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Expedia's (EXPE) CEO Dara Khosrowshahi on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 28, 2016 04:30 PM ET


Alan Pickerill - VP, IR

Dara Khosrowshahi - President & CEO

Mark Okerstrom - CFO & EVP, Operations


Mark Mahaney - RBC Capital Markets

Justin Post - Bank of America/Merrill Lynch

Naved Khan - Cantor Fitzgerald

Brian Fitzgerald - Jefferies

Mike Olson - Piper Jaffray

Tom White - Macquarie Research

Lloyd Walmsley - Deutsche Bank

Ken Sena - Evercore ISI

Ron Josey - JMP Securities

Dae Lee - JPMorgan

Jed Kelly - Oppenheimer

Dan Powell - Goldman Sachs

Peter Stabler - Wells Fargo Securities

Kevin Kopelman - Cowen & Company

Justin Patterson - Raymond James

Dan Wasiolek - Morningstar

Perry Gold - MoffettNathanson


Good day and welcome to the Expedia's Q1 2016 Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Alan Pickerill, Vice President Investor Relations at Expedia. Please go ahead, sir.

Alan Pickerill

Thank you and good afternoon, everybody. Welcome to Expedia's financial results conference call for the first quarter ended March 31, 2016. Pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President and Mark Okerstrom, our CFO and EVP Operations. The following discussion, including responses to your questions, reflects management's views as of today, April 28, 2016 only. We do not undertake any obligation to update or revise this information.

As always, some of the statements made on today's call are forward-looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to today's press release and the Company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements.

You will find reconciliations of the non-GAAP measures to the most comparable GAAP measures discussed today in our earnings release which is posted on the Company's IR Web site at I encourage you to periodically visit our Investor Relations site for important content including today's earnings release.

As a reminder, we sold our 62.4% ownership stake in eLong on May 22, 2015 which was previously a consolidated entity of Expedia, Inc. For GAAP accounting purposes the results of eLong are included in our results through the date of the sale. In order to allow investors to compare our current results on a like-for-like basis with our historical results, our commentary in the earnings release and on this call is principally focused on our results excluding eLong which should be considered in addition to the GAAP results on a fully consolidated basis.

Finally, unless otherwise stated all references to cost of revenue, selling and marketing expense, general and administrative expense and technology and content expense also exclude stock-based compensation and depreciation expense. And all comparisons on this call will be against our results for the comparable period of 2015. With that I would like to turn the call over to Dara.

Dara Khosrowshahi

Thanks, Alan. We are off to a solid start in 2016 with our financial performance coming in a bit better than expected pretty much across the board. This was underscored by continued strong momentum in the unit growth with global room nights up 37%, air tickets up 52%, car days up 48% and advertising and media revenue growing 44%.

Results were strong in Q1 across all of our major brands , resulting in organic room night growth of 24%, consistent with last quarter despite about 500 basis point harder comp. Brand Expedia and each saw healthy room night growth across all regions with accelerating in Q1 versus Q4. Expedia Affiliate Network delivered room night growth above 30% for the fourth consecutive quarter, continuing to gain share versus our competition. And Egencia transaction growth accelerated in Q1 compared to Q4, although we saw signs of corporate travel spend tightening in the form of lower average booking values per transaction. Going forward through 2016, we expect overall room night growth to moderate due to harder comps and law of large numbers largely offset by decrease in headwinds on revenue per room night.