBITDA and free cash flow should not be reviewed in isolation. Investors should consider them in addition to, and not as substitutes for, measures of HomeAway’s financial performance reported in accordance with GAAP. HomeAway’s Adjusted EBITDA or free cash flow may not be comparable to similarly titled measures of other companies and because other companies may not calculate such measures in the same manner as HomeAway does. Adjusted EBITDA and free cash flow have limitations as analytical tools. As an example, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often need to be replaced in the future, and Adjusted EBITDA and free cash flow do not reflect any cash requirements for these replacements. In addition, neither of these measures reflect future requirements for contractual obligations.

Further limitations of Adjusted EBITDA include:

 

   

this measure does not reflect changes in working capital;

 

   

this measure does not reflect interest income or interest expense; and

 

   

this measure does not reflect cash requirements for income taxes.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.


Use of Key Business Metrics

A paid listing is defined by HomeAway as a fee to list a property advertisement on one or more websites in its marketplace. A paid listing allows a property owner or manager to include a description of the property, along with location, pricing, availability, a specified number of photos and contact information. Most listings are sold on a subscription basis, and some listing packages may include listings on more than one of HomeAway’s websites. When purchased at the same time in one bundle, HomeAway counts this as one paid listing.

Average revenue per listing is computed by HomeAway as listing revenue for the period divided by the average of paid listings at the beginning and end of the period and then annualizing the result. The price of listings varies by website and can include various additional fees associated with listing enhancements. The average revenue per listing may fluctuate based on the timing and nature of acquisitions, impacting the number of average paid listings for a given period; changes in HomeAway’s base pricing; uptake of listing enhancements; changes in the pricing of enhancements; changes in brand mix; and the impact of foreign exchange rates on HomeAway’s listing revenue outside of the United States.

The renewal rate for HomeAway’s subscription listings at the end of any period is defined as the percentage of those paid listings that were active at the end of the period ended twelve months prior that are still active as of the end of the reported period. HomeAway does not include all brands in its calculation of renewal rate. Brands included in the calculation of renewal rate for the period ended September 30, 2011 were HomeAway.com, VRBO.com, VacationRentals.com, Fe-Wo-Direckt.de, Holiday-Rentals.co.uk, OwnersDirect.co.uk, Abritel.fr, Homelidays.com and AlugueTemporada.com.br.


HomeAway, Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2011     2010     2011     2010  

Revenue:

        

Listing

   $ 52,499      $ 40,640      $ 148,667      $ 112,551   

Other

     8,621        4,009        23,101        9,849   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     61,120        44,649        171,768        122,400   

Costs and expenses:

        

Cost of revenue (exclusive of amortization shown separately below)

     8,439        6,166        25,548        18,204   

Product development

     8,650        4,532        24,089        12,730   

Sales and marketing

     17,851        12,404        61,129        42,203   

General and administrative

     12,700        10,487        34,386        29,173   

Amortization expense

     3,053        2,526        8,853        7,241   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     50,693        36,115        154,005        109,551   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     10,427        8,534        17,763        12,849   

Other income (expense):

        

Interest expense

     —          (21     —          (22

Interest income

     124        42        240        159   

Other income (expense)

     (1,746     586        (2,135     (2,498
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     (1,622     607        (1,895     (2,361
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     8,805        9,141        15,868        10,488   

Income tax (expense) benefit

     (6,072     (4,640     (9,434     8,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     2,733        4,501        6,434        18,564   

Cumulative preferred stock dividends and discount accretion

     (6,794     (8,855     (24,678     (26,287
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stockholders

   $ (4,061   $ (4,354   $ (18,244   $ (7,723
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

        

Basic and diluted

   $ (0.05   $ (0.11   $ (0.35   $ (0.20
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding:

        

Basic and diluted

     78,528        38,423        52,386        37,970   
  

 

 

   

 

 

   

 

 

   

 

 

 


HomeAway, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

     September 30,     December 31,  
     2011     2010  
     (Unaudited)        

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 170,243      $ 65,697   

Short-term investments

     1,833        11,812   

Accounts receivable, net of allowance for doubtful accounts of $502 and $120 as of September 30, 2011 and December 31, 2010, respectively

     12,387        8,961   

Income tax receivable

     10,701        845   

Prepaid expenses and other current assets

     4,527        4,138   

Restricted cash

     1,046        862   

Deferred tax assets

     2,075        2,572   
  

 

 

   

 

 

 

Total current assets

     202,812        94,887   

Property and equipment, net

     24,061        21,545   

Goodwill

     303,526        300,780   

Intangible assets, net

     64,493        69,790   

Restricted cash

     254        2,000   

Deferred tax assets

     2,949        303   

Other non-current assets

     4,583        437   
  

 

 

   

 

 

 

Total assets

   $ 602,678      $ 489,742   
  

 

 

   

 

 

 

Liabilities, redeemable preferred stock and stockholders’ equity (deficit)

    

Current liabilities:

    

Accounts payable

   $ 3,083      $ 4,812   

Income tax payable

     15,147        2,465   

Accrued expenses

     22,297        21,974   

Deferred revenue

     102,885        86,120   
  

 

 

   

 

 

 

Total current liabilities

     143,412        115,371   

Deferred revenue, less current portion

     2,374        2,431   

Deferred tax liabilities

     15,778        6,073   

Other non-current liabilities

     3,893        3,976   
  

 

 

   

 

 

 

Total liabilities

     165,457        127,851   
  

 

 

   

 

 

 

Commitments and contingencies

    

Redeemable preferred stock

    

Series A

     —          48,931   

Series B

     —          7,975   

Convertible redeemable preferred stock

    

Series C

     —          124,318   

Series D

     —          297,741   

Stockholders’ deficit

    

Common stock

     8        4   

Additional paid-in capital

     552,377        —     

Accumulated other comprehensive loss

     (4,234     (3,732

Accumulated deficit

     (110,930     (113,346
  

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     437,221        (117,074
  

 

 

   

 

 

 

Total liabilities, redeemable preferred stock and stockholders’ equity (deficit)

   $ 602,678      $ 489,742   
  

 

 

   

 

 

 


HomeAway, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

     Nine Months Ended
September 30,
 
     2011     2010  

Cash flows from operating activities

    

Net income

   $ 6,434      $ 18,564   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation

     6,220        4,282   

Amortization of intangible assets

     8,853        7,241   

Amortization of note discount and other

     29        377   

Stock-based compensation

     17,179        9,725   

Excess tax benefit from stock-based compensation

     (1,041     —     

Deferred income taxes

     6,755        (8,768

(Gain) loss on sale of investments and other

     40        (12

Unrealized foreign exchange loss

     752        1,491   

Realized loss on foreign currency forwards

     1,642        428   

Changes in operating assets and liabilities, net of assets and liabilities assumed in business combinations:

    

Accounts receivable

     (3,572     (4,007

Income tax receivable

     (9,809     320   

Prepaid expenses and other assets

     (4,036     (1,635

Accounts payable

     (1,720     (315

Accrued expenses

     (73     1,424   

Income taxes payable

     14,056        (1,728

Deferred revenue

     15,996        16,927   

Deferred rent and other non-current liabilities

     (234     341   
  

 

 

   

 

 

 

Net cash provided by operating activities

     57,471        44,655   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Cash paid for businesses acquired, net of cash acquired

     (4,698     (36,574

Change in restricted cash

     1,538        —     

Cash paid for trademarks and other assets acquired

     (262     (63

Purchases of short-term investments

     —          (86,890

Proceeds from sales and maturities of marketable securities and other

     10,035        70,296   

Net settlement of foreign currency forwards

     (1,642     (428

Purchases of property and equipment

     (8,904     (6,148
  

 

 

   

 

 

 

Net cash used in investing activities

     (3,933     (56,807
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from exercise of options to purchase common stock

     2,737        1,705   

Payment of dividends on preferred stock

     (54,436     (4,051

Proceeds from initial public offering, net underwriting discount and offering cost

     146,303        —     

Payment for repurchase of preferred stock

     (43,451     (3,942

Excess tax benefit from stock-based compensation

     1,041        —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     52,194        (6,288
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (1,186     (988
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     104,546        (22,428

Cash and cash equivalents at beginning of period

     65,697        92,425   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 170,243      $ 69,997   
  

 

 

   

 

 

 


Schedule of Non-GAAP Reconciliations

(Unaudited, in thousands)

 

     Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
     2011     2010     2011     2010  

Net income

   $ 2,733      $ 4,501      $ 6,434      $ 18,564   

Add:

        

Depreciation and amortization

     5,264        4,013        15,073        11,523   

Stock-based compensation

     5,964        3,302        17,179        9,725   

Interest expense

     —          21        —          22   

Interest income

     (124     (42     (240     (159

Foreign exchange expense (income)

     1,725        (582     2,160        2,531   

Income tax expense (benefit)

     6,072        4,640        9,434        (8,076
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 21,634      $ 15,853      $ 50,040      $ 34,130   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
     2011     2010     2011     2010  

Cash provided by operating activities

   $ 17,004      $ 10,790      $ 57,471      $ 44,655   

Cash paid for interest

     —          —          —          —     

Capital expenditures

     (3,119     (2,324     (8,904     (6,148
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 13,885      $ 8,466      $ 48,567      $ 38,507   
  

 

 

   

 

 

   

 

 

   

 

 

 


Supplemental Financial Information

(Unaudited, in thousands)

 

     Three Months
Ended September 30,
     Nine Months
Ended September 30,
 
     2011      2010      2011      2010  

Stock-based compensation:

           

Cost of revenue

   $ 425       $ 190       $ 1,314       $ 593   

Product development

     1,292         531         3,628         1,738   

Sales and marketing

     1,361         384         4,542         1,203   

General and administrative

     2,886         2,197         7,695         6,191   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5,964       $ 3,302       $ 17,179       $ 9,725   
  

 

 

    

 

 

    

 

 

    

 

 

 

Investor Contact:

HomeAway Investor Relations

(512) 505-1700

investors@homeaway.com

or Addo Communications at (310) 829-5400

Media Contact:

Eileen Buesing

Senior Director of Global Public Relations, HomeAway, Inc.

(512) 493-0375

ebuesing@homeaway.com

###